[Federal Register Volume 89, Number 237 (Tuesday, December 10, 2024)]
[Proposed Rules]
[Pages 99340-99579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27939]
[[Page 99339]]
Vol. 89
Tuesday,
No. 237
December 10, 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, et al.
Medicare and Medicaid Programs; Contract Year 2026 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; Proposed Rule
Federal Register / Vol. 89, No. 237 / Tuesday, December 10, 2024 /
Proposed Rules
[[Page 99340]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 417, 422, 423, and 460
[CMS-4208-P]
RIN 0938-AV40
Medicare and Medicaid Programs; Contract Year 2026 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
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare Advantage (Part
C), Medicare Prescription Drug Benefit (Part D), Medicaid, 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, drug
coverage, dual eligible special needs plans (D-SNPs), utilization
management, network adequacy, and other programmatic areas, including
the Medicare Drug Price Negotiation Program. This proposed rule also
includes proposals to codify existing subregulatory guidance in the
Part C and Part D programs.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. Eastern Time on
January 27, 2025.
ADDRESSES: In commenting, please refer to file code CMS-4208-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. Comments, including mass comment
submissions, must be submitted in one of the following three ways
(please choose only one of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-4208-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-4208-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Matthania Volmy, (667) 290-8662--General Questions.
Naseem Tarmohamed, (410) 786-0814--Part C and Cost Plan Issues.
Matthania Volmy, (667) 290-8662--Part D Issues.
Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and Appeal
Issues.
Alissa Stoneking, (410) 786-1120--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.
[email protected]--Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this proposed rule may be found at https://www.regulations.gov/.
I. Executive Summary
A. Purpose
The primary purpose of this proposed rule is to amend the
regulations for the Medicare Advantage (Part C) program, Medicare
Prescription Drug Benefit (Part D) program, Medicaid program, Medicare
cost plan program, and Programs of All-Inclusive Care for the Elderly
(PACE). This proposed rule includes a number of new policies that would
improve these programs for contract year 2026 as well as codify
existing Part C and Part D subregulatory guidance.
We note that, as with previous rules, the new marketing and
communications policies in this rule are proposed to be applicable for
all contract year 2026 marketing and communications, beginning October
1, 2025. However, to operationalize the proposed Format Provider
Directories for Medicare Plan Finder provision at Sec. 422.111(m), we
anticipate that 2025 plan year directory data will need to be made
available online for testing purposes in the summer of 2025, and 2026
plan year data would need to be available online on October 1, 2026.
Therefore, we propose an applicability date of July 1, 2025, for this
provision.
B. Summary of the Key Provisions
1. Vaccine Cost Sharing Changes
This proposal would implement section 11401 of the Inflation
Reduction Act of 2022 (IRA), which amends section 1860D-2 of the Act to
require that, effective for plan years beginning on or after January 1,
2023, the Medicare Part D deductible shall not apply to, and there is
no cost-sharing for, an adult vaccine recommended by the Advisory
Committee on Immunization Practices (ACIP) covered under Part D.
2. Insulin Cost Sharing Changes
This proposal would implement section 11406 of the IRA, which
amends section 1860D-2 of the Act to require that, effective for plan
years beginning on or after January 1, 2023, the Medicare Part D
deductible shall not apply to covered insulin products, and the Part D
cost-sharing amount for a one-month supply of each covered insulin
product must not exceed the statutorily defined ``applicable copayment
amount'' for all enrollees. The applicable copayment amount for 2023,
2024, and 2025 is $35. For 2026 and each subsequent year, in accordance
with the statute, we are proposing that, with respect to a covered
insulin product covered under a prescription drug plan (PDP) or a
Medicare Advantage prescription drug
[[Page 99341]]
(MA-PD) plan prior to an enrollee reaching the annual out-of-pocket
threshold, the ``covered insulin product applicable cost-sharing
amount'' is the lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of subchapter XI; or
An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
3. Medicare Prescription Payment Plan
We propose regulatory changes to codify agency guidance
implementing section 11202 of the IRA, which establishes the Medicare
Prescription Payment Plan and requires each PDP sponsor offering a
prescription drug plan and each MA organization offering an MA-PD plan
to provide to any enrollee of such plan, including an enrollee who is
subsidy eligible, the option to elect with respect to a plan year to
pay cost-sharing under the plan in monthly amounts that are capped.
Specifically, we propose to add new Sec. 423.137, add several new Part
D required materials and content at Sec. 423.2267, add Medicare
Prescription Payment Plan information to the list of required content
for Part D sponsor websites at Sec. 423.2265, and add the Medicare
Prescription Payment Plan to the list of Part D requirements waived for
the Limited Income Newly Eligible Transition (LI NET) program at Sec.
423.2536.
4. Part D Coverage of Anti-Obesity Medications (Sec. 423.100) and
Application to the Medicaid Program
The statutory definition of a covered Part D drug at section 1860D-
2(e)(2) of the Social Security Act (the Act) excludes certain drugs and
uses--specifically, those that may be excluded by Medicaid under
section 1927(d)(2) of the Act. This includes, at section 1927(d)(2)(A)
of the Act, ``agents when used for anorexia, weight loss, or weight
gain.'' Historically, drugs used for weight loss have been excluded
from the definition of covered Part D drug, regardless of their use for
treatment of individuals with obesity, and have been an optional drug
benefit for Medicaid programs. Increases in the prevalence of obesity
in the United States and changes in the prevailing medical consensus
towards recognizing obesity as a disease since the beginning of the
Part D program in 2006 have compelled CMS to re-evaluate Part D
coverage of anti-obesity medications (AOMs) for Medicare Part D
enrollees with obesity where the drug's prescribed use is not for a
medically accepted indication (MAI) that is currently covered under
Part D. We are proposing to reinterpret the statutory exclusion of
agents when used for weight loss to allow Part D coverage of AOMs when
used to treat obesity by reducing excess body weight or maintaining
weight reduction long-term for individuals with obesity who do not have
another condition for which the prescribed use is an MAI that is
covered under the current Part D policy. The proposed reinterpretation
would also apply to the Medicaid program. Thus, AOMs could not be
excluded from Medicaid coverage under this interpretation when used for
weight loss or chronic weight management for the treatment of obesity.
Coverage of AOMs and drugs that contain the same active ingredient as
AOMs that meet the definition of a covered outpatient drug are already
subject to section 1927 requirements when used for an indication, other
than weight loss, that is an MAI, and Medicaid must cover those
products when they are medically necessary. Under our proposed
reinterpretation, AOMs approved for weight loss and chronic weight
management that are used for weight loss in individuals who do not have
obesity or another condition that is an MAI for the AOM would remain
excluded from the definition of covered Part D drug and would remain
optional benefit for Medicaid programs.
5. Promoting Informed Choice--Format Provider Directories for Medicare
Plan Finder
We are proposing to require MA provider directory data, as required
under Sec. 422.111(b)(3)(i) be submitted for use to populate Medicare
Plan Finder (MPF). In addition, we are proposing to require MA
organizations to attest that this information is accurate and
consistent with data submitted to comply with CMS's MA network adequacy
requirements at Sec. 422.116(a)(1)(i) when it is submitted to CMS for
the purpose of incorporating into MPF. The proposed regulatory changes
would further promote informed beneficiary choice and transparency
found in online resources, empowering people with Medicare to make
informed choices about their coverage. In addition, the proposal will
help ensure that provider directory information, including the
provider's cultural and linguistic capabilities, which are currently
required for MA provider directories, and are especially important to
underserved communities, will be more readily available when
considering an MA plan.
6. Promoting Informed Choice--Expand Agent and Broker Requirements
Regarding Medicare Savings Programs, Extra Help, and Medigap
To ensure beneficiaries are well informed about and have an
accurate picture of their MA and Part D enrollment options, we are also
proposing to add the following topics to the existing list of
requirements that agents and brokers must discuss with their customers:
the availability of low-income supports including the Part D Low-Income
Subsidy (also known as ``Extra Help'') and Medicare Savings Programs;
for beneficiaries enrolling into MA when first eligible for Medicare or
dropping a Medigap plan to enroll in an MA plan for the first time,
general information on Medigap Federal guaranteed issue (GI) rights,
the practical implications of switching from Medicare Advantage to
Traditional Medicare, and, when applicable, provide information on
state laws regarding Medigap GI rights for those states where the agent
or broker is licensed and appointed to sell; and requiring that agents
pause to address remaining questions the beneficiary may have related
to enrollment in a plan prior to moving forward with an enrollment. As
Medicare enrollees consider their coverage options, it is essential
that agents and brokers provide adequate information to ensure
beneficiaries can make fully informed choices, both to support
enrollees and promote a functioning, competitive marketplace.
7. Promoting Informed Choice--Enhancing Review of Marketing and
Communications
We are proposing to broaden the marketing definition in Sec. Sec.
422.2260 and 423.2260, in order to expand CMS oversight of Medicare
Advantage and Part D communications materials and activities and
strengthen beneficiary protections against misleading and confusing
advertising tactics. Currently, communications materials and activities
only fall within the regulatory definition of marketing if they meet
certain content and intent standards. To satisfy the content portion of
the current regulatory definition of marketing, communications
materials and activities must include or address content regarding: (1)
the plan's benefits, benefits structure, premiums or cost sharing; (2)
measuring or ranking standards (for example, Star Ratings or plan
comparisons); or (3), for MA plans only, rewards and incentives as
defined
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under Sec. 422.134(a). In order to broaden the definition of
marketing, CMS is proposing to eliminate this content standard and rely
solely on an intent standard to determine whether communications
material and activities are considered marketing. Broadening the
definition of marketing would expand the scope of materials that must
be prospectively submitted to CMS for review, which would allow CMS to
better ensure that MA organizations, Part D sponsors, and their
downstream entities are not providing misleading, inaccurate, or
confusing information to current or potential enrollees, or engaging in
activities that could misrepresent the MA organization or Part D
sponsor, in accordance with Sec. Sec. 422.2262 and 423.2262. We are
also proposing conforming edits to the definition of ``Advertisement
(Ad)'' in Sec. Sec. 422.2260 and 423.2260 to align with the proposed
updates to the definition of marketing.
8. Promoting Transparency for Pharmacies and Protecting Beneficiaries
From Disruptions
We are proposing to require Part D sponsors (or first tier,
downstream, or related entities (FDRs), such as pharmacy benefit
managers (PBMs), on the sponsors' behalf) to notify network pharmacies
which plans the pharmacies will be in-network for in a given plan year
by October 1 of the year prior to that plan year and to require
sponsors to provide pharmacies a list of these plans to network
pharmacies on request after October 1. We are also proposing to require
contracts with pharmacies for participation in Part D networks that
allow the Part D sponsor or FDR to terminate the contract without cause
to also allow pharmacies to terminate the contracts without cause after
providing the same notice that the contract requires the sponsor or FDR
to provide the pharmacy. We believe these policies will address
concerns raised by pharmacies about their ability to provide accurate
information to beneficiaries and will help protect beneficiaries from
disruptions in care that occur when network pharmacies stop providing
services before formally terminating their contracts.
9. Administration of Supplemental Benefits Coverage Through Debit Cards
This provision would codify existing requirements and new
protections for supplemental benefits that are administered using debit
cards by MA organizations. Specifically, we are proposing to: (1)
describe when, how, and in what manner debit cards can be used by an MA
organization and enrollee; (2) introduce additional disclosure
requirements to increase transparency, including additional disclosure
rules around supplemental benefits and plan debit cards (3) further
protect access to plan-covered services for MA enrollees by requiring
MA organizations to allow an enrollee to receive covered benefits
through an alternative process if there is an issue with a plan debit
card, (4) ensure debit cards are electronically linked to plan covered
items and services through a real-time identification mechanism, and 5)
clarify what types of over the counter (OTC) products are acceptable.
Finally, we are proposing to prohibit MA organizations from marketing
the dollar value of a supplemental benefit or the method by which a
supplemental benefit is administered, such as use of a debit card by
the enrollee to provide the plan's payment to the provider for the
covered item or service.
10. Improving Access--Enhancing Rules on Internal Coverage Criteria
In the final rule titled ``Medicare Program; Contract Year 2024
Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, and Medicare Cost Plan
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care
for the Elderly,'' which appeared in the April 12, 2023, Federal
Register (88 FR 22120) (hereinafter referred to as the ``April 2023
final rule''), we codified regulations that clarified the obligations
and responsibilities for MA organizations in covering basic benefits
and established guardrails for MA organizations to develop and use
coverage criteria in a way that aligns with Traditional Medicare. These
rules were applicable to coverage for MA organizations beginning
January 1, 2024. Through CMS account manager engagement with MA
organizations, incoming inquiries from industry stakeholders, and our
ongoing 2024 program audits, we have learned a great deal about common
misunderstandings related to these new rules. In order to further
clarify these rules, we are proposing to build upon and enhance the
regulations from the April 2023 final rule, specifically those related
to the use of internal coverage criteria, by defining the meaning of
``internal coverage criteria,'' establishing policy guardrails to
ensure access to benefits, and adding more specific rules about
publicly posting internal coverage criteria content on MA organization
websites.
11. Ensuring Equitable Access to Behavioral Health Benefits Through
Section 1876 Cost Plan and MA Cost Sharing Limits (Sec. Sec. 417.454
and 422.100)
Addressing the nation's behavioral health crisis and ensuring
equitable access to behavioral health services are key priorities for
CMS.\1\ Beneficiaries with severe mental illness experienced
substantial disruptions in care during the COVID-19 pandemic and these
disruptions were greater among disadvantaged populations (including
historically underserved racial and ethnic groups and low-income
populations).\2\ As a result, CMS is pursuing policies to address
barriers individuals may face in accessing mental health and substance
use disorder care. This includes using the authority under sections
1852(a)(1)(B)(iv), 1856(b)(1), 1857(e)(1), 1876(c)(2)(A), and
1876(i)(3)(D) of the Act to add to the list of Part A and Part B
benefits (items and services) for which Medicare Advantage (MA) and
Section 1876 Cost Plans' (Cost Plans) in-network cost sharing may not
exceed the cost-sharing levels in Traditional Medicare.
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\1\ CMS's behavioral health strategy is available at: https://www.cms.gov/cms-behavioral-health-strategy.
\2\ Busch AB, Huskamp HA, Raja P, Rose S, Mehrotra A.
Disruptions in Care for Medicare Beneficiaries with Severe Mental
Illness During the COVID-19 Pandemic. JAMA Netw Open. 2022 Jan
4;5(1):e2145677. doi: 10.1001/jamanetworkopen.2021.45677. PMID:
35089352; PMCID: PMC8800078. Retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8800078/.
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We propose to require MA and Cost Plans' in-network cost sharing
for categories of mental health and substance use disorder services
(collectively called ``behavioral health services'') be no greater than
that in Traditional Medicare beginning January 1, 2026.
We are proposing behavioral health cost-sharing standards for MA
and Cost Plans that strike a balance between: (1) improving the
affordability of these services for enrollees in a timely manner; and
(2) minimizing disruption to enrollees' access to care and coverage
options. We also propose several changes to the cost-sharing
regulations for MA and Cost Plans at Sec. Sec. 417.454 and 422.100.
Additionally, we solicit comment on: (1) whether CMS should apply these
proposed changes to the behavioral health cost-sharing standards
beginning in contract year 2026 or 2027; (2) whether there should be a
transition period from the existing contract year 2025 behavioral
health cost-sharing standards in current regulations for select service
categories (such as, the standards at Sec. 422.100(f)(6)(i), (iii), or
[[Page 99343]]
(iv) for MA plans), to the proposed cost-sharing standard; and (3) how
long any transition should be. We also solicit comment regarding this
behavioral health cost-sharing proposal's potential impact on how MA
plans would satisfy existing requirements that cost sharing be
actuarially equivalent to Traditional Medicare cost sharing at Sec.
422.100(j)(1) and (2).
12. Improving Experiences for Dually Eligible Enrollees
Dually eligible individuals face fragmentation in many parts of the
health care system, including their experiences as enrollees of
Medicare and Medicaid managed care plans. One way in which we seek to
address such fragmentation is though policies that integrate care for
dually eligible individuals. ``Integrated care'' refers to delivery
system and financing approaches that (1) maximize person-centered
coordination of Medicare and Medicaid services; (2) mitigate cost-
shifting incentives between the two programs; and (3) create a seamless
experience for dually eligible individuals. We are proposing to
establish new Federal requirements for D-SNPs that are applicable
integrated plans to: (1) have integrated member identification (ID)
cards that serve as the ID cards for both the Medicare and Medicaid
plans in which an enrollee is enrolled; and (2) conduct an integrated
health risk assessment (HRA) for Medicare and Medicaid, rather than
separate HRAs for each program. We are also proposing to codify
timeframes for special needs plans to conduct HRAs and individualized
care plans (ICPs) and prioritize the involvement of the enrollee or the
enrollee's representative, as applicable, in the development of the
ICPs.
13. Medical Loss Ratio (MLR)
To improve medical loss ratio (MLR) reporting and oversight and to
better align MA and Part D MLR requirements with commercial MLR and
Medicaid MLR requirements, we are proposing to make certain changes to
the regulations that govern MLR requirements for MA and Part D.
Specifically, we are proposing to establish clinical and quality
improvement standards for provider incentives and bonus arrangements
included in the MA MLR numerator in order to help align such bonus
payments with care outcomes and avoid excess premium transfer to
providers. We also propose to prohibit administrative costs from being
included in quality improvement activities in both the MA and Part D
MLR numerator. Additionally, we propose to adopt additional
requirements for the allocation of expenses in the MLR. We also propose
to establish new audit and appeals processes for MLR compliance. In
addition, we propose to amend the Medicare MLR regulations authorizing
the release of Part C and Part D MLR data. We propose to codify the
rules we established in the CY 2025 Part D Redesign Program
Instructions for the treatment for MLR purposes of Medicare
Prescription Payment Plan unsettled balances for 2026 and subsequent
years. We also propose to explicitly provide that the Medicare MLR
reporting include detailed information regarding provider payment
arrangements. In addition to the proposed changes, we are issuing a
request for information on potential policies that CMS could adopt
regarding how the MA and Part D MLRs are calculated in order to enable
policymakers to address concerns surrounding vertical integration in MA
and Part D.
14. Medicare Transaction Facilitator Requirements for Network Pharmacy
Agreements
We propose to amend Sec. 423.505 by adding paragraph (q) to
require that Part D sponsors' network contracts with pharmacies require
such pharmacies to be enrolled in the Medicare Drug Price Negotiation
Program's (``Negotiation Program'') Medicare Transaction Facilitator
Data Module (``MTF DM''). We believe the requirement among Part D
sponsors' network pharmacies to be enrolled in the MTF DM that would be
added to Part D sponsors' network contracts with pharmacies, if
finalized, would facilitate continued beneficiary access to selected
drugs that are covered Part D drugs, promote access to negotiated
maximum fair prices under the Negotiation Program for both
beneficiaries and dispensing entities, and help ensure accurate Part D
claims information and payment.
15. Enhancing Health Equity Analyses: Annual Health Equity Analysis of
Utilization Management Policies and Procedures
We propose at Sec. 422.137(d)(6)(iii)(A) through (H) to revise the
required metrics for the annual health equity analysis of the use of
prior authorization to require the metrics be reported by each item or
service, rather than aggregated for all items and services.
In the April 2024 final rule, CMS added health equity related
requirements to Sec. 422.137, including a requirement at Sec.
422.137(d)(6) that the Utilization Management committee must conduct an
annual health equity analysis of the use of prior authorization. The
analysis must examine the impact of prior authorization at the plan
level, on enrollees with one or more of the specified social risk
factors (SRF). The analysis must use the outlined metrics, aggregated
for all items and services, calculated for enrollees with the specified
SRFS, and for enrollees without the specified SRFs, from the prior
contract year, to conduct the analysis.
During the public comment period, CMS received a significant number
of comments on the requirement that the metrics for the health equity
analysis be aggregated for all items and services (89 FR 30569).
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. We are proposing to revise the required
metrics for the annual health equity analysis of the use of prior
authorization to require the metrics be reported by each item or
service, rather than aggregated for all items and services.
16. Ensuring Equitable Access to Medicare Advantage Services--
Guardrails for Artificial Intelligence (AI)
On October 30, 2023, the Biden-Harris Administration released an
Executive Order, ``Executive Order on the Safe, Secure, and Trustworthy
Development and Use of Artificial Intelligence,'' directing agencies to
ensure that artificial intelligence tools do not impede the advancement
of equity and civil rights, and that the use of AI within health care
organizations does not deny equal opportunity and justice for the
American people.\3\ Given the growing use of AI within the healthcare
sector, such as, but not limited to, AI-based patient care decision
support tools, vision transformer-based AI methods for lung cancer
imaging applications, and AI and machine learning based decision
support systems in mental health care settings, we believe it is
necessary to ensure that the use of AI does not result in inequitable
treatment, bias, or both, within the healthcare system, and instead is
used to promote equitable access to care and culturally competent care
for all enrollees. As such, we propose to revise
[[Page 99344]]
Sec. 422.112(a)(8) to ensure services are provided equitably
irrespective of delivery method or origin, whether from human or
automated systems. We also clarify that in the event that an MA plan
uses AI or automated systems, it must comply with section 1852(b) of
the Act and Sec. 422.110(a) and other applicable regulations and
requirements and provide equitable access to services and not
discriminate on the basis of any factor that is related to the
enrollee's health status.
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\3\ https://www.federalregister.gov/documents/2023/11/01/2023-24283/safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence.
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17. Promoting Community-Based Services and Enhancing Transparency of
In-Home Service Contractors
CMS has become aware that some entities that provide covered
benefits may not be included in an MA organization's provider
directory. These concerns relate to safety and a lack of transparency
regarding supplemental benefit service providers and their access to an
enrollee's home, as well as ensuring individuals know which providers
are deeply rooted within the communities they serve. This is
particularly of concern when the enrollee may not have information
about who may have access to their home, personally identifiable
information (PII), or protected health information (PHI). As such, to
strengthen beneficiary protections and transparency, we propose to: (1)
codify definitions of community-based organizations (CBOs), in-home or
at-home supplemental benefit providers and direct furnishing entities;
(2) require plans to identify, within the provider directory, which
providers and direct furnishing entities meet the proposed definition
of a CBO; (3) require plans to identify in-home or at-home supplemental
benefit providers and direct furnishing entities, including those that
provide a hybrid of services (both in-home or at-home, and in-office
services), either through a subset list within the provider directory
or through a separate list comprising in-home or at-home supplemental
benefit providers and direct furnishing entities; and (4) clarify
existing policy by stating that all direct furnishing entities must be
included within the provider directory.
C. Conclusion
Finally, we are clarifying and emphasizing our intent that if any
provision of this rule, once finalized, 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 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 propose
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).
D. Summary of Costs and Benefits
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BILLING CODE 4120-01-C
II. Implementation of IRA Provisions for the Medicare Prescription Drug
Benefit Program
A. Coverage of Adult Vaccines Recommended by the Advisory Committee on
Immunization Practices Under Medicare Part D (Sec. Sec. 423.100 and
423.120)
1. Background
Section 11401 of the Inflation Reduction Act (IRA) amended section
1860D-2 of the Act by adding new paragraph (8) to subsection (b) and
new paragraph (5) to subsection (c) and making other conforming
amendments to require that, effective for plan years beginning on or
after January 1, 2023, the Medicare Part D deductible shall not apply
to, and there is no cost-sharing for, an adult vaccine recommended by
the Advisory Committee on Immunization Practices (ACIP) covered under
Part D.
Section 11401(e) of the IRA directed the Secretary to implement
section 11401 of the IRA for 2023, 2024, and 2025 by program
instruction or other forms of program guidance. In accordance with the
law, CMS issued memoranda via the Health Plan Management System (HPMS)
that outlined requirements for Part D sponsors regarding the
implementation of section 11401.
On September 26, 2022, CMS released an HPMS memorandum titled
``Contract Year 2023 Program Guidance Related to Inflation Reduction
Act Changes to Part D Coverage of Vaccines and Insulin.'' \4\ In this
memorandum, we provided guidance that for any new ACIP-recommended
adult vaccine that becomes available during a plan year, Part D
sponsors must apply the $0 cost-sharing requirements in section 1860D-
2(b)(8) of the Act to applicable claims with dates of service after
ACIP's issued recommendation.
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\4\ https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf.
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On April 4, 2023, CMS issued an HPMS memorandum titled ``Final
Contract Year (CY) 2024 Part D Bidding Instructions'' in which we
explained that, in order for a vaccine to be considered ACIP-
recommended for adult use, it must be both adopted by the Director of
the Centers for Disease Control and Prevention (CDC) and published in
the CDC's Morbidity and Mortality Weekly Report (MMWR).\5\
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\5\ https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf.
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On July 24, 2023, CMS issued a revision to the April 4, 2023
memorandum in which we clarified that the effective date of the $0
cost-sharing requirement for an ACIP-recommended adult vaccine must be
aligned with the date on which the CDC Director adopts the respective
ACIP vaccine recommendation, as posted on the CDC's website at https://www.cdc.gov/vaccines/acip/recommendations.html, not the date on which
the recommendation is published in the MMWR.\6\
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\6\ https://www.cms.gov/files/document/acip-recommended-vaccines-july-2023.pdf.
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In this rule, we propose to codify the requirements related to $0
cost-sharing for adult vaccines recommended by ACIP under Part D for
2026 and each subsequent plan year.
[[Page 99350]]
2. Definition of ACIP-Recommended Adult Vaccine
Section 1860D-2(b)(8)(B) of the Act specifies that for purposes of
section 1860D-2(b)(8) of the Act, the term ``adult vaccine recommended
by the Advisory Committee on Immunization Practices'' means a covered
Part D drug that is a vaccine licensed by the U.S. Food and Drug
Administration (FDA) under section 351 of the Public Health Service Act
(PHSA) for use by adult populations and administered in accordance with
recommendations of the CDC's ACIP as adopted by the CDC Director. We
propose to refer to these vaccines as ``ACIP-recommended adult
vaccines'' and to codify this definition at Sec. 423.100. CMS is not
proposing to specify a particular age for a vaccine to be considered
``adult'' for the purposes of determining if a Part D vaccine is
subject to $0 cost sharing under section 11401 of the IRA. We defer to
how the CDC and ACIP categorize such a recommendation. Part D sponsors
must use the information provided by the CDC and ACIP to determine if
the vaccine is recommended for, and being administered to, an adult.
Consistent with the September 26, 2022 HPMS memorandum, we propose
to define an ``ACIP-recommended adult vaccine'' as a vaccine licensed
by the FDA for use in adults and administered in accordance with ACIP
recommendations. In some cases, the vaccine may be included on the ACIP
``Adult Immunization Schedule'' \7\ and, in other cases, the vaccine
may be recommended under a separate ACIP recommendation that is not
part of the Adult Immunization Schedule. In alignment with the
September 26, 2022 HPMS memorandum, we interpret the term
``recommendation'' to refer to a recommendation under any one of ACIP's
categories of recommendations, including routine, catch-up, risk-based,
and shared clinical decision-making immunization recommendations. As
described by ACIP, the different categories of recommendations can be
distinguished based on the default decision to vaccinate. Routine,
catch-up, and risk-based immunization recommendations include a default
decision to vaccinate an individual based on their age or other
indication, unless contraindicated. For shared clinical decision-making
recommendations, the decision of whether or not to vaccinate is
determined based on the ``best available evidence of who may benefit
from vaccination; the individual's characteristics, values, and
preferences; the health care provider's clinical discretion; and the
characteristics of the vaccine being considered.'' \8\
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\7\ https://www.cdc.gov/vaccines/schedules/hcp/imz/adult.html.
\8\ https://www.cdc.gov/vaccines/acip/acip-scdm-faqs.html.
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Some vaccines that are not on the ACIP Adult Immunization Schedule
for routine immunization are included on the ACIP Vaccine
Recommendations and Guidelines web page.\9\ This web page describes
ACIP recommendations for vaccines that are used in limited populations
and under limited circumstances. For example, ACIP recommends certain
vaccinations for travelers prior to travelling to certain countries.
Therefore, consistent with the September 26, 2022 HPMS memorandum, as
long as the vaccine is an FDA-licensed vaccine for use by adults that
is recommended by ACIP for use by adults, such vaccine would meet our
proposed definition of an ACIP-recommended adult vaccine, when provided
in accordance with ACIP recommendations.
---------------------------------------------------------------------------
\9\ https://www.cdc.gov/vaccines/hcp/acip-recs/index.html.
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As described in the September 26, 2022 HPMS memorandum, a Part D
vaccine would not meet our proposed definition of an ACIP-recommended
adult vaccine and, therefore, would not be subject to the requirements
implemented in this proposed rule, if the vaccine is: (1) not licensed
by the FDA under section 351 of the PHSA for use by adults; (2) not
recommended by ACIP for use by adults; (3) administered to an
individual who is not an adult, even if such use in the non-adult is
supported by ACIP recommendations (for example, recommendations in the
ACIP child and adolescent immunization schedule); or (4) not
administered in accordance with ACIP recommendations.
In summary, we propose to add at Sec. 423.100 a definition of
``ACIP-recommended adult vaccine'' that means a covered Part D drug, as
defined at Sec. 423.100, that is a vaccine licensed by the FDA under
section 351 of the Public Health Service Act for use by adult
populations and administered in accordance with recommendations of ACIP
of the CDC as adopted by the CDC Director.
3. No Deductible or Cost-Sharing for ACIP-Recommended Adult Vaccines
Section 1860D-2(b)(8)(A) of the Act specifies that the deductible
shall not apply and there shall be no coinsurance or other cost-sharing
with respect to ACIP-recommended adult vaccines. Generally, Part D
vaccines that have ACIP-recommended uses in the adult population and
are administered to an adult must be provided with no enrollee cost-
sharing. As described in the September 26, 2022 HPMS memorandum, this
means that enrollees must not be subject to cost sharing on the
ingredient cost of the vaccine submitted on the prescription drug event
(PDE) record, or any associated sales tax, dispensing fee, or vaccine
administration fee, regardless of the vaccine's formulary tier
placement or the benefit phase that the enrollee is in.
We are also proposing at Sec. 423.120(g)(3) that enrollees who
submit direct member reimbursement (DMR) requests for ACIP-recommended
adult vaccines accessed at either out-of-network pharmacies or
providers (in accordance with Sec. 423.124(a) and (c)), or at in-
network pharmacies or providers, that a Part D sponsor determines are
coverable under their benefit must not be subject to cost sharing.
While Part D sponsors generally may charge the enrollee for the
difference between the cash price and plan allowance for DMRs for
covered Part D drugs accessed from both out-of-network and in-network
pharmacies, neither Sec. 423.124(b) nor Chapter 14 of the Prescription
Drug Benefit Manual directly addresses covered Part D drugs that have
statutorily limited cost sharing.\10\ Because there can be no cost
sharing for ACIP-recommended adult vaccines accessed at either out-of-
network pharmacies or providers (in accordance with Sec. 423.124(a)
and (c)), or at in-network pharmacies or providers, that a Part D
sponsor determines are coverable under their benefit, the Part D
sponsor must reimburse the enrollee for the full cash price paid to the
pharmacy or provider for an ACIP-recommended adult vaccine.
---------------------------------------------------------------------------
\10\ Section 423.124(b) currently states that a Part D sponsor
that provides its Part D enrollees with coverage other than defined
standard coverage may require its Part D enrollees accessing covered
Part D drugs at out-of-network pharmacies to assume financial
responsibility for any differential between the out-of-network
pharmacy's (or provider's) usual and customary price and the Part D
sponsor's plan allowance. Section 50.4.3 of Chapter 14 of the
Medicare Prescription Drug Benefit Manual (https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf)
provides detailed guidance on how Part D sponsors must process DMR
requests that are submitted by enrollees who paid cash at an out-of-
network (or an in-network) pharmacy (or provider) and where the
pharmacy (or provider) did not submit the claim to the Part D plan.
---------------------------------------------------------------------------
The total gross covered drug cost (TGCDC) is usually reported
differently on PDEs depending on whether the drug was accessed at an
out-of-network or in-
[[Page 99351]]
network pharmacy or provider. Specifically, Part D sponsors report the
cash price that the enrollee paid to the pharmacy or provider as the
TGCDC for out-of-network DMRs but only report the negotiated price as
the TGCDC for in-network DMRs. However, we are clarifying here that
with respect to ACIP-recommended adult vaccines, as an exception to the
Chapter 14 guidance, the sponsor should report the cash price paid to
the pharmacy or provider as the TGCDC on the PDE for both out-of-
network and in-network DMRs. Regardless, there is no true out-of-pocket
(TrOOP) cost accumulation for these claims because the beneficiary has
no cost sharing for ACIP-recommended adult vaccines under the basic
Part D benefit.
Under our proposed policy at Sec. 423.120(g), and as described in
the September 26, 2022 HPMS memorandum, new Part D vaccines that become
available during the plan year and meet the definition of an ACIP-
recommended adult vaccine are subject to the cost-sharing requirements
of section 1860D-2(b)(8)(A) of the Act. Consistent with the definition
of a covered Part D drug at Sec. 423.100, the statutory cost-sharing
requirements apply regardless of whether a Part D sponsor adds the
vaccine to the formulary midyear, or the enrollee obtains the vaccine
via a formulary exception. In addition, we propose at Sec.
423.120(g)(2) that if ACIP issues a new or revised recommendation for a
vaccine, related to its use in adults during the plan year, Part D
sponsors must apply the cost-sharing requirements of this proposed
rule, as applicable, to any ACIP-recommended adult vaccine claims with
dates of service after the proposed ``Effective date of the ACIP
recommendation'' discussed later in this proposed rule.
Consistent with the April 4, 2023, HPMS memorandum, Part D sponsors
may place ACIP-recommended adult vaccines on any tier, including a
vaccine tier, and apply utilization management strategies (for example,
prior authorization), insofar as such tier placement or utilization
management strategy is consistent with the requirements of CMS's
formulary review and approval process under Sec. 423.120(b).
As described in section 30.2.7 of Chapter 6 of the Medicare
Prescription Drug Benefit Manual, Part D sponsors may only use
utilization management strategies to assess the necessity of vaccines
that are less commonly administered in the Medicare population,
facilitate the use of vaccines in line with ACIP recommendations, and
evaluate potential reimbursement of vaccines that could be covered
under Part B.\11\ For example, utilization management strategies may be
used to ensure an enrollee meets the age or clinical requirements
recommended by ACIP for a particular vaccine, such as the respiratory
syncytial virus (RSV) vaccine which is currently recommended by ACIP
for adults aged 75 years of age and older and adults aged 60-74 who are
at increased risk for severe RSV disease. However, regardless of an
ACIP-recommended adult vaccine's tier placement or applicable
utilization management strategies, the statutory zero cost-sharing
limits required under this proposed rule would still apply.
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\11\ https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf
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In summary, we propose to codify at Sec. 423.120(g)(1) the
requirement that Part D sponsors must not apply the deductible or
charge cost sharing on ACIP-recommended adult vaccines. We also propose
to codify at Sec. 423.120(g)(2) that once a new or revised
recommendation is posted on the CDC website, Part D sponsors must
provide coverage consistent with Sec. 423.120(g)(1) for dates of
service on or after the ``Effective date of the ACIP recommendation''
as discussed later in this proposed rule. Finally, we propose to codify
at Sec. 423.120(g)(3) that these cost-sharing requirements apply for
ACIP-recommended adult vaccines obtained from either in-network or out-
of-network pharmacies or providers (in accordance with Sec. 423.124(a)
and (c)).
4. Effective Date of ACIP Recommendations
In the July 24, 2023, HPMS memorandum, we stated that Part D
sponsors must provide $0 cost sharing for an ACIP-recommended adult
vaccine as of the date the CDC Director adopts the ACIP's
recommendation, and it is posted on the CDC's website. Accordingly, we
propose to add at Sec. 423.100 a definition of ``Effective date of the
ACIP recommendation'' that means the date specified on the CDC website
noting the date the CDC Director adopted the ACIP recommendation.
In the July 24, 2023 HPMS memorandum, we also stated that in the
event that the CDC Director's adoption of an ACIP recommendation for an
adult vaccine is posted on the CDC's website but an adoption date is
not specified, the effective date of the ACIP recommendation is the day
after the last day of the ACIP meeting at which the recommendation was
approved. However, we are not including this requirement in our
proposed definition of ``Effective date of the ACIP recommendation'' at
Sec. 423.100 as it is highly unlikely that an ACIP recommendation will
be posted without the date on which it was adopted by the CDC Director.
In the event that a recommendation is posted without an effective date,
CMS will consult with the CDC to obtain the date the recommendation was
adopted by the CDC Director and provide guidance.
The ACIP holds three regular meetings annually, generally in
February, June, and October, in addition to emergency sessions, for the
purpose of reviewing scientific data and voting on vaccine
recommendations. We note that the proposed ``Effective date of the ACIP
recommendation'' and the date on which it is published on the CDC's
website may not always be the same date (if, for example, the website
posting occurs after the date specified as the date the CDC Director
adopted the recommendation). Nevertheless, the proposed ``Effective
date of the ACIP recommendation'' determines when the cost-sharing
requirements apply. Consequently, if an enrollee paid cost sharing for
an ACIP-recommended adult vaccine after the ``Effective date of the
ACIP recommendation'' (for example, the enrollee received the vaccine
after the ``Effective date of the ACIP recommendation,'' but prior to
the recommendation being posted on the CDC website), once the
recommendation has been posted to the CDC website, the Part D sponsor
will need to reimburse the enrollee for any cost sharing they paid for
the vaccine.
In instances where ACIP expands a previous recommendation, narrows
a previous recommendation, or removes a previous recommendation, the
``Effective date of the ACIP recommendation'' is the date the CDC
Director adopted the changed recommendation once the recommendation is
posted on the CDC's website. We note that a change to an ACIP
recommendation alone does not affect a vaccine's status as a Part D
drug. Specifically, a Part D drug is defined at Sec. 423.100, in
relevant part, as including a vaccine, if used for a medically accepted
indication, as defined in section 1860D-2(e)(4) of the Act. Since an
ACIP recommendation does not affect what is considered a medically
accepted indication, as defined under section 1860D-2(e)(4) of the Act,
for a particular vaccine, an ACIP recommendation alone does not affect
a vaccine's status as a Part D drug. However, if the FDA labeling
changes to
[[Page 99352]]
align with a narrowed ACIP recommendation, this may change what is
considered a medically accepted indication and may change what
indications are coverable under Part D for a particular vaccine. In
other words, if an ACIP recommendation is narrowed or removed, the
vaccine may still be coverable under Part D, but an enrollee may be
subject to cost-sharing for the vaccine if it is not administered in
accordance with the revised ACIP recommendation.
When an ACIP recommendation for a particular vaccine is narrowed
(for example, additional restrictions are added or the vaccine is
recommended for a more limited patient population), Part D sponsors may
implement prior authorization (PA) to determine whether the vaccine is
being administered in accordance with ACIP recommendations and whether
the enrollee should be subject to cost-sharing. For example, if an ACIP
recommendation is amended to raise the age for which a vaccine is
recommended to be administered, Part D sponsors may implement PA to
ensure a beneficiary meets this new age requirement. However, Part D
sponsors are not required to implement PA for vaccines to determine if
a vaccine is being used for an ACIP-recommended use and is therefore
subject to $0 cost-sharing.
When an ACIP recommendation is narrowed and a Part D sponsor does
not currently have a PA in place for that vaccine, the plan must submit
a negative formulary change request to add a PA requirement for that
vaccine that aligns with the newly narrowed recommendation, consistent
with Sec. 423.120(e)(1). As specified in Sec. 423.120(e)(3)(i),
negative change requests for maintenance changes are considered to be
approved after 30 days unless the Part D sponsor is notified otherwise.
Once the request is approved, Part D sponsors may implement the PA
requirement and, if the plan determines that the vaccine is not being
used for an ACIP--recommended use, may charge the enrollee the
applicable cost-sharing. Part D sponsors are permitted, but not
required, to make retroactive determinations for claims that were
processed with $0 cost-sharing after the ``Effective date of the ACIP
recommendation'' and before the date on which the PA requirement went
into effect.
If ACIP withdraws a recommendation for a previously recommended
vaccine such that the vaccine no longer meets the definition of an
ACIP-recommended adult vaccine, Part D sponsors are not required to
submit a negative change request and may immediately apply cost sharing
for the vaccine for dates of service after the ``Effective date of the
ACIP recommendation.''
Because the cost-sharing limits for vaccines outlined in this
proposal have been in place since 2023 through program instruction
authority and we have annually reviewed cost sharing in plan benefit
package submissions, we believe the impacts of our proposed
codification of these requirements should have minimal impact on Part D
sponsors and beneficiaries.
B. Appropriate Cost-Sharing for Covered Insulin Products Under Medicare
Part D (Sec. Sec. 423.100 and 423.120)
1. Background
Section 11406 of the Inflation Reduction Act (IRA) amended section
1860D-2 of the the Act by adding new paragraph (9) to subsection (b)
and new paragraph (6) to subsection (c) and making other conforming
amendments to require that, effective for plan years beginning on or
after January 1, 2023, the Medicare Part D deductible shall not apply
to covered insulin products, and the Part D cost-sharing amount for a
1-month supply of each covered insulin product must not exceed the
statutorily defined ``applicable copayment amount'' for all enrollees.
For 2023, 2024, and 2025, the applicable copayment amount is $35. For
2026 and each subsequent year, the applicable copayment amount is the
lesser of: (1) $35, (2) an amount equal to 25 percent of the maximum
fair price (MFP) established for the covered insulin product in
accordance with part E of subchapter XI of the Act, or (3) an amount
equal to 25 percent of the negotiated price of the covered insulin
product under the PDP or MA-PD plan.
Section 11406(d) of the IRA directed the Secretary to implement
section 11406 of the IRA for 2023, 2024, and 2025 by program
instruction or other forms of program guidance. In accordance with the
law, CMS issued several memoranda related to cost-sharing for covered
insulin products via the Health Plan Management System (HPMS) that
outlined expectations for Part D sponsors regarding the implementation
of section 11406. On September 26, 2022, CMS released an HPMS
memorandum titled ``Contract Year 2023 Program Guidance Related to
Inflation Reduction Act Changes to Part D Coverage of Vaccines and
Insulin,'' in which we provided program instructions for the
implementation of the requirements in section 11406.\12\ On April 4,
2023, we released additional guidance in the ``Final Contract Year (CY)
2024 Part D Bidding Instructions'' in which we provided instructions
for Part D sponsors as they prepared to submit bids for CY 2024.\13\
Lastly, on April 1, 2024, we released ``Final CY 2025 Part D Redesign
Program Instructions.'' \14\
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\12\ https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf.
\13\ https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf.
\14\ https://www.cms.gov/files/document/final-cy-2025-part-d-redesign-program-instructions.pdf.
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In this rule, we propose to codify the requirements related to
appropriate cost-sharing for covered insulin products under Part D for
2026 and each subsequent plan year.
2. Definition of Covered Insulin Product
Section 1860D-2(b)(9)(C) of the Act defines a covered insulin
product as ``an insulin product that is a covered Part D drug covered
under a PDP or MA-PD plan and that is approved under section 505 of the
Federal Food, Drug, and Cosmetic Act (FFDCA) or licensed under section
351 of the Public Health Service Act (PHSA) and marketed pursuant to
such approval or licensure, including any covered insulin product that
has been deemed to be licensed under section 351 of the PHSA pursuant
to section 7002(e)(4) of the Biologics Price Competition and Innovation
Act of 2009 and marketed pursuant to such section.''
We are proposing to codify the statutory definition of ``covered
insulin product'' at Sec. 423.100 and, in alignment with the guidance
in CMS's September 26, 2022 HPMS memorandum, we clarify that a covered
insulin product includes drug products that are a combination of more
than one type of insulin. We are also proposing, consistent with the
September 26, 2022 HPMS memorandum, that the definition of a covered
insulin product include drug products that are a combination of both
insulin and a non-insulin drug or biological product. Our proposed
definition of covered insulin product would not, however, include
medical supplies associated with the injection of an insulin product,
unless such medical supplies are a device constituent part of a
combination product (as defined in 21 CFR 3.2(e)) containing insulin
and such combination product is licensed under section 351 of the PHSA.
While our proposed definition of ``covered insulin product''
includes drug products that are a combination of more than one type of
insulin or both insulin and non-insulin drug or biological products,
the definition would be limited to those drug products
[[Page 99353]]
that are FDA-licensed products. Consequently, because a compounded drug
product, as described in Sec. 423.120(d), is not FDA-licensed, it
would not meet the definition of ``covered insulin product''. As such,
a compounded drug product would not be subject to the requirements for
a ``covered insulin product'' under our proposed definition at Sec.
423.100.
Section 1860D-2(b)(9)(C) of the Act specifies that a ``covered
insulin product'' is an insulin product that is a covered Part D drug
covered under a PDP or MA-PD plan. Section 423.100 defines a covered
Part D drug to be a Part D drug that is included on a Part D sponsor's
formulary, treated as being included in a Part D plan's formulary as a
result of a coverage determination or appeal, and obtained at a network
pharmacy or an out-of-network pharmacy in accordance with Sec.
423.124(a) and (c). Accordingly, we specify in our proposed definition
at Sec. 423.100 that a ``covered insulin product'' is a covered Part D
drug as defined in Sec. 423.100.
Additionally, we propose at Sec. 423.100 that a ``covered insulin
product'' is licensed under section 351 of the Public Health Service
Act and marketed pursuant to such licensure. We clarify that this
proposed definition, in accordance with the statute, includes any
covered insulin product that had an approved marketing application that
was deemed to be a license for the insulin product (that is, an
approved biologics license application) under section 351 of the PHSA
pursuant to section 7002(e)(4) of the Biologics Price Competition and
Innovation Act of 2009 and marketed pursuant to such license. We also
note that outside of these situations where the insulin had an approved
marketing application under section 505 of the Federal Food, Drug, and
Cosmetic Act, that was deemed to be a license for the insulin product
(that is, an approved biologics license application) under section 351
of the Public Health Service Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009, there is no
need to reference section 505 of the Federal Food, Drug, and Cosmetic
Act since a biological product can no longer be approved under section
505 and must be licensed in a biologics license application under
section 351 of the Public Health Service Act. As such, a reference to
section 505 is not included in our proposed definition of a ``covered
insulin product''.
3. Definition of Applicable Cost-Sharing Amount for Covered Insulin
Products
Section 1860D-2(b)(9)(D) of the Act defines ``applicable copayment
amount'' with respect to a covered insulin product under a PDP or an
MA-PD plan dispensed during plan year 2026, and each subsequent plan
year, as the lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of subchapter XI, or;
An amount equal to 25 percent of the negotiated price of
the covered insulin product under the PDP or MA-PD plan.
We interpret the section 1860D-2(b)(9)(D) reference to ``applicable
copayment amount'' as an amount that could be either a fixed copayment
or a coinsurance percentage. Therefore, we propose to define this
``applicable copayment amount'' as an ``applicable cost-sharing
amount'' at Sec. 423.100. In addition, to ensure that the reference to
``applicable cost-sharing amount'' is specific to the cost-sharing for
covered insulin products described under proposed Sec. 423.120(h), and
discussed later in this proposed rule, we propose to define the term
``covered insulin product applicable cost-sharing amount.''
Specifically, we propose to add at Sec. 423.100 a definition of
``covered insulin product applicable cost-sharing amount'' that means,
with respect to a covered insulin product covered under a PDP or an MA-
PD plan prior to an enrollee reaching the annual out-of-pocket
threshold during plan year 2026 and each subsequent plan year, the
lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of subchapter XI, or;
An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
For example, the August 15, 2024 publication ``Medicare Drug Price
Negotiation Program: Negotiated Prices for Initial Price Applicability
Year 2026'' establishes the maximum fair price for the covered insulin
product Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog
FlexPen; NovoLog PenFill as $119 for a 30-day supply in CY 2026.\15\ An
amount equal to 25 percent of the maximum fair price for this product
is $29.75, which is lower than the cost-sharing amount of $35.
Therefore, the covered insulin product applicable cost-sharing amount
for Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen;
NovoLog PenFill would be the lesser of: (1) $29.75; or (2) an amount
equal to 25 percent of the negotiated price, as defined in Sec.
423.100, of the covered insulin product under the PDP or MA-PD plan.
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\15\ https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf.
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4. Cost Sharing for Covered Insulin Products
Section 1860D-2(b)(9)(A) of the Act specifies that for plan year
2023 and subsequent plan years, the deductible, as described in section
1860D-2(b)(1) of the Act, shall not apply with respect to any covered
insulin product. Section 1860D-2(b)(9)(B)(ii) of the Act further
specifies that for 2025 and subsequent plan years, the coverage
provides benefits for any covered insulin product, prior to an
individual reaching the out-of-pocket threshold, with cost-sharing for
a month's supply that does not exceed the applicable copayment amount.
We are proposing to codify these requirements at Sec. 423.120(h)(1)
and (2).
In alignment with the guidance in our September 26, 2022 HPMS
memorandum, we propose to interpret the section 1860D-2(b)(9) cost-
sharing requirements to apply separately to each prescription fill that
is dispensed. For a prescription fill dispensed in an amount up to a 1-
month supply, $35 (or a lower amount specified by the sponsor) is
considered a copayment for purposes of determining the ``covered
insulin product applicable cost-sharing amount.'' Under our proposal,
and consistent with our current policy in the September 26, 2022 HPMS
memorandum, Part D sponsors would not be required to prorate the $35
copayment if less than a 1-month supply is dispensed. We believe this
proposed policy is supported by section 1860D-2(b)(9)(D) of the Act,
which does not explicitly require prorating the applicable copayment
amount for less than a 1-month supply. It also aligns with current
regulations because insulin is not a solid oral dosage form subject to
daily cost-sharing requirements at Sec. 423.153(b)(4). Under our
proposal, if the ``covered insulin product applicable cost-sharing
amount'' is a coinsurance, the coinsurance percentage would be
[[Page 99354]]
applied to the negotiated price regardless of the days' supply
dispensed.
With respect to extended-day supplies (that is, greater than a 1-
month supply) of covered insulin products, we are proposing that cost
sharing must not exceed the cumulative ``covered insulin product
applicable cost-sharing amount'' that would apply if the same days'
supply was dispensed in the fewest number of 1-month supply increments
necessary. For example, if a covered insulin product is dispensed for
greater than a 1-month supply, but less than a two-month supply, the
lesser of $70 or 25 percent of MFP or negotiated price, whichever
applies, would remain the maximum cost-sharing amount. Similarly, the
lesser of $105 or 25 percent of the MFP or negotiated price, whichever
applies, would apply for a covered insulin product that is dispensed
for greater than a two-month supply up to a three-month supply. If the
``covered insulin product applicable cost-sharing amount'' is a
coinsurance, the coinsurance percentage would be applied to the
negotiated price regardless of the days' supply dispensed.
While Part D sponsors must not charge cost-sharing that exceeds the
``covered insulin product applicable cost-sharing amount,'' Part D
sponsors may charge cost-sharing that is equal to or less than the
``covered insulin product applicable cost-sharing amount.'' This means
that Part D sponsors have the flexibility to specify cost-sharing that
is equal to or lower than the lesser of: a $35 copayment, or 25 percent
coinsurance based on the MFP (if established for such product under the
Medicare Drug Price Negotiation Program for that year), or 25 percent
coinsurance based on the negotiated price. Part D sponsors could meet
this cost-sharing requirement by establishing a copayment amount that
is equal to or lower than $35 for a 1-month supply, establishing a
coinsurance percentage that is equal to or lower than 25 percent of the
product's MFP or negotiated price, or establishing both a copayment
amount equal to or lower than $35 and a coinsurance percentage equal to
or lower than 25 percent of the product's MFP or negotiated price.
In the September 26, 2022 HPMS memorandum, we provided guidance on
managing out-of-network claims. We are now proposing that enrollees who
submit direct member reimbursement (DMR) requests for covered insulin
products accessed at either out-of-network pharmacies or providers (in
accordance with Sec. 423.124(a) and (c)), or at in-network pharmacies
or providers, must not pay more than the ``covered insulin product
applicable cost-sharing amount.'' While Part D sponsors generally may
charge the enrollee for the difference between the cash price and plan
allowance for DMRs for covered Part D drugs accessed from both out-of-
network and in-network pharmacies, neither Sec. 423.124(b) nor Chapter
14 of the Prescription Drug Benefit Manual directly addresses covered
Part D drugs that have statutorily limited cost sharing.\16\ Therefore,
for covered insulin products accessed at either out-of-network
pharmacies or providers (in accordance with Sec. 423.124(a) and (c)),
or at in-network pharmacies or providers, we propose at Sec.
423.120(h)(4) that the Part D sponsor must reimburse the enrollee for
the full cash price paid to the pharmacy or provider for a covered
insulin product minus the ``covered insulin product applicable cost-
sharing amount.''
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\16\ Section 423.124(b) currently states that a Part D sponsor
that provides its Part D enrollees with coverage other than defined
standard coverage may require its Part D enrollees accessing covered
Part D drugs at out-of-network pharmacies to assume financial
responsibility for any differential between the out-of-network
pharmacy's (or provider's) usual and customary price and the Part D
sponsor's plan allowance. Section 50.4.3 of Chapter 14 of the
Medicare Prescription Drug Benefit Manual (https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf)
provides detailed guidance on how Part D sponsors must process DMR
requests that are submitted by enrollees who paid cash at an out-of-
network (or an in-network) pharmacy (or provider) and where the
pharmacy (or provider) did not submit claim to Part D plan.
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The total gross covered drug cost (TGCDC) usually is reported
differently on prescription drug events (PDEs) depending on whether the
drug was accessed at an out-of-network or in-network pharmacy or
provider. Specifically, Part D sponsors report the cash price that the
enrollee paid to the pharmacy or provider as the TGCDC for out-of-
network DMRs but only report the negotiated price as the TGCDC for in-
network DMRs. However, we are clarifying here that with respect to
covered insulin products, as an exception to the Chapter 14 guidance,
the sponsor should report the cash price paid to the pharmacy or
provider as the TGCDC on the PDE for both out-of-network and in-network
DMRs. Additionally, true out-of-pocket (TrOOP) cost accumulation for
covered insulin products would be limited to the beneficiary's cost-
sharing amount, which cannot exceed the ``covered insulin product
applicable cost-sharing amount.''
As described in the April 4, 2023 HPMS memorandum, Part D sponsors
may place covered insulin products on any tier, and apply utilization
management strategies (for example, prior authorization and step
therapy), insofar as such tier placement or utilization management
strategy is consistent with the requirements of CMS's formulary review
and approval process under Sec. 423.120(b). However, regardless of a
covered insulin product's tier placement or applicable utilization
management strategy, the statutory cost-sharing limits under this
proposed rule still apply.
We propose to codify at Sec. 423.120(h)(1) and (2) that with
respect to coverage of a covered insulin product, as we propose to
define such term at Sec. 423.100, prior to an enrollee reaching the
annual out-of-pocket threshold, a Part D sponsor must not apply a
deductible and must ensure any enrollee cost-sharing for each
prescription fill up to a 1-month supply does not exceed the ``covered
insulin product applicable cost-sharing amount'' as defined at Sec.
423.100. We also propose to codify at Sec. 423.120(h)(3) that Part D
sponsors must ensure that any enrollee cost sharing for each
prescription fill greater than a 1-month supply does not exceed the
cumulative ``covered insulin product applicable cost-sharing amount,''
that would apply if the same days' supply was dispensed in the fewest
number of 1-month supply increments necessary. Finally, we propose to
codify at Sec. 423.120(h)(4) that these cost-sharing requirements
apply for covered insulin products obtained from either in-network and
out-of-network pharmacies and providers.
C. Medicare Prescription Payment Plan (Sec. Sec. 423.137, 423.2265,
423.2267, and 423.2536)
1. Background
The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169) made
several additions and amendments to the Social Security Act (the Act)
that affect the structure of the defined standard Part D drug benefit.
Section 11202 of the IRA (Maximum Monthly Cap on Cost-Sharing Payments
under Prescription Drug Plans and MA-PD Plans) added a new section
1860D-2(b)(2)(E) to the Act requiring all Medicare prescription drug
plans to offer their Part D enrollees the option to pay out-of-pocket
(OOP) Part D drug costs through monthly payments over the course of the
plan year instead of at the pharmacy point of sale (POS) beginning
January 1, 2025.
CMS undertook consumer focus group testing to select a name for the
program
[[Page 99355]]
established at section 1860D-2(b)(2)(E) of the Act that would resonate
with Medicare Part D enrollees. After multiple rounds of consumer
testing fieldwork and evaluation of the results, CMS announced the
official name of the program as the ``Medicare Prescription Payment
Plan.'' We refer to the program herein using this name.
Section 11202(c) of the IRA directs the Secretary to implement the
Medicare Prescription Payment Plan for 2025 by program instruction or
other forms of program guidance. In accordance with the law, CMS
released guidance establishing critical operational, technical, and
communication requirements for the Medicare Prescription Payment Plan
for 2025. To provide Part D sponsors with sufficient time to implement
the program, CMS released the guidance in two parts: the first
addressed critical operational and technical requirements and the
second addressed communications-related requirements.\17\ In order to
solicit the feedback of interested parties, CMS initially published
both parts as draft guidance and voluntarily solicited comment. After
consideration of the comments, we then released final versions of each
part.
---------------------------------------------------------------------------
\17\ See: Medicare Prescription Payment Plan: Final Part One
Guidance on Select Topics, Implementation of Section 1860D-2 of the
Social Security Act for 2025, and Response to Relevant Comments;
Medicare Prescription Payment Plan: Final Part Two Guidance on
Select Topics, Implementation of Section 1860D-2 of the Social
Security Act for 2025, and Response to Relevant Comments.
---------------------------------------------------------------------------
CMS released the draft part one guidance in August 2023, which
covered topics such as how incurred OOP pharmacy costs should be re-
calculated into monthly billed amounts (``program calculations'');
participant billing requirements; pharmacy payment obligations and
claims processing; requirements related to Part D enrollee outreach;
requirements related to Part D enrollee election; procedures for
termination of election; reinstatement and preclusion; participant
disputes; and data submission requirements. CMS also provided examples
of the program calculations to help Part D sponsors program their
claims and billing systems correctly for 2025. After consideration of
comments received on the draft part one guidance, CMS released the
final part one guidance (hereinafter referred to as ``final part one
guidance'') in February 2024.
CMS released the draft part two guidance in February 2024, which
covered topics such as outreach, education, and communications
requirements for Part D sponsors; CMS Part D enrollee education and
outreach; pharmacy processes; and Part D sponsor operational
requirements. After consideration of comments received on the draft
part two guidance, CMS released the final part two guidance
(hereinafter referred to as ``final part two guidance'') in July 2024.
In addition to the final part one and final part two guidance, CMS
released a technical memorandum in July 2023 providing examples to
demonstrate the calculations of the maximum monthly cap on cost sharing
payments under the program in different scenarios, a second technical
memorandum in April 2024 providing additional examples of calculations
that reflect IRA-related changes to the incurred costs that count
toward true out-of-pocket costs (TrOOP), and a set of frequently asked
questions in October 2024 providing clarifications on the final part
one and final part two guidance.
CMS also developed model and standardized materials to be used by
Part D sponsors in meeting the statutory requirement for Part D
sponsors to communicate with enrollees about the program. The materials
developed by CMS include a model election request form, a model notice
of election approval, a standardized likely to benefit notice, a model
notice of voluntary termination, a model notice of failure to pay, and
a model notice of involuntary termination. Where possible, CMS based
development of the Medicare Prescription Payment Plan model materials
on Part D plan enrollment and disenrollment notices to promote
consistency across the Part D program. CMS issued the model materials
through the Office of Management and Budget's Information Collection
Request (ICR) process and released final model materials in July 2024
after consideration of public comments received on the ICR package.
CMS does not have authority to implement the Medicare Prescription
Payment Plan through program instruction authority beyond 2025. As
such, we are pursuing rulemaking to codify the requirements of the
program for 2026 and subsequent years.
With only a few exceptions, we are proposing to codify, without
modification, the requirements established in the final part one and
final part two guidance at Sec. 423.137 for 2026 and subsequent years.
Because we are codifying existing guidance, these provisions are not
expected to impact the baseline.
Instances where we are making modifications to the requirements
previously finalized for 2025 include--
Proposing to modify the requirements for how Part D
sponsors handle adjustments for Part D claims under the Medicare
Prescription Payment Plan; and
Proposing to modify the timing requirements for the grace
period and initial notice of failure to pay.
We are also proposing new requirements for three additional topics:
Requirements related to year-over-year participation for
existing participants in the Medicare Prescription Payment Plan and
addition of a renewal notice to the required notices related to
election into the program;
Requirements for the effective date of voluntary
terminations from the program;
Requirements for Part D plans to provide pharmacies with
easily accessible information on a Part D enrollee's costs incurred
under the program.
We are also proposing to modify Sec. 423.2267(e), which lists CMS-
required materials and content for Part D sponsors, to include model
and standardized materials for the Medicare Prescription Payment Plan,
and to modify the list of required content for Part D sponsor websites
at Sec. 423.2265 to include Medicare Prescription Payment Plan
information. Finally, we are proposing to modify Sec. 423.2536 to
waive requirements related to the Medicare Prescription Payment Plan
for the Limited Income Newly Eligible Transition (LI NET) program.
2. Provisions of the Proposed Regulation
(a) Basis, Scope, and General Rule
Section 1860D-2(b)(2)(E)(i) of the Act requires that each PDP
sponsor offering a prescription drug plan and each MA organization
offering an MA-PD plan must provide to any enrollee of such plan,
including an enrollee who is a subsidy eligible individual (as defined
in paragraph (3) of section 1860D-14(a) of the Act), the option to
elect, with respect to a plan year, to pay cost sharing under the plan
in monthly amounts that are capped in accordance with section 1860D-
2(b)(2)(E) of the Act.
In the final part one guidance, CMS stated that, for calendar year
2025, the provision applies to all Part D sponsors, including both
stand-alone PDPs and MA-PDs, as well as Employer Group Waiver Plans
(EGWPs), cost plans, and demonstration plans.
In the final part two guidance, CMS stated that while the Medicare
Prescription Payment Plan is applicable to all Part D plans, it has no
practical
[[Page 99356]]
application for PACE participants or enrollees in plans that
exclusively charge $0 cost sharing for Part D covered drugs. As such,
CMS does not expect Part D plans that exclusively charge $0 cost
sharing for covered Part D drugs to all plan enrollees to offer
enrollees the option to pay their OOP costs through monthly payments
over the course of the plan year or otherwise comply with the final
part one guidance or the final part two guidance for calendar year
2025. CMS further stated that, if a Part D plan has any enrollees that
could pay any cost sharing, even a nominal amount, under the Part D
plan at any point during the year, then this clarification would not be
applicable to such a plan.
For the reasons articulated in the final part two guidance, we
intend to continue to not expect such plans to offer enrollees the
option to pay their OOP costs through monthly payments over the course
of the plan year or otherwise comply with the Medicare Prescription
Payment Plan requirements set forth in this proposed rule and in the
proposed new regulation at Sec. 423.137.
In this proposed rule, we propose to codify at Sec. 423.137(a) the
rules we established in the 2025 guidance to apply to plan year 2026
and subsequent years and, in the case of a plan operating on a non-
calendar year basis, for the portion of the plan year starting on
January 1, 2026. CMS recognizes that implementing the proposed
modifications to the requirements established in the final part one and
final part two guidance and the new requirements in this proposed rule
could be operationally challenging for plans operating on a non-
calendar year basis to implement midway through a plan year. As such,
we intend to not expect plans operating on a non-calendar year basis to
comply with the Medicare Prescription Payment Plan requirements set
forth in this proposed rule and in the proposed new regulation at Sec.
423.137 to the extent that those requirements differ from those
established in the final part one and final part two guidance during
any portion of the non-calendar plan year that starts in 2025 and
continues into 2026.\18\ However, such plans would be expected to
comply with all requirements set forth in this proposed rule and in the
proposed new regulation at Sec. 423.137 for non-calendar plan years
beginning in 2026 and subsequent non-calendar plan years.
---------------------------------------------------------------------------
\18\ Specifically, during any portion of the non-calendar plan
year that starts in 2025 and continues into 2026, we intend to not
expect plans operating on a non-calendar year basis to comply with
the proposed modifications to the requirements for how Part D
sponsors handle adjustments for Part D claims under the Medicare
Prescription Payment Plan and the timing requirements for the grace
period and initial notice of failure to pay. During any portion of
the non-calendar plan year that starts in 2025 and continues into
2026, we also intend to not expect plans operating on a non-calendar
year basis to comply with proposed new requirements related to year-
over-year participation for existing participants in the Medicare
Prescription Payment Plan and addition of a renewal notice to the
required notices related to election into the program; for the
effective date of voluntary terminations from the program; and for
Part D plans to provide pharmacies with easily accessible
information on a Part D enrollee's costs incurred under the program.
---------------------------------------------------------------------------
In our final part one guidance, we also established definitions of
key terms related to the Medicare Prescription Payment Plan for plan
year 2025. We now propose to codify our existing definitions at Sec.
423.137(b) for plan year 2026 and subsequent years with certain
clarifications. Specifically, at Sec. 423.137(b)(1), we propose to
define ``OOP costs for the Medicare Prescription Payment Plan'' as the
cost sharing amount the Part D enrollee is directly responsible for
paying. In the final part one and final part two guidance, we referred
to these costs simply as ``OOP costs.' '' We propose to codify the more
specific definition of ``OOP costs for the Medicare Prescription
Payment Plan'' to avoid confusion with other uses of the term OOP
costs, which may be inconsistent with the use of that term in the final
part one and final part two guidance.
As described in section (b) of this proposed rule, the formula for
calculating the maximum monthly cap differs for the first month of
participation in the program versus the remaining months of the year.
The cap for the first month for which the Part D enrollee has opted
into the Medicare Prescription Payment Plan incorporates an enrollee's
TrOOP prior to election into the program. However, the subsequent month
calculation is determined by calculating the sum of any remaining OOP
costs owed by the participant from a previous month that have not yet
been billed and any additional OOP costs for the Medicare Prescription
Payment Plan in the subsequent month. As such, for the subsequent month
calculation of the Part D cost sharing incurred by the Part D enrollee,
the term ``OOP costs for the Medicare Prescription Payment Plan''
includes those Part D cost sharing amounts that the enrollee is
responsible for paying after accounting for amounts paid by third-party
payers. Specifically, the OOP costs for the Medicare Prescription
Payment Plan do not include the covered plan pay amount or other TrOOP-
eligible amount(s), such as any amount paid by potential third-party
payers, such as State Pharmaceutical Assistance Programs or charities.
Additionally, within the definition of OOP costs for the Medicare
Prescription Payment Plan, we propose to define ``remaining OOP costs
owed by the participant'' to be the sum of OOP costs for the Medicare
Prescription Payment Plan that have not yet been billed to the program
participant. For example, if a Medicare Prescription Payment Plan
participant incurs $2,000 in January and is billed $166.67, the
remaining OOP costs owed by the participant are $2,000 - $166.67 =
$1,833.33.
Finally, in the final part two guidance, CMS stated that it does
not expect the LI NET program to offer enrollees the option to pay
their OOP costs through monthly payment over the course of the plan
year or to comply with the final part one guidance or final part two
guidance for calendar year 2025. CMS clarified that, consistent with
the agency's longstanding interpretation and implementation of the LI
NET program, participants in the LI NET program are considered to be
enrolled in a PDP. However, because the LI NET program is limited to
offering Part D-eligible individuals with temporary coverage during a
limited, transitional period, CMS stated it does not expect the LI NET
program to comply with the requirements of the final part one guidance
or the final part two guidance for calendar year 2025 in connection
with the offering of such transitional coverage. Pursuant to our
authority under section 1860D-14(e)(5)(B) of the Act to waive such
requirements of title XI and title XVIII of the Act as may be necessary
to carry out the purposes of the LI NET program, we propose to codify
in this rule a waiver for the LI NET program with respect to the
requirements of the Medicare Prescription Payment Plan for plan year
2026 and subsequent years. The LI NET program is limited to temporary
coverage during a limited, transitional period and applying the
Medicare Prescription Payment Plan to the LI NET program would be
inconsistent with the purposes of such transitional coverage and would
raise various operational challenges for the program. Accordingly, we
are proposing to revise Sec. 423.2536 to redesignate paragraphs (c)
through (k) as paragraphs (d) through (l) and add new paragraph (c) to
include the proposed Medicare Prescription Payment Plan requirements at
Sec. 423.137 discussed in this section to the list of Part D
requirements waived for the LI NET program. In addition, we
[[Page 99357]]
are proposing to revise newly redesignated paragraphs Sec.
423.2536(i)(1) and (i)(4) to add the materials proposed at Sec. Sec.
423.2265(b)(16) and 423.2267(e)(45) through (51) (discussed previously)
to the list of communication requirements waived for the LI NET
program.
(b) Calculation of the Maximum Monthly Cap on Cost-Sharing Payments
Section 1860D-2(b)(2)(E)(iv) of the Act specifies how the monthly
caps on OOP cost sharing payments are to be calculated. The formula for
calculating the cap differs for the first month of participation in the
program, versus the remaining months of the year. The maximum monthly
cap calculations include specifics of a participant's Part D drug costs
(previously incurred costs and new OOP costs), as well as the number of
months remaining in the plan year; as such, the amount can vary from
person-to-person and month-to-month. Assuming a program participant
remains in the Medicare Prescription Payment Plan through the end of
the plan year, the total amounts billed monthly through the December
payment (which would be billed and paid in the following year) will
equal the total OOP costs for the Medicare Prescription Payment Plan
during the year.
Under section 1860D-2(b)(2)(E)(iv)(I) of the Act, for the first
month for which the Part D enrollee has opted into the Medicare
Prescription Payment Plan, the term ``maximum monthly cap'' means an
amount calculated by taking the annual OOP threshold minus any Part D
costs the Part D enrollee incurred during the year before opting into
the program, divided by the number of months remaining in the plan
year. The number of months remaining in the plan year includes the
current reference month (for example, for a calendar year plan, the
months remaining in the calculation for the January maximum cap would
be 12).
Additionally, incurred costs for the Medicare Prescription Payment
Plan (as used in the statutory definition of the first month's maximum
cap calculation) means the incurred costs, with the meaning set forth
at section 1860D-2(b)(4)(C) of the Act and described in section 30 of
the Final CY 2025 Part D Redesign Program Instructions (Final 2025
Program Instructions), that were incurred prior to effectuation of an
election into the Medicare Prescription Payment Plan, including all
TrOOP-eligible costs.\19\ If election into the program occurs mid-
month, this would include Part D costs incurred within the calendar
month of election but prior to election.
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\19\ Final CY 2025 Part D Redesign Program Instructions: https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements.
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Under section 1860D-2(b)(2)(E)(iv)(II) of the Act, for each
subsequent month for which the Part D enrollee has opted into the
program, the maximum monthly cap is determined by calculating the sum
of any remaining OOP costs owed by the participant from a previous
month that have not yet been billed and any additional OOP costs for
the Medicare Prescription Payment Plan in the subsequent month, divided
by the number of months remaining in the plan year. The number of
months remaining includes the month for which the cap is being
calculated. This calculation repeats for each month in which the
participant remains in the Medicare Prescription Payment Plan. The
resulting maximum monthly cap will change if additional OOP costs for
the Medicare Prescription Payment Plan are incurred.
Under section 1860D-2(b)(4)(B)(i)(VII) of the Act, the annual OOP
cost threshold for 2025 is $2,000. Under section 1860D-
2(b)(4)(B)(i)(VII) of the Act, for 2026 and subsequent years, the
annual OOP cost threshold is equal to the amount specified for the
previous year, increased by the annual percentage increase described in
section 1860D-2(b)(6). ``Incurred costs'' means any costs incurred or
treated as incurred under section 1860D-2(b)(4)(C) of the Act.
In the final part one guidance, we established standards for
calculating the maximum monthly cap for the Medicare Prescription
Payment Plan. The participant will not have any monthly bills to pay
under this program until opting into the program and incurring OOP
costs for covered Part D drugs. Once a participant incurs an OOP Part D
drug cost, all their OOP costs for all covered Part D drugs will be
billed on a monthly basis as long as the participant remains in the
program. Program calculations apply to all OOP costs for the Medicare
Prescription Payment Plan, including those in the deductible phase.
Part D sponsors must include all covered Part D drugs in the program.
However, non-covered drugs are excluded. Part D sponsors are
responsible for correctly calculating the monthly caps based on the
statutory formulas, determining the amount to be billed (not to exceed
the cap), and sending monthly bills to program participants.
In the final part one guidance, we also established that opting
into the program will not impact how a program participant moves
through the Part D benefit or what counts towards their TrOOP costs.
Under section 1860D-2(b)(4)(F) of the Act, a participant's TrOOP-
eligible costs under the Medicare Prescription Payment Plan will still
be treated as incurred based on the date each Part D claim is
adjudicated. Opting into the program only provides participants with
the ability to spread OOP costs over the year--the total incurred costs
and the timing of TrOOP accumulation do not change.
In the final part one guidance, we also established standards for
how to incorporate extended day supplies of medications in the
calculations. For participants who fill prescriptions for an extended
day supply, their OOP costs for those prescriptions will be attributed
to the month the prescription was filled and will not be pro-rated over
the months covered by the prescription. For example, if a participant
in the program has $300 in OOP costs for the Medicare Prescription
Payment Plan for a 90-day supply dispensed in January, the full $300
will be counted as incurred in January.
In addition, we stated that when an individual opts into the
Medicare Prescription Payment Plan during the plan year, the
individual's incurred costs used to calculate the first month maximum
cap are equal to the individual's accumulated TrOOP before opting into
the program. If election into the program occurs mid-month, this would
include Part D costs incurred within the calendar month of election but
prior to election (refer to example B4 in Appendix B of the final part
one guidance for an illustration of a mid-month election). The number
of months remaining in the plan year includes the month when an
individual opts into the program. When an individual opts into the
Medicare Prescription Payment Plan prior to the start of the plan year
(such as during open enrollment), the first month maximum monthly cap
calculation applies to their first month of active coverage within the
plan year.
The final part one guidance also stated that in scenarios where the
OOP costs for the Medicare Prescription Payment Plan in the first month
of participation in the program are less than the maximum monthly cap,
a Part D sponsor cannot bill the participant more than their actual
incurred OOP costs. Specifically, a Part D sponsor must bill the
participant the lesser of the participant's OOP costs for the Medicare
Prescription Payment Plan or the first month's maximum monthly cap.
Section 1860D-2(b)(2)(E)(iv)(I) of the Act clearly states that the
first month maximum cap calculation applies to the
[[Page 99358]]
first month an enrollee has elected to participate in the Medicare
Prescription Payment Plan; in scenarios in which a participant incurs
$0 in OOP costs for the Medicare Prescription Payment Plan in the first
month, the Part D sponsor must not bill the participant for the first
month and would use the subsequent month maximum monthly cap
calculation for all succeeding months in the year in which the
participant remains in the program.
Finally, the final part one guidance established that ``OOP costs''
(defined as ``OOP costs for the Medicare Prescription Payment Plan''
for the purposes of this rule) refers only to the patient pay portion
for covered Part D drugs that a program participant would have paid at
the POS if they had not opted into the Medicare Prescription Payment
Plan, not to all incurred costs as defined under section 1860D-
2(b)(4)(C) of the Act. For these calculations, the OOP costs for the
Medicare Prescription Payment Plan do not include the covered plan paid
amount or amounts paid by third parties, such as qualified State
Pharmaceutical Assistance Programs (SPAPs) or charities. OOP costs for
the Medicare Prescription Payment Plan also do not include any amounts
paid by enrollees for monthly premiums.
In this proposed rule, we propose to codify the standards we
established in the final part one guidance for plan year 2026 and
subsequent years at Sec. 423.137(c).
(c) Eligibility and Election
Under section 1860D-2(b)(2)(E)(i) of the Act, Part D sponsors must
provide the option to opt into the Medicare Prescription Payment Plan
to all Part D enrollees, including enrollees who are eligible for the
Low-Income Subsidy (LIS). For 2026 and subsequent years, we propose to
codify the statutory requirement that Part D sponsors must offer the
program to all Part D enrollees, including those who are LIS eligible,
at Sec. 423.137(d).
In the final part one guidance, we explained that while the statute
requires that an LIS enrollee must have the option to become a Medicare
Prescription Payment Plan participant, individuals with low, stable
drug costs (such as LIS enrollees) are not likely to benefit from the
program. Further, LIS enrollment, for those who qualify, is more
advantageous than participation in the Medicare Prescription Payment
Plan. We are aware that there may be limited circumstances in which an
LIS enrollee would benefit from participation in the Medicare
Prescription Payment Plan, but, in general, participation in the
Medicare Prescription Payment Plan is unlikely to benefit LIS
enrollees. It is important that Part D sponsors inform any individual
interested in the Medicare Prescription Payment Plan of potential
eligibility for the LIS program. In this rule, for 2026 and subsequent
years, we propose to require Part D sponsors to include information on
the availability of the LIS program and other financial assistance
programs in the election-related materials described at proposed Sec.
423.137(d)(10) with the goal of alerting Part D enrollees to the
availability of these programs that can lower costs.
In addition, under section 1860D-2(b)(2)(E)(v)(III)(aa) of the Act,
Part D sponsors may not restrict the application of the Medicare
Prescription Payment Plan benefit to specific covered Part D drugs. To
minimize potential confusion and operational challenges, in the final
part one guidance, we stated that for 2025, once an individual has
opted into the program, OOP cost sharing for all covered Part D drugs
must be included in program bills until the participant reaches the OOP
threshold, opts out of the Medicare Prescription Payment Plan, or is
terminated from the Medicare Prescription Payment Plan due to failure
to pay. The program must apply to all of a program participant's
prescriptions for covered Part D drugs. We propose to codify this
requirement for 2026 and subsequent years at Sec. 423.137(d)(5).
Section 1860D-2(b)(2)(E)(v)(II) of the Act states that a Part D
enrollee may opt into the Medicare Prescription Payment Plan prior to
the beginning of the plan year or in any month during the plan year. In
the final part one guidance, we established requirements for a process
for enrollees to opt into the Medicare Prescription Payment Plan in
2025, consistent with the statutory requirement cited previously. The
final part one guidance set forth the following requirements for 2025:
Part D sponsors must allow Part D enrollees to opt into
the Medicare Prescription Payment Plan prior to the plan year
(including the Annual Election Period for the subsequent plan year, the
Part D initial enrollment period, and Part D special election periods)
or at any point during the plan year.
Part D sponsors must allow Part D enrollees to opt into
the Medicare Prescription Payment Plan after the conclusion of an
enrollment period and before the new plan enrollment effective date
(for example, an enrollee could opt into the program for the upcoming
plan year after the conclusion of the Annual Election Period and in
advance of the January 1 new plan enrollment effective date).
In this proposed rule, for 2026 and subsequent years, we propose to
codify these requirements at Sec. 423.137(d)(4)(1).
In the final part one guidance, we also established requirements
for election into the program in 2025, which were designed to reduce
administrative burden by aligning with existing requirements and
procedures for Part D plan enrollment and to provide a uniform
experience for Part D enrollees by reducing potential variation in
program administration across Part D plans. We required the Part D
enrollee, or their authorized legal representative, to complete an
election request, provide the required information to the Part D
sponsor, and be approved by the Part D sponsor to opt into the Medicare
Prescription Payment Plan. Part D sponsors must have the following
mechanisms available to Part D enrollees who wish to opt into the
Medicare Prescription Payment Plan:
A paper election request form that can be mailed.
A toll-free telephone number that must provide the
individual with evidence the election request was received (for
example, a confirmation number).
A website application that must provide the individual
with evidence the election request was received (for example, a
confirmation number).
Part D sponsors must consider Medicare Prescription Payment Plan
election requests regardless of the election mechanism or format (for
example, a handwritten letter). For an election request to be
considered complete, the Part D sponsor must receive the name of the
Part D enrollee, their Medicare ID number, and the signature (or verbal
attestation, in the case of telephonic requests)
of the Part D enrollee or their authorized legal representative
validating that the requestor understands and accepts the Part D
sponsor's terms and conditions for the program. In this proposed rule,
for 2026 and subsequent years, we propose to codify these requirements
at Sec. Sec. 423.137(d)(2) and 423.137(d)(3).
We are committed to ensuring that Part D enrollees, once they
request to participate, are able to access the benefits of the program
as timely as possible and recognize the importance of timely access to
prevent enrollees from not filling prescriptions due to affordability
challenges. To that end, we requested comment in the draft part one
guidance on real-time or POS election approaches that would require
Part D sponsors to effectuate election into the
[[Page 99359]]
Medicare Prescription Payment Plan without any delay or with only a
nominal delay between the election request and effectuation. As we
clarified in the final part one guidance, real-time election refers to
a process that would enable a Part D enrollee to request election and
be effectuated into the program in one instance from any setting (and
so is not limited to only the pharmacy POS setting). POS election,
rather, is limited to the pharmacy POS setting and would require
updates to pharmacies' claims processing systems.
In response to the request for comment in the draft part one
guidance, many commenters expressed support for real-time election,
noting that it would prevent dispensing delays and prescription
abandonment. However, due to a number of policy and operational
barriers and the restricted lead-up time to the statutory
implementation date of January 1, 2025, we did not require real-time or
POS election for 2025. In the final part one guidance for 2025, we
required a 24-hour effectuation timeframe for election requests made
during the plan year, to reduce the likelihood of dispensing delays and
prescription abandonment while reducing operational burden for plans
and pharmacies. Specifically, we stated that when a Part D sponsor
receives a program election request for the next, upcoming plan year
(or in advance of a new plan enrollment effective date during a plan
year) through either an election request form or through other means,
the Part D sponsor must process the request within 10 calendar days of
receipt, or the number of calendar days before the plan enrollment
starts, whichever is shorter. When a current Part D enrollee requests
to opt into the Medicare Prescription Payment Plan during the plan
year, Part D sponsors must process the election request within 24
hours.
Since publication of the final part one guidance, we have conducted
extensive outreach with a variety of stakeholders and conducted in-
depth research to assess the feasibility of real-time or POS election
options for 2026 or future years. Our research indicates that there is
no mechanism for program election information to be passed through the
current National Council for Prescription Drug Programs (NCPDP)
Telecommunication Standard and easily integrated into Part D sponsor
and/or pharmacy benefit manager (PBM) systems; updates to current
standards would also be needed to support POS election. These updates
would require significant lead time and coordination with industry
standards committees that have existing processes and timelines outside
of CMS's purview. However, real-time election (facilitated by Part D
sponsors outside of the POS) is operationally feasible and need not
involve changes to the current Telecommunication Standard; in fact,
some Part D sponsors have indicated to CMS that they plan to offer
real-time election to their enrollees in 2025. We also note that real-
time election facilitated by Part D sponsors could still take place at
the POS; for example, an individual who receives the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' while picking up a
high-cost prescription could step away from the pharmacy counter to
call their Part D plan or submit an online election request, and then
return to the counter, request that the pharmacist re-process the
claim, and pay $0 at POS for the prescription.
In this rule, for 2026 and subsequent years, we propose to codify
the 24-hour effectuation requirement at Sec. 423.137(d)(4), but
request comment on a potential requirement for Part D sponsors to
effectuate election requests received via phone or web in real-time for
2026 or future years. In particular, we are interested in the
operational feasibility of implementing a real-time election
requirement for 2026, what technology and processes would be required
to enable a real-time election requirement for 2026, implications for
Part D enrollees, and potential burden on interested parties. We are
also interested in opportunities for pharmacists to support enrollees
in using any future Part D sponsor-adjudicated real-time election
mechanisms at the POS.
In the final part two guidance, we stated that for 2025, paper
election requests are considered received on the date and time--
The Part D sponsor initially stamps a document received by
regular mail (that is, U.S. Postal Service); or
A delivery service that has the ability to track when a
shipment is delivered (for example, U.S. Postal Service, UPS, FedEx, or
DHL) delivers the document.
A telephonic election request is considered received on the date
and time:
The verbal request is made by telephone with a customer
service representative; or
A message is left on the Part D sponsor's voicemail system
if the Part D sponsor utilizes a voicemail system to accept requests or
supporting statements after normal business hours.
An electronic election request is considered received on the date
and time a request is received through the Part D sponsor's website
and/or portal. This is true regardless of when a Part D sponsor
ultimately retrieves or downloads the request. In this rule, for 2026
and subsequent years, we propose to codify these processing time
requirements at Sec. 423.137(d)(2).
In the final part one guidance, we stated that in 2025, if a Part D
sponsor receives an election request that does not have all necessary
elements required to consider it complete, the sponsor must not
immediately deny the request. For requests received prior to the plan
year, the Part D sponsor must contact the individual to request the
additional documentation necessary to process the request within 10
calendar days of receipt of the incomplete election request. For
requests received during the plan year, the Part D sponsor must contact
the individual to request the additional documentation necessary to
process the request within 24 hours of receipt of the incomplete
election request. Additional documentation to make the program election
request complete must be received by the Part D sponsor within 21
calendar days of the request for additional information. The Part D
sponsor may deny the election request if the requisite information is
not received from the individual in that timeframe. If a Part D
enrollee has fulfilled all program election requirements, but the Part
D sponsor is unable to process the election into the program in the
required amount of time due to no fault of the individual, the Part D
sponsor must process a retroactive election back to the original date
when the individual should have been admitted into the Medicare
Prescription Payment Plan (that is, within 24 hours of the individual
providing the requisite information for election into the program). In
addition, the Part D sponsor must reimburse the participant for any OOP
cost sharing paid on or after that date and include those amounts, as
appropriate, in a monthly bill under the program within 45 calendar
days. In this rule, for 2026 and subsequent years, we propose to codify
these requirements for how Part D sponsors must process program
election requests, including timing and notice requirements, procedures
for collecting missing information on election requests, and
requirements for retroactive election in the event the Part D sponsor
fails to process an election within 24 hours at Sec. 423.137(d)(4).
Section 423.137(d)(4)(i) includes proposed requirements for processing
election requests made prior to the plan year, and Sec.
423.137(d)(4)(ii) includes proposed requirements for processing
[[Page 99360]]
election requests made during the plan year.
In the final part one guidance, we also included requirements for
Part D sponsors to process retroactive election requests in cases where
an enrollee cannot have immediate election into the program and
believes that any delay in filling a prescription due to the 24-hour
timeframe required to process a program election request may seriously
jeopardize their life, health, or ability to regain maximum function
and so must pay out-of-pocket to the pharmacy. In the final part one
guidance, we state that in this situation in 2025, the enrollee must
request retroactive election within 72 hours of the date and time when
the claim was adjudicated. In this rule, for 2026 and subsequent years,
we propose to codify these requirements at Sec. 423.137(d)(6). These
requirements ensure that enrollees can participate in the program in
cases where they believe that a delay in filling a prescription would
seriously jeopardize their life, health, or ability to regain maximum
function and can be reimbursed for costs they paid for the prescription
before being effectuated in the program.
At Sec. 423.137(d)(7), for 2026 and subsequent years, we propose
to codify requirements for Part D sponsors to develop standardized
procedures for determining and processing reimbursements for excess
program payments made by participants who become LIS eligible,
consistent with the final part one guidance for 2025. CMS regulations
at 42 CFR 423.800(c) apply to all subsidy eligible individuals and
require Part D sponsors to reimburse subsidy-eligible individuals, and
any organizations paying cost sharing on behalf of such individuals,
any excess premium or OOP cost sharing paid by the individual or
organization after the effective date of the individual's eligibility
for a subsidy. This requirement applies to any OOP cost sharing paid
under the Part D benefit, including cost sharing paid by or on behalf
of an enrollee who has participated in the Medicare Prescription
Payment Plan. Under the timeframes specified at 42 CFR 423.800(e) and
423.466(a), Part D sponsors must process retroactive claims and premium
adjustments for LIS-eligible individuals and make any resulting refunds
and recoveries within 45 calendar days of the Part D sponsor's receipt
of complete information regarding these adjustments.\20\ These same
requirements apply to enrollees who have elected into the Medicare
Prescription Payment Plan and later become LIS-eligible.
---------------------------------------------------------------------------
\20\ Refer to Medicare Prescription Drug Benefit Manual; Chapter
13--Premium and Cost-Sharing Subsidies for Low-Income Individuals.
---------------------------------------------------------------------------
Section 1860D-2(b)(2)(E)(v)(II) of the Act requires Part D sponsors
to offer the Medicare Prescription Payment Plan to all Part D enrollees
in any month during the year. At Sec. 423.137(d)(8), for 2026 and
subsequent years, we propose to codify requirements for mid-year plan
switches, consistent with the requirements included in the final part
one guidance for 2025. If a Part D enrollee who opted into the Medicare
Prescription Payment Plan switches plans (Plan Benefit Package (PBP))
during the plan year or is reassigned by CMS, regardless of whether the
new plan is offered by the same or a different Part D sponsor, the Part
D sponsor of the prior Part D plan must offer the participant the
option to repay the full outstanding amount in a lump sum. If the
individual chooses to continue paying monthly, the Part D sponsor must
continue to bill the participant monthly based on the participant's
accrued OOP costs while in the program under that sponsor's Part D
plan. The Part D sponsor cannot require full immediate repayment.
The Part D sponsor is not permitted to automatically sign up the
individual for the Medicare Prescription Payment Plan under the new
plan. However, an individual must be able to opt into the program
regardless of whether they had participated in the program under the
prior plan. If an individual opts into the Medicare Prescription
Payment Plan under their new plan after switching plans mid-year, the
new Part D sponsor must calculate the individual's monthly cap for the
first month of participation under the new plan using the formula for
the calculation of the maximum monthly cap in the first month. This is
the case even when the first plan and the second plan are administered
by the same Part D sponsor.
As outlined in section (e) of this proposed rule, preclusion is
only permitted in plans that are offered by the same Part D sponsor and
may extend beyond the immediately subsequent plan year if a Part D
enrollee remains in a plan offered by the same Part D sponsor and
continues to owe an overdue balance. If an individual pays off the
outstanding balance during a subsequent year, the enrollee is eligible
to request to participate in the Medicare Prescription Payment Plan
program again.
At Sec. 423.137(d)(9), for 2026 and subsequent years, we propose
to codify requirements related to participation renewal year-over-year,
a topic CMS did not address in the final part one or final part two
guidance because the IRA limited CMS program instruction for a single
year of the program (CY 2025). To streamline the process for Part D
enrollees and Part D sponsors, we propose an automatic election renewal
process, wherein program participation continues into the next upcoming
year automatically, provided the participant remains in the same PBP in
the upcoming year, unless the program participant indicates otherwise.
If an enrollee is switching Part D plans, including switching between
two PBPs offered by the same Part D sponsor, the automatic election
renewal process would not apply. We propose requiring Part D sponsors
to send a notice alerting the Part D enrollee that their participation
in the program will continue into the next year unless they indicate
that they would like to opt out for the upcoming year. This notice
would be required to be sent out to program participants by the end of
the Annual Election Period (no later than December 7) and must include
the Part D sponsor's program terms and conditions for the upcoming
year. This proposed automatic renewal process reduces burden for Part D
enrollees who would like to remain in the program, as they would not
need to complete additional paperwork to renew their election, and it
is consistent with automatic renewal of Part D plan enrollment, which
provides a seamless experience for Part D enrollees. Automatic renewal
also entails less administrative burden for Part D sponsors, as they
are not required to process full election request forms again for
program participants and would not be required to perform ``likely to
benefit'' analyses (see section (d) of this proposed rule) for the
upcoming plan year on program participants. CMS also considered
requiring Part D enrollees to actively re-elect into the program each
year. Under this approach, Part D sponsors would be required to
terminate an enrollee's participation at the end of the contract year
and the enrollee would be required to opt back into the program (with
the standard election request form or a streamlined renewal form) in
order to participate in the following year. CMS opted to propose the
automatic election renewal, because the alternative active re-election
process places additional burden on both Part D enrollees and Part D
sponsors. In addition, this approach is consistent with the existing
Part D enrollment process, which automatically renews each year. We
request comment on the proposal for automatic election renewal,
including the process for enabling
[[Page 99361]]
automatic election and associated notification requirements.
In the final part two guidance, we addressed program election
communications and notice requirements for Part D sponsors, including
timing, content, and supplemental information requirements for each
required notice in 2025. We required Part D sponsors to make an
election request form available throughout the plan year and during the
Part D plan enrollment periods.
Part D sponsors must send a paper election request form within the
same timeframe as the membership ID card mailing specified at 42 CFR
423.2267(e)(32)(i).
The election request form may be sent in the membership ID card
mailing, or in a separate mailing in the same timeframe. The election
request form must include all of the following:
Fields for the Part D enrollees' first and last name,
Medicare Number, birth date, phone number, permanent residence street
address, and mailing address, if different from permanent residence
street address.
A signature field, allowing the enrollee to attest that
they understand--
++ That the form is a request to participate in the Medicare
Prescription Payment Plan, and the Part D sponsor will contact them if
more information is needed to complete the request;
++ That by signing the form, they have read and understood the form
and the Part D sponsor's terms and conditions; and
++ That the Part D sponsor will inform the individual when their
participation in the program is active, and, until the individual
receives that notification, that they are not a participant in the
program.
Instructions for how to submit the form to the Part D
sponsor.
Instructions for how the Part D enrollee can contact the
Part D sponsor for questions or assistance.
A Part D sponsor may include the program terms and conditions on
the election request form or may include them on a separate attachment.
In this rule, we propose to codify these requirements for 2026 and
subsequent years at Sec. 423.137(d)(10)(i).
Once a program election request is accepted by the Part D sponsor,
the Part D sponsor must communicate to the Part D enrollee that the
request to participate in the Medicare Prescription Payment Plan has
been accepted and effectuated via written notice of election approval,
within the timeframes described at Sec. 423.137(d)(10)(ii)(A). For
requests received prior to the plan year, Part D sponsors are required
to send the written notice of election approval within the timeframe
described at Sec. 423.137(d)(10)(ii)(A)(1). For requests received
during the plan year, regardless of how the Part D enrollee submitted
the election request (paper, telephone, or electronic), the Part D
sponsor must deliver the notice of election approval within the
timeframe described at Sec. 423.137(d)(10)(ii)(A)(2) first
telephonically and then via a written notice. The call must include the
required elements for the notice of election approval described at
Sec. 423.137(d)(10)(ii)(B). The Part D sponsor must then deliver the
written notice of election approval to the program participant either
via mail or electronically, depending on the participant's preferred
and authorized communication method, within 3 calendar days of
delivering the initial telephone notice.
If a Part D sponsor is processing an election request over the
phone and is able to confirm in that phone call that the election
request is approved and the Part D enrollee's participation is active,
that same phone call can serve to meet the acceptance of election
telephone notification requirement. Similarly, if an electronic
election request is approved and effectuated in real time and the Part
D sponsor is able to provide a digital confirmation of program
participation, the Part D sponsor is not required to also deliver the
notice of election approval via phone call. In either case, the Part D
sponsor must still deliver the written notice within 3 calendar days.
In the final part two guidance, we set forth requirements for Part
D plan sponsors related to the contents of the notice of election
approval in 2025. The notice of election approval must include--
The effective date of the individual's participation;
A description of how payments for covered Part D drugs
under the program will work, including that the individual will pay $0
to the pharmacy for covered Part D drugs and the Part D plan will bill
the individual each month;
An overview of how the monthly bill is calculated,
including a statement on how monthly bills may change each month, and a
statement outlining that under the program, the individual will not pay
more for covered Part D drugs than they would have paid without the
program or more than the Medicare Part D annual out-of-pocket maximum;
Information about procedures for involuntary termination
due to failure to pay and how to submit an inquiry or file a grievance,
as well as a statement informing the individual that they can
voluntarily leave the program at any time;
A statement describing that leaving the Medicare
Prescription Payment Plan, either involuntarily or voluntarily, will
not affect the individual's Medicare Part D coverage with the Part D
plan;
A description of how if an individual leaves the program,
they may still owe a program balance, they can pay the balance all at
once or be billed monthly, and they will resume paying the pharmacy
directly for their Part D prescriptions after leaving the program; and
An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and the Manufacturer's
Pharmaceutical Assistance Program, and how to learn more about these
programs.
In this rule, we propose to codify these requirements for 2026 and
subsequent years at Sec. 423.137(d)(10)(ii).
Part D sponsors are required to send a notice of denial upon denial
of an election request. In the final part one guidance, we set forth
the following requirements for 2025. For requests received prior to the
plan year, the notice of denial must be sent within 10 calendar days of
receipt of the election request. For requests received during the plan
year, the notice of denial must be sent within 24 hours of receipt of
the election request. For incomplete election requests, the notice of
denial must be sent within 10 calendar days of the expiration of the
timeframe for submission of additional information.
Finally, the notice of denial must explain the reason for denial
and provide a description of the grievance process available to the
individual. In this rule, for 2026 and subsequent years, we propose to
codify these requirements at Sec. 423.137(d)(10)(iii).
For 2026, we also propose to require Part D sponsors to send a
renewal notice alerting the program participant that their
participation in the program will continue into the next year unless
they indicate that they would like to opt out for the upcoming year.
This notice would be required to be sent out to program participants by
the end of the AEP (no later than December 7) and must include the Part
D sponsor's program terms and conditions for the upcoming year and a
reminder that the participant may opt out of the program at any time,
including for the upcoming plan year.
In this rule, for 2026 and subsequent years, we propose to codify
these requirements at Sec. 423.137(d)(10)(iv) and to add the election
request form, notice
[[Page 99362]]
of election approval, and renewal notice as required materials and
content for Part D sponsors at Sec. 423.2267(e)(45), (e)(46) and
(e)(51).
CMS issued model materials that Part D enrollees can use to fulfill
the election request and election approval requirements through the
Medicare Advantage and Prescription Drug Programs: Part C and Part D
Medicare Prescription Payment Plan Model Documents (CMS-10882; OMB
0938-1475) ICR package. As established in Sec. 423.2267(c), model
materials and content are required materials and content created by CMS
as an example of how to convey beneficiary information. If Part D
sponsors choose to not use a CMS-developed model version of a
particular required material or content, they must still accurately
convey the vital information in the required material or content to the
beneficiary.
For the required program election request form that CMS proposes to
codify at Sec. 423.2267(e)(45), this means that a Part D sponsor who
chooses to develop their own form must include or provide all of the
elements outlined at Sec. 423.137(d)(10)(i)(B). For the notice of
election approval that CMS proposes to codify at (e)(46), a Part D
sponsor who chooses to develop their own notice must include all of the
elements outlined at Sec. 423.137(d)(10)(ii)(B). Finally, for the
renewal notice that CMS proposes to codify at (e)(51), a Part D sponsor
who chooses to develop their own notice must include all of the
elements outlined at Sec. 423.137(d)(10)(iv)(B). These notification
and content requirements are consistent with the requirements outlined
in the final part two guidance for 2025, with the exception of the
renewal notice, which was not included in the program instructions.
Additionally, Part D sponsors are required to furnish additional
educational information on the Medicare Prescription Payment Plan with
the election request form and the notice of acceptance. Part D sponsors
are encouraged to use the CMS-developed program fact sheet available on
Medicare.gov to satisfy these requirements. If the Part D sponsor
develops and uses alternative informational materials in lieu of the
CMS-developed fact sheet to satisfy these requirements, they must
ensure that these alternative materials accurately convey program
information and are compliant with existing Part D requirements
specified at 42 CFR part 423 subpart V. In this rule, for 2026 and
subsequent years, we propose to codify this requirement at Sec.
423.137(d)(10)(i)(C) and 423.137(d)(10)(ii)(C).
(d) Part D Enrollee Targeted Outreach
The statute establishes that some Part D enrollees will incur OOP
costs that make them likely to benefit from election into the Medicare
Prescription Payment Plan. As stated in the final part one guidance for
2025, by ``likely to benefit,'' we generally mean that a participant's
monthly costs would be lower under the program compared to any single
monthly amount they would have had to pay at the pharmacy without the
program. We acknowledge, however, that individuals may consider a
number of other factors in determining whether they, personally, would
benefit from the program.
While this program is open to all Part D enrollees, Part D
enrollees incurring high OOP costs earlier in the plan year are
generally more likely to benefit. Section 1860D-2(b)(2)(E)(v)(III)(dd)
of the Act requires that Part D sponsors have a mechanism in place to
notify a pharmacy when a Part D enrollee incurs OOP costs with respect
to covered Part D drugs that make it likely the enrollee may benefit
from participating in the program.
CMS recognizes, however, that notification of Part D enrollees
likely to benefit from the Medicare Prescription Payment Plan prior to
reaching the pharmacy POS will be a critical component to program
success. Early notification will streamline the election process and
prevent potential drug dispensing delays. As such, in addition to the
statutory requirement for pharmacy POS notification (as outlined in
section 1860D-2(b)(2)(E)(v)(III)(dd) of the Act), in the final part two
guidance, CMS also established requirements for 2025 for Part D
sponsors to undertake targeted outreach, both prior to and during the
plan year, directly to Part D enrollees likely to benefit from the
program.
While the statute requires a likely to benefit notification, it
does not outline the specific criteria or define the profile of someone
who is likely to benefit under the program. In the final part one
guidance, CMS developed a standardized, quantitative framework for
assessing ``likely to benefit,'' which was used to inform targeted
outreach requirements both prior to and during the plan year. However
as noted previously, CMS recognizes that an individual Part D enrollee
may find that they would personally benefit from the program even if
they would not be identified as likely to benefit under this particular
standardized framework. Those individuals are certainly permitted to
opt into the program, as are all Part D enrollees. The definition and
framework for ``likely to benefit'' described in the final part one
guidance is specifically for identifying Part D enrollees for targeted
outreach and communication in the absence of any information regarding
an individual's specific financial circumstances.
As described in the final part one guidance, in retrospective
modeling of prescription drug event (PDE) data, CMS found that to be
``likely to benefit'' from the program, the Part D enrollee would have
to incur some level of substantial OOP costs; further, the Part D
enrollee's highest monthly OOP cost incurred would have to be more than
the highest monthly paid amount under the Medicare Prescription Payment
Plan (if the program had applied). CMS used this approach to identify
``likely to benefit'' because it focuses on addressing Part D
enrollees' potential cash-flow concerns by lowering their maximum OOP
costs in a month (and limiting the potential for participants to be
faced with Medicare Prescription Payment Plan monthly payments that may
initially provide substantial financial relief but later, due to timing
constraints, result in monthly beneficiary payments that are higher
than they would have been absent the program). This approach strictly
compares the monthly OOP amounts with and without the Medicare
Prescription Payment Plan, without any subjective assessments of what
amount might be beneficial to an individual Part D enrollee. CMS used
the approach described previously to set thresholds for targeted
outreach criteria in the first year of the program (2025). In the final
part one guidance, we established a 2025 POS notification threshold of
$600 for a single prescription. Additional details regarding the POS
notification process are described in section (h) of this proposed
rule.
In the final part two guidance, we established a requirement for
Part D sponsors to notify enrollees who were likely to benefit prior to
the 2025 plan year. In setting criteria to identify Part D enrollees
likely to benefit prior to the plan year, CMS seeks to identify
individuals who have persistently high costs for covered Part D
prescription drugs. That is balanced, however, by a desire to limit
notifications to Part D enrollees who are not likely to benefit from
participation in the program (such as Part D enrollees for whom the
program would initially provide substantial financial relief but later,
due to timing constraints, would result in monthly payments that are
higher than they would have been absent the
[[Page 99363]]
program). With the goal of assessing the persistence of high OOP costs,
and thus, the likelihood of a prior year's OOP costs predicting future
OOP burden, CMS analyzed PDE records. CMS first identified Part D
enrollees who had incurred total OOP costs of at least $2,000 in the
first three quarters of 2021, then examined their total OOP costs in
the subsequent year, 2022. CMS's analysis was based on the patient
payment amount for covered Part D claims only, reflecting the actual
OOP financial burden for Part D enrollees.
In the final part two guidance, we established that to fulfill the
requirements for prior to the plan year notification, during the fourth
quarter of the year, Part D sponsors must review their Part D claims
history from the first three quarters of the year to identify Part D
enrollees likely to benefit in the upcoming year. For CY 2025, Part D
sponsors are required to conduct outreach to Part D enrollees who
incurred at least $2,000 in OOP costs for covered drugs through
September of 2024. Based on this analysis and any additional analysis
Part D sponsors conduct to identify enrollees who may be likely to
benefit from this program, the Part D sponsor must send the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' to identified
enrollees no later than the end of the Annual Election Period (open
enrollment), which is December 7 of each year. For example, for CY
2025, Part D sponsors assessed claims for covered Part D drugs with
dates of services from January through September 2024 and sent the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' in
October, November, or early December 2024 (no later than December 7,
2024). If Part D sponsors develop supplemental strategies for
identification of Part D enrollees likely to benefit prior to the plan
year, these notifications must be provided during the same timeframe.
In the final part two guidance, we established that prior to the
plan year, when a Part D sponsor identifies current Part D enrollees as
likely to benefit using the methods noted previously, it is then
required to notify each such Part D enrollee in writing that they are
likely to benefit from the Medicare Prescription Payment Plan, using
the standardized ``Medicare Prescription Payment Plan Likely to Benefit
Notice.'' This outreach may be done via mail or electronically (based
on the Part D enrollee's preferred and authorized communication
methods) and must include a Medicare Prescription Payment Plan election
request form. The outreach must also include additional information
about the Medicare Prescription Payment Plan; this additional
information requirement may be fulfilled by including with the notice
the CMS-developed fact sheet about the program. If Part D sponsors
develop and use alternative informational materials in lieu of the CMS-
developed fact sheet to satisfy this requirement, they must ensure that
these alternative materials accurately convey program information and
are compliant with existing Part D requirements specified at 42 CFR
part 423 subpart V and in the Medicare Communications and Marketing
Guidelines (MCMG) Additionally, the initial notice may be provided via
telephone, so long as the standardized ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' and additional information are sent
within 3 calendar days of the telephone notification.
In the final part two guidance, we established that while Part D
sponsors are required to notify all Part D enrollees who meet the
criteria outlined previously, Part D sponsors should be aware that
potential changes to a Part D enrollee's clinical condition, medication
status, or cost sharing (for example, discontinuation of therapy or
addition of supplemental payers) could affect the likelihood that a
Part D enrollee may benefit from the Medicare Prescription Payment
Plan. Part D sponsors should be aware of potential status changes when
contacted by an enrollee to discuss participation in the program and
should counsel enrollees accordingly.
In addition to the criteria for identification of Part D enrollees
likely to benefit from the program in advance of an upcoming plan year,
in the final part two guidance, CMS established a requirement for 2025
for Part D sponsors to put in place reasonable guidelines for ongoing
identification of Part D enrollees likely to benefit during the plan
year. For example, Part D sponsors may undertake targeted outreach to
Part D enrollees if they become aware in advance of a new high-cost
prescription for a Part D enrollee that would trigger the pharmacy POS
notification process. If Part D sponsors have prior authorization or
other utilization management edits in place for a drug that, based on
their benefit structure, would result in OOP costs above the pharmacy
POS notification threshold, then the Part D sponsor could initiate
outreach to the Part D enrollee based on approved prior authorization
requests, informing them of the Medicare Prescription Payment Plan and
of the opportunity to opt into the program.
A Part D enrollee is less likely to benefit from opting in during
the last quarter of a year (for example, in December, the last month of
the plan year, because OOP costs for the Medicare Prescription Payment
Plan in that month cannot be spread over more than 1 month). As such,
in the final part one and final part two guidance, we established that
a Part D enrollee should not be notified that they are likely to
benefit in the last month of the plan year for that plan year; however,
Part D sponsors may choose to provide them with information on how to
opt into the program for the upcoming year. Participants who have
already opted into the Medicare Prescription Payment Plan should not be
notified about opting into the program while their participation is in
effect. Additionally, enrollees who are precluded from opting into the
program due to failed monthly payment after conclusion of the required
grace period should not be notified that they are likely to benefit
from the program during the plan years in which they are precluded from
participating in the program. Finally, PDPs that are non-renewing their
contracts or individual plan benefit packages are not required to
comply with the requirements at Sec. 423.137(e)(3)(i) related to prior
to plan year targeted outreach. Non-renewing PDPs must still comply
with the requirements at Sec. 423.137(e)(3)(ii) related to during the
plan year targeted outreach through the end of the plan year but are
not required to identify and outreach to Part D enrollees likely to
benefit from the program in the upcoming plan year.
In the final part two guidance, we established that Part D sponsors
may develop strategies other than the approach outlined previously for
identification of additional Part D enrollees likely to benefit during
the plan year. However, Part D sponsors must develop standardized
processes for implementing their criteria for identification of
enrollees likely to benefit from the program during the plan year,
including outreach timeframe and mode of communication, and must apply
any identification criteria to every Part D enrollee uniformly.
In the final part two guidance, we established that during the plan
year, when a Part D sponsor identifies current Part D enrollees as
likely to benefit from the program, it is required to provide the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' to the
identified Part D enrollee along with a Medicare Prescription Payment
Plan election request form and additional information about the
Medicare Prescription Payment Plan. This additional information
requirement may be fulfilled by including with the notice
[[Page 99364]]
the CMS-developed fact sheet about the program. If Part D sponsors
develop and use alternative informational materials in lieu of the CMS-
developed fact sheet to satisfy this requirement, they must ensure that
these alternative materials accurately convey program information and
are compliant with existing Part D requirements specified at 42 CFR
part 423 subpart V and in the MCMG. This outreach may be done via mail
or electronically (based on the Part D enrollee's preferred and
authorized communication methods). Additionally, the initial notice may
be provided via telephone, so long as the written ``Medicare
Prescription Payment Plan Likely to Benefit Notice,'' election request
form, and additional information are sent within 3 calendar days of the
telephone notification. Part D sponsors are encouraged to inform the
Part D enrollee that they are likely to benefit when contacting the
Part D enrollee for other reasons, such as while communicating a prior
authorization coverage determination.
For the initial years of the program, we propose to maintain the
criteria for Part D sponsor outreach prior to the plan year, during the
plan year, and at the point of sale that were established in the final
part one and final part two guidance for 2025. More specifically, we
propose that Part D sponsors must notify a pharmacy when a Part D
enrollee incurs OOP costs for a single prescription that equal or
exceed the POS threshold of $600. To identify Part D enrollees likely
to benefit in advance of the plan year, we propose that Part D sponsors
be required to assess their current Part D enrollees' prescription drug
costs from the current year and conduct outreach to Part D enrollees
who incurred $2,000 in OOP costs for covered Part D drugs through
September of that year. We also propose that Part D sponsors will be
required to put in place reasonable guidelines for ongoing
identification of Part D enrollees likely to benefit during the plan
year. As described in this section, an example of a reasonable
guideline for ongoing identification during the plan year would be a
standardized approach in which a Part D sponsor undertakes targeted
outreach to Part D enrollees when they become aware in advance (such as
through the prior authorization process) of a new high-cost
prescription that would trigger the pharmacy POS notification process.
We remind Part D sponsors that they must develop standardized processes
for implementing their criteria for identification of enrollees likely
to benefit from the program during the plan year, including outreach
timeframe and mode of communication, and must apply any identification
criteria to every Part D enrollee uniformly.
We plan to revisit these requirements in future rulemaking, as CMS
gains program experience and can evaluate program data and operations.
In general, we expect to maintain the same overall framework for
targeted outreach, which will include a POS notification threshold
based on incurred OOP costs, prior to plan year criteria based on
incurred OOP costs in the current year, and requirements for Part D
sponsors to put in place reasonable guidelines for ongoing
identification of Part D enrollees likely to benefit during the plan
year. We would assess the targeted outreach requirements for the POS
notification threshold and prior to plan year criteria on an annual
basis and make modifications, if needed, based on review and analysis
of Medicare Prescription Payment Plan data and other Medicare data,
including: (1) analysis of program participation levels; (2) analysis
of the proportion of participants who met our definition of ``likely to
benefit,'' as established in the final part one guidance and described
in this section, based on actual OOP costs incurred and program
payments; (3) analysis of the proportion of Part D enrollees who would
have met our definition of ``likely to benefit'' if they had elected
into the Medicare Prescription Payment Plan but were not identified
based on current targeted outreach criteria; (4) program operations;
and (5) level of burden on pharmacies and Part D sponsors. After the
assessment and review of the aforementioned factors, CMS would then
publish the specific targeted outreach parameters for the upcoming plan
year. In this proposed rule, CMS is not codifying an approach to
modifying targeted outreach criteria for future years of the program;
however, we seek comment on the approach described here and will use
feedback from interested parties to support future policy development.
In addition to the agency's authorities with respect to the
Medicare Prescription Payment Plan under section 11202 of the IRA, CMS
also has authority under section 1860D-12(b)(3)(D) of the Act to impose
additional contractual terms and conditions on Part D plan sponsors
that are necessary and appropriate. Consistent with our authority under
section 11202 of the IRA and under section 1860D-12(b)(3)(D) of the
Act, in this proposed rule, we propose to codify the targeted outreach
framework and thresholds established in the final part one and final
part two guidance at Sec. 423.137(e).
Specifically, we propose to codify the likely to benefit criteria
at paragraph (e)(1), the requirements for the pharmacy POS notification
at paragraph (e)(2), and the requirements for Part D sponsor direct
outreach to identified likely to benefit enrollees prior to and during
the plan year at paragraph (e)(3). Additionally, we propose to codify
the targeted outreach notification and education requirements at
paragraph (e)(4) and to codify targeted outreach exclusions at
paragraph (e)(5). Finally, we propose to add the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' as a required
standardized communication material for Part D sponsors at Sec.
423.2267(e)(47).
As stated in the final part two guidance for 2025, the thresholds
published by CMS are a minimum requirement. Part D sponsors may develop
supplemental strategies for identification of additional Part D
enrollees likely to benefit prior to and during the plan year. If
supplemental strategies are implemented, then Part D sponsors must
apply any additional identification criteria to every enrollee of each
plan equally, which we propose to codify at paragraph (e)(1)(ii).
We are not scoring any aspects of this provision related to the
development and distribution of the ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' in the Collection of Information
section of this rule since we believe all information impacts of those
provisions have already been accounted for under OMB control number
0938-1475.
(e) Termination of Election, Reinstatement, and Preclusion
Section 1860D-2(b)(2)(E)(v)(IV)(aa) of the Act requires a Part D
sponsor to terminate an individual's Medicare Prescription Payment Plan
participation if that individual fails to pay their monthly billed
amount. In addition, under section 1860D-2(b)(2)(E)(v)(IV)(bb) of the
Act, Part D sponsors may preclude an individual from opting into the
Medicare Prescription Payment Plan in a subsequent year if the
individual fails to pay the amount billed for a month as required under
the program.
In the final part one guidance, we established standards for
termination of election, reinstatement, and preclusion in 2025
consistent with the statutory requirements. CMS established procedures
for voluntary termination of election, under which Part D sponsors are
required to have a process to allow a participant who has opted into
the
[[Page 99365]]
Medicare Prescription Payment Plan to opt out during the plan year. In
the final part two guidance, we stated that the Part D sponsor must
process the participant's voluntary termination request and send the
individual a notification confirming the termination within 10 calendar
days of receipt of the request but did not specify the effective date
of termination. For 2026 and subsequent years, we propose to maintain
the requirement for Part D sponsors to send the notice of voluntary
termination within 10 calendar days of receipt but require that the
effective date of termination must be within 24 hours of receipt of the
voluntary termination request. We believe this aligns with the required
timeframe for processing election requests during the plan year and
ensures timely response to opt out requests during the plan year. We
seek comment on this proposal.
When a participant opts out of the Medicare Prescription Payment
Plan, a Part D sponsor must provide the individual with a notice of
termination after the individual notifies the Part D sponsor that they
intend to opt out under the Part D sponsor's established process. The
notice of voluntary termination must include--
Pertinent dates, including the date on which the
individual's participation in the program ends;
An explanation that the individual is receiving the notice
either because they requested a voluntary termination or because they
changed Part D plans;
A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan, and that the
individual's Part D drug coverage will not be impacted;
A statement clarifying that the individual will continue
to be billed monthly or can choose to pay the amount owed all at once,
and that the individual will not pay interest or fees on the amount
owed;
A statement clarifying that the individual can join the
Medicare Prescription Payment Plan again and instructions for how to do
so, which may differ depending on whether the voluntary termination was
requested by the individual or if it was because the individual changed
Part D plans; and
An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and a Manufacturer's Pharmaceutical
Assistance Program, and how to learn more about these programs.
The Part D sponsor must also offer the participant the option to
repay the full outstanding amount in a lump sum. However, the Part D
sponsor is prohibited from requiring full immediate repayment from a
participant who has been terminated from the Medicare Prescription
Payment Plan. If the participant opts not to repay the full outstanding
amount in a lump sum, the sponsor must continue to bill amounts owed
under the program in monthly amounts not to exceed the maximum monthly
cap according to the statutory formula for the duration of the plan
year after an individual has been terminated. In this rule, for 2026
and subsequent years, we propose to codify these requirements at Sec.
423.137(f)(2)(i) and to add the voluntary termination notice as a
required material and content for Part D sponsors at Sec.
423.2267(e)(50).
CMS issued model material that Part D enrollees can use to fulfill
the voluntary termination notice requirement through the Medicare
Advantage and Prescription Drug Programs: Part C and Part D Medicare
Prescription Payment Plan Model Documents (CMS-10882; OMB 0938-1475)
ICR package. As established in Sec. 423.2267(c), model materials and
content are required materials and content created by CMS as an example
of how to convey beneficiary information. If Part D sponsors choose to
not use the CMS-developed model notice and develop their own voluntary
termination notice, they must include all of the required elements
outlined at Sec. 423.137(f)(2)(i)(A)(2)(ii). These notification and
content requirements are consistent with the requirements outlined in
the final part two guidance for 2025.
We also established standards for involuntary termination in 2025,
including requirements for the provision of a grace period of at least
two months when an individual has failed to pay the billed amount by
the payment due date. If an individual fails to pay the billed amount
within 15 calendar days of the payment due date, the Part D sponsor
must send the individual an initial notice of failure to pay. The
notice of failure to pay must include--
Pertinent dates and key pieces of information, including
the date the missed monthly payment was due, the amount the individual
must pay to remain in the program, and the date by when payment must be
received, which is the date of the end of the grace period;
A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan, and that the
individual's Part D drug coverage will not be impacted;
Instructions for how to submit payment;
Information about procedures for involuntary termination
due to failure to pay, including the date on which the participant
would be removed if payment is not received, and how to submit an
inquiry or file a grievance;
A statement on how individuals should pay their Part D
plan premium first if they cannot afford both their premium and their
program balance; and
An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and the Manufacturer's
Pharmaceutical Assistance Program, and how to learn more about these
programs.
If the individual fails to pay the amount due by the end of the
grace period, the Part D sponsor must send the individual an
involuntary termination notice explaining that the individual has been
terminated from the Medicare Prescription Payment Plan. The involuntary
termination notice must be sent within 3 business days following the
last day of the end of the grace period, and must include the
following:
Pertinent dates, including the date the individual was
originally notified of the missed monthly payment and the due date for
that payment, as well as the date on which the individual's
participation in the program ends, which should be the same date as the
notice;
A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan, and that the
individual's Part D drug coverage will not be impacted;
Instructions for how to submit payment and the amount
owed;
How to submit an inquiry or file a grievance;
A statement clarifying that the individual can join the
Medicare Prescription Payment Plan again if they pay the amount owed;
and
An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and the Manufacturer's
Pharmaceutical Assistance Program, and how to learn more about these
programs.
If either the notice of failure to pay or notice of involuntary
termination is returned to the Part D sponsor as undeliverable, the
Part D sponsor must immediately implement its existing procedure for
researching a potential change of address. In this rule, for 2026
[[Page 99366]]
and subsequent years, we propose to codify these notice requirement
standards at Sec. 423.137(f)(2)(ii) and to add the notice of failure
to pay and notice of involuntary termination as required model
materials and content for Part D sponsors at Sec. 423.2267(e)(48) and
(e)(49).
CMS issued model materials that Part D enrollees can use to fulfill
the failure to pay and involuntary termination notice requirements
through the Medicare Advantage and Prescription Drug Programs: Part C
and Part D Medicare Prescription Payment Plan Model Documents (CMS-
10882; OMB 0938-1475) ICR package. As established in Sec. 423.2267(c),
model materials and content are required materials and content created
by CMS as an example of how to convey beneficiary information. If Part
D sponsors choose to not use the CMS-developed models and develop their
own notice of failure to pay or involuntary termination notice, they
must include all of the required elements for each notice outlined at
Sec. 423.137(f)(2)(ii)(C)(2) and (D)(2), respectively. These
notification and content requirements are consistent with the
requirements outlined in the final part two guidance for 2025.
We also set forth requirements for 2025 related to the grace period
and reinstatement. When a program participant fails to pay a program
bill, the Part D sponsor must provide individuals with a grace period
of at least two months upon notifying the individual of the initial
missed payment.
We propose to make certain modifications to the timing requirements
for the grace period and initial notice of nonpayment established in
the final part one guidance. Specifically, in the final part one
guidance, we stated that the grace period must begin on the first day
of the month for which the balance is unpaid or the first day of the
month following the date on which the payment is requested, whichever
is later. In this proposed rule, we propose to change the date on which
the grace period must begin to the first day of the month following the
date on which the initial notice is sent. We believe this would
simplify the timing requirements for the notice of nonpayment and the
required grace period. We seek comment on whether to adopt this change
or continue with the approach described in the final part one guidance.
In the final part one guidance for 2025, we also stated that if a
participant fails to pay their monthly billed amount with fewer than
two full calendar months remaining in the calendar year, the grace
period must carry over into the next calendar year. If the program
participant is within their grace period from the prior year, the Part
D sponsor must allow the participant to opt into the program for the
next year, but if the participant fails to pay the amount due from the
prior year during the required grace period, the Part D sponsor may
terminate the individual's participation in the program in the new
year.
A participant must be allowed to pay the overdue balance in full
during the grace period to remain in the program. Additionally, Part D
sponsors must reinstate an individual who has been terminated from the
Medicare Prescription Payment Plan within a reasonable timeframe if the
individual demonstrates good cause for failure to pay the program
billed amount within the grace period and pays all overdue amounts
billed. In response to public comments received on the final part one
guidance, we clarified that CMS was adopting the same meaning of ``good
cause'' outlined in section 60.2.4 of the Medicare Prescription Drug
Benefit Manual, Chapter 3--Eligibility, Enrollment and Disenrollment
that applies to reinstatements when an enrollee fails to pay their Part
D premiums. CMS also described specific circumstances that constitute
good cause, including--
A serious illness, institutionalization and/or
hospitalization of the program participant or their authorized
representative (that is, the individual responsible for the
participant's financial affairs), that lasted for a significant portion
of the grace period for Medicare Prescription Payment Plan payment;
Prolonged illness that is not chronic in nature, a serious
(unexpected) complication to a chronic condition or rapid deterioration
of the health of the participant, a spouse, another person living in
the same household, a person providing caregiver services to the
participant, or the participant's authorized representative (that is,
the individual responsible for the participant's financial affairs)
that occurs during the grace period for the Medicare Prescription
Payment Plan payment;
Recent death of a spouse, immediate family member, person
living in the same household, or person providing caregiver services to
the participant, or the participant's authorized representative (that
is, the individual responsible for the participant's financial
affairs);
Home was severely damaged by a fire, natural disaster or
other unexpected event, such that the participant or the participant's
authorized representative was prevented from making arrangement for
payment during the grace period for the Medicare Prescription Payment
Plan;
An extreme weather-related, public safety or other
unforeseen event declared as a Federal or state level of emergency
prevented premium payment at any point during the Medicare Prescription
Payment Plan grace period. For example, the participant's bank or U.S.
Post Office closes for a significant portion of the grace period; or
For Part D plan disenrollments effectuated by CMS for
failure to pay Part D Income Related Monthly Adjustment Amount (IRMAA),
Federal government error (that is, CMS, SSA or the Railroad Retirement
Board (RRB)) caused the Medicare Prescription Payment Plan payment to
be incorrect or late, and the participant was unaware of the error or
unable to take action prior to the disenrollment effective date.
In addition, we stated that there may be circumstances other than
those listed which meet the definition of good cause, provided these
circumstances meet the standard of being outside of the participant's
control or are unexpected such that the participant could not have
reasonably foreseen their occurrence, and these circumstances are the
cause for the non-payment of past due program balances. Finally, we
stated that a Part D sponsor may reinstate an individual who has been
terminated from the Medicare Prescription Payment Plan and pays all
overdue amounts billed in full, at the sponsor's discretion and within
a reasonable timeframe, even if the individual does not demonstrate
good cause. In this rule, for 2026 and subsequent years, we propose to
codify these grace period and reinstatement requirements at Sec.
423.137(f)(3).
We also established standards for 2025 for preclusion of election
in a subsequent plan year. We clarified that, consistent with the
statute, a Part D sponsor may only preclude an individual from
participating in the Medicare Prescription Payment Plan in a subsequent
year if the individual owes an overdue balance to that plan sponsor. If
an individual enrolls in a Part D plan offered by a different Part D
sponsor than the Part D sponsor to which the individual owes an overdue
balance, that individual cannot be precluded from opting into the
Medicare Prescription Payment Plan in a subsequent year by that
different Part D sponsor. We also stated that preclusion may extend
beyond the immediate subsequent plan year if a Part D enrollee
[[Page 99367]]
remains in a plan offered by the same Part D sponsor and continues to
owe an overdue balance. While a Part D sponsor that offers more than
one Part D plan may have different preclusion policies for its
different plans, the Part D sponsor must apply its preclusion policy
consistently among all enrollees of the same Part D plan. In this rule,
for 2026 and subsequent years, we propose to codify requirements
related to preclusion of election in a subsequent plan year at Sec.
423.137(f)(4).
For 2025, we established a prohibition on Part D enrollment
penalties for failure to pay a Medicare Prescription Payment Plan
amount billed. We stated that a Part D plan sponsor is prohibited from
disenrolling a Part D enrollee from a Part D plan or declining future
enrollment into a Part D plan for failure to pay any amount billed
under the Medicare Prescription Payment Plan. In this rule, for 2026
and subsequent years, we propose to codify this requirement at Sec.
423.137(f)(5).
Finally, we clarified that, if a participant in the Medicare
Prescription Payment Plan is disenrolled voluntarily or involuntarily
from their Part D plan under the provisions at 42 CFR 423.44(b), the
participant is also terminated from the Medicare Prescription Payment
Plan in that plan. In this rule, for 2026 and subsequent years, we
propose to codify this requirement at Sec. 423.137(f)(6). We note that
nothing in proposed section Sec. 423.137(f) prohibits a Part D sponsor
from billing an individual for an outstanding Medicare Prescription
Payment Plan amount owed.
We are not scoring any aspects of this provision related to the
development and distribution of the notice of voluntary termination,
the notice of failure to pay, and the notice of involuntary termination
in the Collection of Information section of this rule since we believe
all information impacts of those provisions have already been accounted
for under OMB control number 0938-1475.
(f) Participant Billing Rights
Section 1860D-2(b)(2)(E)(iii) of the Act requires Part D sponsors,
on a monthly basis, to bill participants who are in the Medicare
Prescription Payment Plan and incur OOP costs for the Medicare
Prescription Payment Plan an amount that cannot exceed the applicable
maximum monthly cap.
In the final part one guidance, we established standards for
participant billing rights for 2025 consistent with the statute.
Specifically, we established that for each billing period after an
individual has opted into the program, a Part D sponsor must not bill a
participant who is in the program but has not yet incurred any OOP
costs for the Medicare Prescription Payment Plan during the plan year.
The Part D sponsor will calculate a monthly amount that takes into
account the OOP costs for the Medicare Prescription Payment Plan in
that month that were incurred on or after the date on which the
individual opted into the program, and that each billing period will be
a calendar month. In the final part one guidance, we further explained
that the billing period begins either on the effective date of a Part D
enrollee's participation in the Medicare Prescription Payment Plan (for
the first month a participant elects into the program during the plan
year) or the first day of the month (for each subsequent month or for
the first month of a participant who elects into the program prior to
the start of the plan year). The billing period ends on the last date
of that month. Additionally, in the final part one guidance, we
established that Part D sponsors must send a bill for the Medicare
Prescription Payment Plan that is separate from the bill for the
collection of premiums, if applicable, and continue to follow existing
regulations and guidance for the collection of premiums as described at
42 CFR 423.293.
We clarified that past due balances from prior monthly bills may
also be included in a billing statement, which could result in the
total amount on the billing statement exceeding the maximum monthly
cap. However, the amount billed for the month for which the maximum
monthly cap is being calculated cannot be higher than the cap for that
month as established in the statute.
We also encouraged Part D sponsors to offer multiple means of
payment, such as an electronic fund transfer mechanism (including
automatic charges of an account at a financial institution or credit or
debit card account) and payment by check and to offer participants
flexibility around requesting a specific day of the month for program
charges and withdrawals from a bank account. We reiterate that
encouragement here.
In addition, we stated that, because under section 1860D-
2(b)(2)(E)(iii) of the Act, Part D sponsors may not bill a participant
more than the maximum monthly cap, late fees, interest payments, or
other fees, such as for different payment mechanisms, are not permitted
under the Medicare Prescription Payment Plan. We also stated that plan
sponsors are responsible for ensuring that any third parties they
contract with also comply with such requirements.
We also reminded Part D sponsors (and any third parties Part D
sponsors contract with) that actions to collect unpaid balances related
to the Medicare Prescription Payment Plan may be subject to other
applicable Federal and state laws and requirements, including those
related to payment plans, credit reporting, and debt collection. These
requirements also apply in the event of a death of a program
participant.
We also stated that, while Part D sponsors may create their own
billing and payment procedures for the Medicare Prescription Payment
Plan, Part D sponsors are required to prioritize payments towards Part
D plan premiums to avoid a Part D enrollee losing their Part D coverage
when it is unclear whether a payment received from a participant is
intended by the participant to cover their outstanding Part D plan
premium or Medicare Prescription Payment Plan balance. Specifically, if
a Part D enrollee has opted into the program and makes payments
directly to the Part D sponsor, and it is unclear whether a payment
should go towards the participant's outstanding Part D plan premium or
Medicare Prescription Payment Plan balance, the Part D sponsor may
contact the enrollee to clarify the purpose of the payment. If the Part
D sponsor does not contact the enrollee or is not able to ascertain the
purpose of the payment, then the payment must be applied to the Part D
premium.
Under section 1860D-2(b)(2)(E)(v)(VI) of the Act, Part D sponsors
must treat any unsettled balances with respect to amounts owed by
participants under the Medicare Prescription Payment Plan as plan
losses. In addition, the statute requires that the Secretary shall not
be liable for any such balances outside of those assumed as losses
estimated in plan bids. In the final part two guidance, we stated that
if a Part D sponsor is compensated by or on behalf of the participant
for an unsettled balance or sells an unsettled balance as a debt, it
cannot treat the amount as a loss and cannot include it in its bid.
Only uncompensated unsettled balances can be included in the bid. We
also stated that the Part D bid pricing tool (BPT) has been modified to
reflect projected losses associated with the Medicare Prescription
Payment Plan. Specifically, these losses must be reflected as
administrative costs in the Part D BPT.
Under section 1860D-2(b)(2)(E)(v)(III)(gg) of the Act, Part D
sponsors must have a financial reconciliation process in place to
correct
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inaccuracies in billing and/or payments. In the final part one
guidance, we established standards for Part D sponsors related to
financial reconciliation for Medicare Prescription Payment Plan
payments. We stated that while a Part D sponsor may not bill a program
participant an amount for a month that is more than the maximum monthly
cap, a participant may pay more than the maximum monthly cap, up to the
annual OOP threshold. However, the participant cannot pay more than
their total OOP costs for the Medicare Prescription Payment Plan. If a
participant does pay more than their total OOP costs for the Medicare
Prescription Payment Plan, the Part D sponsor must reimburse the
participant the amount that is paid above the balance owed.
In addition, in the final part one guidance, we stated that, for
2025, CMS expects that Part D sponsors will develop standardized
procedures for determining and processing reimbursements for excess
Medicare Prescription Payment Plan payments made by program
participants and that Part D sponsors bear the responsibility for
timely financial reconciliation with Part D enrollees. Federal
regulations at 42 CFR 423.466(a) require sponsors to process the
adjustment and issue refunds or recovery notices within 45 calendar
days of receipt of LIS changes, Financial Information Reporting (FIR),
or Information Reporting (Nx) transactions necessitating the claims
adjustment. As such, Part D sponsors must make the retroactive
adjustments and promptly issue refunds or initiate recovery once
complete information regarding a claim's adjustment is received. In the
final part one guidance, we also stated that the plan must work with
the participant to determine if they should either refund the
difference directly to the Part D enrollee or apply the overpayment to
the remaining OOP costs owed. In addition, Part D sponsors are
responsible for appropriately updating TrOOP accumulators and
restacking claims.
We also stated that when reconciliation results in an increased
amount owed by the participant, plans should recalculate the maximum
monthly cap for the month(s) in question. As stated in the final part
one guidance, under section 1860D-2(b)(2)(E)(iv)(II) of the Act, for
each subsequent month for which the Part D enrollee has opted into the
program, the maximum monthly cap is determined by calculating the sum
of any remaining OOP costs owed by the participant from a previous
month that have not yet been billed and any additional OOP costs for
the Medicare Prescription Payment Plan in the subsequent month, divided
by the number of months remaining in the plan year. When Part D claims
adjustments result in increased amounts owed by the participant, and
these amounts have not yet been billed to the participant, they should
be included in the revised remaining OOP costs owed by the participant
and, thus, in the subsequent month maximum cap for the next billing
period. Finally, when a covered Part D drug claim adjustment occurs
after the end of a plan year, the Part D sponsor should use the general
guidance provided earlier in this section to appropriately recalculate
the amount owed to or by the participant and issue a final bill or
refund, as necessary.
In this proposed rule, we propose to codify the requirements
established for calendar year 2025 in the final part one guidance
discussed in this section for 2026 and subsequent years at Sec.
423.137(g) with an exception. In the final part one guidance, we stated
that the plan must work with the participant to determine if they
should either refund the difference directly to the Part D enrollee or
apply the overpayment to the remaining OOP costs owed by the
participant. In this proposed rule, we are proposing to modify that
requirement and instead require a plan follow its normal processes for
adjustments and issuing refunds. We believe this modification will
simplify operational processes on the part of Part D sponsors without
negatively impacting Medicare Prescription Payment Plan participants.
In addition, in this proposed rule, we are proposing to modify the
approach when Part D claims adjustments result in increased amounts
owed by the participant; instead of stating that Part D sponsors
``should'' include the additional costs in the revised remaining OOP
costs owed by the participant, we now propose that Part D sponsors
``must'' include the increased amount in this manner. This is
consistent with the requirement established in the final part one
guidance and included in section (b) of this proposed rule, which
states that once a participant incurs an OOP Part D drug cost, all
their OOP costs for all covered Part D drugs will be billed on a
monthly basis as long as the participant remains in the program as well
as the uniform benefits requirements at Sec. 423.104(b)(2). We seek
comment on whether we should finalize these proposed changes or adopt
the processes as established in the 2025 final part one guidance for
2026 and subsequent years.
We propose to codify the requirement that the Part D sponsor will
calculate a monthly amount that takes into account the OOP costs for
the Medicare Prescription Payment Plan in that month that were incurred
on or after the date on which the individual opted into the program at
paragraph (g)(1). We propose to define each billing period as a
calendar month at paragraph (g)(2). We propose to establish
requirements for the contents of a billing statement at paragraph
(g)(3). We propose to establish that unsettled balances with respect to
amounts owed under the program will be treated as plan losses at
paragraph (g)(4). We propose to establish requirements for
prioritization of premium payments at paragraph (g)(5). Finally, we
propose to establish general standards for Medicare Prescription
Payment Plan financial reconciliation at paragraph (g)(6).
(g) Participant Disputes
In the final part one guidance, we stated that Part D sponsors must
apply their established Part D coverage determination and appeals
procedures, as required under section 1860D-4(g) and (h) of the Act and
Sec. 423.566(a), to any dispute made by a Medicare Prescription
Payment Plan participant about the amount of Part D cost sharing owed
by that participant for a covered Part D drug. We also stated that Part
D sponsors must apply their established Part D grievance procedures,
which Part D sponsors are required to have in place under section
1860D-4(f) of the Act and Sec. 423.562, to any dispute made by a
Medicare Prescription Payment Plan participant related to any aspect of
the Medicare Prescription Payment Plan. This includes election
requests, billing requirements, and termination-related issues other
than disputes related to the amount of Part D cost sharing owed by a
participant for a drug. We also clarified that a decision on the amount
of cost sharing for a drug is a coverage determination and directed
readers to Sec. 423.566(b)(5) and to the latest Parts C & D Enrollee
Grievances, Organization/Coverage Determinations, and Appeals Guidance
for requirements related to grievances, coverage determinations, and
redeterminations. We stipulated that Part D sponsors must use their
existing coverage determination, appeals, and grievance procedures for
the Medicare Prescription Payment Plan to ensure that Part D enrollees
have the ability to contest copay amounts and any adverse decisions
related to participation in the Medicare Prescription Payment Plan.
Applying existing procedures required under Part D also reduces the
need for Part D sponsors to develop new processes and allows Part D
enrollees to use
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procedures to which they are accustomed.
Consistent with the requirements established in the final part one
guidance, at Sec. 423.137(h), we propose to codify requirements for
Part D sponsors to apply their existing Part D coverage determination,
appeal, and grievance procedures to the Medicare Prescription Payment
Plan.
We are not scoring this provision in the Collection of Information
section of this rule because it codifies existing guidance, and because
the filing of an appeal is an information collection associated with an
administrative action pertaining to specific individuals or entities
and thus is exempt from Paperwork Reduction Act requirements under 5
CFR 1320.4(a)(2) and (c). We seek comment on this assumption.
(h) Pharmacy POS Notification Process
Under section 1860D-2(b)(2)(E)(v)(III)(dd) of the Act and discussed
in section (d) of this proposed rule, Part D sponsors must have a
mechanism to notify a pharmacy when a Part D enrollee incurs OOP costs
with respect to covered Part D drugs that make it likely the Part D
enrollee may benefit from participating in the program. Furthermore,
section 1860D-2(b)(2)(E)(v)(III)(ee) of the Act requires Part D
sponsors to ensure that a pharmacy, after receiving such a notification
from the Part D sponsor, informs the Part D enrollee that they are
likely to benefit from the Medicare Prescription Payment Plan. The
final part one and final part two guidance established standards for
2025 related to pharmacy POS notification processes.
In the final part two guidance, we established that all Part D
sponsors must use the standard codes developed by NCPDP for
communication with network pharmacies about enrollees' Medicare
Prescription Payment Plan status, as appropriate. This includes the
mechanism to notify the pharmacy that a Part D enrollee has been
identified as likely to benefit based on OOP costs at the POS.
As established in the final part two guidance, in pharmacy settings
in which there is direct contact with enrollees (for example, community
pharmacies where enrollees present in person to pick up prescriptions),
the Part D sponsor must ensure that a hard copy of the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' is provided to
enrollees identified as likely to benefit (or the person acting on
their behalf) at the time the prescription is picked up. This includes
pharmacies with a drive-through or curbside pick-up option. Pharmacies
should make available the CMS-developed Spanish-language version of the
notice, in lieu of the English-language version, to their patients upon
request. Identified enrollees who receive the notice from the pharmacy
and need the notice in another format or language are instructed to
call their Part D sponsor for assistance. The Part D sponsor should
ensure compliance with the language access and accessibility
requirements at Sec. 423.2267 in the delivery of the ``Medicare
Prescription Payment Plan Likely to Benefit Notice.'' CMS encourages
Part D sponsors to provide pharmacies with additional educational
material on the Medicare Prescription Payment Plan, such as the CMS-
developed fact sheet, which could also be distributed to Part D
enrollees along with the notice.
The final part two guidance established that the requirement to
provide the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' in no way obligates the pharmacy to provide additional
Medicare Prescription Payment Plan counseling or consultation to the
Part D enrollee. Pharmacies are encouraged, but not required, to
provide educational material related to the Medicare Prescription
Payment Plan at the time they provide an enrollee with the notice.
In the final part two guidance, CMS established that regardless of
the setting, if the pharmacy is in contact with a Part D enrollee
identified as likely to benefit and the enrollee declines to complete
the prescription purchase, the Part D sponsor must ensure that the
pharmacy provides the ``Medicare Prescription Payment Plan Likely to
Benefit Notice'' to the Part D enrollee. For example, if a Part D
enrollee visits a retail pharmacy to pick up their prescription but
then declines to complete the transaction because of the cost, the Part
D sponsor must still ensure that the pharmacy provides the standardized
``Medicare Prescription Payment Plan Likely to Benefit Notice'' to that
Part D enrollee.
In the final part two guidance, we also established that when a
Part D enrollee opts into the Medicare Prescription Payment Plan after
receiving the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' from the pharmacy, in addition to providing the notice of
election approval, as described in section (c) of this proposed rule,
the Part D sponsor is responsible for clearly communicating additional
necessary next steps to the Part D enrollee. Next steps may include,
but are not limited to, how to proceed with filling any outstanding
prescriptions.
In the final part one and final part two guidance, we established
that, in general, all Medicare Prescription Payment Plan requirements
are the same for every pharmacy type, including mail order, home
infusion, specialty, and long-term care pharmacies. However, CMS is
aware that some pharmacy types may not have direct contact with Part D
enrollees and/or may lack a practical means for providing the physical
standardized ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' directly to the Part D enrollee. Therefore, in the final part
one and final part two guidance, we established standards for unique
pharmacy scenarios and different pharmacy types.
In the final part two guidance, we noted that long-term care
pharmacies typically do not have a POS encounter between the pharmacy
and the enrollee (long-term care resident). In these cases, the
pharmacy may deliver medications that are kept in the custody of long-
term care facilities until time of administration. In addition, long-
term care pharmacies often use retrospective or post-consumption
billing (that is, billing after the drug is dispensed to the facility
for an enrollee). As such, when the POS notification is received by a
long-term care pharmacy, the Part D sponsor should not require that the
long-term care pharmacy provide the ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' prior to dispensing the medication.
Instead, the Part D sponsor should require the long-term care pharmacy
to provide the notice to the Part D enrollee (or their authorized
representative) at the time of its typical enrollee cost-sharing
billing process. Given our understanding of the variation in how long-
term care pharmacies dispense and bill covered Part D drugs, we are not
proposing specific timing requirements for provision of the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' via long-term care
pharmacies. We encourage Part D sponsors to assess the particular
circumstances of their network long-term care pharmacies when
establishing timing requirements for pharmacy distribution of the
notice.
The final part two guidance also described special approaches to
the POS notification requirements for Indian Health Service (IHS),
Tribe and Tribal Organization, and Urban Indian Organization (I/T/U)
pharmacies. I/T/U pharmacies provide no-cost prescription drugs to
eligible IHS enrollees. When IHS-eligible Part D enrollees fill a
prescription at an I/T/U pharmacy, their covered Part D prescription
drug cost sharing, as defined by their plan's benefit structure, is not
collected at the
[[Page 99370]]
POS. As such, if a high-cost prescription drug claim for a Part D
enrollee is submitted to a Part D sponsor from an I/T/U pharmacy, the
Part D sponsor is not required to return the pharmacy notification
indicating the enrollee is likely to benefit from the program. Part D
sponsors should also ensure that their customer service representatives
are aware of this situation regarding I/T/U pharmacies when receiving
inquiries from Part D enrollees regarding program election. In
discussing a Part D enrollee's prescription drug costs, customer
service representatives may need to review the primary pharmacy type
used by the Part D enrollee. Part D enrollees who solely use I/T/U
pharmacies, and thus have $0 in OOP costs for covered Part D drugs, may
not benefit from participation in the Medicare Prescription Payment
Plan.
In the final part two guidance, we established that for other
pharmacy types without in-person encounters (such as mail order
pharmacies), Part D sponsors must require the pharmacy to notify the
Part D enrollee via a telephone call or their preferred contact method.
This requirement should not, however, be interpreted as a requirement
to delay dispensing the medication. Pharmacies are encouraged to
utilize existing touchpoints with Part D enrollees, such as outreach to
review medication instructions or collect a method of payment, to
convey the content of the ``Medicare Prescription Payment Plan Likely
to Benefit Notice'' prior to processing payment for the prescription
that triggered the notice. As with retail pharmacies, CMS encourages
other pharmacy types to consider providing the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' via additional modes of
communication beyond the requirements in this section, such as through
a patient portal or secure email. CMS encourages Part D sponsors to
work with pharmacies to establish and maintain reasonable procedures
related to the timing and number of attempts for prompt notification of
identified Part D enrollees.
In addition to the notification mechanisms described in the final
part two guidance, we also stated that pharmacies may also choose to
develop additional strategies to provide the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' to enrollees identified as
likely to benefit.
In the final part two guidance, we established that, given the
statutory requirement for notification of enrollees likely to benefit
at the pharmacy point of sale, Part D sponsors must ensure that their
pharmacy network contracts include a provision requiring pharmacies to
provide this notification to Part D enrollees. This provision is
sufficient to meet the proposed requirements for Part D sponsors to
ensure that a pharmacy, after receiving such a notification from the
Part D sponsor, informs the Part D enrollee that they are likely to
benefit from the Medicare Prescription Payment Plan. Additional
tracking or documentation by the pharmacy or on behalf of the pharmacy
by the Part D sponsor that the notice has been delivered to the
identified enrollee is not required.
In the final part two guidance, CMS acknowledged that a small
portion of Part D enrollees will have supplemental coverage, such as
through an SPAP, charity, or other health insurance (OHI), that will
modify the final OOP amount the enrollee would otherwise owe at the
point of sale. The ``Medicare Prescription Payment Plan Likely to
Benefit Notice'' contains language directing enrollees with
supplemental coverage to seek advice related to their specific
situation prior to opting into the Medicare Prescription Payment Plan.
Part D sponsors should ensure that their customer service
representatives are aware of this possibility when receiving inquiries
from Part D enrollees regarding program election. When discussing a
Part D enrollee's prescription drug costs, customer service
representatives may need to review records for Information Reporting
(Nx) transactions, indicating supplemental coverage or OHI.
As specified by section 1860D-2(b)(2)(E)(iv) of the Act, the number
of months remaining in the plan year is an important component of the
maximum monthly cap calculation. As described in the final part one
guidance, the maximum monthly cap in the first month of program
participation is determined by calculating the annual OOP threshold
minus any Part D costs the Part D enrollee incurred during the year
before opting in, divided by the number of months remaining in the plan
year. Given that the pharmacy POS threshold is a static amount, this
may result in scenarios late in the plan year in which Part D enrollees
who receive the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' at the pharmacy based on their OOP costs, but whose costs are
below the maximum monthly cap, are then required to pay the full amount
as part of their first month's bill. For example, if a Part D enrollee
has not yet opted into the Medicare Prescription Payment Plan and fills
a new prescription with an OOP cost of $650 in October 2025, their
maximum monthly cap in the first month could be as high as $666.67
(assuming $0 in prior TrOOP accumulation). In this scenario, a Part D
enrollee could receive the POS notification based on their OOP costs
exceeding the threshold of $600 for 2025, but if they opted into the
Medicare Prescription Payment Plan, because their OOP costs are below
the maximum monthly cap, the Part D sponsor would bill them for the
entire $650 as part of their first month's bill. Part D sponsors should
ensure that customer service representatives are aware of this
possibility when receiving inquiries from Part D enrollees regarding
program election.
In this proposed rule, we propose to codify the requirements noted
previously that were established in the final part one and final part
two guidance for 2026 and subsequent years at Sec. 423.137(i).
Specifically, we propose to codify the requirement that the Part D
sponsor must use standard NCPDP codes for notifying the pharmacy that
an enrollee has been identified as likely to benefit at (i)(1). We
propose to codify point of sale requirements for the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' at paragraph
(i)(2). Finally, we propose to codify requirements for Part D sponsors
to include a provision in their pharmacy network contracts requiring
pharmacies to provide the likely to benefit notification to Part D
enrollees at (i)(3).
(i) Pharmacy Claims Processing
In accordance with section 1860D-2(b)(2)(E)(v)(III)(ff) of the Act,
Part D sponsors must ensure that enrollee participation in the Medicare
Prescription Payment Plan does not affect the amount paid to pharmacies
or the timing of such payments. In the final part one guidance, we
established that Medicare Prescription Payment Plan participants will
pay $0 at the POS instead of the OOP cost sharing they would normally
pay at the POS when filling a prescription. Consequently, Part D
sponsors must pay the pharmacy the enrollee's cost-sharing amount in
addition to the Part D sponsor's portion of the payment. The final part
one and final part two guidance established standards for 2025 related
to pharmacy claims processing. Additional details related to pharmacy
payment obligations are discussed in section (j) of this proposed rule.
To ensure a uniform, consistent claims adjudication process and to
leverage existing Part D processes to minimize operational burdens, the
final part one guidance established that Part D sponsors and pharmacies
must use a Bank Identification Number (BIN) and/
[[Page 99371]]
or Processor Control Number (PCN) electronic claims processing
methodology for applicable Medicare Prescription Payment Plan
transactions. CMS believes that this standardized approach to
processing claims under the Medicare Prescription Payment Plan
satisfies the statutory provisions of the Medicare Prescription Payment
Plan (such as enabling $0 OOP cost sharing at the POS for all covered
Part D drugs) while also having minimal effect on other existing Part D
processes (such as COB claims processing with supplemental payers, PDE
cost/payment field reporting, or TrOOP accumulation).
In addition to the agency's authorities with respect to the
Medicare Prescription Payment Plan under section 11202 of the IRA, CMS
has authority under section 1860D-12(b)(3)(D) of the Act to impose
additional contractual terms and conditions on Part D plan sponsors
that are necessary and appropriate. Consistent with our authority under
section 11202 of the IRA and under section 1860D-12(b)(3)(D) of the
Act, in this proposed rule, we propose to codify the requirement that
Part D sponsors use, and ensure that pharmacies use, the Medicare
Prescription Payment Plan claims processing methodology outlined
herein. Except for certain scenarios discussed in the final part two
guidance and in detail in this section, Part D sponsors must utilize,
and must ensure that pharmacies utilize, an additional BIN/PCN that is
unique to the Medicare Prescription Payment Plan to facilitate
electronic processing of supplemental COB transactions for program
participants. Part D sponsors must provide the unique Medicare
Prescription Payment Plan BIN/PCN and any other pertinent billing
information to the pharmacy on paid claim responses when the enrollee
is also a Medicare Prescription Payment Plan participant.
CMS regulations at 42 CFR 423.120(c)(4) require the Part D sponsor
to assign and exclusively use unique routing and beneficiary
identifiers for the Medicare Part D program. The intent of the
requirement is to ensure that: (1) pharmacies can routinely identify
situations in which they are billing a Part D claim, and (2) payers
secondary to Part D can properly coordinate benefits on Part D claims.
During the bidding process, plans are required to submit BIN/PCN
information; CMS periodically extracts and posts the information on the
CMS website to assist those involved in the processing of pharmacy
claims for beneficiaries enrolled in Part D. The posting of BIN/PCN
information would also be of assistance to pharmacies as part of
Medicare Prescription Payment Plan transaction processing as it
provides the information necessary for a pharmacy to route the claim to
the correct processor. We required in final part one guidance that Part
D sponsors assign a program-specific PCN that starts with ``MPPP.'' In
addition, Part D sponsors must report the new BIN/PCN to CMS.
The method established in the final part one guidance results in
two transactions being submitted by the pharmacy to the same Part D
sponsor (or their PBM), using two different BIN/PCN combinations. The
Part D sponsor's primary unique BIN/PCN (as required by 42 CFR
423.120(c)(4)) is used for the initial Part D claim adjudication; the
Part D sponsor then returns the appropriate OOP cost sharing amount in
the NCPDP Telecommunication Standard response pricing segment field
``Patient Pay Amount'' (505-F5). Then, a second Medicare Prescription
Payment Plan BIN/PCN is used to process only the final OOP participant
liability amount; this process accounts for any other payments made by
supplemental coverage to which the participant may be entitled that may
reduce the participant's OOP cost. The transaction processed through
the Medicare Prescription Payment Plan BIN/PCN must be submitted after
processing any applicable other payer transactions in order to capture
the final patient responsibility amount after all other payers have
paid. This allows the Part D sponsor to pay the pharmacy for the amount
the participant would otherwise have paid at the POS to obtain their
prescription. This process also allows the ``Patient Pay Amount'' to be
used by Part D sponsors for other downstream reporting requirements,
such as PDE records and explanation of benefits (EOB) reporting, which
reflect the actual participant liability amounts as incurred.
To clarify, Medicare Prescription Payment Plan payments are not
considered to be OHI, as the participant's Part D sponsor is the source
of both primary and Medicare Prescription Payment Plan payments to the
pharmacy. Information Reporting (Nx) transactions will not be generated
for Medicare Prescription Payment Plan COB transactions, as the Part D
plan is the entity processing both the primary and Medicare
Prescription Payment Plan claims and will already be aware of necessary
transaction data.
The process established in the final part one guidance also allows
Part D sponsors to continue to adhere to Medicare Secondary Payer (MSP)
laws and any other Federal and state laws establishing payers of last
resort (for example, AIDS Drug Assistance Programs (ADAPs)), as
discussed in the Medicare Prescription Drug Benefit Manual Chapter 14,
Section 30.3.13. As noted earlier in this section, transactions
submitted through the Medicare Prescription Payment Plan BIN/PCNs are
to be processed after all other payers, including SPAPs, ADAPs, or
charities. CMS is aware of concerns that the return of a $0 claim
response at the POS may inhibit pharmacies from offering suggestions
for their patients to explore other mechanisms to reduce OOP costs,
like charitable organizations. CMS recognizes the importance of
charitable organizations and other supplemental payers in reducing OOP
costs for eligible Part D enrollees; nothing in the final part one or
part two guidance prohibits pharmacies from continuing their current
practices with regard to recommending charitable support to patients.
The final part two guidance also noted that final patient pay
amount returned to the pharmacy by a supplemental payer for a covered
Part D drug may occasionally be higher than the original Part D patient
pay amount. In these cases, for the program participant's portion of
the claim (what they would have paid directly to the pharmacy), the
Part D sponsor may only include in the Medicare Prescription Payment
Plan the participant's original Part D cost sharing, as determined by
their plan-specific benefit structure.
The final part one guidance stated that Part D sponsors must ensure
that there is no impact to PDE cost/payment field reporting as a result
of this claims processing methodology. PDE submissions must reflect
participant and plan liability amounts as if the Medicare Prescription
Payment Plan did not apply. Additionally, this approach should have no
impact to prescriber or participant real-time benefit tools, meaning
participant liability amounts must be represented as if the Medicare
Prescription Payment Plan did not apply. If the individual has opted
into the program, Part D sponsors can consider providing patient costs
that reflect the program in their participant real-time benefit tool,
as long as the total expected cost-sharing is clearly communicated to
the individual. If the individual has not opted into the program, the
participant real-time benefit tool could be used to alert the
individual about the program (either generally or conditionally when
the participant real-time benefit tool returns a liability amount over
a particular dollar amount).
[[Page 99372]]
Except as proposed in paragraph Sec. 423.137(d)(6) of this
proposed rule, Part D sponsors are not required to include under this
program paper claims submitted to the Part D sponsor by a Medicare
Prescription Payment Plan participant. ``Paper claims'' refer to any
claims for which the participant requests retroactive reimbursement by
the Part D sponsor (whether the request is made via a paper form,
telephonically, or electronically), including requests for direct
member reimbursement for OON claims.
In the final part two guidance, we established requirements for the
readjudication of eligible prescription drug claims for new Medicare
Prescription Payment Plan participants. When a Part D enrollee receives
the ``Medicare Prescription Payment Plan Likely to Benefit Notice''
from the pharmacy, they may choose to take time to consider opting into
the program and leave the pharmacy without the prescription that
triggered the notification. As such, when the Part D enrollee returns
to the pharmacy to pick up their prescription after successfully opting
into the program, the prescription claim that triggered the
notification must be readjudicated to allow for appropriate processing
by the Part D sponsor and/or PBM. Should a Part D enrollee have other
unpaid claims at the same pharmacy for covered Part D drugs from prior
dates of service, in addition to the prescription that may have
triggered the likely to benefit notification, they may also request
that those claims be readjudicated, so as to be included in the
Medicare Prescription Payment Plan. CMS encourages Part D sponsors to
provide their enrollees with education and information on how to
proceed with readjudication of other unpaid claims for covered Part D
drugs.
For example, a Part D enrollee is prescribed a new medication with
an OOP cost that is above the POS notification threshold. The Part D
sponsor would notify the pharmacy that the enrollee is likely to
benefit from the Medicare Prescription Payment Plan. The pharmacy would
then provide the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' to the Part D enrollee. The enrollee decides to leave the
pharmacy without paying for their high-cost prescription, so they can
contact their plan and opt into the program. However, the pharmacy also
has two other covered Part D prescriptions filled for the Part D
enrollee from prior dates of service, for which the Part D enrollee
also decided to leave the pharmacy without picking up and paying. When
the Part D enrollee returns to the pharmacy after their election into
the Medicare Prescription Payment Plan has been effectuated, the Part D
sponsor must require the pharmacy to reverse and reprocess the high-
cost claim that triggered the likely to benefit notification. The
program participant would then pay $0 at the pharmacy for the high-cost
claim and pay their typical plan-defined cost sharing for the other
claims with prior dates of service. Alternatively, the Part D enrollee
could request that the pharmacy reverse and reprocess all three claims,
so the program participant pays $0 at the pharmacy for all three drugs.
In the case of same-day program effectuation (when the Part D claim
date of service is the same as the date of program effectuation), the
pharmacy is not required to reverse and resubmit the Part D claim,
provided that the pharmacy otherwise obtains the necessary Medicare
Prescription Payment Plan BIN/PCN for the program-specific transaction.
CMS noted that Part D sponsors are not required to provide that
pharmacies reverse and reprocess claims under the Medicare Prescription
Payment Plan that have already been paid for by the Part D enrollee. As
noted in the final part one guidance and proposed here at Sec.
423.137(d)(6), Part D sponsors must have processes in place to
reimburse enrollee cost sharing when an enrollee has met the conditions
for a retroactive election into the Medicare Prescription Payment Plan.
As noted in section (h) of this proposed rule, in the final part
one and final part two guidance, we established that, in general, all
Medicare Prescription Payment Plan requirements are the same for every
pharmacy type, including mail order, home infusion, specialty, and
long-term care pharmacies. However, CMS is aware that different
pharmacy types may have slightly different approaches to processing
covered Part D claims for Medicare Prescription Payment Plan
participants. Therefore, in the final part one and final part two
guidance, we established standards for unique pharmacy scenarios and
different pharmacy types.
The final part two guidance described the processing of covered
Part D claims for Medicare Prescription Payment Plan participants in
special pharmacy settings. As discussed in that guidance, CMS is aware
that there are multiple types of payment arrangements between long-term
care pharmacies and long-term care facilities and/or Part D enrollees.
In some situations, long-term care pharmacies do not collect Part D
cost sharing from the enrollee but instead bill the long-term care
facility for the final patient OOP responsibility. When such an
arrangement is in place between a long-term care pharmacy and a long-
term care facility, and an enrollee in a long-term care facility is
participating in the Medicare Prescription Payment Plan, billing the
participant's Part D plan's Medicare Prescription Payment Plan BIN/PCN
for the participant's OOP costs (when the pharmacy would not have
otherwise directly billed the enrollee) may result in additional
financial burden on that participant. Given our understanding of the
variation in how long-term care pharmacies dispense and bill covered
Part D drugs, we are not proposing specific requirements for Part D
sponsors related to the use of the Medicare Prescription Payment Plan
BIN/PCN with long-term care pharmacies. CMS encourages Part D sponsors
to take the participant's particular circumstances into account when
considering Medicare Prescription Payment Plan billing practices and to
work with the participant, their authorized representative, and the
long-term care pharmacy to understand the best billing approach for the
participant.
Additionally, as noted in section (h) of this proposed rule, I/T/U
pharmacies provide no-cost prescription drugs to eligible IHS
enrollees. When IHS-eligible Part D enrollees fill a prescription at an
I/T/U pharmacy, their covered Part D prescription drug cost sharing, as
defined by their plan's benefit structure, is not collected at the POS.
Given that, if an IHS-eligible Part D enrollee is also participating in
the Medicare Prescription Payment Plan, the Part D plan sponsor must
ensure that the I/T/U pharmacy does not bill the Part D plan's Medicare
Prescription Payment Plan BIN/PCN. Instead, the Part D plan sponsor
must ensure that the I/T/U pharmacy processes the claim as if the IHS-
eligible enrollee were not participating in the Medicare Prescription
Payment Plan. If a Part D sponsor receives a claim from an I/T/U
pharmacy that was submitted to the Medicare Prescription Payment Plan-
specific BIN/PCN, the Part D sponsor must reject the claim. To help
prevent this situation from occurring, Part D sponsors must also put in
place processes to prevent Medicare Prescription Payment Plan BIN/PCNs
from being returned on paid claim responses to I/T/U pharmacies. These
requirements apply only with respect to I/T/U pharmacies that dispense
prescriptions at no cost to the IHS enrollee. The Part D sponsor must
[[Page 99373]]
ensure other network pharmacies providing services to Part D enrollees
process claims in accordance with the Medicare Prescription Payment
Plan requirements, as established in the final part one guidance and
final part two guidance.
At Sec. 423.137(j)(7), we propose requirements related to
transparency around OOP costs for the Medicare Prescription Payment
Plan at the pharmacy POS, a topic CMS did not address through program
instruction for CY 2025. Once an enrollee is a participant in the
Medicare Prescription Payment Plan, they will pay $0 at the pharmacy
POS. Part D sponsors then correctly calculate the monthly caps based on
the statutory formulas, determine the amount to be billed, and send
monthly bills to program participants. CMS has heard concerns about the
potential lack of participant visibility into their OOP costs for the
Medicare Prescription Payment Plan at the POS, given the $0 final claim
response from the Part D sponsor to the pharmacy. As noted in the final
part two guidance, CMS strongly encourages Part D sponsors to educate
program participants on the options for assessing OOP costs for the
Medicare Prescription Payment Plan prior to the pharmacy POS (such as
utilizing interactive prescription drug cost tools available on the
Part D sponsor's website or calling the plan's customer service line).
However, to provide additional support for OOP cost transparency for
Medicare Prescription Payment Plan participants, we are proposing
requirements for Part D sponsors to ensure that pharmacies can easily
access information on a Part D enrollee's OOP costs for the Medicare
Prescription Payment Plan for prescriptions processed under the program
at the POS. These costs should be provided in the paid claim billing
response on the Medicare Prescription Payment Plan COB transaction. In
addition, Part D sponsors must ensure that pharmacies are prepared to
provide this information to a participant at the POS. We seek comment
on the proposal, including suggested processes for how Part D sponsors
can provide this information to pharmacies in a manner that conforms
with existing standards.
In this proposed rule, we propose to codify the requirements
established in the final part one and final part two guidance for 2026
and subsequent years and noted previously at Sec. 423.137(j). We
propose to codify that Part D sponsors and pharmacies must use a BIN/
PCN electronic claims processing methodology for Medicare Prescription
Payment Plan transactions at paragraph (j)(1). We propose to codify the
requirement for handling of higher final patient pay amounts from
supplemental payers at paragraph (j)(2). We propose to codify that the
claims processing methodology have no impact on PDE reporting at
paragraph (j)(3). We propose to codify that program participation and
the associated claims processing methodology have no impact on the
cost-sharing information displayed in real-time benefit tools at
paragraph (j)(4). We propose to establish standards for exclusion of
retroactive or ``paper'' claims at paragraph (j)(5). We propose to
codify requirements for the readjudication of certain covered Part D
claims for program participants at (j)(6). Finally, we propose to
codify new requirements for Part D sponsors to enhance OOP cost
transparency at the POS at (j)(7).
(j) Pharmacy Payment Obligations
Consistent with 1860D-2(b)(2)(E)(v)(III)(ff) of the Act, Part D
sponsors must pay the pharmacy the enrollee's cost-sharing amount in
addition to the Part D sponsor's portion of the payment. The final part
one and final part two guidance established standards for 2025 related
to pharmacy payment obligations.
Consistent with section 1860D-12(b)(4) of the Act and 42 CFR
423.520, and as stated in the final part one guidance, Part D sponsors
must reimburse a network pharmacy the total of a participant's OOP
costs for the Medicare Prescription Payment Plan and the Part D sponsor
portion of the payment for a covered Part D drug no later than 14
calendar days after the date on which the claim is received for an
electronic claim or no later than 30 calendar days after the date on
which the claim is received for any other claim. The timing of payment
of the total of a participant's OOP costs for the Medicare Prescription
Payment Plan and the Part D sponsor portion of the payment for long-
term care and home infusion pharmacies should follow current practices
for payment of the Part D sponsor portion to be consistent with this
requirement.
Consistent with section 1860D-11(i) of the Act, CMS may not
interfere with the negotiations between Part D sponsors and pharmacies
and generally may not institute a price structure for the reimbursement
of covered Part D drugs. Further, as stated in the final part one
guidance, CMS does not have the statutory authority to directly
reimburse Part D sponsors' contracted pharmacies for costs associated
with administering the program. That said, CMS recognizes the important
role that pharmacies will play in the implementation of this program
and strongly encourages Part D sponsors to ensure that pharmacies
receive adequate reimbursement for services provided to Part D
enrollees related to participation in the Medicare Prescription Payment
Plan.
As established in the final part one and final part two guidance,
any additional transaction fees or other costs pharmacies incur from
processing claims under the Medicare Prescription Payment Plan or
otherwise related to the program are considered allowable
pharmacy costs associated with the dispensing of a covered Part D drug
that may be paid through applicable dispensing fees. Consistent with 42
CFR 423.100 and sections 20.6 and 20.7 of Chapter 5 of the Medicare
Prescription Drug Benefit Manual, a drug's negotiated price must
include any dispensing fees, and uniform negotiated prices must be
available to plan enrollees for a particular covered Part D drug when
purchased from the same pharmacy. Should Part D sponsors and pharmacies
come to contractual arrangements that reimburse pharmacies for program
operations through a non-dispensing fee mechanism (for example,
remuneration for administrative services), these arrangements must be
reported appropriately via the bid pricing tool and direct and indirect
remuneration (DIR) reporting, as necessary.
As established in the final part one guidance and section (f) of
this proposed rule, it is not permissible for Part D sponsors to charge
program participants fees related to the Medicare Prescription Payment
Plan. Additionally, section 1860D-2(b)(2)(E)(v)(III)(ff) of the Act
requires Part D sponsors to ensure that enrollee participation in the
Medicare Prescription Payment Plan does not affect the amount paid to
pharmacies or the timing of such payments. As a result, Part D sponsors
cannot impose any fees or costs related to program implementation on
pharmacies, as such fees or costs would affect the amount paid to
pharmacies in violation of the statute. As established in the final
part one guidance, participation in the Medicare Prescription Payment
Plan is an arrangement between the Part D sponsor and the Part D
enrollee; pharmacies cannot be held responsible for any unsettled
balances of a participant or for collecting unpaid balances from the
participant on the Part D sponsor's behalf.
In this proposed rule, we propose to codify the requirements
established in the final part one and final part two guidance for 2026
and subsequent years as noted previously at Sec. 423.137(k).
[[Page 99374]]
Specifically, we propose to codify the requirement that the Medicare
Prescription Payment Plan does not affect the amount or timing of
payment to pharmacies at paragraph (k)(1), including that Part D
sponsors cannot impose any fees or costs related to program
implementation on pharmacies and that pharmacies cannot be held
responsible for any unsettled balances of a participant or for
collecting unpaid balances from the participant on the Part D sponsor's
behalf.
(k) Monitoring, Compliance and Data Submission Requirements
In the final part one guidance, we clarified that existing
requirements in 42 CFR 423.514(a) governing data collection for Part D
sponsors apply to the Medicare Prescription Payment Plan. Accordingly,
in the final part one guidance, we stated that Part D sponsors must
report information related to the Medicare Prescription Payment Plan on
PDE records and through new reporting requirements at the beneficiary
level and contract-PBP levels. Part D sponsors must report data at the
beneficiary-level on election status in the program through the MARx
System and contract-level data about the program through HPMS. These
data elements were formally issued for public comment in the Federal
Register through the Office of Management and Budget (OMB) Information
Collection Request (ICR) process. We are not scoring this provision in
the Collection of Information section of this rule since we believe all
information impacts of this provision have already been accounted for
under OMB control numbers 0938-1468, 0938-0982, and 0938-0992.
In the final part two guidance, we stated that CMS will use this
data, along with data about plan grievances and beneficiary complaints
entered in the Medicare Complaints Tracking Module (CTM), to assess
compliance with all Medicare Prescription Payment Plan requirements and
ensure program integrity. We stated our expectation that Part D
sponsors incorporate the Medicare Prescription Payment Plan into their
compliance programs in accordance with 42 CFR 423.504(b)(4)(vi) to
ensure they are meeting program requirements. We also noted that, as
stated in 42 CFR 422.504(e) and 423.505(e), CMS and/or its contractors
may conduct specific audits of Part D sponsors' implementation of the
Medicare Prescription Payment Plan and may initiate audit activity that
requires additional data collection or site visits.
(l) General Part D Sponsor Outreach and Education Requirements
Under section 1860D-2(b)(2)(E)(v)(III)(bb) of the Act, Part D
sponsors must notify prospective Part D enrollees prior to the plan
year through promotional materials of the option to participate in the
Medicare Prescription Payment Plan. Additionally, under section 1860D-
2(b)(2)(E)(v)(III)(cc) of the Act, Part D sponsors must also provide
information on such option in educational materials to Part D
enrollees.
To ensure all prospective and current Part D enrollees are aware of
the program, we propose to codify requirements that are consistent with
those included in the final part two guidance for Part D sponsors to
provide general education on the program via a mailing and through
their websites for 2026 and subsequent years at Sec. Sec.
423.137(m)(1) and 423.137(m)(2), respectively. We propose requiring
Part D sponsors to send a program election request form and additional
educational information on the program either in the membership ID card
mailing, described at Sec. 423.2267(e)(32), or in a separate mailing
sent out within the same timeframe. Under Sec. 423.2267(e)(32),
membership ID cards must be provided to new enrollees within 10
calendar days from receipt of CMS confirmation of enrollment or by the
last day of the month prior to the plan effective date, whichever is
later. Part D sponsors may send the Medicare Prescription Payment Plan
mailing described at Sec. 423.137(m)(1) to only new plan enrollees who
typically receive the membership ID card mailing or to all of their
Part D enrollees. Further, for 2026 and subsequent years, we propose to
codify requirements at Sec. 423.137(m)(2) for plans to include certain
information, as described in more detail later in this section, on
their publicly available websites, described at Sec. 423.128(d)(2). As
we stated in the final part two guidance, Part D sponsors are
encouraged to use the CMS-developed educational fact sheet to satisfy
requirements to provide supplemental information on the program.
In the final part two guidance, we explained that CMS has updated
existing Part D resources that are required to be furnished to Part D
enrollees under Sec. 423.2267(e) to include information about the
program. These include the Annual Notice of Change (ANOC, described at
Sec. 423.2267(e)(3)), the Evidence of Coverage (EOC, described at
Sec. 423.2267(e)(1)), and the Explanation of Benefits (EOB, described
at Sec. 423.128(e)(7)). Each has been updated to include program
information through the OMB ICR process (for the EOB) or through the
general annual issuance of Part D model materials (for the ANOC and
EOC). In addition to meeting these requirements, we propose to codify
at Sec. 423.137(m)(2) for 2026 and subsequent years the following
requirements for a Part D sponsor to include on its website:
An election request mechanism, as described at Sec.
423.137(d)(2).
An overview of the Medicare Prescription Payment Plan.
Examples of program calculations and explanations.
A description of Part D enrollees who may be likely to
benefit.
The financial implications of program participation.
The implications of missing monthly payments.
Instructions for opting into and out of the program.
A description of the standards for retroactive election
when an enrollee believes that a delay in filling a prescription due to
the 24-hour effectuation timeframe may seriously jeopardize their life,
health, or ability to regain maximum function.
A description of the dispute and grievance procedure, as
required under Sec. 423.137(h).
Contact information for Part D enrollees to obtain further
information.
General information about the LIS program, including how
LIS enrollment for eligible individuals is likely to be more
advantageous than participation in the Medicare Prescription Payment
Plan.
We also propose to amend Sec. 423.2265(b) to add paragraph (b)(16)
to include information on the Medicare Prescription Payment Plan as
required content for Part D sponsor websites.
Additionally, as described in the final part two guidance, Part D
sponsors may also include information on the Medicare Prescription
Payment Plan in their marketing materials. In developing their
materials, Part D sponsors must ensure that the materials accurately
convey program information and are compliant with existing Part D
requirements specified at 42 CFR part 423 subpart V. Part D sponsors
should also refer to the MCMG, which provides guidance and examples
regarding what constitutes a marketing material, the rules and
processes for sponsor submission of those marketing materials using
HPMS, and use of marketing materials.
CMS is aware that health care providers and pharmacists play a key
role in cost-of-care conversations with their patients that can include
[[Page 99375]]
discussions about potential prescription drug costs. As noted in the
final part two guidance, CMS encourages Part D sponsors to include
information about the Medicare Prescription Payment Plan in their
communications with contracted providers and network pharmacies. More
specifically for contracted providers, CMS encourages Part D sponsors
to target these communications to subgroups of providers based on
provider specialty and likelihood of prescribing high cost covered Part
D drugs.
With regard to network pharmacies, CMS encourages Part D sponsors
to provide pharmacies with education and resources related to the
Medicare Prescription Payment Plan. While some pharmacies, such as
specialty pharmacies, may be more likely to dispense high-cost drugs
that trigger the POS notification, all pharmacy types would benefit
from program resources and a thorough understanding of how the Medicare
Prescription Payment Plan works and how it can benefit participants.
The CMS-developed fact sheet may serve as a useful tool for Part D
sponsors to communicate information on the Medicare Prescription
Payment Plan with both contracted providers and pharmacies.
We are not scoring any aspects of this provision related to the
inclusion of Medicare Prescription Payment Plan information in the
ANOC, EOC, or EOB in the Collection of Information section of this rule
since we believe all information impacts of those provisions have
already been accounted for under OMB control numbers 0938-1051 and
0938-1228. We are also not scoring the requirement to provide the
election request form, as we believe the information impact of that
provision has already been accounted for under OMB control number 0938-
1475.
(m) Severability
The Medicare Prescription Payment Plan provisions proposed herein
are separate and severable from one another. If any of these
provisions, once finalized, 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 is our intention that such provision
shall be severable from this rule and not affect the remainder thereof,
or the application of such provision to other persons not similarly
situated or to other, dissimilar circumstances.
III. Strengthening Current Medicare Advantage, Medicare Prescription
Drug Benefit, and Medicaid Program Policies
A. Part D Coverage of Anti-Obesity Medications (AOMs) (Sec. 423.100)
and Application to the Medicaid Program
1. Background
The statutory definition of a covered Part D drug at section 1860D-
2(e)(2) of the Social Security Act (the Act) excludes certain drugs and
uses--specifically, those that may be excluded by Medicaid under
section 1927(d)(2) of the Act. This includes ``[a]gents when used for
anorexia, weight loss, or weight gain.'' Since the drugs, classes of
drugs, and medical uses listed in section 1927(d)(2) of the Act ``may
be excluded from coverage'' (emphasis added) under Medicaid, state
Medicaid programs have discretion over whether to provide such
coverage, whereas Medicare does not. Since the beginning of the Part D
program in 2006, CMS has interpreted the statutory exclusion of
``[a]gents when used for . . . weight loss . . . '' at section
1927(d)(2)(A) of the Act to mean that a drug when used for weight loss,
even when not used for cosmetic purposes, is excluded from the
definition of covered Part D drug.\21\ All drugs used for weight loss
have been excluded historically from the definition of covered Part D
drug and considered to be an optional benefit under the Medicaid
program, at the discretion of the state Medicaid program, regardless of
their use to treat the disease of obesity. Drugs used for weight loss
or chronic weight management can be covered by Part D plans only as a
supplemental benefit.
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\21\ 73 FR 20489-20490 in ``Medicare Program; Policy and
Technical Changes to the Medicare Prescription Drug Benefit''
published April 15, 2008 (73 FR 20486). However, CMS's longstanding
interpretation of the phrase ``[a]gents when used for . . . weight
gain . . . '' (emphasis added) in the same section of the Act has
not included drugs used to treat acquired immunodeficiency syndrome
(AIDS) wasting and cachexia (73 FR 20490).
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Multiple medical and scientific organizations consider obesity to
be a chronic disease.22 23 24 25 In its 2013 resolution to
recognize obesity as a disease, the American Medical Association (AMA)
noted that although obesity is characterized by increased adiposity
(body fat), obesity is a hormonal disease state with impaired
functioning of multiple metabolic processes.\26\ Similarly, the
American Association of Clinical Endocrinologists and American College
of Endocrinology (AACE/ACE) recognizes obesity as a chronic disease
state with adiposity-based complications and pathophysiologic processes
resulting from the dysregulated secretion of inflammatory and hormonal
factors from fat cells.\27\ Obesity increases the risk of, or
exacerbates, hypertension, dyslipidemia, type 2 diabetes,
cardiovascular disease, obstructive sleep apnea, nonalcoholic
steatohepatitis (NASH)/metabolic dysfunction-associated steatohepatitis
(MASH), and some cancers, among other conditions.\28\ Obesity also is
associated with increased risk of all-cause mortality and death due to
cardiovascular disease.\29\
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\22\ Recognition of Obesity as a Disease H-440.842. Accessed
June 28, 2024 from https://policysearch.ama-assn.org/policyfinder/detail/obesity?uri=%2FAMADoc%2FHOD.xml-0-3858.xml.
\23\ CDC. Adult Obesity Facts. May 14, 2024. Accessed June 28,
2024 from https://www.cdc.gov/obesity/php/data-research/adult-obesity-facts.html.
\24\ Mechanick J.I., Garber A.J., Handelsman Y, Garvey W.T.
American Association of Clinical Endocrinologists' position
statement on obesity and obesity medicine. Endocr Pract. 2012 Sep-
Oct;18(5):642-8. doi: 10.4158/EP12160.PS.
\25\ World Health Organization. Obesity and Overweight. March 1,
2024. Accessed August 21, 2024 from https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight.
\26\ American Medical Association House of Delegates. Resolution
420 (A-13). Recognition of Obesity as a Disease. May 15, 2013.
Available from: https://media.npr.org/documents2013/jun/ama-resolution-obesity.pdf.
\27\ Mechanick J.I., Hurley D.L., Garvey W.T. Adiposity-Based
Chronic Disease As a New Diagnostic Term: The American Association
of Clinical Endocrinologists and American College Of Endocrinology
Position Statement. Endocr Pract. 2017 Mar;23(3):372-378. doi:
10.4158/EP161688.PS.
\28\ American Association of Clinical Endocrinologists and
American College of Endocrinology Comprehensive Clinical Practice
Guidelines for Medical Care of Patients with Obesity, Endocrine
Practice, Volume 22, Supplement 3, 2016, Pages 1-203, https://doi.org/10.4158/EP161365.GL.
\29\ Jensen M.D., Ryan D.H., Apovian C.M., et al. 2013 AHA/ACC/
TOS guideline for the management of overweight and obesity in
adults: a report of the American College of Cardiology/American
Heart Association Task Force on Practice Guidelines and The Obesity
Society [published correction appears in Circulation. 2014 Jun
24;129(25 Suppl 2):S139-40]. Circulation. 2014;129(25 Suppl 2):S102-
S138. doi:10.1161/01.cir.0000437739.71477.ee.
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The prevalence of obesity in both the United States (U.S.)
population, and in the Medicare population more specifically, has
increased since the beginning of the Part D program. According to the
Centers for Disease Control and Prevention (CDC), the prevalence of
obesity (defined by CDC as body mass index [BMI] of 30 kg/m\2\ or
greater) in the U.S. population increased from 30.5 percent in 1999 to
2000 to 41.9 percent from 2017 to March 2020.\30\ The prevalence of
obesity from 2017 to March 2020 was 49.9 percent of non-Hispanic Black
adults, 45.6 percent
[[Page 99376]]
of Hispanic adults, 41.4 percent of non-Hispanic white adults, and 16.1
percent of non-Hispanic Asian adults.\31\ With respect to the Medicare
population, CMS data indicate that approximately 22 percent of all
Medicare beneficiaries had a diagnosis of obesity in 2022 \32\ compared
to 8.7 percent in 2012.\33\ As of 2020, the proportion of Medicare fee-
for-service beneficiaries with obesity was 24 percent of the Black/
African American population, 19 percent of the White population, 18
percent of the Hispanic population, 17 percent of the American Indian/
Alaska Native population, and 7 percent of the Asian/Pacific Islander
population.\34\ However, obesity prevalence based on Medicare claims
data likely underestimates actual obesity prevalence in the Medicare
population since data are dependent on the degree to which obesity was
recorded as a diagnosis code on medical claims. This assumption is
supported by the fact that available National Health and Nutrition
Examination Survey (NHANES) data from 2017 to March 2020 indicate that
the prevalence of obesity in the U.S. population age 60 and older was
41.5 percent, which parallels the trend in the general U.S. population
described in the CDC statistics and is much higher than the obesity
prevalence calculated based on Medicare claims data.\35\
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\30\ CDC. Adult Obesity Facts. May 14, 2024. Available from
https://www.cdc.gov/obesity/adult-obesity-facts/index.html.
\31\ Stierman, B., et al. National Health and Nutrition
Examination Survey 2017-March 2020 Prepandemic Data Files--
Development of Files and Prevalence Estimates for Selected Health
Outcomes. 2021. Available from https://stacks.cdc.gov/view/cdc/106273. Note that race and ethnicity categories reflect the 1997
Standards for the Classification of Federal Data on Race and
Ethnicity (62 FR 58782) which have since been updated in 2024 (89 FR
22182).
\32\ Internal analysis of 2022 Chronic Conditions Data.
\33\ Chronic Conditions Data Warehouse. Other Chronic or
Disabling Conditions Trends, 2012-2021. April 2023. Available from:
https://www2.ccwdata.org/web/guest/medicare-charts/medicare-other-chronic-and-disabling-condtions/#b2bothertrend. See also: https://www2.ccwdata.org/documents/10280/19099072/b2b-other-trend.jpg.
\34\ Obesity Disparities in Medicare Fee-For-Service
Beneficiaries Data Snapshot. January 2022. Available from: https://www.cms.gov/files/document/omh-datasnapshot-obesity.pdf.
\35\ Stierman, B., et al. National Health and Nutrition
Examination Survey 2017-March 2020 Prepandemic Data Files--
Development of Files and Prevalence Estimates for Selected Health
Outcomes. 2021. Available from https://stacks.cdc.gov/view/cdc/106273.
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Data on obesity prevalence across the entire Medicaid population
are limited. For example, available state-level data indicate that 43.7
percent of adult Medicaid enrollees in Rhode Island had obesity in 2017
to 2018, which was similar to the rate of obesity in the U.S. adult
population at the same time (42.4 percent), but higher than the
prevalence of obesity among adults in the state with commercial
insurance (36.0 percent).36 37 The prevalence of obesity
varies by state; \38\ therefore, the prevalence of obesity among each
state's Medicaid enrollees may be proportional.
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\36\ https://www.niddk.nih.gov/health-information/health-statistics/oversight-obesity.
\37\ Mylona E.K., Benitez G., Shehadeh F., Fleury E., Mylonakis
S.C., Kalligeros M., Mylonakis E. The association of obesity with
health insurance coverage and demongraphic characteristics: a
statewide cross-sectional study. Medicince (Baltimore). 2020 Jul
2;99(27):e21016. doi: 10.1097/MD.0000000000021016.
\38\ https://www.cdc.gov/obesity/php/data-research/adult-obesity-prevalence-maps.html#cdc_data_surveillance_section_4-across-states-and-territories.
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Given the prevalence and the impact of obesity in the U.S., the
Biden-Harris Administration released the National Strategy on Hunger,
Nutrition, and Health focused on ending hunger and reducing diet-
related diseases such as obesity.\39\ One of the Strategy's pillars is
integrating nutrition and health, which recognizes the opportunities
within Medicare and Medicaid to support beneficiaries' access to
nutritious foods, obesity counseling, and other nutrition-related
services. Reinterpreting the statute to provide for coverage for AOMs
for individuals who have obesity would build on that National Strategy
by offering another tool that can support Medicare and Medicaid
beneficiaries in addressing obesity and living healthier lives.
Further, CMS believes that excluding AOMs from Part D coverage has
created a scenario where Medicare Part D enrollees with obesity have
been unable to access drug therapy to treat what is recognized as a
chronic disease, potentially exacerbating health disparities in groups
disproportionately affected by obesity.
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\39\ White-House-National-Strategy-on-Hunger-Nutrition-and-
Health-FINAL.pdf.
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Available AOMs in the glucagon-like peptide-1 (GLP-1) and glucose-
dependent insulinotropic polypeptide (GIP)/GLP-1 receptor agonist
classes contain the same active ingredients initially approved by the
U.S. Food and Drug Administration (FDA) to improve glycemic control in
patients with type 2 diabetes, and later approved to reduce the risk of
major adverse cardiovascular events in adults with type 2 diabetes
mellitus and established cardiovascular disease. One AOM in the GLP-1
receptor agonist class has received FDA approval for the reduction of
the risk of major adverse cardiovascular events in non-diabetic adults
with established cardiovascular disease and either obesity or
overweight.\40\ The scientific evidence on AOMs continues to evolve--
novel AOMs are in development or new indications for existing AOMs may
be approved in the future. A medically accepted indication (MAI), as
defined in section 1860D-2(e)(4) of the Act, refers, in part, to the
definition of MAI in section 1927(k)(6) of the Act. CMS issued guidance
on March 20, 2024 via a Health Plan Management System (HPMS) email
clarifying that AOMs that receive FDA approval for an additional
indication other than chronic weight management can be considered a
Part D drug for that specific use since the use is an MAI that is not a
use that is excluded from the definition of a Part D drug.\41\
Therefore, under current policy, AOMs are coverable under Part D for
individuals with obesity or overweight only if the drug is being
prescribed for another condition (other than weight loss or chronic
weight management) for which the drug has an FDA-approved indication or
its use is supported by CMS-approved compendia.\42\ Currently, this
means that AOMs (or drugs with the same active ingredients) are
coverable under Part D for individuals with obesity or overweight for
the FDA-approved uses of glycemic control in patients with type 2
diabetes, reduced risk of major adverse cardiovascular events in adults
with type 2 diabetes mellitus and established cardiovascular disease,
reduced risk of major adverse cardiovascular events in non-diabetic
adults with established cardiovascular disease. Should our proposed
reinterpretation be finalized, Part D enrollees with obesity could
receive coverage for AOMs even in cases where the AOM is prescribed for
treatment of obesity, and not prescribed for another condition that is
an FDA-approved indication or that is supported by CMS-approved
compendia.
---------------------------------------------------------------------------
\40\ Table: GLP-1 and GIP/GLP-1 receptor agonists for chronic
weight management. Med Lett Drugs Ther. 2024 Aug 5;66(1708):e1-e2.
doi: 10.58347/tml.2024.1708d.
\41\ HPMS email. Part D Coverage of Anti-Obesity Medications
with Medically Accepted Indications. March 20, 2024. Available from:
https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-march-18-22.
\42\ CMS-approved compendia are described in section
1927(g)(1)(B)(i) of the Act. The recognized compendia are American
Hospital Formulary Service Drug Information and DRUGDEX[supreg]
Information System. See section 10.6 in chapter 6 of the
Prescription Drug Benefit Manual. Available from https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf.
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While we refer to AOMs generally throughout the discussion of this
proposed reinterpretation and have referred to specific classes of
AOMs, this proposal is not limited to particular drugs or drug classes.
Currently
[[Page 99377]]
available AOMs achieve therapeutic action through a variety of
mechanisms including slowed gastric emptying, inhibiting dietary fat
absorption, and targeting receptor pathways in the brain that are
involved in hunger, cravings, and feelings of fullness. We also
acknowledge that ``AOM'' is a term used pervasively throughout the
medical literature but is not a term used by the FDA in reference to
drug development. For purposes of this proposal, we use the term
``AOM'' to refer to products (drugs and biologicals) for the indication
of weight management that are intended to be used for medical weight
loss, as described in FDA draft guidance \43\, consistent with clinical
practice guidelines.\44\ We also acknowledge that AOMs, when used for
medical weight loss, are generally indicated to reduce excess body
weight and maintain weight reduction long-term, and not overtly for
``treatment of obesity.''
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\43\ FDA. Draft Guidance for Industry Developing Products for
Weight Management. February 2007. Available from https://www.fda.gov/media/71252/download.
\44\ American Association of Clinical Endocrinologists and
American College of Endocrinology Comprehensive Clinical Practice
Guidelines for Medical Care of Patients with Obesity, Endocrine
Practice, Volume 22, Supplement 3, 2016, Pages 1-203, https://doi.org/10.4158/EP161365.GL.
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2. Proposed Reinterpretation
Given the changes in how the medical community has come to regard
obesity as a disease since the start of the Part D program, CMS
believes that its longstanding interpretation of the reference in
section 1927(d)(2) of the Act to ``[a]gents when used for . . . weight
loss'' as including AOMs when used for weight loss or chronic weight
management regardless of whether the AOMs were used to treat obesity
reflects an outdated medical understanding, and that it would be more
consistent with current medical views to propose to reinterpret the
phrase ``[a]gents when used for . . . weight loss'' to exclude AOMs
when used for the treatment of obesity. As a result of this proposed
reinterpretation, AOMs-- when used for weight loss or chronic weight
management for the treatment of obesity--would no longer be excluded
from Part D coverage based on section 1860D-2(e)(2) of the Act, which
prohibits Part D coverage of ``drugs or classes of drugs. . .which may
be excluded from coverage or otherwise restricted under section
1927(d)(2).'' In addition, CMS would no longer consider AOMs when used
for weight loss or chronic weight management for the treatment of
obesity to be excluded from the definition of Part D drug at Sec.
423.100, which at paragraph (2)(ii) excludes drugs that may be excluded
from Medicaid coverage under section 1927(d)(2). Our proposal is not
contingent on the underlying etiology of obesity (for example, due to
unspecified causes or specified causes such as drug-induced obesity or
obesity due to specific genetic variants or syndromes) and would
encompass any drugs that are indicated for weight loss or chronic
weight management for the treatment of obesity. In table 2., we provide
examples to illustrate the effect of our proposal on AOM coverage in
Medicare Part D.
This proposed reinterpretation would align with our longstanding
policy interpreting the phrase ``[a]gents when used for. . .weight
gain'' in section 1927(d)(2)(A) to not include drugs used to treat
acquired immunodeficiency syndrome (AIDS) wasting and cachexia (73 FR
20490).\45\ CMS believes that its longstanding interpretation of the
phrase ``[a]gents when used for . . . weight gain'' in section
1927(d)(2)(A) is correct, and by adjusting its interpretation of
``[a]gents when used for . . . weight loss,'' we would be bringing the
interpretation of these two phrases into alignment.
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\45\ Since the inception of the Part D program, CMS has aligned
Part D with the Medicaid policy that prescription drug products
being used to treat AIDS wasting and cachexia are not considered
agents used for weight gain, and therefore such products are not
excluded under in section 1927(d)(2)(A) of the Act. The Medicaid
policy was effective April 5, 1999. See Medicaid Drug Rebate Program
Release #88. March 5, 1999. Available from https://www.medicaid.gov/medicaid-chip-program-information/by-topics/prescription-drugs/downloads/rx-releases/state-releases/state-rel-088.pdf.
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We are not proposing to reinterpret the statutory exclusion of
``[a]gents when used for . . . weight loss'' in section 1927(d)(2) of
the Act to permit Part D coverage of AOMs when used for weight loss or
chronic weight management in individuals with overweight, even if such
individuals have weight-related comorbid conditions. We are not
proposing such a change in interpretation because, unlike obesity,
overweight is not recognized as a disease. The FDA-approved indications
for most AOMs used for weight loss or chronic weight management specify
that individuals with overweight must also have weight-related
conditions, but there is no such requirement for the presence of
comorbid conditions in individuals with obesity. We believe this
supports recognizing obesity as a distinct disease. Our proposal to
limit the reinterpretation to AOMs used for weight loss or weight
management for the treatment of obesity is based on the distinction
between obesity as a disease and overweight, which is not recognized as
a disease, but may occur in combination with other conditions that are
weight related. As we have discussed, some AOMs are FDA-approved to
improve glycemic control in patients with type 2 diabetes and reduce
major cardiovascular events in adults with established cardiovascular
disease (in adults with type 2 diabetes, obesity, or overweight),
independent of the indication for weight loss or chronic weight
management. AOMs that have received FDA approval for these uses have
demonstrated effectiveness in these conditions (which are common
weight-related conditions) independent of weight loss. Therefore, we
believe that for individuals with overweight, the current policy for
coverage under Part D should be maintained to permit coverage of an AOM
when the AOM is used for a weight-related condition for which the AOM
has demonstrated effectiveness independent of weight loss and is an
MAI. By contrast, in obesity, we consider weight loss to be the
mechanism for reducing excess adiposity and mitigating its accompanying
hormonal and metabolic dysregulation. We acknowledge, however, that by
limiting our proposed reinterpretation, we could create a perverse
incentive for some individuals with overweight to gain additional
weight in order to meet criteria for obesity. We solicit comment on our
proposed reinterpretation, including our underlying assumptions and the
decision not to extend our reinterpretation of the statutory exclusion
to provide that individuals with overweight and at least one weight-
related comorbidity could receive coverage of AOMs for weight loss or
chronic weight management under Part D.
We are not proposing a definition of obesity for the purpose of
determining eligibility for Part D coverage of AOMs. Obesity is most
commonly defined as a BMI of 30 kg/m \2\ or greater, but AACE/ACE has
described the limitations of relying on BMI alone to adequately
characterize obesity as a chronic disease of excess
adiposity.46 47 For purposes of
[[Page 99378]]
defining ``individuals at risk for diabetes'' who may receive diabetes
screening tests, section 1861(yy)(2)(C) of the Act defines obesity as a
BMI greater than or equal to 30 kg/m \2\. Some available AOMs specify
obesity as a BMI greater than or equal to 30 kg/m \2\ in the FDA-
approved indication. The FDA-approved indications for other AOMs
initially specified obesity as a BMI greater than or equal to 30 kg/m
\2\, but the indications have since been revised and reference to a
specific BMI has been removed. We would permit Part D sponsors to
define obesity for the purposes of their prior authorization (PA)
criteria as long as the Part D sponsor's PA criteria are not more
restrictive than the FDA labeling for the particular AOM. This approach
is consistent with other disease states for which CMS does not specify
diagnostic criteria, but reviews Part D plan-submitted PA criteria for
clinical appropriateness.
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\46\ American Association of Clinical Endocrinologists and
American College of Endorinology Comprehensive Clinical Practice
Guidlines for Medical Care of Patients with Obesity, Endocrine
Pratice, Volume 22, Supplement 3, 2016, Pages 1-203, https://doi.org/10.4158/EP161365.GL.
\47\ Mechanick J.I., Hurley D.L., Gavery W.T. Adiposity-Based
Chronic Disease As a New Diagnostic Term: The American Association
of Clinical Endocrinologists and American College of Endocrinology
Position Statement. Endor Pract. 2017 Mar;23(3):372-378. doi:
10.4158/EP161688.PS.
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As required under Sec. 423.120(b)(1)(vi), Part D sponsors'
Pharmacy and Therapeutics (P&T) committees are required to consider the
therapeutic advantages in terms of safety and efficacy of Part D drugs
that are included in the plan formulary. This process includes drug-
specific safety considerations for the elderly or individuals with
disabilities. Further, as required under Sec. 423.120(b)(1)(x), Part D
sponsors' P&T committees must review utilization management (UM)
criteria for clinical appropriateness. CMS maintains a robust, clinical
formulary review process to ensure that all Part D plan formularies
comply with statutory and regulatory requirements, including the
requirement under section 1860D-11(e)(2)(D)(i) of the Act that CMS may
only approve a Part D plan if it ``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 under the plan.'' As part of the formulary
content review, CMS reviews submitted UM criteria, which include PA
criteria and step therapy (ST) requirements, to ensure these criteria
are consistent with the FDA labeling and widely used treatment
guidelines, as appropriate. Recognizing that obesity is a chronic
disease and weight gain is common if drug therapy for obesity is
discontinued, we would review Part D sponsors' PA criteria for AOMs in
the same manner that we would review the PA criteria for drugs used to
treat other chronic conditions that require ongoing drug therapy to
maintain successful treatment. PA criteria for AOMs that are overly
restrictive may be deemed to be inconsistent with CMS' formulary review
requirements if the criteria appear to be likely to substantially
discourage enrollment of individuals with obesity in the Part D plan.
Similarly, CMS would not approve ST requirements for AOMs that are
inconsistent with clinical guidelines.
In general, Part D sponsors must cover formulary drugs for all FDA-
approved indications that are not excluded from Part D coverage.\48\
Most available AOMs are also indicated for use in individuals with
overweight with weight-related comorbid conditions. A weight-related
comorbid condition might include, for example, hypertension, type 2
diabetes, dyslipidemia, sleep apnea, or cardiovascular disease. As
stated previously, some available AOMs contain the same active
ingredients approved by the FDA to improve glycemic control in patients
with type 2 diabetes and reduce major cardiovascular events in adults
with established cardiovascular disease and type 2 diabetes, and one
AOM has received FDA approval to reduce the risk of major adverse
cardiovascular events in non-diabetic adults with established
cardiovascular disease and either obesity or overweight. Therefore,
individuals with type 2 diabetes or established cardiovascular disease
(with type 2 diabetes, obesity, or overweight) are already eligible for
AOM coverage under current policy because these FDA-approved
indications are distinct from the indication of weight loss or chronic
weight management. Should our reinterpretation be finalized as
proposed, individuals with obesity would be eligible for AOM coverage
covered regardless of weight-related comorbid conditions. In
comparison, AOMs used for weight loss or chronic weight management in
individuals with overweight, who do not have another condition that is
an MAI for the AOM, would continue to be excluded from the definition
of a Part D drug and would not be coverable under Part D. In other
words, Part D sponsors would continue to exclude drugs with FDA-
approved indications of weight loss or chronic weight management in
individuals with overweight with weight-related comorbidities from Part
D coverage, unless the individual has another condition that is an MAI
for the AOM. See examples in table 2 illustrating the effect of our
proposal as it relates to AOM coverage for individuals with overweight.
Consistent with current guidance, CMS expects Part D sponsors to
consistently utilize PA for drugs with the highest likelihood of non-
Part D covered uses, including when there is a high likelihood that a
drug's medical use is excluded from Part D coverage.\49\
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\48\ HPMS memorandum. Issuance of the 2010 Call Letter. March
30, 2009. Available from https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/downloads/2010callletter.pdf. Note, Part D sponsors may limit PA criteria to
cover only certain FDA-approved indications if they are implementing
indication-based formulary design, consistent with the August 29,
2018 HPMS memorandum, ``Indication-Based Formulary Design Beginning
in Contract Year (CY) 2020.'' Available from: https://www.cms.gov/research-statistics-data-and-systems/computer-data-and-systems/hpms/hpms-memos-archive-weekly-items/syshpms-memo-2018-aug-29th.
\49\ See section 30.2.2.3 in chapter 6 of the Prescription Drug
Benefit Manual. Available from https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf.
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3. Impact on Medicaid Coverage
Our proposal to reinterpret the reference to ``[a]gents when used
for . . . weight loss'' in section 1927(d)(2)(A) of the Act to allow
for Medicare Part D coverage of drugs used for the treatment of obesity
would also apply to the Medicaid program. Since both Medicaid and
Medicare reference the Medicaid definition of covered outpatient drugs
in section 1927(k)(2) of the Act and rely on section 1927(d)(2)(A) of
the Act for what may constitute ``[a]gents when used for . . . weight
loss,'' it follows that CMS should apply the same interpretation of
these provisions for Medicare and Medicaid. Thus, if finalized, our
proposed reinterpretation would mean that AOMs, when used for weight
loss or chronic weight management for the treatment of obesity, could
not be excluded from Medicaid drug coverage. States would continue to
have the discretion to utilize preferred drug lists and PA to establish
certain limitations on the coverage of these drugs as long as such
practices are consistent with the requirements of section 1927(d) of
the Act to ensure appropriate utilization. In the case of an individual
without obesity seeking coverage for an AOM for weight loss or chronic
weight management, a state's coverage determinations and State Plan
requirements related to ``[a]gents when used for . . . weight loss,''
under section 1927(d)(2)(A) of the Act would govern. AOMs and drugs
that contain the same active ingredient as AOMs that meet the
definition of a covered outpatient drug are already subject to section
1927 requirements, and
[[Page 99379]]
Medicaid must cover those products when the prescribed use is an MAI
other than weight loss or chronic weight management when they are
medically necessary. In table 2, we provide examples to illustrate the
effect of our proposal on AOM coverage in Medicaid.
We believe that our proposed interpretation for the Medicaid
program is consistent with the relevant statutory provisions and with
our reinterpretation for the Medicare program and would result in the
same benefits and achieve the same goals for the Medicaid program as
those articulated for the Medicare program. This proposed policy is
intended to facilitate access to these medications for individuals who
meet the criteria for obesity whether they are enrolled in Medicaid,
Medicare, or both.
We seek comments on how this interpretation can best be implemented
for state Medicaid programs and Medicaid enrollees. Among other areas,
we seek comment on potential interactions with rate setting and
coverage standards for Medicaid managed care plans, and ways to ensure
adequate notice to beneficiaries and other stakeholders of the changes
resulting from this interpretation should this proposal be finalized.
4. Coverage Considerations
CMS is considering what an appropriate applicability date for the
reinterpretation in the Part D program would be in light of section
1860D-12(f) of the Act and Sec. 423.516, which provide that CMS may
not implement, other than at the beginning of a calendar year,
regulations that impose new, significant regulatory requirements on a
prescription drug plan (PDP) sponsor or a PDP, and seeks comment on
this issue.
We have not identified any similar basis for delaying the
applicability date for Medicaid to align with a Part D applicability
date at the beginning of a calendar year. Accordingly, any
reinterpretation of section 1927(d)(2) of the Act would be applicable
under the Medicaid program as of the effective date of the rule in
which this provision is finalized. Therefore, should this proposal be
finalized, state Medicaid programs that provide drug coverage would
generally be required to provide coverage of AOMs for weight loss or
chronic weight management for treating obesity in Medicaid-enrolled
individuals as of the effective date of the final rule, which is
generally 60 days after the final rule is published. Should the
proposed reinterpretation be applicable to Medicare at the beginning of
a calendar year, consistent with section 1860D-12(f) of the Act and
Sec. 423.516, there could be a time period during which AOMs used for
weight loss or chronic weight management for treatment of obesity would
be required to be covered by state Medicaid programs that cover
prescription drugs, but would not be covered by Part D. As a result,
Medicaid programs that provide drug coverage would be required to cover
AOMs used for weight loss or chronic weight management for certain
dually eligible individuals until such time as Part D coverage began.
We invite commenters to share feedback on the impact of this
reinterpretation to Part D sponsors and their enrollees. We also
solicit comments on the impact of our proposal on state Medicaid
programs and Medicaid enrollees, including dually eligible enrollees.
Specifically, we seek comment on the implications of aligning or not
aligning the applicability dates for coverage under Medicaid and
Medicare. We also seek comments on implementation considerations this
proposal might raise under Medicaid, including related to any potential
coverage changes, state plan changes, coordination of care, or budget
implications, and any implications related to state contracts with
Medicaid managed care organizations.
5. Summary
In summary, due to changes in the prevailing medical consensus
towards recognizing obesity as a disease, we are re-evaluating Part D
coverage of AOMs for Medicare beneficiaries with obesity who do not
have another condition for which an AOM is indicated and for whom the
prescribed use would be otherwise coverable under Part D. As a result
of our proposed reinterpretation of the phrase ``[a]gents when used for
. . . weight loss'' in section 1927(d)(2) of the Act, AOMs that are
used for treating obesity and that otherwise meet the definition of
Part D drug at Sec. 423.100 would no longer be excluded from Part D
coverage pursuant to the exclusion in paragraph (2)(ii) of that
definition for drugs that may be excluded from Medicaid coverage under
section 1927(d)(2) of the Act. Our proposed reinterpretation would also
apply to Medicaid such that state Medicaid programs would no longer
have the discretion to exclude AOMs from Medicaid drug coverage as
``[a]gents when used for . . . weight loss'' when used for weight loss
or weight management for the treatment of obesity. If our
reinterpretation is finalized as proposed, states that are not already
covering AOMs for weight loss or weight management would be required to
do so to treat obesity in Medicaid enrollees with obesity. AOMs, when
used for weight loss or chronic weight management in individuals who do
not have obesity, would continue to be excluded from the definition of
Part D drug, and may be excluded at state option from coverage by state
Medicaid programs, unless the AOM is being used for a condition other
than weight loss or chronic weight management for which such use would
be covered as an MAI as defined in section 1927(k)(6) of the Act.
We solicit comment on this proposal.
BILLING CODE 4120-01-P
[[Page 99380]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.005
BILLING CODE 4120-01-C
[[Page 99381]]
B. Network Transparency for Pharmacies
At Sec. 423.505(i), we propose to require Part D sponsors to
notify network pharmacies which plans the pharmacies will be in-network
for in a given plan year by October 1 of the year prior to that plan
year. We also propose to require sponsors to provide pharmacies with
such a list of in-network plans on request after October 1. We believe
this change is necessary to ensure that pharmacies can provide their
customers with accurate information about which plans the pharmacy is
participating in.
Part D sponsors contract with network pharmacies, either directly
or through pharmacy benefit managers (``PBMs''), to provide Part D
drugs to their enrollees. Sponsors and PBMs can contract with
pharmacies at any time, but they generally perform most of their
contracting activities for a plan year in the winter and spring of the
prior year (for example, between January and May of 2024 for the 2025
plan year). However, sponsors do not submit bids for their Part D plans
until the first Monday in June of the year prior to the plan year (for
example, bids for the 2025 plan year were submitted by June 3, 2024)
and do not receive final approval of those bids until August. Because
sponsors and PBMs typically offer more than one plan in a service area,
sometimes under more than one contract and under more than one
marketing name, neither they nor the pharmacies they contract with know
which plans will be served by the networks the pharmacies agree to join
until months after executing network contracts.
Pharmacies often do not have the ability to meaningfully negotiate
with or demand clear information from PBMs and plans regarding which
networks they will participate in. Congress and the Federal Trade
Commission (``FTC'') have initiated inquiries into PBM practices,
including pharmacy contracting practices, in recent years. The FTC
determined that large PBMs employ ``lopsided and unfair contracting
practices'' that prevent pharmacies, particularly smaller pharmacies
not affiliated with large chains, from engaging in meaningful
negotiations about contracting terms, including monetary and non-
monetary terms.\50\ The FTC highlighted PBM's practice of unilaterally
amending contracts by requiring pharmacies to opt out of new terms,
rather than affirmatively opt in, as making it difficult for pharmacies
to understand what terms apply at any given time.\51\ This ``passive
contracting'' often changes the networks pharmacies participate in with
little notice or clear communication.\52\
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\50\ Federal Trade Commission, ``Pharmacy Benefit Managers: The
Powerful Middlemen Inflating Drug Costs and Squeezing Main Street
Pharmacies: Interim Staff Report'', July 2024, available at https://www.ftc.gov/reports/pharmacy-benefit-managers-report, pp. 48-49.
\51\ Id, at p. 50.
\52\ Ibid.
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Part D beneficiaries often base their enrollment decisions in part
on whether the pharmacies they wish to use are in a plan's network. At
the beginning of each plan year, CMS commonly receives complaints from
beneficiaries reporting that they enrolled in a plan because they
believed their preferred pharmacy was in the network, only to discover
that it was not when they attempted to fill a prescription. These
beneficiaries often request special enrollment periods (``SEP'') based
on this misunderstanding. Beneficiaries may ask their pharmacies which
plans the pharmacies are or will be in network for prior to selecting a
plan. Pharmacies have reported to CMS that they often do not know which
plans they will be in network for in the following plan year unless
they check Medicare Plan Finder (``MPF''). While the individuals can
use MPF to identify whether a particular pharmacy is in a particular
plan for the following plan year during the AEP, MPF does not provide
users a comprehensive list of all the plans in a service area that a
particular pharmacy is in network for. Rather, a user must select each
Part D plan to identify whether the pharmacy is in network. Pharmacies
report that this cumbersome process hinders their ability to provide
timely and accurate information to their Part D-eligible customers
during the AEP in particular.
In order to allow pharmacies to provide accurate information to
Part D beneficiaries about their network participation, we propose to
require sponsors (or first tier, downstream, or related entities
(``FDRs''), such as PBMs, on the sponsors' behalf) to provide each
network pharmacy a list of the plans the network pharmacy will be
participating in for a plan year by October 1 of the year prior to the
plan year. We propose to adopt this requirement pursuant to our
authority at section 1857(e) of the Act, made applicable to Part D
through section 1860D-12(b)(3)(D) of the Act, which authorizes the
Secretary to adopt contract terms and conditions as necessary and
appropriate, so long as those terms are not inconsistent with the Part
D statute. This will allow pharmacies to efficiently provide customers
accurate information about their network participation during the AEP
that commences on October 15 of each year. We also propose to require
that sponsors provide this information on request to network pharmacies
after October 1. The information provided must include the contract
number, plan ID, and marketing name for each of the sponsor's plans for
which the pharmacy is in network. We propose to allow the sponsor to
provide the information in hard copy and/or electronically.
We solicit comments on this proposal.
C. Part D Medication Therapy Management (MTM) Program Eligibility
Criteria (Sec. 423.153(d)(2))
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 as described in section 1860D-4(c)(2)(A)(ii) of the Act,
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 eligible individuals who have multiple chronic diseases, are taking
multiple covered Part D drugs, and are identified as likely to incur
annual costs for covered Part D drugs that exceed a level specified 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. CMS codified the MTM targeting criteria at Sec. 423.153(d)(2).
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. CMS established improved targeting
criteria for the Part D MTM program to help ensure more consistent,
equitable, and expanded access to MTM services, effective January 1,
2025, in the April 2024 final rule (89 FR 30448). Specifically, CMS
finalized 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). 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)
[[Page 99382]]
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 additional chronic diseases beyond those codified
as core chronic diseases.
The Affordable Care Act 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 comprehensive medication review
(CMR). Part D sponsors must offer each beneficiary enrolled in the MTM
program an annual CMR with written summaries in CMS' Standardized
Format under Sec. 423.153(d)(1)(vii)(B) and (D). We recognize that
some MTM enrollees may suffer cognitive impairments and, therefore, may
not be able to participate in the CMR. In the April 2024 final rule,
CMS codified at Sec. 423.153(d)(1)(vii)(B)(2) its longstanding policy
that the pharmacist or qualified provider may perform the CMR with the
beneficiary's prescriber, caregiver, or other authorized individual if
the beneficiary is offered the CMR and is unable to accept the offer to
participate in the CMR due to cognitive impairment. Furthermore, CMS
acknowledges that beneficiaries may invite other individuals, such as
their caregiver or authorized representative, to join them in the CMR
\53\ under any circumstance. This situation is outside of the policy
established under Sec. 423.153(d)(1)(vii)(B)(2) for when the
beneficiary is unable to accept the offer to participate due to
cognitive impairment. 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. Accordingly, we expect Part D sponsors and MTM providers to
comply with the Health Insurance Portability and Accountability Act of
1996 (HIPAA) and its implementing regulations and maintain
documentation of who participated in the CMR in accordance with Sec.
423.153(d)(1)(vii)(B).
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\53\ May 6, 2024 HPMS memorandum, Contract Year 2025 Part D
Medication Therapy Management Program Guidance and Submission
Instructions available at: https://www.cms.gov/files/document/memo-contract-year-2025-medication-therapy-management-mtm-program-submission-v050624.pdf.
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In response to the December 2022 proposed rule (87 FR 79452), some
commenters suggested expanding the inclusion of Alzheimer's disease on
the list of core chronic diseases to include other dementias such as
Lewy Body disease or frontotemporal lobar degeneration. In our
responses to those comments in the April 2024 final rule, we stated
that we would 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 covered Part D
drugs, where MTM services could most impact therapeutic clinical
outcomes, including those suggested by the commenters, and that we may
consider proposing additional core chronic diseases in future
rulemaking.
We agree that beneficiaries with other dementias may benefit from
MTM services. Although Alzheimer's disease is the most common cause of
dementia at 60 to 80 percent of dementia cases, the 2024 Alzheimer's
Disease Facts and Figures Special Report: Mapping a Better Future for
Dementia Care Navigation \54\ notes that many people with dementia,
especially those over the age of 85, have two or more causes of
dementia (mixed dementia) including cerebrovascular disease,
hippocampal sclerosis, and Parkinson's Disease. The report discusses
that it is not possible to definitively distinguish one cause of
dementia from another based on symptoms alone. The same report further
notes that autopsy and biomarker-based studies have found that 15 to 30
percent of individuals who met the criteria for clinical Alzheimer's
dementia based on symptoms did not have the specific brain changes
associated with Alzheimer's disease. Since Alzheimer's disease is just
one of many possible causes of dementia, changing the core chronic
disease from Alzheimer's disease to ``Alzheimer's disease and
dementia'' would allow enrollment of more beneficiaries with other
causes of dementia who could potentially benefit from MTM services.
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\54\ https://www.alz.org/media/Documents/alzheimers-facts-and-figures.pdf.
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MTM services are beneficial for people with dementia. One report
notes that complex medication regimens for such individuals may lead to
polypharmacy and increased adverse drug reactions (ADRs) and
interactions, especially if the beneficiary is taking potentially
inappropriate medications (PIMs).\55\ The same report states, for
instance, that people with dementia are frequently prescribed
medications that can impair cognition, such as anticholinergics or
sedatives, and that antipsychotics are also often inappropriately
prescribed to people with dementia to treat behaviors that can be a
symptom of dementia. A CMR with a pharmacist or other trained clinician
could help reduce PIM use in this population.\56\ We believe that MTM
services such as CMRs empower beneficiaries to speak with their
prescribers about preventing any ADRs.
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\55\ Maidment I.D., Fox C., Boustani M., Katona C. Medication
management--the missing link in dementia interventions. Int J
Geriatr Psychiatry. 2012 May;27(5):439-42. doi: 10.1002/gps.2745.
Epub 2011 Jun 29. PMID: 21714119.
\56\ Rao P., Hung A. Impact of medication therapy management
programs on potentially inappropriate medication use in older
adults: A systematic review. J Manag Care Spec Pharm. 2024
Jan;30(1):3-14. doi: 10.18553/jmcp.2024.30.1.03. PMID: 38153866;
PMCID: PMC10775773.
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There is also evidence that access to MTM services would improve
medication adherence for beneficiaries with dementia. Medication
nonadherence is a common problem in people with dementia due to memory
loss and cognitive impairment; one article estimated that somewhere
from 33 to over 40 percent of such individuals are nonadherent to their
oral antidementia medications.\57\ The article stated that Black,
Hispanic, and Asian dementia patients were more likely to be
nonadherent to antidementia medications than white patients, and that
MTM services significantly reduced nonadherence in Black and Hispanic
dementia patients. Having a CMR has also been associated with reduced
nonadherence to medications for diabetes, hypertension, and
hyperlipidemia in people with Alzheimer's disease.\6\
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\57\ Dong X., Tsang C., Wan J., Chisolhm-Burns M., et al.
Effects of Medicare Part D medication therapy management on racial/
ethnic disparities in adherence to antidementia medications among
patients with Alzheimer's disease and related dementias: An
observational study. Exploratory Research in Clinical and Social
Pharmacy. 2024 March; Volume 13, Article 100420:2667-2766. https://doi.org/10.1016/j.rcsop.2024.100420.
\6\ Dong, X., Tsang, C. C. S., Zhao, S., Browning, J. A., Wan,
J. Y., Chisholm-Burns, M. A., . . . Wang, J. (2021). Effects of the
Medicare Part D comprehensive medication review on medication
adherence among patients with Alzheimer's disease. Current Medical
Research and Opinion, 37(9), 1581-1588. https://doi.org/10.1080/03007995.2021.1935224.
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Therefore, we have concluded that it would be appropriate to update
the list of core chronic diseases used to identify Part D enrollees who
have multiple chronic diseases for purposes of determining eligibility
for MTM enrollment to include not only
[[Page 99383]]
Alzheimer's disease but also all other causes of dementia to improve
medication adherence and to reduce the risk of adverse events.
Consistent with this proposal, we propose to modify the regulatory text
at Sec. 423.153(d)(2)(iii)(A) identifying ``Alzheimer's disease'' as a
core chronic disease to include ``Alzheimer's disease and dementia''
effective January 1, 2026.
D. Part D Sponsors Must Provide Network Pharmacies Reciprocal Rights To
Terminate Contracts Without Cause and Request for Information on Access
to Pharmacy Services and Prescription Drugs
1. Terminate Contracts Without Cause
At Sec. 423.505(i), we propose to require Part D sponsors to allow
pharmacies to terminate their network contracts without cause after the
same notice period that the sponsor is allowed to terminate network
pharmacy contracts without cause. This provision would only apply if
the network pharmacy contract allows terminations without cause by the
sponsor; if the contract does not allow terminations without cause by
the sponsor, it would not be required to allow such terminations by the
pharmacy. This change would prohibit the current practice CMS has
observed by some sponsors and their FDRs to only allow pharmacies to
terminate their network contracts without cause after giving a
relatively long period of notice (sometimes exceeding one year), while
preserving their right to terminate without cause on much shorter
notice. We believe this change to provide greater fairness in
contracting terms is necessary to protect beneficiaries from
disruptions in receiving Part D benefits that would occur if network
pharmacies stop providing services before formally terminating their
contracts.
Part D sponsors contract with network pharmacies, either directly
or through FDRs, to their enrollees. Under Sec. 423.505(b)(18), Part D
sponsors must have a standard contract with reasonable and relevant
terms and conditions of participation whereby any willing pharmacy may
access the standard contract and participate as a network pharmacy.
This requirement was adopted pursuant to section 1860D-4(b) of the Act,
which requires prescription drug plan sponsors to permit the
participation of any pharmacy that meets the terms and conditions under
the plan. In addition to the standard terms and conditions that
sponsors must offer to any willing pharmacy, sponsors may negotiate
non-standard terms and conditions with certain pharmacies that would
govern those pharmacies' participation in the sponsor's Part D network.
Both the Part D statute and regulations require that all network
contracts with pharmacies, including both the standard contract and any
non-standard contract a sponsor may use to contract with a network
pharmacy, contain certain terms meant to protect beneficiaries and
ensure compliance with Part D requirements. For example, section 1860D-
4(b)(1)(E) of the Act prohibits sponsors from requiring network
pharmacies to accept insurance risk in their network contracts. Section
1860D-4(m) of the Act prohibits sponsors from restricting a pharmacy
from informing an enrollee of any differential between the negotiated
price of, or copayment or coinsurance for, a drug or biological and a
lower price the enrollee would pay for the drug or biological without
using health insurance coverage. Finally, Sec. 423.505(i) requires
that contracts between sponsors and network pharmacies contain several
provisions, including--
Provisions prohibiting pharmacies from holding an enrollee
liable for payment of any fees that are the responsibility of the Part
D sponsor (Sec. 423.505(i)(3)(i));
A provision requiring prompt payment of clean claims
(Sec. 423.505(i)(3)(v)); and
A provision requiring disclosure and updating of any drug
pricing standards used to determine payment, in accordance with Sec.
423.505(b)(21)(i) (Sec. 423.505(i)(3)(vii)).
Part D sponsors often use FDRs, such as PBMs, to contract with
network pharmacies on their behalf. In accordance with Sec.
423.505(i)(3)(iii) and (iv), contracts between sponsors and PBMs must
contain the same provisions required for all FDR contracts, including a
provision requiring that the PBM perform activities in a manner that
complies with all applicable regulations and with the Part D sponsor's
contractual obligations to CMS.
Therefore, any network pharmacy contracts a PBM enters into as part
of its services to the Part D sponsor must contain the same terms that
would be required for the contracts if they were directly between the
sponsor and the network pharmacy.
In recent years, CMS has received an increasing number of
complaints from pharmacies about sponsors' and PBMs' Part D network
pharmacy contracts. Specifically, pharmacies often report being
dissatisfied with reimbursement terms. Many of these pharmacies report
that they would like to exit their Part D network contracts, but that
they are unable to do so without providing extensive notice. Some of
these reports have included copies of the executed contracts in
question that include the termination terms. At least one PBM requires
3-years notice for a retail pharmacy in its network to terminate the
contract without cause. The notice provisions are often not
reciprocal--one PBM network contract requires at least ten months'
notice from a pharmacy seeking to exit its network without cause but
allows the PBM to terminate the contract without cause on a 90-day
notice.
CMS has also received reports of pharmacies that are unable to
formally terminate their networks contracts simply refusing to fill
prescriptions for Part D beneficiaries covered by the plans using those
networks. Such ad hoc refusals to fill prescriptions are very
disruptive to beneficiaries. The pharmacies that refuse to fill
prescriptions for a particular network continue to appear in Medicare
Plan Finder and on sponsor websites as network pharmacies until and
unless the plan takes action to terminate the pharmacy, which results
in beneficiaries receiving misleading information about where they may
obtain Part D drugs under the plans they are enrolled in. Because these
refusals occur without official terminations, sponsors and PBMs do not
receive advance notice of them and cannot perform the transition
activities they ordinarily would when a pharmacy leaves a network.
These transition activities often include notifying affected
beneficiaries and arranging for transfer of prescriptions.
We do not believe that pharmacies--particularly small pharmacies
unaffiliated with larger chains--have the ability to negotiate such
reciprocal termination terms on their own. As described in section
III.B. of this proposed rule, pharmacies often do not have the ability
to meaningfully negotiate with or demand clear information from PBMs
and plans regarding contracting terms. Congress and the FTC have
initiated inquiries into PBM practices, including pharmacy contracting
practices, in recent years. The FTC determined that large PBMs employ
``lopsided and unfair contracting practices'' that prevent pharmacies,
particularly smaller pharmacies not affiliated with large chains, from
engaging in meaningful negotiations about contracting terms, including
monetary and non-monetary terms.\58\ The FTC highlighted PBMs'
[[Page 99384]]
practice of unilaterally amending contracts by requiring pharmacies to
opt out of new terms, rather than affirmatively opt in, making it
difficult for pharmacies to understand what terms apply at any given
time.\59\
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\58\ Federal Trade Commission, ``Pharmacy Benefit Managers: The
Powerful Middlemen Inflating Drug Costs and Squeezing Main Street
Pharmacies: Interim Staff Report'', July 2024, available at https://www.ftc.gov/reports/pharmacy-benefit-managers-report, pp. 48-49.
\59\ Id, at 50, 54.
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To prevent disruptions in care for beneficiaries, CMS proposes to
require contracts with pharmacies for participation in Part D networks
that allow the sponsor or FDR, such as a PBM, to terminate the contract
without cause to allow pharmacies to terminate the contract without
cause after providing the same notice that the contract requires the
sponsor or FDR to provide the pharmacy. A single network pharmacy
contract often governs participation in multiple networks, with some
pharmacies participating in all the Part D networks offered by a
sponsor or FDR and some only participating in some of the networks.
Therefore, we also propose that if the network pharmacy contract allows
the sponsor or FDR to terminate the pharmacy's participation in some,
but not all, of the networks covered by the contract without cause,
that the contract allow the network pharmacy to terminate its
participation in some, but not all, networks without cause after
providing the same notice the contract requires the sponsor or FDR to
provide. We propose to adopt this requirement under our authority at
section 1857(e) of the Act, made applicable to Part D through section
1860D-12(b)(3)(D) of the Act, which authorizes the Secretary to adopt
contract terms and conditions as necessary and appropriate, so long as
those terms are not inconsistent with the Part D statute. This
requirement would be consistent with other requirements CMS currently
imposes for downstream contracts, including pharmacy contracts, such as
the requirement at Sec. 423.505(i)(3)(v) that contracts require
sponsors to promptly pay clean claims and at Sec. 423.505(i)(5) that
contracts allow Part D sponsors to approve, suspend, or terminate
contracts with network pharmacies.
2. Request for Information on Access to Pharmacy Services and
Prescription Drugs
As noted in a December 14, 2023 letter from the CMS Office of the
Administrator to pPlans and PBMs, pharmacies serve a critical role in
Medicare Part D by providing access to medications across the country,
including to Part D beneficiaries.\60\ CMS is concerned about the
sustainability of these businesses, especially small and independent
pharmacies, and their potential closures that may leave Part D
beneficiaries without convenient access to pharmacy services--
especially in rural and underserved areas. We have also heard that
pharmacies may decline to fill certain prescriptions that would result
in a net loss in reimbursement.
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\60\ https://www.cms.gov/files/document/pharmacy-benefit-manager-insurer-letter.pdf.
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CMS reminds plans that under section 1860D-4(b)(1)(A) of the Act
and Sec. 423.505(b)(18), they must offer a standard contract with
reasonable and relevant contract terms whereby any willing pharmacy may
participate as a network pharmacy. Additionally, under section 1860D-
4(b)(1)(C) of the Act and Sec. 423.120(a), plans must have a
contracted pharmacy network that is sufficient to ensure that Part D
beneficiaries have convenient access to pharmacy services. CMS seeks
comment on what additional data or information to consider--such as
reimbursement rates, underlying costs, steering, contracting terms, and
other elements which may affect pharmacies' ability to continue
providing Part D drugs to beneficiaries--to improve our ability to
protect beneficiaries' convenient access to Part D drugs consistent
with current access standards at Sec. 423.120.
E. Modifying the Definition of ``Service area'' Sec. 422.2
In Sec. 422.2, CMS defines service area to include ``a geographic
area that for local MA plans is a county or multiple counties''. We are
proposing to modify the definition to align with our proposal to
include a definition of county in Sec. 422.116 that includes ``county-
equivalents'' as recognized by the United States Census Bureau for
economic census purposes. To ensure consistency in the use of the term
``county'' across service area and network adequacy requirements and to
codify our longstanding policy of treating county-equivalents the same
as counties for these purposes, we are proposing to amend the
definition of service area in Sec. 422.2 to refer to ``a geographic
area that for local MA plans is one or more counties, as defined in
Sec. 422.116(a)(1)''.
F. Administration of Supplemental Benefits Coverage Through Debit Cards
Sec. Sec. 422.2, 422.102, 422.102, 422.111, and 422.2263
1. Background
We have made a concerted effort in the past several years to better
understand how supplemental benefits are provided by MA plans, how they
are being used by enrollees, and how the provision of these benefits
can be improved. These most recent efforts began with a request for
information (RFI) published in in the August 1, 2022, Federal Register
(87 FR 46918) that solicited feedback on ways to strengthen the MA
program, including ways to improve the transparency of supplemental
benefits. We received thousands of responses to these requests, and we
have used this information to inform our efforts to improve how
benefits are administrated within the MA program. A few commenters to
the RFI suggested that CMS collect information regarding the usage of
Special Supplemental Benefits for the Chronically Ill (SSBCI) so that
there would be increased transparency around utilization patterns and
costs associated with supplemental benefits, including SSBCI. We
finalized a reporting requirement regarding the usage of supplemental
benefits in the Paperwork Reduction Act package released on March 14,
2023, and expect to receive this data for the first time in 2025 (88 FR
15726). This data should promote greater transparency regarding the
overall utility of these benefits while also helping to inform future
decision making. Most recently, in the April 2024 final rule, we added
evidentiary standards to SSBCI requirements by requiring MA plans to
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 (89 FR 30560). CMS has already begun implementing this
requirement and will continue to review these bibliographies to ensure
that MA plans are offering SSBCI that are supported by evidence and
consistent with statutory and regulatory standards. Overall, through
these initiatives, we have focused our efforts on ensuring supplemental
benefits improve health outcomes and are continuing this theme in this
proposed rule.
Section 1852(a)(3)(A) of the Act gives MA organizations the ability
to offer supplemental benefits to plan enrollees, subject to the
Secretary's approval. CMS has adopted rules--primarily in Sec. Sec.
422.100(c)(2) and 422.102--to regulate how those supplemental benefits,
such as vision, dental, gym membership, and others must be offered. For
example, in Medicare Program, Establishment of the Medicare
[[Page 99385]]
Advantage Program Final Rule,\61\ which appeared in the Federal
Register on January 28, 2005, we established at Sec. 422.102(a)(4)
that an MA organization could offer as a mandatory supplemental benefit
a reduction in cost sharing below the actuarial value specified in
section 1854(e)(4)(B) of the Act (70 FR 4617). Later, in the 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 Final Rule \62\ (January 19, 2021;
86 FR 5913) (hereinafter referred to as the January 2021 final rule),
we further clarified the scope of supplemental benefits that reduce
cost sharing by adding rules at Sec. 422.102(a)(5) and (a)(6)(i) and
(ii) to clarify the different circumstances under which an MA plan may
reduce cost sharing for covered items and services as a mandatory
supplemental benefit and the mechanisms by which an MA plan may make
such reductions in cost sharing available to enrollees. Mandatory
supplemental benefits are benefits that are included in the plan and
are generally available to all enrollees with no additional premiums.
As described in Sec. 422.102(b), optional supplemental benefits are
benefits that are available to plan enrollees who choose to pay an
additional premium in order to receive those services. The majority of
supplemental benefits that beneficiaries receive in MA are mandatory
supplemental benefits, and we refer to mandatory supplemental benefits
in this section unless otherwise specified.
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\61\ https://www.federalregister.gov/documents/2005/12/23/05-24446/medicare-program-establishment-of-the-medicare-advantage-program.
\62\ https://www.govinfo.gov/content/pkg/FR-2021-01-19/pdf/2021-00538.pdf.
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In the January 2021 final rule, we explained that MA plans may
choose to structure mandatory supplemental benefits in a few ways (86
FR 5913). For example, an MA plan may offer, as a mandatory
supplemental benefit, the use of a debit card to administer reduced
cost sharing for plan-covered services or to provide coverage of 100
percent of the cost of plan-covered items or services. This may include
reduced cost sharing for dental and vision services (when offered as a
mandatory supplemental benefit, not as an optional benefit) where a
claim for additional payment is submitted to the plan, and/or coverage
by the plan (through use of the card) of all or part of the cost of OTC
items, fitness-related benefits, food and produce, transportation, and
utilities support. With respect to a mandatory supplemental benefit in
the form of reduced cost sharing, a beneficiary may receive a debit
card to use to pay for any applicable cost sharing when receiving a
basic benefit or mandatory supplemental benefit, including SSBCI. For
example, if the plan provides a transportation service as a covered
benefit and provides a debit card to be used to reduce cost sharing for
those defined transportation services, the beneficiary could use the
debit card to pay for those services. We remind readers that reduced
cost sharing is not permitted as an optional supplemental benefit (that
is a supplemental benefit that a beneficiary would select in exchange
for additional premiums) (see 86 FR 5913). Thus, this mechanism of
using debit cards is not permitted to administer optional supplemental
benefits (that is, an optional dental or vision service package).
We further explained in the January 2021 final rule that MA
organizations that choose to use a debit card to administer mandatory
supplemental benefits must do so in a manner that ensures the debit
card can only be used towards plan-covered items and services. To the
extent these items and services are mandatory supplemental benefits,
they must also meet all the regulatory supplemental benefit standards
at Sec. Sec. 422.100(c)(2) and 422.102(a) through (f). To summarize,
CMS's prior rulemakings provided standards around supplemental
benefits, including codifying the definition of a supplemental benefit,
identifying the requirements for a benefit to be considered primarily
health related, and in regard to Special Supplemental Benefits for the
Chronically Ill (SSBCI), requiring plans to 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.
The use of debit cards is permitted for administering both
mandatory supplemental benefits for all MA enrollees and mandatory
supplemental benefits available as Special Supplemental Benefits for
the Chronically Ill (SSBCI) as defined at Sec. 422.102(f). We also
explained in the January 2021 final rule that debit cards may only be
used to administer coverage of items and services that are identified
in the MA plan's bid and marketing and communication materials as
covered benefits (86 FR 5913). Consistent with guidance in Chapter 4 of
the Medicare Managed Care Manual (MCM), Sec. 40.3, we stated that
debit cards used for plan-covered benefits must be exclusively linked
to only the covered items and drugs specified by the MA organization
and that MA organizations are not permitted to offer use of a debit
card to enrollees for purchasing items or services that are not plan-
covered (86 FR 5913). In addition, the use of the debit card to pay
cost sharing or pay for covered items and services must be tied to the
period of coverage, that is the specific plan year or part of a plan
year during which the enrollee is enrolled with and covered by the MA
plan. (MA organizations may include a maximum dollar limit on a per-
month basis, per-year basis, or other periodicity within the plan year
tied to the benefit maximum.) The debit card itself is not a
supplemental benefit; rather, it is a tool used to administer coverage
to an enrollee for identified plan-covered items and services at a
reduced cost. Plan-covered items and services that are paid for by a
debit card must meet the requirements and standards for mandatory
supplemental benefits or be basic benefits in the case of reduced cost
sharing for a Part A or B covered benefit, as specified in the January
2021 final rule (86 FR 5913).
Since the January 2021 final rule, many MA organizations have
disclosed the use of debit cards to administer a benefit in their
annual bid notes. In reviewing annual bids, we've observed that MA
organizations appear to regularly use debit cards to administer several
mandatory supplemental benefits, including reductions in cost sharing
for dental and vision services and/or payment for OTC items, fitness-
related benefits, food and produce, transportation, and utilities
support. In recent years, based on questions from stakeholders,
including beneficiaries, we have also become aware that there is some
confusion around the use of debit cards. For example, we have received
many stakeholder questions requesting CMS clarify what these cards are
and how they can be used. We have also received complaints from
enrollees who tell us that they are confused when trying to use their
debit card. Often these individuals do not receive guidance on which
plan covered supplemental benefits can be purchased with their debit
card or where and how they can use them. Additionally, stakeholders
have raised concerns that there are not enough guardrails on how these
cards are used and how purchases are tracked, especially at large box
stores that carry non-covered items and services (for example, Costco
or Walmart) that would be inappropriate
[[Page 99386]]
for the MA plan to cover as supplemental benefits. For example, there
are concerns that the enrollee may use the plan debit card to purchase
items and services that are not covered or that do not meet the
requirements for MA supplemental benefits.
To provide further clarity to both MA organizations and
beneficiaries on the parameters around the appropriate use of plan
debit cards, we are proposing requirements on the proper administration
of supplemental benefits. Based on our authority under section
1856(b)(1) of the Act to establish standards for MA organizations,
along with our authority in section 1857(e)(1) of the Act to adopt
additional terms and conditions for MA contracts that are not
inconsistent with the Part C statute and that are necessary and
appropriate for the MA program, we propose to codify in regulation text
the requirements and limitations discussed in the preamble of the 2022
final rule and later in the May 6, 2024, memo titled ``Final Contract
Year (CY) 2025 Standards for Part C Benefits, Bid Review and
Evaluation'' regarding the administration of supplemental benefits,
including the use of plan debit cards. We believe codifying these
standards will also ensure that MA requirements regarding supplemental
benefits are applied uniformly across the MA industry and for all
supplemental benefits: both standard (that is, primarily health
related) supplemental benefits and non-primarily health related SSBCI.
We also propose to expand on these requirements by adopting additional
disclosure and access guardrails to increase transparency, protect
access to plan-covered services for MA enrollees, and ensure that MA
plans cover (that is, provide, furnish, and/or pay for) only those
items and services that are permissible MA benefits.
Specifically, we propose to add a new paragraph (g) at Sec.
422.102 to codify existing guidelines for administering supplemental
benefits, including the use of debit cards to administer plan-covered
benefits, and add new guardrails to ensure that beneficiaries are fully
aware of covered supplemental benefits and how to access those
benefits.
2. The Administration of Supplemental Benefits
Our regulations at Sec. 422.100(c)(2) define a mandatory or
optional supplemental health care benefit (with the exception of
Special Supplemental Benefits for the Chronically Ill (SSBCI) as
defined at Sec. 422.102(f)) as an item or service: (1) not covered by
original Medicare; (2) that is primarily health related; and (3) for
which the plan must incur a non-zero direct medical cost. The 2022
Final Rule further clarified at Sec. 422.100(c)(2)(ii)(A) that to be
considered primarily health related, a supplemental benefit must be to
diagnose, prevent, or treat an illness or injury; compensate for
physical impairments; act to ameliorate the functional/psychological
impact of injuries or health conditions; or reduce avoidable emergency
and health care utilization. Additionally, we have codified numerous
requirements that MA organizations must comply with when delivering
supplemental benefits at Sec. 422.102(a) through (e). More recently,
we codified standards for SSBCI benefits at Sec. 422.102(f), which
include the requirements that SSBCI may only be offered to chronically
ill enrollees as defined by section 1852(a)(3)(D) of the Act, must
incur a non-zero non-administrative cost, and must have a reasonable
expectation of improving or maintaining the health or overall function
of the enrollee. SSBCI may include benefits that are not primarily
health related per Sec. 422.100(c)(2)(ii)(A) but must have a
reasonable expectation of improving or maintaining the health or
overall function of the chronically ill enrollee. Additionally, per
section 1852(a)(3)(D)(ii)(II) of the Act, CMS has authority to waive
the uniformity requirements that usually apply for all MA benefits so
that SSBCI can be offered non-uniformly.
We are proposing in this rule that MA organizations must have
processes for delivering all MA plan covered supplemental benefits to
enrollees that ensure compliance with Sec. Sec. 422.100(c)(2) and
422.102(a) through (f) and appropriate access to suppliers and
providers in accordance with Sec. 422.112(a) as applicable. Per Sec.
422.112(a), MA coordinated care plans may specify the networks of
providers from whom enrollees may obtain services if the MA
organization ensures that all covered services, including supplemental
services contracted for by (or on behalf of) the Medicare enrollee, are
available and accessible under the plan. The MA organization may
therefore contract with providers or vendors to furnish covered
services, including supplemental benefits administered via a debit card
or otherwise. For example, a plan may contract with a particular vendor
to provide their food and produce benefit. In this scenario, that
specific vendor is the network provider for furnishing the food and
produce benefit. We note that section 1854(a)(6)(B)(iii) of the Act,
commonly known as the ``non-interference clause,'' prohibits CMS from
requiring any MA organization to contract with a particular provider to
furnish covered items and services. Therefore, CMS does not specify
which vendors MA organizations contract with to furnish covered items
and services. (Note however that Sec. 422.204(b)(3) requires that
providers that furnish covered Part A and B benefits must meet the
applicable requirements of Title XVIII of the Act and that certain
types of institutional providers must have participation agreements
with Medicare.)
We also note that all coordinated care plans are required to cover
benefits, including supplemental benefits, at in-network cost sharing
when an in-network provider or benefit is unavailable or inadequate to
meet an enrollee's medical needs in accordance with the standards set
forth in our rules and regulations.\63\ This is required for all
benefits, regardless of how they are administered.
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\63\ Sec. 422.112 (a)(1)(iii); Chapter 4, section 30.2 of the
Medicare Managed Care Manual; 88 FR 22200.
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If an in-network provider is unavailable or inadequate to
administer covered plan benefits, whether Parts A and B or supplemental
benefits, the MA organization should have a plan or process in place to
ensure that the requirements under Sec. 422.112(a)(1)(iii) are met.
However, given inconsistencies in how supplemental benefits are
provided, we believe it is necessary to clarify this requirement in
regulatory text. Therefore, we propose and seek comment on new Sec.
422.102(g)(1) that would require MA organizations to have processes for
delivering all MA organization covered supplemental benefits to
enrollees that ensure compliance with Sec. Sec. 422.100(c)(2) and
422.102(a) through (f) and appropriate access to all covered services
in accordance with Sec. 422.112(a).
3. New Guardrails for Plan Debit Cards
As described in section III.H.2 of this proposed rule, we are
proposing to include a clarification in Sec. 422.102(g)(1) requiring
that MA organizations have processes for delivering all MA organization
covered supplemental benefits to enrollees that ensure compliance with
Sec. Sec. 422.100(c)(2) and 422.102(a) through (f) and appropriate
access to all covered services per Sec. 422.112(a). Thus, we believe
it is necessary to specify that this requirement would apply to all
plan covered supplemental benefits, including supplemental benefits
administered through debit cards.
[[Page 99387]]
Under this proposal, plans must have a process in place to maintain
enrollee access to these benefits. When plans offer debit cards to
assist with the cost sharing for covered benefits or otherwise
administer supplemental benefits, the MA organization must ensure that
the access requirements at Sec. 422.112(a) are met. This means
regardless of the mode of delivery (e.g., debit card or other means),
MA organizations must ensure that all covered services, including
supplemental benefits, and SSBCI for eligible enrollees, contracted for
by (or on behalf of) enrollees, are available and accessible under the
plan.
In addition, we require that plan-covered benefits be disclosed in
the plan's evidence of coverage (EOC). Section 422.111 requires that MA
organizations disclose all benefits offered under an MA plan, including
applicable conditions and limitations, and any other conditions
associated with receipt or use of benefits. These requirements are
applicable to all benefits, including those administered via debit
card. We also note that MA organizations are required to send an
Explanation of Benefits (EOB) to an enrollee that captures all claims
activity that occurs during a reporting period (monthly or quarterly
cycle). The EOB must include claims information for all Part C claims
processed during the reporting period, including all claims for Part A
and Part B covered items and services, mandatory supplemental benefits,
optional supplemental benefits, and SSBCI.\64\ The EOB must disclose
for each claim a descriptor, billing code and amount billed, total cost
approved for reimbursement, share of the total cost paid by the plan,
and share of the total cost for which the enrollee is liable.
Additionally, the EOB must include certain year-to-date information
such as the amount an enrollee has incurred toward the Maximum Out-of-
Pocket (MOOP) limit.\65\ These EOB requirements include supplemental
benefits that MA plans elect to cover through a debit card.
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\64\ https://www.ecfr.gov/current/title-42/part-422/section-422.111#p-422.111(k).
\65\ https://www.ecfr.gov/current/title-42/part-422/section-422.111#p-422.111(k).
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However, given stakeholder and enrollee feedback, we believe
additional clarity and more specific guardrails regarding the use of
debit cards are necessary to ensure that enrollees are adequately aware
of the benefits that are available to them from their plan through a
debit card and how to access them.
In the January 2021 final rule, we stated that consistent with
current guidance in section 40.3 of Chapter 4 of the Medicare MCM,
debit cards may only be used for plan-covered benefits under the
condition that the card is exclusively linked to the covered items. We
also suggested in the January 2021 final rule (86 FR 5913) that MA
organizations may accomplish this by providing a debit card that is
linked to an appropriate merchant and item/service codes so that the
enrollee may pay the cost sharing at the point of service. We believe
such a link is necessary to ensure that the debit card is used for the
permissible purpose--to reduce the enrollee's cost sharing for a
covered item or service or to pay for an item or service that is
covered by the MA plan at up to 100 percent of the cost. Therefore, we
propose at Sec. 422.102(g)(2)(i) the following requirements that MA
organizations must meet if they choose to administer reductions in cost
sharing or provide coverage of 100 percent of the cost of a mandatory
supplemental benefit. We are proposing at Sec. 422.102(g)(2)(i) that
when administering a mandatory supplemental benefit through plan debit
cards, an MA organization must provide debit cards that are
electronically linked to plan covered benefits through a real-time
identification mechanism to verify eligibility of plan covered benefits
at the point of sale. This means that a plan issued debit card must be
electronically linked to the covered benefit through a real-time
mechanism that ensures the enrollee is only able to receive covered
items or services that they are eligible to receive at the point of
sale. The debit card must include some sort of mechanism that ensures
the enrollee may only use the card to purchase the covered item or
service. For example, an MA organization could provide a debit card
linked to covered benefits through the use of item/service codes so
that the enrollee is only able to pay the cost sharing for those select
items at the point of sale. In this scenario, the MA organization would
have to ensure that the enrollee is only able to purchase items or
services they are specifically eligible to receive. This is necessary
to ensure that enrollees only receive benefits they are eligible to
receive and to ensure that MA organizations do not inadvertently
furnish non-covered benefits. The debit card is intended only to
facilitate or administer certain covered benefits and may not be used
to pay for non-covered items or services. We are not proposing to
prescribe exactly how plans effectuate the proposed requirements at
Sec. 422.102(g)(2)(i) because we believe flexibility for plans to
innovate around these processes will be beneficial to the industry.
However, if an MA organization provides a debit card that is not
electronically linked to covered items and services and does not
include checks to ensure that the enrollee may only receive covered
benefits they are eligible to receive, the MA organization would be in
violation of these proposed requirements.
Next, we propose at Sec. 422.102(g)(2)(ii) to require MA
organizations that use debit cards to administer a supplemental benefit
to provide instructions for debit card use and customer service support
to enrollees to answer questions or help with issues related to the
administration of the card. For example, if an MA organization provides
a food and produce benefit that may be accessed via a debit card, the
plan must provide eligible enrollees with instructions on how to use
the debit card and provide customer support service to beneficiaries
who have questions about how to use the debit card. This support
service must include instructions to beneficiaries on the process to
access these benefits if not accessible by debit card, in accordance
with Sec. 422.112(a). We believe this is necessary to ensure that
enrollees are fully aware of their benefits and how to properly access
those benefits, particularly those living in rural areas with limited
access to broadband/internet for communication. Finally, all benefits
must be limited to the specific plan year. Therefore, we propose to
state at Sec. 422.102(g)(2)(iv) that MA organizations must ensure the
use of a debit card to administer a covered benefit is limited to the
specific plan year.
In the January 2021 final rule, we amended Sec. 422.102(a)(6) to
state that an MA organization may offer reduced cost sharing as a
mandatory supplemental benefit through the use of reimbursement,
through a debit card or other means. In order to further support the
proposed requirements at Sec. 422.102(g)(1), we also propose to revise
Sec. 422.102(a)(6) by removing ``or other means'' and adding
``manual'' before reimbursement to ensure that reductions in cost
sharing as a supplemental benefit are clearly limited to either manual
reimbursement or to a debit card governed by the proposed rules under
Sec. 422.102(g) for covered items and services. We believe this
revision ensures that when providing reduced cost sharing through a
debit card, that card is governed by the proposed requirements at Sec.
422.102(g)(1)(i). This proposal would
[[Page 99388]]
prohibit plans from using other mechanisms not directly described in
Sec. 422.102(a)(6)(i).
We further believe this revision is necessary because ``other
means'' could be interpreted to allow an unrestricted card or other
vague mechanisms, which would conflict with CMS requirements that a
debit card be exclusively linked to covered benefits and limited to the
plan year or the requirements being proposed at Sec. 422.102(g)(1)(i).
Further, MA organizations are required to administer reductions in cost
sharing in a manner that ensures the debit card, reimbursement, or
allowance can only be used towards plan-covered services and are
limited to the specific plan year. The use of an unrestricted card
cannot guarantee compliance with these requirements.
While we are proposing to remove ``or other means,'' we solicit
comment on what other means, outside of manual reimbursement or a debit
card, would be unintentionally removed as options to plans should we
finalize this proposed revision. We also solicit comment on how these
other means or mechanisms may still guarantee compliance with existing
requirements at Sec. 422.102(a)(6) and the requirements proposed at
Sec. Sec. 422.102(g) and 422.111(b)(6) (discussed in section III.H.2
of this proposed rule). For example, it is not our intent that the
proposed changes at Sec. 422.102(a)(6) prohibit an organization from
using a stored value card,\66\ provided the use of these cards by MA
plans complies with the requirements at Sec. 422.102(g). Therefore, we
also solicit comment on whether the use of stored value cards meets the
requirements at Sec. 422.102(g). Specifically, we solicit comment on
whether the mechanisms available and used with stored valued cards are
sufficient so that the purchases made through such cards can be
electronically linked to plan covered items through a real-time
identification mechanism that verifies the eligibility of plan covered
benefits at the point of sale, and can restrict the time period allowed
for the use of the stored value card to the plan year only. We also
solicit comment on whether stored value cards should be explicitly
added to Sec. 422.102(a)(6) and Sec. 422.102(g) as an acceptable
means of administering reductions in cost sharing and the coverage of
supplemental benefits.
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\66\ https://www.fiscal.treasury.gov/stored-value-card/.
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We solicit comment on all aspects of this proposal and may consider
finalizing revisions to our policies based on the comments received.
4. Access
While a MA organization may utilize a debit card to administer a
benefit, this does not exempt the plan from ensuring access and network
adequacy is preserved for the benefit if there is an issue with the
vendor or a technical issue with the debit card. As discussed earlier,
the regulations at Sec. 422.112(a)(1)(iii) specify that coordinated
care plans must arrange for, and cover any, medically necessary
(clinically appropriate for non-primarily health related SSBCI) 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. Additionally, our long-
standing guidance under section 40.3.1 of Chapter 4 of the Medicare MCM
states, ``Every MA plan, independent of the payment method it chooses,
must also allow--under circumstances which it describes (for example,
when the debit card network is not operating correctly)--for manual
reimbursement for the purchase of OTC items based on submitted
receipts.'' We included this language in the Medicare MCM Chapter 4 to
ensure enrollee access by requiring plans to have an alternative method
(for example, reimbursement based on submitted receipts) for enrollees
to receive their OTC benefits if there was an issue with the contracted
vendor or an operational issue with the debit card. We believe that it
is important to adopt a similar policy here in order to maintain
enrollee access for all benefits administered through a debit card, not
just OTC benefits.
Therefore, we propose at Sec. 422.102(g)(2)(iii) that a plan must
have an alternative process that allows for reimbursement of eligible
expenses for plan covered benefits. We believe this proposal would
allow enrollees to maintain access to covered benefits that are
administered through the offering of a debit card should the real-time
identification mechanism fail or otherwise be unavailable. This would
allow enrollees to be reimbursed for the purchase of eligible plan
covered benefits if they are unable to use their plan debit cards. We
believe that requiring plans to allow this alternative will ensure that
the enrollee has access to the benefit if there is an issue with the
vendor, a technical issue with the debit card, or any other situation
in which the use of a debit card is unfeasible for the enrollee. This
may include non-technical issues, such as when an enrollee is having
trouble understanding how to use the debit card or is otherwise running
into non-technical obstacles to its use. This alternative reimbursement
process could also apply if there are failures with the electronic
processing system used by the provider. This includes situations where
a permitted transaction is erroneously declined. In other words, in the
case that the debit card is not operating correctly or as intended,
there is an issue with the vendor, or any other situation in which the
use of a debit card is unfeasible for the enrollee, the MA plan must
allow enrollees to be reimbursed for the purchase of the covered
benefit based on submitted receipts. This also includes situations in
which a contracted vendor is not easily accessible due to an enrollee's
transportation constraints. This proposed requirement protects enrollee
access to benefits that they are entitled to receive regardless of
issues that may arise from a plan's chosen mode of delivery (for
example, plan debit card).
This alternative process must be in place for both in-network and
out-of-network access to the benefit where necessary (for example, in
the event that in-network providers and/or vendors are unavailable or
inadequate to meet the enrollee's needs). In this scenario, the plan
would still be responsible for ensuring out of network access at in
network cost sharing. We expect MA organizations to adequately disclose
the process by which reimbursement may be made to enrollees and to
ensure that the process is accessible to all enrollees. We also
encourage MA organizations to be mindful of enrollees in rural areas,
especially those who have limited access to broadband or internet
communication, when implementing this requirement and when disclosing
information about how to effectuate a reimbursement to plan enrollees.
This is consistent with and will further ensure compliance by MA
coordinated care plans with Sec. 422.112(a).
We also note that MA plans that are PPOs are required to provide
reimbursement for all covered services, regardless of whether the items
are provided within the network of providers under Sec.
422.4(a)(1)(v). Regarding reimbursement, Sec. 422.4(a)(1)(v)(B)
requires PPOs to provide for ``reimbursement for all covered benefits
regardless of whether the benefits are provided within the network of
providers.'' This applies to all supplemental benefits, including those
administered through a debit card (we note that in this scenario, an
enrollee may be subject to increased cost sharing). For example, a MA
organization may contract with a particular grocery store to furnish
their
[[Page 99389]]
food and produce benefit. However, in a PPO, enrollees may purchase
eligible food and produce at another non-contracted grocer (out of
network provider) and be reimbursed for those covered items. We expect
MA PPOs to have processes to verify out of network reimbursement is
only made for plan-covered services and to indicate to enrollees the
process by which reimbursement can be made. As noted above, that
process should be mindful of enrollees in rural or remote areas with
limited access to providers and internet-based communication methods.
Finally, we remind MA plans that our regulations at Sec.
422.112(b)(3) provide for coordinated care MA plans to include
community-based services in their plans for coordination and continuity
of care for enrollees. In addition, Sec. 422.112(b)(3) specifically
states that MA coordinated care plans are required to ``coordinate MA
benefits with community and social services generally available in the
area served by the MA plan.'' MA plans may contract with community-
based organizations to provide supplemental benefits that are compliant
with the statutory and regulatory requirements. We strongly encourage,
for example, an MA plan that elects to offer a food and produce
supplemental benefit to do so via a community-based organization that
is able to process the benefit through a debit card. We understand that
in some areas there may be a limited number of community-based
providers, including small businesses. However, we strongly encourage
plans to partner with community-based providers or other local, smaller
businesses when offering supplemental benefits, particularly regarding
food and produce benefits that may be offered to chronically ill
enrollees under SSBCI regulations at Sec. 422.102(f). We believe that
encouraging plans to contract with community-based providers will
improve enrollee access to benefits. With covered benefits available in
their communities, enrollees will be able to more readily and easily
obtain and use covered benefits and thus have the potential to improve
their overall health.
5. Additional Disclosure Guardrails
To increase transparency for beneficiaries accessing plan-covered
benefits, we also propose to add additional disclosure requirements
specific to supplemental benefits under Sec. 422.111. Section
422.111(b) currently requires MA organizations to disclose mandatory
and optional supplemental benefits and the premium for those benefits.
We propose to amend Sec. 422.111(b)(6) to state that MA organizations
must disclose any mandatory supplemental benefits (including reductions
in cost sharing) or optional supplemental benefits, the premium for
optional supplemental benefits, and any applicable conditions and
limitations associated with receipt or use of supplemental benefits. We
propose to clarify that this disclosure must include eligible OTC items
and, where supplemental benefits are administered through a debit card,
must specify which benefits may be accessed using the debit card. We
believe that such disclosure is necessary to ensure transparency
considering the growth of the scope of supplemental benefits and
authorized administrative flexibilities, such as the use of plan-
furnished debit cards to administer certain supplemental benefits. This
will help ensure that plan enrollees are sufficiently aware of what
covered benefits may be accessed through any debit card they receive
from their plan.
Lastly, regarding OTC items, longstanding CMS guidance (section
40.1 of Chapter 4 of the Medicare MCM) defines OTC items as health-
related items and medications that are available without a
prescription, and Sec. 422.102(c)(2) provides that permissible
supplemental benefits are items and services that are not covered by
Medicare Part A, Part B or Part D. Per Sec. 422.100(c)(2), plans may
never offer as a supplemental benefit something that is covered under
Part B or that is paid for under Part D for the plan's enrollees,
including an OTC item or medication. Additionally, while the 2022 Final
Rule did include OTC items as an example of permissible primarily
health-related supplemental benefits (86 FR 5971), it did not include a
non-exhaustive list of acceptable and non-acceptable items. We have
also received feedback that a non-exhaustive list could provide further
clarity for MA organizations. Therefore, we include a non-exhaustive
list here. Examples of permitted primarily health related OTC items
that have been reviewed and approved by CMS during the bid review
process include, but are not limited to: amplified phones, analgesics,
antacids, anti-bacterial grooming products (when recommended by a
provider), antihistamines, anti-inflammatories, antiseptics, blood
pressure cuffs, callous/wart remover, custom made compression garments
(if furnished under circumstances when it would not be covered by the
Part B benefit), contact lens solution and cases, over the counter
contraceptives (such as condoms and over the counter, non-prescription
birth control pills), cotton swabs, COVID-19 tests (over the counter),
decongestants, dressing and eating aids, extension grabbers or reaching
aids, facial cleaners (including acne wash), feminine hygiene products
(such as douche, lubricants, pads, tampons, wipes), fiber supplements,
first aid supplies, energy protein bars and power drinks, nutritional
drinks/shakes, hand sanitizer, hearing aid batteries, hearing
amplifiers, herbal supplements, hip kits, dietary supplements (such as
CoQ10, garlic, gingko biloba, melatonin, and saw palmetto,)
incontinence supplies (such as adult diapers and under pads), insulin
refrigeration units, and lip soothers/balms (non-medicated), low vision
aids, magnifying glasses, medicine dispensers, mouth/oral care products
(such as toothbrush/paste, floss, mouthwash, denture adhesives/
cleaners), naloxone (if furnished under circumstances when it would not
be covered by Medicare Part B or Part D), night lights, nicotine
replacement therapy (NRT), pain relief products (such as Epsom salt and
ice packs), pill bottle openers, pill/tablet boxes, cutters, and
crushers, pulse oximeters, probiotics, nonprescription reading glasses,
shoe insoles/inserts/arch supports, skin moisturizers for dry skin,
skin protectant (such as diaper rash ointment, moleskin, mosquito
repellent, petroleum jelly), witch hazel, sleep aids, soap (doctor
recommended antibacterial/antimicrobial), sunscreen, supportive items
(such as compression hosiery, rib belts, elastic knee support), toilet
lights, vitamins and minerals, nonprescription weight loss items,
weight scales, and disposable face masks (to protect against
respiratory illnesses). Although this is not considered to be an
exhaustive list of OTC items, we solicit comment on whether there are
additional items that stakeholders believe should be included on this
list.
CMS has also reviewed items that CMS has determined not to be
permissible MA supplemental benefits because they do not meet the
requirement that the item or service be primarily health related. Such
OTC items that cannot be covered as MA supplemental benefits include
air conditioners, baby items, bad breath remedies (gum, breath mints),
bagging fees, body scrubs, cannabidiol, cleaning products (Clorox,
Lysol), clocks, dehumidifiers, deodorant, grooming/shaving supplies,
hair care (shampoo, conditioner, dye, bleach, hair removal and hair
growth products), humidifiers, jar openers, paper products (tissue,
[[Page 99390]]
toilet paper, paper towels), perfume, pest control, skin moisturizers
used for anti-aging, teeth whiteners, water bottles, and personal
coolers. We note that items such as air conditioners, cleaning
products, dehumidifiers, humidifiers, grooming supplies to assist with
hygiene, paper products (tissue, toilet paper, paper towels), and pest
control may be permissible as a non-primarily health related SSBCI
provided the item has a reasonable expectation of improving or
maintaining the health or overall function of the enrollee and meets
the standards at Sec. 422.102(f). For example, research indicates that
air conditioners may improve the breathing of patients with COPD and
asthma.\67\ We solicit comment on these listed items and may revise the
list based on feedback received.
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\67\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5291496/.
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Again, we reiterate that the list of permissible primarily health
related OTC items set forth in this proposed rule is non-exhaustive.
We've also included a non-exhaustive list of items that are not
primarily health related but could be offered as a non-primarily health
related SSBCI provided the requirements under Sec. 422.102(f) are met.
CMS reviews bids each year to ensure that proposed supplemental
benefits meet the applicable regulatory and statutory standards.\68\
For example, MA organizations may propose to offer OTC items not on
this list and CMS may come across items in the future, not listed here,
that we believe do not meet the definition of a supplemental benefit
per Sec. 422.100(c)(2) or are not primarily health related per Sec.
422.100(c)(2)(ii). However, we believe including these lists in this
preamble discussion will help MA organizations consistently apply the
requirements at Sec. Sec. 422.100(c)(2) and 422.100(c)(2)(ii) and
assist MA organizations when planning and preparing their annual bid
packages.
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\68\ We strongly encourage MA organizations that are looking to
cover new or novel benefits to raise those to CMS well in advance of
bid submission to allow ample time for the MA organization to
provide, and CMS to review, information explaining how the
applicable statutory and regulatory standards are met for the
proposed benefits without the time pressures of the bid review
process.
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6. Marketing Supplemental Benefits
Another important consideration related to debit cards is MA
organizations' marketing tactics. We have become aware of certain
advertisements that solely mention debit cards, or marketing terms such
as ``Medicare flex cards,'' with an alluring value attached to them,
potentially giving false impressions that the card itself is the
benefit, that it can be used to purchase anything and can be used
anywhere, and that an individual can receive it automatically by
enrolling in the advertised MA plan.
CMS has concerns with these advertisements. As discussed
previously, the debit card itself is not the supplemental benefit,
rather, it is the mechanism through which the MA organization
administers and pays for the covered supplemental benefit. There is a
risk that a beneficiary might view this type of advertisement and make
an enrollment decision based on the belief that, by enrolling in the
plan, they will automatically receive a card with ``free'' money to
spend wherever they choose. In reality, that is not the case because
debit cards used by MA plans in administering MA supplemental benefits
have various restrictions, including restrictions related to
eligibility, the timeframe in which the debit card may be used, the
providers with whom the debit card may be used, and the covered items
and services for which the debit card may be used.
To prevent such inaccurate or misleading advertising, we are
proposing new parameters for MA organizations' marketing of
supplemental benefits. Specifically, we propose to add new paragraph
(b)(11) to Sec. 422.2263, prohibiting MA organizations from marketing
the dollar value of a supplemental benefit or the method by which a
supplemental benefit is administered, such as use of a debit card by
the enrollee to provide the plan's payment to the provider for the
covered services. We believe that this proposed requirement is
necessary to promote informed choice among prospective and current MA
enrollees. By prohibiting the dollar value and administration method in
marketing materials, it will provide the beneficiary with enough
information to inquire further if the supplemental benefit would be
helpful to their care, rather than an overly simplified advertisement
that does not include the level of information required for an informed
enrollment decision. Our proposal would also reduce the number of
misleading MA supplemental benefit advertisements.
We solicit comment on all aspects of this proposal and may consider
revisions based on the comments received.
This proposal primarily codifies and clarifies existing guidance
and practices and is not expected to have additional impact above
current operating expenses. This proposal would not impose any new
collection of information requirements.
G. Non-Allowable Supplemental Benefits for the Chronically Ill (SSBCI)
(Sec. 422.102)
Section 1852(a)(3)(D)(ii)(I) of the Act requires that an item or
service offered as SSBCI have a reasonable expectation of improving or
maintaining the health or overall function of the chronically ill
enrollee. The 2024 final rule titled the ``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)'' (the
``April 2024 Final Rule'') (89 FR 30448) finalized requirements at
Sec. 422.102(f)(3) 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 an SSBCI has a
reasonable expectation of improving or maintaining the health or
overall function of a chronically ill enrollee. In the 2024 Final Rule,
we also codified at Sec. 422.102(f)(5) that CMS may 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. In addition, in the April 2024 final rule
(89 FR 30448), we modified and strengthened the current requirements in
Sec. 422.2267(e)(34) for the SSBCI disclaimer that MA organizations
offering SSBCI must use whenever SSBCI are mentioned. Specifically, we
required 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. We also finalized 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 required that MA
organizations include the SSBCI disclaimer in all marketing and
communications materials that mention SSBCI. These requirements further
help to ensure that the marketing of and communication about these
benefits was not misleading or potentially confusing
[[Page 99391]]
to enrollees who rely on these materials to make enrollment decisions.
Section 1852(a)(3)(A) provides CMS the authority to approve
supplemental benefits. Supplemental benefits must meet the regulatory
and statutory requirements for approval, including that the benefits
may not be approved if the agency finds that including such
supplemental benefits would substantially discourage enrollment by
Medicare+Choice (now Medicare Advantage) eligible individuals with the
organization. Further, per section 1854(a)(5)(C) of the Act, CMS is not
obligated to accept any or every bid submitted by an MA organization.
Based on our experience reviewing, approving, and denying bid proposals
throughout the years, we are relying upon these authorities to propose
in regulation a non-exhaustive list of non-primarily health related
items or services that do not meet the standard of having a reasonable
expectation of improving or maintaining the health or overall function
of the enrollee standard as described in section 1852(a)(3)(D)(ii)(I)
of the Act and at CMS regulations at Sec. 422.102(f)(1)(ii).
Therefore, none of these items and services are permissible SSBCI. We
believe that codifying this non-exhaustive list of examples of items or
services that do not meet these standards provides transparency and
greater certainty for MA organizations and enrollees about the rules
that govern these benefits, which is necessary and appropriate to
ensure that supplemental benefits coverage is properly furnished by all
MA organizations that choose to offer these supplemental benefits.
SSBCI must meet the regulatory requirements set forth under Sec.
422.102(f). They must also meet the requirements to be a supplemental
benefit as described at 422.100(c)(2), with the exceptions that the
benefits need not be primarily health related, as described at Sec.
422.100(c)(2)(ii)(A), and the MA organization must incur a non-zero
direct non-administrative cost (as opposed to a non-zero medical cost)
in covering the benefit. Further, while an SSBCI may be non-primarily
health related, there must still be a reasonable expectation that the
item or service will improve or maintain the health or overall function
of the chronically ill enrollee. For example, an air conditioner is not
a primarily health related item or service, but there is acceptable
evidence that using an air conditioner may improve the health of
patients with asthma, chronic obstructive pulmonary disease (COPD),\69\
or other breathing problems for whom an air conditioner might keep them
from being hospitalized during times of excessive heat or
wildfires.\70\ A health plan's care coordination team might be able to
identify these individuals in advance to provide them access to an air
conditioner.
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\69\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5291496/.
\70\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2900329/.
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We propose to codify a non-exhaustive list of non-primarily health
related items or services that do not have a reasonable expectation of
improving or maintaining the health of a chronically ill enrollee and
therefore cannot be offered as SSBCI. Those items include--
Procedures that are solely cosmetic in nature
and do not extend upon Traditional Medicare coverage (for example,
cosmetic surgery such as facelifts or cosmetic treatment for facial
lines, atrophy of collagen and fat, and bone loss due to aging);
Alcohol, tobacco, and cannabis products;
Funeral planning and expenses;
Life insurance;
Hospital indemnity insurance; and
Broad membership-type programs inclusive of
multiple unrelated services and discounts.
These items and services cannot be offered as SSBCI for the
following reasons:
Regarding cosmetic services, CMS explained in previous guidance
(see HPMS memorandum, ``Final Contract Year (CY) 2025 Standards for
Part C Benefits, Bid Review and Evaluation,'' dated May 6, 2024, pp.
30-31) that coverage for procedures that are cosmetic in nature are not
permitted to be offered as SSBCI because these benefits do not meet the
statutory requirement of a ``reasonable expectation of improving or
maintaining the health or overall function of the enrollee.'' CMS may
decline 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. Some plans have
proposed to offer cosmetic services for aesthetic purposes only, such
as botulinum toxin injections for lines and wrinkles, in their bids.
CMS disapproved these proposals during bid review. While MA
organizations are permitted to offer non-primarily health related
benefits to chronically ill enrollees, these benefits must still have a
direct impact on the enrollee's health. Purely cosmetic procedures are
not health related and thus cannot be permitted as a supplemental
benefit. For these reasons, procedures that are solely cosmetic in
nature and do not extend upon Traditional Medicare coverage cannot be
offered as SSBCI.
We do note however that some cosmetic procedures may be acceptable
to be offered as an SSBCI benefit if used to treat medical conditions
that affect health or overall function and would not be considered
purely cosmetic in nature. For example, the use of botulinum toxin
injections is acceptable when treating medical conditions such as an
overactive bladder, bladder leakage issues due to neurologic disease,
headache prevention in adults with chronic migraine, increased muscle
stiffness in adults with limb spasticity, cervical dystonia (CD),
strabismus, eyelid spasms or blepharospasm, and hyperhidrosis. There
are some circumstances in which Traditional Medicare (i.e., Medicare
Parts A and B) provides coverage for these items. These would be
acceptable as a supplemental benefit in situations in which the MA
organization is extending upon or providing coverage, beyond that which
is provided under Traditional Medicare, related to these procedures.
Additionally, coverage for reconstructive medical procedures that
extend upon or wrap around Traditional Medicare coverage and are not
solely cosmetic in nature (for example, reconstructive surgery for
blepharoplasty, subperichondrial hematoma, sebaceous cysts, cleft
palate, or trauma related injuries) would also be permitted as a
supplemental benefit.
In the 2019 HPMS memo titled ``Implementing Supplemental Benefits
for Chronically Ill Enrollees,'' we stated that MA organizations may
offer food and produce to assist chronically ill enrollees in meeting
nutritional needs assuming all requirements for SSBCI under Sec.
422.102(f) are met, and that such items may include items such as (but
not limited to) produce, frozen foods, and canned goods. We noted that
tobacco and alcohol are expressly prohibited however, as neither are
considered food or nutritional. In addition, CMS has received inquiries
from MA organizations about whether they are permitted to offer
cannabis-based products as a supplemental benefit. In response to these
inquiries, CMS has stated that medical marijuana or derivatives, such
as cannabis oil, cannot be covered by MA organizations
[[Page 99392]]
as they are illegal substances under Federal law.
In the 2019 HPMS memo titled ``Implementing Supplemental Benefits
for Chronically Ill Enrollees,'' we also stated that while MA
organizations may provide services to assist in the establishment of
decision-making authority for health care needs (for example, power of
attorney for health services) and/or may provide education such as
financial literacy classes, technology education, and language classes,
assuming all requirements for SSBCI under Sec. 422.102(f) are met, but
coverage of funeral expenses is not permitted. Funeral services are
provided after the death of the beneficiary and, as such, cannot be
tied to improving or maintaining that individual's health or overall
function. Similarly, life insurance would not be permissible as SSBCI.
We also do not consider hospital indemnity insurance to meet the
definition of a supplemental benefit. MA organizations offering
supplemental benefits must incur a non-zero direct medical cost, except
that in the case of an SSBCI that is not primarily health related the
MA organization may instead incur a non-zero, direct non-administrative
cost (Sec. 422.100(c)(2)(ii)(B)). Reductions in cost sharing fit into
the definition of a supplemental benefit as they are increases in the
MA organization's share of the overall payment for the covered health
care item or service. However, payment for hospital indemnity insurance
premiums would not fit this definition because an MA organization
paying for separate, third-party insurance for the enrollee does not
incur a direct cost on behalf of the enrollee. Rather, it shifts
payment for medical costs to another payer.
Additionally, MA organizations are already permitted to reduce cost
sharing for inpatient and other covered benefits as part of an SSBCI
reduction in cost sharing package. Therefore, MA organizations already
have a mechanism to reduce cost sharing under existing rules that do
not require offering separate, third-party insurance coverage. Finally,
42 CFR part 422 subpart M appeal and grievance requirements require all
covered benefits to be subject to the MA appeal rights. The purchase of
a hospital indemnity insurance policy would mean that the actual
benefits from the policy to enrollees (that is, payment toward or
reimbursement of the costs of health care items and services) would not
be covered by subpart M. Having only the payment of premium subject to
appeal is inconsistent with how other benefits available through the MA
organizations are subject to appeal and potentially creates enrollee
confusion or misleads enrollees as to what the MA organization is
responsible for furnishing and paying and thus is inappropriate as a
supplemental benefit.
Finally, CMS has received and declined proposals from MA
organizations to offer broad membership programs, inclusive of multiple
unrelated services discounts, such as Amazon Prime, Costco, and others,
as SSBCI. A generic membership is not permissible as SSBCI because it
is not limited to items or services that have a reasonable expectation
of improving or maintaining the health or overall function of the
enrollee. That is not to say that an MA organization cannot contract
with any of these retailers to offer covered benefits in some capacity
(for example, benefits administered via a restricted debit card).
However, a generic membership that would include items or services that
do not have a reasonable expectation of improving or maintaining the
health or overall function of the enrollee and no mechanism to ensure
that enrollees receive only covered benefits is not compliant with CMS
rules regarding supplemental benefits and thus not allowable as a
supplemental benefit.
Lastly, we reiterate the statutory prohibition against MA
organizations offering cash or monetary rebates (section 1851(h)(4)(A)
of the Act), and we further reiterate that items or services that are
not intended to improve the enrollee's health, such as gambling items
(e.g., online casino games, lottery tickets), firearms and ammunition,
would not meet our requirements for supplemental benefits.
We propose to codify examples discussed here as items and services
that cannot be offered as SSBCI at Sec. 422.102(f)(1)(iii). We solicit
comment on all aspects of this proposal and may consider revisions to
our proposal based on the comments received. These revisions may
include, but are not limited to, a revision to the non-exhaustive list
of non-primarily health related items and services that do not have a
reasonable expectation of improving or maintaining the health of a
chronically ill enrollee and may not be offered as SSBCI.
CMS also solicits comment on other items and services not listed
here that would be appropriate to include in the list of items that may
not be offered as SSBCI.
We ask that commenters include in their comments explanations and
why they believe suggested items do not meet the statutory requirement
of having a reasonable expectation of improving or maintaining the
health or overall function of the enrollee and include any relevant
information and research for CMS to consider. Based on the comments
received, we may consider finalizing revisions to this proposed policy.
Finally, we note that just because we are proposing to codify a
non-exhaustive list of benefits and services that may not be offered as
an SSBCI, this does not mean that all items not included on this list
are allowable. All benefits must be proposed in a plan's annual bid and
are subject to review by CMS. Further, all SSBCI must meet the
requirements under Sec. 422.102(f), including the requirement of a
written bibliography of relevant acceptable evidence that demonstrates
the impact of a service on the health or overall function of its
recipient (Sec. 422.102(f)(3)), and the requirement that any enrollees
targeted with an SSBCI service or benefit must meet all the eligibility
requirements under Sec. 422.102(f).
This proposal primarily codifies and clarifies existing guidance
and practices and is not expected to have additional impact above
current operating expenses for MA organizations. This proposal would
not impose any new collection of information requirements.
We seek comment on all aspects of this proposal and may consider
revisions to the final policy based on the comments received.
H. Eligibility for Supplemental Benefits for the Chronically Ill
(SSBCI) and Technical Changes to the Definition of Chronically Ill
Enrollee (Sec. 422.102)
1. Eligibility for Supplemental Benefits for the Chronically Ill
(SSBCI)
The Balanced Budget Act (BBA) of 2018 (Pub. L. 115-123) provided
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 33800 through 33805), where we referred to them as
Special Supplemental Benefits for the Chronically Ill (SSBCI).
Supplemental benefits, including SSBCI, are generally funded using
MA plan rebate dollars. The MA rebate dollars may be used for
mandatory, but not optional, supplemental benefits
[[Page 99393]]
offered by the plan (Sec. 422.266(b)(1)).\71\ 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
(BPT) 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 the statutory
amendment authorizing SSBCI and our subsequent guidance in a Health
Plan Management System (HPMS) memorandum dated April 24, 2019 (``2019
HPMS memo'' hereafter),\72\ 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 over the last 5 years.
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\71\ Rebates can also be used to buy down Part B and D premiums
under Sec. 422.266(b)(2) and (b)(3).
\72\ https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/supplemental_benefits_chronically_ill_hpms_042419.pdf.
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As we described in 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) (hereafter
referred to as the ``April 2024 final rule'') (89 FR 30551), 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 is
eligible for the SSBCI by meeting the statutory 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 of chronic conditions is the same as the list for
which MA organizations may offer chronic condition special needs plans
(C-SNPs), which can be found in the definition of ``severe or disabling
chronic condition'' within Sec. 422.2.
Section 422.102(f)(4)(i) and (ii) requires that the MA plans have
written policies for making SSBCI enrollment determinations, document
that each enrollee eligible for SSBCI is a chronically ill enrollee and
provide this documentation to CMS upon request.\73\
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\73\ 89 FR 30551.
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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.
Section 422.102(f)(4)(iii)(A) requires MA plans must have and apply
written policies based on objective criteria for determining a
chronically ill enrollee's eligibility to receive a particular SSBCI.
Section 422.102(f)(4)(v) further requires that MA plans maintain
without modification, as it relates to an SSBCI, 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 for the full coverage year.
In the June 2020 final rule, we stated that it is our expectation
that plans communicate to enrollees information in a clear manner about
the scope of SSBCI that the MA plan covers and who is eligible for
those benefits (85 FR 33803). We made further changes to our
regulations in our April 2024 final rule, where we modified the
disclaimer requirements at Sec. 422.2267(e)(34) to require plans to
include clear information about SSBCI eligibility criteria in marketing
and communications materials that mention SSBCI, including by listing
the chronic conditions an enrollee must have in order to be eligible
for the SSBCI. Taken together, these previous actions and the proposed
changes to the regulation here demonstrate our broader concern about
the importance of transparency as it applies to SSBCI eligibility.
Currently, as permitted by Sec. 422.504(f)(2), CMS may review
SSBCI eligibility criteria by requesting it from plans. This is
currently done on a case-by-case basis. Since there is no public
posting of a plan's criteria for determining how an enrollee may or may
not qualify for an SSBCI, enrollees are left to speculate whether a
particular benefit, which may be attractive to an enrollee and spur
them to enroll in a plan, is even available to them. This lack of
transparency limits a potential enrollee's ability to review and
determine whether they may be eligible for SSBCI based on the plan's
eligibility criteria. Additionally, we received several comments in
response to 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 proposed rule
(herein after referred to as the ``November 2023 proposed rule'')
requesting that plans post their objective eligibility criteria for
SSBCI on a public-facing website to increase transparency for potential
enrollees. In response to these comments, we noted that CMS would
consider taking this action in future rulemaking (89 FR 30558).\74\
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\74\ https://www.federalregister.gov/d/2024-07105/p-1069.
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Further, when reviewing SSBCI eligibility criteria, we have
discovered that several plans offering SSBCI benefits do not determine
eligibility in an objective manner, as required at Sec.
422.102(f)(4)(iii)(A).\75\ For example, an enrollee may self-attest
that they are eligible for SSBCI without additional criteria or any
verification from the plan of this eligibility status. This would not
meet our requirements. Additionally, we have noted in our reviews that
some plans determine what SSBCI to cover and pay for without
consultation with a doctor or other medical professional to determine
the clinical appropriateness of the items and services offered under
the SSBCI benefit. CMS has also identified instances where plans, when
determining eligibility, are not properly evaluating enrollees using
all three components of the definition for ``chronically ill enrollee''
as defined in section 1852(a)(3)(D)(iii) of the Act. One of the three
requirements in the statutory definition of ``chronically ill
enrollee'' is that the individual requires intensive care coordination.
As we noted in the June 2020 Final Rule, we did not define ``intensive
care coordination'' or establish standards for when an MA enrollee
requires such services.\76\ We wished to allow plans flexibility in
determining what the phrase meant to best serve their enrollees.
However, we noted some examples of methods through which
[[Page 99394]]
plans may determine an enrollee required intensive care coordination,
such as conducting a health risk assessment, performing a retrospective
claims review for an enrollee, or by other means the plan deems
necessary. CMS reaffirms its position stated in the June 2020 final
rule, that objective criteria which utilize the above mechanisms for
meeting the three-pronged definition are present in the medical
community and may be readily accessible to the plan.
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\75\ Prior to the effective date the April 2024 final rule, this
requirement was codified at 42 CFR. 422.102(f)(3)(iii). The April
2024 final rule slightly reorganized Sec. 422.102(f) as part of
amendments to adopt new requirements.
\76\ https://www.federalregister.gov/d/2020-11342/p-59.
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We have identified that the current regulation text (Sec.
422.102(f)(1)(i)(A)) may need further clarification for plans. It was
never our intention to imply that the presence of a chronic illness or
chronic condition alone is sufficient to satisfy all three of the
statutory criteria to qualify as a chronically ill enrollee. Therefore,
we are clarifying that having a medically complex chronic condition or
comorbidity by itself is insufficient to satisfy the requirements in
Sec. 422.102(f)(1)(i)(A)(1), (f)(1)(i)(A)(2), and (f)(1)(i)(A)(3), and
are proposing a technical edit to clarify this requirement. We propose
to amend Sec. 422.102(f)(1)(i)(A) and (f)(1)(i)(A)(1) through (3) to
specify that '' a chronically ill enrollee is an individual enrolled in
the MA plan who meets all of the following:
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. (3) Requires intensive care coordination. This is consistent
with the statute, which defines a ``chronically ill enrollee'' at
section 1852(a)(3)(D)(iii) of the Act as an enrollee who: (1) 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; (2) has a high risk of hospitalization or other adverse
health outcomes; and (3) requires intensive care coordination. This
clarification would allow the definition of a chronically ill enrollee
at Sec. 422.102(f)(1)(i)(A)(1) through (3) to mirror the statutory
language at section 1852(a)(3)(D)(iii) of the Act as intended in the
2020 final rule.
Additionally, we propose that plans must demonstrate that an
enrollee has met all three of the criteria set forth in Sec.
422.102(f)(1)(i)(A) through the use an objective process (for example,
either a health risk assessment, a claims review, or other similar
means). We wish to continue to allow plans flexibility in the methods
they use to determine that enrollees have met all three criteria.
By way of example, a plan could establish that in order to be
eligible for certain SSBCI, an enrollee must have a confirmed diagnosis
of diabetes by their primary care physician, and must also have been
admitted to the hospital in the last 90 days. Under this example, the
diagnosis of a chronic illness is sufficient to satisfy the first
criterion (as proposed), that the enrollee, ``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
\77\.'' However, the plan must also determine that the enrollee has met
the second and third criteria: (2) has a high risk of hospitalization
or other adverse health outcomes; and (3) requires intensive care
coordination. The plan may determine that an enrollee meets the second
requirement by being hospitalized in the last 90 days. The plan may
reason that enrollees who have been hospitalized in the last 90 days
are at high risk of readmission and so meet the second statutory
requirement of having a high risk of hospitalization. The plan may
further decide that the enrollee would require intensive care
coordination to prevent further hospitalization, and thus would satisfy
the third regulatory requirement. In this hypothetical scenario, the
plan has determined through an objective process that the chronically
ill enrollee meets all three requirements at Sec. 422.102(f)(1)(i)(A).
Given the variability, inconsistency and subjective eligibility
determinations by plans that we have observed or been notified about as
part of our routine monitoring, we are proposing three additional
amendments to the regulation text. First, we propose to codify at a new
paragraph at Sec. 422.102(f)(1)(i)(C) a provision prohibiting MA plans
from using the presence of a chronic illness as the sole basis for
determining eligibility for SSBCI, in accordance with statute and the
minimum requirements for an MA plan to determine that an individual
meets the statutory definition of ``chronically ill enrollee.'' As
described previously, it has become evident through our routine
monitoring that some plans are not abiding by the statutory
requirements to determine eligibility for SSBCI. CMS has proceeded with
compliance actions in these cases, and while we noted in the June 2020
final rule that we wished to allow flexibility for plans to identify
needs within their unique plan population, some plans have
inappropriately determined eligibility for SSBCI when the enrollee does
not meet the three-pronged criteria set forth at section
1852(a)(3)(D)(iii) of the Act to receive SSBCI. As we make the
technical edit to clarify our regulation, we also propose to add
regulation text to Sec. 422.102(f)(1)(i)(C) which provides that having
one or more comorbidities and medically complex chronic conditions
alone is not sufficient to demonstrate that an enrollee meets all three
criteria set forth in paragraph (f)(1)(i)(A) and that MA plans must,
through health risk assessments, review of claims data, or other
similar means, demonstrate that enrollees meet all three criteria set
forth in paragraph (f)(1)(i)(A). Our proposal to make a technical
correction would clarify our policy as it regards SSBCI eligibility and
would not impose any new collection of information requirements.
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\77\ As previously noted, the list of chronic conditions that
qualify as comorbid and medically complex chronic conditions that
are life threatening or significantly limit the overall health or
function of an enrollee for purposes of SSBCI eligibility can be
found within the definition of ``severe or disabling chronic
condition'' in CMS's regulations at Sec. 422.2.
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We further propose that plans must publish on their public-facing
website the objective criteria developed and used by the MA plan as
required in Sec. 422.102(f)(4)(i) and (iii)(A) to determine whether an
enrollee is eligible to receive any, and which particular, SSBCI
benefits the plan offers. These objective criteria must set forth how
the plan evaluates each enrollee and determines whether the enrollee
meets the three-pronged definition of a chronically ill enrollee as set
forth in the statute. Specifically, we are proposing that plans must
post on their public-facing website their objective criteria for
determining that an enrollee is a chronically ill enrollee within the
statutory and regulatory definition and is eligible to receive SSBCI
offered by the plan. Plans must make this information available to all
persons on their public-facing website. We remind MA plans of their
digital accessibility obligations as recipients of Federal assistance
under section 504 of the Rehabilitation Act.\78\ We propose this
requirement be codified in the regulation text at Sec.
422.102(f)(4)(iii)(C). In addition, we propose minor reorganization of
paragraph (f)(4)(iii) by adding the words, ``Have objective criteria
for SSBCI. Specifically, the plan must'' and then listing the
requirements in paragraphs (f)(4)(iii)(A) through (C).
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\78\ 29 U.S.C. 794; 45 CFR pt. 84.
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We believe this proposal would provide greater transparency and
[[Page 99395]]
consistency to the eligibility determination process for potential
enrollees and will enhance the enrollees' ability to make informed
decisions about their enrollment and the benefits. We remind plans that
Sec. 422.102(f)(4)(v) requires that plans maintain their evidentiary
standards or objective criteria for enrollee eligibility for the entire
coverage year.
In addition, we remind plans that under Sec. 422.2262, general
communications materials and activities requirements, MA organizations
may not mislead, confuse, or provide materially inaccurate information
to current or potential enrollees. Consistent with these existing
requirements, we expect that MA organizations, as well as the agents
and brokers that are operating on behalf of such organizations, will
provide appropriate information on how the plan evaluates each enrollee
and determines whether the enrollee meets the three-pronged definition
of a chronically ill enrollee when discussing SSBCI benefits with a
current or potential enrollee, to ensure that information about SSBCI
provided in such discussions is accurate and not misleading.
Additionally, while there is not currently a consistent manner by
which plans publicly report this information or submit the information
directly to CMS, we believe these proposals will provide an increased
level of compliance oversight, increase good governance and oversight
of the Medicare Trust Fund, and improve patient participation in their
care and awareness of their eligibility for benefits, by making this
information publicly available rather than only available upon request
by CMS.
We seek public comment on both proposals and may, based on the
comments received, consider finalizing revisions to this final policy.
I. Risk Adjustment Data Updates
1. Update Hierarchical Condition Categories (HCC) Definition (Sec.
422.2)
The current definition of Hierarchical Condition Categories (HCC)
at 42 CFR 422.2 references the International Classification of
Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), which was
the standard medical data code set HHS adopted for health conditions
from October 16, 2002, to September 30, 2015 (45 CFR 162.1002(a)(1) and
45 CFR 162.1002(b)(1)). For the period starting on October 1, 2015, HHS
adopted an updated version of the ICD, ICD-10-CM, as the standard
medical data code set for health conditions (45 CFR 162.1002(c)(2)).
The ICD diagnosis codes--referred to as disease codes in the current
HCC definition--that are grouped in an HCC for risk score calculation
are only those valid codes that are from the ICD version that is in
place during a respective year. For example, for dates of service
starting on October 1, 2015, only valid ICD-10-CM codes would have been
included in HCCs, since ICD-9-CM codes were no longer in use.
We are proposing to remove the reference to a specific version of
the ICD from the definition of HCC in Sec. 422.2, while maintaining a
reference to the ICD in general. The ICD is updated as advances are
made in healthcare, and as new editions are issued, the code set
standard adopted by HHS may change to use the most current edition. See
section 1173(c) of the Act for the Secretary's authority to adopt code
sets, as well as 45 CFR part 162 (specifically, Sec. Sec. 162.1000
through 162.1011) for the diagnosis code sets adopted for HIPAA
transactions. The current HCC definition in Sec. 422.2 states that
disease groupings consist of ``disease codes (currently ICD-9-CM codes)
that predict average healthcare spending.'' Amending the HCC definition
to remove reference to a specific version of the ICD would keep the
definition in Sec. 422.2 current as updates are made to the HCCs in
model calibrations and newer versions of the ICD are created and
adopted by the Secretary. We are also proposing to substitute the terms
``disease codes'' with ``diagnosis codes'' and ``disease groupings''
with ``diagnosis groupings'' to be consistent with ICD terminology.
The proposed update at Sec. 422.2 is a technical change to the
longstanding definition of HCC. The proposal to remove the reference to
a specific version of the ICD from the HCC definition does not change
the meaning of HCC or how it is used in Sec. 422.311, which has been
defined and used in MA regulations since 2010 (75 FR 19803) as part of
describing risk adjustment data validation audit reports and the
voluntary dispute resolution process available for MA organizations to
dispute errors identified during those audits. For this reason, we do
not expect the proposed change to result in additional costs or savings
and are not scoring this provision in the Regulatory Impact Analysis
section. Further, as we are not imposing any new reporting
requirements, we do not believe that our proposal will result in
additional paperwork burden and have not incorporated a burden increase
in the Collection of Information section.
2. Clarifying the Obligation of PACE Regulations To Submit Data (Sec.
460.180(b))
CMS is authorized under section 1894(d)(1) of the Act to make
payments to PACE organizations in the same manner as MA organizations.
Consistent with that, PACE organizations must submit data in accordance
with the risk adjustment data requirements for MA organizations at
Sec. 422.310. Codified at 42 CFR 460.200, PACE organizations are
required to collect data, maintain records, and submit reports as
required by CMS to establish payments rates. We are proposing to codify
our longstanding practice of requiring the collection and mandatory
submission of risk adjustment data by PACE organizations by adding a
new paragraph at 42 CFR 460.180(b)(3) that requires the data they
submit is in accordance with risk adjustment data submission
requirements in Sec. 422.310. By codifying this longstanding
requirement of PACE organizations, the proposed provision does not
create any new requirements or make changes to payment for PACE
organizations. See, for example, 64 FR 66234, 66266 (Nov. 24, 1999)
(``We will subsequently require PACE organizations to submit additional
encounter data consistent with the encounter data requirements for
[MAOs] set forth in 42 CFR 422.257 [the precursor to Sec. 422.310] . .
. .''); see also the system of record notice (SORN) for the CMS
Encounter Data System (EDS), System No. 09-70-0506, at 79 FR 34539
(July 17, 2014) and the CMS Risk Adjustment Suite of Systems (RASS),
System No. 09-70-0508, at 80 FR 49237 (August 17, 2015).
We are proposing to add a new paragraph at Sec. 460.180(b)(3) to
codify existing longstanding practice for the collection and mandatory
submission of risk adjustment data, as specified in Sec. 422.310, for
PACE organizations. The proposed provision does not create any new
requirements or make any changes to payment for PACE organizations. The
proposed regulatory changes will not result in additional costs, nor do
we expect the impact of these changes to result in savings. For this
reason, we do not expect the proposed change to result in additional
costs or savings and are not scoring this provision in the Regulatory
Impact Analysis section. Further, as we are not imposing any new
reporting requirements, we do not believe that our proposal will result
in additional paperwork burden and have not incorporated a burden
increase in the Collection of Information section.
[[Page 99396]]
3. Clarifying the Obligation of Cost Plans To Submit Certain Data
(Sec. 417.486(a))
Currently, we require the submission of risk adjustment data from
organizations that operate cost plans under section 1876 of the Act in
the same manner as MA organizations. Codified at 42 CFR 417.486(a), the
contract of Section 1876 Cost plans must provide that the plan agrees
to submit to CMS: (1) all financial information required under subpart
O of this part and for final settlement; and (2) any other information
necessary for the administration or evaluation of the Medicare program.
In this proposed rule, we propose to amend Sec. 417.486(a) to add
a new Sec. 417.486(a)(3) to codify existing longstanding practice of
requiring the collection and mandatory submission of risk adjustment
data as specified in 42 CFR 422.310 by 1876 Cost plans. As stated in
the 2012 Advance Notice, we have required the submission of encounter
data for Cost plans under our authority in sections 1876(h)(3),
1833(a)(1)(A), and 1861(v) to determine ``reasonable costs.'' Also see
42 CFR 417.568 (requiring Cost plans to ``provide adequate cost and
statistical data . . . that can be verified by qualified auditors'')
and Sec. 417.576(b)(2)(iii) (requiring Cost plans to submit ``[a]ny
other information required by CMS''). These proposed regulatory changes
will not result in additional costs, nor do we expect the impact of
these changes to result in savings. For this reason, we do not expect
the proposed change to result in additional costs or savings and are
not scoring this provision in the Regulatory Impact Analysis section.
Further, as we are not imposing any new reporting requirements, we do
not believe that our proposal will result in additional paperwork
burden and have not incorporated a burden increase in the Collection of
Information section.
J. Ensuring Equitable Access to Medicare Advantage (MA) Services--
Guardrails for Artificial Intelligence (Sec. 422.112)
1. Background
On January 25, 2021, the Biden-Harris Administration released an
Executive Order, ``Advancing Racial Equity and Support for Underserved
Communities Through the Federal Government'' (E.O. 13985), directing
agencies to embed equity principles, policies, and approaches across
Federal Government programs. In October 2022, the White House Office of
Science and Technology Policy (OSTP) released the Blueprint for an AI
Bill of Rights,\79\ identifying five principles to protect the public
from the misuse of artificial intelligence, including eliminating
discriminatory practices by algorithms and systems. On October 30,
2023, the Biden-Harris Administration also released an Executive Order,
``Executive Order on the Safe, Secure, and Trustworthy Development and
Use of Artificial Intelligence,'' directing agencies to ensure that
artificial intelligence tools do not impede the advancement of equity
and civil rights, and that the use of AI within health care
organizations does not deny equal opportunity and justice for the
American people.\80\ On January 30, 2024, CMS published ``Medicare
Program; Request for Information on Medicare Advantage Data'' which
received several comments related to the use and regulation of AI and
requests for CMS ensure that MA plans' use of AI complies with existing
CMS rules without negatively impacting health disparities.\81\
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\79\ https://www.whitehouse.gov/ostp/ai-bill-of-rights/.
\80\ https://www.federalregister.gov/documents/2023/11/01/2023-24283/safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence.
\81\ https://www.federalregister.gov/documents/2024/01/30/2024-01832/medicare-program-request-for-information-on-medicare-advantage-data.
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15 U.S.C. 9401(3) defines ``artificial intelligence'' or ``AI'' as
``a machine-based system that can, for a given set of human-defined
objectives, make predictions, recommendations or decisions influencing
real or virtual environments. Artificial intelligence systems use
machine- and human-based inputs to--(A) perceive real and virtual
environments; (B) abstract such perceptions into models through
analysis in an automated manner; and (C) use model inference to
formulate options for information or action.''
The health care industry has seen the adoption of AI in multiple
capacities, such as, but not limited to, AI-based patient care decision
support tools, vision transformer-based AI methods for lung cancer
imaging applications, and AI and machine learning based decision
support systems in mental health care settings.\82\ In some instances,
automation has created efficiencies, cost savings, and time management
improvements for health providers and support staff.
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\82\ Khosravi M., Zare Z., Mojtabaeian S.M., Izadi R.,
Artificial Intelligence and Decision-Making in Healthcare: A
Thematic Analysis of a Systematic Review of Reviews. Health Serv Res
Manag Epidemiol. 2024 Mar 5;11:23333928241234863. doi: 10.1177/
23333928241234863. PMID: 38449840; PMCID: PMC10916499.
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However, there have been many instances of algorithmic
discrimination, where the use of AI has resulted in deepening bias and
discrimination, exacerbating existing inequities within the health care
system.\83\ Often, these individual patients are members of
historically underserved and marginalized groups, which, increases the
risk of automated bias and discrimination for these populations when AI
tools are used within their health care.\84\ A study in the Journal of
Biomedical Informatics determined that people of color or individuals
with lower socioeconomic status typically have less complete electronic
health records (EHRs). The study demonstrates that as advances in AI
are incorporated into the clinic, patients of lower socioeconomic
status and patients of color, can receive differential treatment in
early disease detection and risk prediction.'' \85\ Also, AI and
related tools rely on large data sets which can have missing or
incorrect information. The massive volume of data needed to train an AI
model amplifies bias and may result in low quality AI recommendations
without complete and substantial data. It is not uncommon for
individual patients to have incorrect or missing data in their medical
records, which produces flawed AI recommendations.\86\ In addition, CMS
has received concerns from external stakeholders through various
formats about beneficiary harm potentially resulting from MA
organizations' use of AI.
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\83\ Executive Office of the President, May 2016, ``Big Data: A
Report on Algorithmic Systems, Opportunity, and Civil Rights.''
https://obamawhitehouse.archives.gov/sites/default/files/microsites/ostp/2016_0504_data_discrimination.pdf.
\84\ Hoffman and Podgurski, ``Artificial Intelligence and
Discrimination in Health Care, Yale Journal of Health Policy, Law,
and Ethics,'' Vol. 19 [2020], Iss. 3, Art. 1. https://yaleconnect.yale.edu/get_file?pid=bbaf6b35fe2b49fd1f4c39fbb91951db5b92a42618d4fd2a6724813f4cf64872.
\85\ Getzen, Emily et al. ``Mining for equitable health:
Assessing the impact of missing data in electronic health records.''
Journal of biomedical informatics vol. 139 (2023): 104269.
doi:10.1016/j.jbi.2022.104269.
\86\ Hoffman and Podgurski, ``Artificial Intelligence and
Discrimination in Health Care, Yale Journal of Health Policy, Law,
and Ethics,'' Vol. 19 [2020], Iss. 3, Art. 1.
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One example of algorithmic discrimination involves the use of AI to
predict which patients are most likely to miss their medical
appointments. The AI often uses data, such as prior no-show history, to
advise providers to double-book certain patients. In this instance,
lower-income patients were more likely to miss their medical
appointments due to challenges around transportation, childcare, and
work schedules. As a result of using this data
[[Page 99397]]
within the AI tool, providers double-booked lower-income patients,
causing longer wait times for lower-income patients and perpetuating
the cycle of additional missed appointments for vulnerable
patients.\87\
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\87\ Hoffman and Podgurski, ``Artificial Intelligence and
Discrimination in Health Care, Yale Journal of Health Policy, Law,
and Ethics,'' Vol. 19 [2020], Iss. 3, Art. 1. https://yaleconnect.yale.edu/get_file?pid=bbaf6b35fe2b49fd1f4c39fbb91951db5b92a42618d4fd2a6724813f4cf64872.
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Our proposed policy intends to make clear that MA organizations
must provide all enrollees, without exception, equitable access to
services, including when MA organizations use AI or other automated
systems to aid their decision-making.
2. Proposed Policy
On June 29, 2000 (65 FR 40170), we issued a final rule titled,
Medicare Program; Medicare+Choice Program (the June 2000 final rule),
which described the requirement that MA plans must provide services in
a culturally competent manner that addresses unique racial and
ethnically related health care concerns. We stated that these services
should accommodate the unique health-related beliefs, attitudes,
practices, and communication patterns of beneficiaries and their
caregivers to improve services, strengthen programs, increase community
participation and eliminate disparities in health status among diverse
population groups (65 FR 40217). Furthermore, we required that MA
organizations ensure that all covered benefits are ``available and
accessible to all enrollees.'' As such, Sec. 422.112(a)(8) requires MA
organizations that offer coordinated care plans to ensure that services
are provided in a culturally competent manner to all enrollees,
including those with limited English proficiency or reading skills, and
diverse cultural and ethnic backgrounds.
In the April 2023 final rule (88 FR 22120), CMS revised the
paragraph heading at Sec. 422.112(a)(8), from ``Cultural
considerations'' to ``Ensuring Equitable Access to Medicare Advantage
(MA) Services.'' Additionally, in the April 2023 final rule (88 FR
22120), at Sec. 422.112(a)(8), CMS replaced the phrase, ``those with
limited English proficiency or reading skills, and diverse cultural and
ethnic backgrounds'' after the word ``including'' and added in its
place paragraphs (i) through (vii), listing more examples of
underserved populations to whom an MA organization must ensure that
services are provided in a culturally competent manner and promote
equitable access to services in order to satisfy the existing
requirement. CMS noted specifically in the April 2023 final rule that,
``MA organizations must provide all enrollees, without exception,
accommodations to equitably access services according to applicable
statutory, regulatory, and other guidance.'' \88\
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\88\ https://www.federalregister.gov/d/2023-07115/p-361.
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Given the growing use of AI within the health care sector, we
believe it is necessary to ensure that the use of AI does not result in
inequitable treatment, bias, or both, within the health care system,
and instead is used to promote equitable access to care and culturally
competent care for all enrollees. As such, we propose to revise Sec.
422.112(a)(8), Ensuring equitable access to Medicare Advantage (MA)
Services, by moving the examples listed in paragraphs (i) through (vii)
under a new paragraph (i)(A) through (G), and creating a new paragraph
(ii) that requires MA organizations to ensure services are provided
equitably irrespective of delivery method or origin, whether from human
or automated systems. We specify that artificial intelligence or
automated systems, if utilized, must be used in a manner that preserves
equitable access to MA services.
In the same way that MA organizations, ``must provide all
enrollees, without exception, accommodations to equitably access
services according to applicable statutory, regulatory, and other
guidance,'' \89\ MA organizations must provide enrollees with equitable
access to services under the MA plan design or benefits or both
regardless of the tools or methods utilized to make care decisions or
to provide that care. Section 1852(b) of the Act and Sec. 422.110(a)
prohibit an MA organization from denying, limiting, or conditioning the
coverage or furnishing of benefits to individuals eligible to enroll in
an MA plan offered by the organization on the basis of any factor that
is related to health status. Additionally, Sec. 422.100(f)(2) provides
that 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. We are not proposing any
regulatory modifications to these requirements, as these existing
requirements already apply to MA plans if they use AI or automated
systems. Instead, we reiterate that in the event that an MA plan uses
AI or automated systems, they must comply with section 1852(b) of the
Act, Sec. 422.110(a) and other applicable regulations and
requirements, provide equitable access to services, and not
discriminate on the basis of any factor that is related to the
enrollee's health status. Regarding enforcement and oversight of MA
organizations, CMS has a well-established, robust, and successful
process for ensuring organizations that offer MA plans are complying
with our regulations and program guidance. As a result of CMS's
authority under 42 CFR part 422, subparts K and O, CMS may conduct
program audits and compliance activities as well as issue compliance
and enforcement actions to MA organizations who fail to comply with our
regulations.
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\89\ https://www.federalregister.gov/d/2023-07115/p-361.
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As the health care system evolves and utilizes new and emerging AI
tools, we feel the need to clarify that these tools, including but not
limited to, machine learning, patient care decision support tools, and/
or other algorithmic tools, must not violate CMS rules. If MA
organizations use these AI tools or automated systems in any manner, it
is their responsibility to ensure that the usage of such tools complies
with all existing Medicare policies, including, but not limited to,
providing culturally competent care to all enrollees in a non-
discriminatory manner. In the event that an MA organization licenses an
AI or automated system, or contracts with a third party for services
that are furnished using one of these tools, the MA organization will
be held responsible in accordance with Sec. Sec. 422.110(a) and
422.504(i)(1), which provides that an MA organization is ultimately
responsible even if it uses an First Tier, Downstream, and Related
Entity (FDR) to fulfill obligations and responsibilities under the MA
regulations and MA contract with CMS. We also note that MA
organizations are responsible for ensuring that usage of AI tools
complies with internal coverage criteria rules. This provision
addresses the equitable coverage of Medicare-covered benefits and
therefore applies equally to Cost plans. Because this is a
clarification of existing policy, we do not anticipate any new burden
associated with this proposal. Further, at this time, this proposal is
specific to MA plans. We note that CMS's formulary review process of
Medicare Part D plans includes a comprehensive check to ensure
enrollees are not facing discrimination or bias or both.
We recognize that technology in this space is quickly evolving. As
such, we want to ensure that these proposed
[[Page 99398]]
revisions and clarifications take into consideration the fast-paced
nature of this industry and the evolving application of these tools
within the health care industry. As such, we have provided examples for
how MA organizations could ensure they remain in compliance with this
proposal. MA organizations could maintain compliance by: (1) ensuring
that they understand, recognize, and limit the impact of biased data
inputs within any AI and/or automated system they utilize; (2) that
they create and follow a process to regularly review any automated
system they utilize to ensure that the use of the automated system is
non-discriminatory; and (3) that outputs with a known discriminatory
bias (such as expected utilization or predictability of payment or
both) are not used within a MA organization's automated system in a
manner that discriminates in the delivery of services in violation of
section 1852(b) of the Act or Sec. 422.110(a).
3. Definitions
For purposes of this policy, we propose to adopt the following
definition of ``automated system'' in Sec. 422.2 based on the
Blueprint for an AI Bill of Rights. We propose to define ``automated
system'' as ``any system, software, or process that uses computation as
whole or part of a system to determine outcomes, make or aid decisions,
inform policy implementation, collect data or observations, or
otherwise interact with individuals or communities or both. Automated
systems include, but are not limited to, systems derived from machine
learning, statistics, or other data processing or artificial
intelligence techniques, and exclude passive computing infrastructure.
`Passive computing infrastructure' is any intermediary technology that
does not influence or determine the outcome of decision, make or aid in
decisions, inform policy implementation, or collect data or
observations, including web hosting, domain registration, networking,
caching, data storage, or cybersecurity. As used in this part,
automated systems that are within the scope of this definition are only
those that have the potential to meaningfully impact individuals' or
communities' rights, opportunities, or access.'' \90\
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\90\ https://www.whitehouse.gov/ostp/ai-bill-of-rights/.
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We also propose to define ``Patient care decision support tool,''
consistent with the definition at 45 CFR 92.4, as any automated or non-
automated tool, mechanism, method, technology, or combination thereof
used by an MA organization to support clinical decision-making in its
health programs or activities. We recognize that this industry is fast-
evolving and ever-changing, and therefore the following uses are
examples, but not an exhaustive list. Patient care decision support
tools are tools used to guide health care decision-making and can range
in form from flowcharts and clinical guidelines to complex computer
algorithms, decision support interventions, and models. MA
organizations may use these systems to assist with decision-making for
various purposes. Patient care decision support tools are used for
screening, risk prediction, diagnosis, prognosis, clinical decision-
making, treatment planning, health care operations, and allocation of
resources, all of which affect the care that individuals receive.
Patient care decision support tools may create or contribute to
discrimination and their use may lead to poorer health outcomes among
members of historically marginalized communities.
We reiterate that ``artificial intelligence'' or ``AI'' is defined
in 15 U.S.C. 9401(3) as ``a machine-based system that can, for a given
set of human-defined objectives, make predictions, recommendations or
decisions influencing real or virtual environments. Artificial
intelligence systems use machine and human-based inputs to--(A)
perceive real and virtual environments; (B) abstract such perceptions
into models through analysis in an automated manner; and (C) use model
inference to formulate options for information or action.''
We seek comment on this proposal and may consider finalizing
revisions based on the comments received.
K. Promoting Community-Based Services and Enhancing Transparency of In-
Home Service Contractors (Sec. 422.2, 422.111)
Section 1852(c)(1) of the Act requires an MA organization to
disclose, among other things, the number, mix, and distribution of plan
providers in a clear, accurate, and standardized form to each enrollee
in an MA plan offered by the MA organization at the time of enrollment
and at least annually thereafter. CMS implemented this requirement in a
regulation at Sec. 422.111(a) and (b)(3)(i), requiring that an MA
organization must disclose the number, mix, and distribution
(addresses) of providers from whom enrollees may reasonably be expected
to obtain services, in the manner specified by CMS, to each enrollee
electing an MA plan it offers; in a clear, accurate, and standardized
form; and at the time of enrollment and at least annually thereafter,
by the first day of the annual coordinated election period. In
addition, under Sec. 417.427, the MA disclosure requirements at Sec.
422.111 also apply to section 1876 cost plans. The regulatory proposals
herein apply to all organizations offering network-based plans as
defined at Sec. 422.2, including MA plans and section 1876 cost plans.
We refer to these entities generally as ``plans'' throughout this
proposal.
CMS has historically interpreted the disclosure requirement at
Sec. 422.111(b)(3)(i)--``the number, mix, and distribution (addresses)
of providers from whom enrollees may reasonably be expected to obtain
services''--as referring to the provider directory. CMS developed the
MA and Section 1876 Cost Plan Provider Directory Model and Instructions
document,\91\ a model material created as an example of how to convey
the required information to enrollees. In accordance with Sec.
422.2267(c), when drafting their provider directories based on CMS's
model, plans must accurately convey the vital information in the
required material and follow the order of content when specified by
CMS.
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\91\ The current MA and Section 1876 Cost Plan Provider
Directory Model and Instructions document is located at: https://www.cms.gov/medicare/health-drug-plans/managed-care-marketing/models-standard-documents-educational-materials.
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The current provider directory model contains an array of specific
required information based on Sec. 422.111(b)(3)(i) but also provides
some flexibility to plans. For example, plans that offer supplemental
benefits must furnish a provider directory for those benefits, but
plans may choose to include these network providers that offer
supplemental benefits in a directory combined with health care
providers or in an entirely separate provider directory. The provider
directory model also requires that plans include in the directory any
providers or entities providing covered benefits or services, which may
be reasonably contacted by an enrollee for the purposes of making an
appointment (for example, dentist appointment). However, this means
that some entities which provide covered benefits to enrollees may be
currently excluded from the directory as they do not have a phone
number for appointments, or because they take appointments by booking
through a third party. Due to these and other possible scenarios, CMS
has become aware that some entities that provide covered benefits,
especially those that provide covered supplemental benefits,
[[Page 99399]]
including non-primarily health related benefits, may not be included in
the provider directory (such as, but not limited to, adult day care
entities, transportation services, pest control services, contractors
or other building services which construct ramps for homes, etc.).
While our intent was to require plans to include all entities that
furnish covered benefits to enrollees, CMS has become aware that some
plans do not include all such entities (while still complying with
regulations and acting consistent with current guidance).
We therefore propose to add at Sec. 422.2 a definition for a
``direct furnishing entity'' which means any individual or entity that
delivers or furnishes covered benefits to the enrollee. This includes
Medicare Part A and B covered benefits, as well as all types of
supplemental benefits. A direct furnishing entity may include entities
like transportation services or adult day care facilities. We also note
that direct furnishing entities may include first tier, downstream, or
related entities (FDRs), but we wish to define a new term to clarify
that with this definition, we mean entities from whom enrollees may
expect to receive directly furnished services, regardless of their
status as an FDR. We further note the distinction between services
administered to enrollees and plan-covered services. Agents and
brokers, for example, fall under the definition of an FDR, but would
not meet the proposed definitions of a direct furnishing entity as they
do not cover, furnish or directly provide Medicare Part A or B benefits
or services, nor any supplemental benefits.
We solicit feedback on the proposed definition for a direct
furnishing entity. Specifically, we are interested in: (1) whether this
definition is sufficient to encompass individuals or entities who may
reasonably provide covered supplemental benefits to the enrollee and
should therefore be included in the provider directory, or (2) whether
the definition should be further refined to include a more tailored
subset of individuals or entities. We may consider finalizing changes
to this definition based on comments received.
Our intent in requiring a provider directory and further specifying
parameters for required provider directory data elements was to include
entities that meet the above proposed definition of a direct furnishing
entity in the provider directory under Sec. 422.111(b)(3)(i) because
enrollees may reasonably be expected to obtain services from them.
However, as we noted previously, it is possible that in certain
instances, a plan may have contracted with a direct furnishing entity
to provide some covered benefits, but reasonably believed that Sec.
422.111(b)(3)(i) did not require that particular direct furnishing
entity to be included in the provider directory because there is no
phone number the enrollee can call to request an appointment with that
entity at a specific address (as required per the current provider
directory model).
CMS has also been alerted to concerns related to the possible
exclusion of these direct furnishing entities from provider
directories. These concerns relate to safety and a lack of transparency
regarding supplemental benefit service providers and their access to an
enrollee's home. Since many supplemental benefits include interaction
with an enrollee at the enrollee's home (for example, in-home support
services, meal delivery, home modifications, individuals providing
adult day care services), a greater safety risk exists for enrollees
who use these services. This is particularly of concern when the
enrollee may not have information about who may have access to their
home, personally identifiable information (PII), or protected health
information (PHI). In 2023, CMS became aware of news reports that an
FDR contracted with several MA organizations to provide in-home support
services had over 1,200 complaint reports logged against the FDR's
employees, including several allegations of sexual harassment and
assault that occurred in the enrollees' home that were referred to law
enforcement for further investigation.\2\ It has been further reported
that other FDRs that furnished covered benefits in an enrollee's home
may have jeopardized enrollees' safety and caused harm. In these
instances, enrollees and their caregivers may have benefited from
increased transparency from the MA plan regarding the specific FDRs
that the MA organization utilizes to furnish services, including those
that may likely enter the enrollee's home to furnish covered items and
services.
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\2\ https://www.bloomberg.com/news/features/2023-05-30/papa-eldercare-startup-faces-abuse-claims-by-seniors-caregivers?embedded-checkout=true&leadSource=uverify%20wall.
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CMS also strongly encourages plans to do business with
organizations deeply rooted within the community they serve and may be
best suited to serve. As explained in the Calendar Year 2023 Physician
Fee Schedule proposed rule (87 FR 46102), community-based organizations
(CBOs) are defined as public or private not-for-profit entities that
provide specific services to the community, or targeted populations in
the community, to address the health and social needs of those
populations. They may include community-action agencies, housing
agencies, area agencies on aging, centers for independent living, aging
and disability resource centers, or other non-profits that apply for
grants to perform social services. While we currently require at Sec.
422.112(b)(3) that coordinated care plans' arrangements with contracted
providers include programs for the coordination of plan services with
community and social services generally available in the area served by
the MA plan, we note that there is currently no way for enrollees to
determine through the provider directory, or other means set forth in
regulation, which contracted providers are CBOs located in or near the
community in which the enrollee lives.
In an effort to allow enrollees more access to information
regarding their service providers, and further encourage MA plans' use
of community-based providers, CMS is proposing to codify new
requirements in the regulation. We propose to add new language to
clarify that plans must include in their provider directory all direct
furnishing entities. We propose to clarify our policy by amending Sec.
422.111(b)(3) to explicitly state the requirement to include direct
furnishing entities. We propose that Sec. 422.111(b)(3)(i)(A) and (B)
would be revised to specify the following:
All direct furnishing entities as defined in Sec. 422.2,
from whom enrollees may reasonably be expected to obtain services.
Each provider's cultural and linguistic capabilities,
including languages (including American Sign Language) offered by the
provider or a skilled medical interpreter at the provider's office.
Section 422.111(b)(3)(i)(C) and (D) are described later in this
section. Section 422.111(b)(3)(i)(E) and (F) would be revised to
specify the following:
Any out-of-network coverage; any point-of-service option,
including the supplemental premium for that option.
How the MA organization meets the requirements of
Sec. Sec. 422.112 and 422.114 for access to services offered under the
plan.
While it has been CMS's expectation that plans include the
information at proposed Sec. 422.111(b)(3)(i)(A) already in their
provider directories (to the extent that there is a reasonable
expectation that enrollees may obtain services from these direct
furnishing entities), we believe that adjusting our regulation text to
codify this policy explicitly will
[[Page 99400]]
prevent any confusion or misunderstanding regarding CMS's MA provider
directory requirements.
Further, we propose that plans must clearly identify all direct
furnishing entities that provide in-home or at-home supplemental
benefits or services, or a hybrid of these benefits or services (both
in-home or at-home, and in-office benefits or services) at Sec.
422.111(b)(3)(i)(D). We propose that Sec. 422.111(b)(3)(i)(D) would
require easily identifiable notations, filters, or other distinguishing
features to indicate in-home or at-home supplemental benefit providers
(as defined in Sec. 422.2). For the purposes of this requirement, we
are proposing to define an in-home or at-home supplemental benefit
provider as any direct furnishing entity in which the direct furnishing
entity or an employee of the direct furnishing entity is given an
enrollee's physical address in order to provide in-person supplemental
benefits or SSBCI items or services to that enrollee. We also propose
that this definition state that an in-home or at-home supplemental
benefit provider may include direct furnishing entities who offer both
in-office as well as in-home or at-home supplemental benefits. We
propose that this definition be added to the regulation at Sec. 422.2.
We solicit comment on this definition and whether it should be expanded
to include any entity that may enter an individual's home for purposes
beyond providing supplemental benefits, items, or services to
enrollees. We are particularly interested in whether additional
transparency and further safety assurances are necessary for
individuals who may receive covered benefits including Medicare Parts A
and B benefits at their physical address. We may consider finalizing
changes to this definition based on the comments received.
We also seek comment on the manner plans would be required to
identify these in-home or at-home supplemental benefit providers. We
note that currently the provider directory model requires plans to
include a notation next to any provider listings where the providers
only offer home visits and do not see patients at a physical office
location. Because the provider directory model currently requires that
supplemental benefit providers only offering in-home or at-home
services be easily identified, it excludes providers and suppliers who
may provide in-home or at-home services in addition to in-office
services. Therefore, any enrollees wishing to find in-home or at-home
supplemental benefit providers may refer to this notation in the
provider directory but may not be aware of other providers and
suppliers that provide a hybrid of services (both in-home or at-home,
and in-office services). Additionally, we note that some provider
directories may include a large volume of providers, both PCPs as well
as supplemental benefit providers, making some lists prohibitively
large. We propose that plans would be required to create a subset of
the provider directory through which plans identify in-home or at-home
supplemental benefit service providers, including those that may
provide a hybrid of services (both in-home or at-home, and in-office
services). An example of how a plan may identify this subset list is a
designated section for these types of providers under section 2 (List
of Network Providers) of their provider directory, as shown in the
model document, alongside the plan's other listed provider types (for
example, PCPs, specialists, hospitals, etc.). Another example specific
to a plan's online provider directory is a filter function for this
provider type, which would result in a filtered list of the in-home or
at-home supplemental benefit providers. Such a subset list of in-home
or at-home service providers, including those that may provide a hybrid
of services (both in-home or at-home, and in-office supplemental
benefit services), would allow the enrollee to clearly identify and
differentiate which direct furnishing entities may be entering their
home. We propose that, by including such a list, plans must continue to
adhere to the current provider directory requirements set forth at
Sec. Sec. 422.111(a)(2), 422.111(b)(3)(i), 422.111(h)(2)(i) and (ii),
422.120, 422.2262, 422.2265(b)(3) and (4), 422.2265(c)(1)(iv),
422.2267(a), 422.2267(c), 422.2267(d), and 422.2267(e)(11) regarding
what information must be included, and all other relevant provider
directory requirements. We seek comment on this proposed requirement
and may consider revisions to a final policy based on the comments
received.
As an alternative to this subset list, which would be found within
the provider directory, we propose and seek comment on requiring plans
to create a list that is entirely separate from the currently required
provider directory that identifies the in-home or at-home supplemental
benefit providers including those that may provide a hybrid of services
(both in-home or at-home, and in-office services) under the plan. This
alternative proposal may reduce enrollee burden in identifying such
providers and increase transparency for the enrollee, as they would not
have to filter a provider directory or scroll through a potentially
large directory to locate a specific designation for these types of
providers in order to find the relevant information. We similarly
propose, as an alternative, that the list required by this alternative
would have to be easily available through the plan's public-facing
website, and plans must continue to adhere to the current provider
directory requirements set forth at Sec. Sec. 422.111(a)(2),
422.111(b)(3)(i), 422.120, 422.2262, and 422.2267(e)(11) regarding what
information must be included, and other relevant provider directory
requirements. We seek comment on this alternative and may consider
finalizing it or making revisions based on comments received.
We further propose to define community-based organizations (CBOs)
in regulation, as there currently exists no definition in MA
regulations. We propose to add this definition to Sec. 422.2. This
definition would provide clarity to plans when adding the new proposed
CBO notation to their provider directories regarding which direct
furnishing entities are CBOs. This proposed definition is taken from
the Calendar Year 2023 Medicare Physician Fee Schedule proposed rule
(87 FR 46102) cited previously. We propose to define CBOs as ``public
or private not-for-profit entities that provide specific services to
the community or targeted populations in the community to address the
health and social needs of those populations.'' We noted in the
Calendar Year 2023 Medicare Physician Fee Schedule proposed rule that
these CBOs may include community-action agencies, housing agencies,
area agencies on aging, centers for independent living, aging and
disability resource centers or other non-profits that apply for grants
or contract with health care entities to perform social services. They
may receive grants from other agencies in the U.S. Department of Health
and Human Services, including Federal grants administered by the
Administration for Children and Families (ACF), Administration for
Community Living (ACL), the Centers for Disease Control and Prevention
(CDC), the Substance Abuse and Mental Health Services Administration
(SAMHSA), or state-funded grants to provide social services. We solicit
comment on this proposed definition, and whether this definition would
be sufficiently broad enough to include all locally based organizations
with whom an enrollee may wish to engage. We may consider finalizing
revisions to this
[[Page 99401]]
definition based on the comments received.
We also propose to include new regulation text at Sec.
422.111(b)(3)(i)(C) requiring plans to include in their provider
directory easily identifiable notations indicating direct furnishing
entities that are CBOs. We propose to codify this requirement in Sec.
422.111(b)(3)(i)(C) that plans must include in their provider
directories easily identifiable notations, filters, or other
distinguishing features to indicate providers and direct furnishing
entities that are community-based organizations (CBOs) (as defined in
Sec. 422.2).
We are interested in encouraging more engagement from both plans
and enrollees with organizations invested in the community and local
economy and wish to provide enrollees the ability to more easily
identify and engage with CBOs. We also wish to encourage plans, to the
extent possible, to engage with local businesses and vendors when
determining which entities to contract with. As we noted in the
Calendar Year 2025 Medicare Physician Fee Schedule proposed rule (89 FR
61875), local businesses and CBOs, ``know the populations they serve
and their communities and may have the infrastructure or systems in
place to help coordinate supportive services that address social
determinants of health or serve as a source from which ACOs can receive
information regarding community needs.'' While CMS is prohibited from
requiring plans to contract with specific providers under section
1854(a)(6)(B)(iii) of the Act and Sec. 422.256(a)(2)(i), we strongly
encourage plans to engage with CBOs given evidence indicating that
providers who coordinate care with CBOs to address health related
social needs (HRSNs) (for example, housing, transportation, care
management, etc.) can positively influence health outcomes.\92\
Therefore, we wish to strongly encourage collaboration of this kind. We
further note that this complies with our regulation at Sec.
422.112(b)(3) requiring coordinated care plans to coordinate MA plan
services with community and social services generally available in the
area served by the MA plan. Plans may contract with CBOs to provide
benefits--including supplemental benefits--that are compliant with the
statutory and regulatory requirements. For example, a plan could elect
to offer a meal or food and produce supplemental benefit (so long as
the benefit meets the requirements of Sec. 422.100(c)(2) and other
requirements for supplemental benefits) and pay a CBO for furnishing
the covered benefit. We understand that in some areas there may be a
limited number of CBO providers, and so we encourage plans to continue
engaging with CBOs. Plans including a notation within the provider
directory identifying an entity that is a CBO would increase enrollee
awareness of these types of entities. This could lead to more enrollees
choosing to receive items and services from CBOs that are more familiar
with their community, can better coordinate supportive services, and
can further address their community needs.
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\92\ McCarthy, D., Lewis, C., Horstman, C., Bryan, A., & Shah,
T. (2022). ``Guide to Evidence for Health-Related Social Needs
Interventions: 2022 Update'' [ROI Calculator for Partnerships to
Address the Social Determinants of Health]. The Commonwealth Fund.
https://www.commonwealthfund.org/sites/default/files/202209/ROI_calculator_evidence_review_2022_update_Sept_2022.pdf.
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We believe the burden associated with these proposed requirements
would be minimal. First, the proposed addition of the CBO notation in
the provider directory would likely involve minimal burden given that
plans must also include a notation or filter for other types of
entities. With our proposed CBO definition, it should take little time
for plans to identify their contracted CBOs and websites to add a
notation to the listings for these entities in their provider
directory. The proposed addition of direct furnishing entity listings
should also create minimal burden since this is a clarification of
existing policy and plans may already include all direct furnishing
entities in their provider directories currently. There should
therefore be few plans that need to make adjustments to their current
provider directory due to the new proposed regulation text clarifying
this requirement. We also expect if commenters believe that a subset
list of in-home or at-home supplemental benefit providers is a
satisfactory method to identify these providers, then there would be
minimal burden associated as plans already must maintain an updated
provider list as required by regulation. However, should commenters
believe that the creation of a separate list for in-home and at-home
supplemental benefit providers be prudent, we would likewise expect a
low associated burden. As discussed, this list would be a subgroup of
the current provider directory and include only in-home or at-home
supplemental benefit providers, and, as previously noted, plans should
already have information regarding which organizations fall under the
proposed definition for an in-home or at-home supplemental benefit
provider.
In summary, we propose to: (1) codify definitions of CBOs and in-
home or at-home supplemental benefit providers and direct furnishing
entities; (2) require plans to identify, within the provider directory,
which providers and direct furnishing entities meet the proposed
definition of a CBO; (3) require plans to identify in-home or at-home
supplemental benefit providers and direct furnishing entities,
including those that provide a hybrid of services (both in-home or at-
home, and in-office services), either through a subset list within the
provider directory or through a separate list comprising in-home or at-
home supplemental benefit providers and direct furnishing entities; and
(4) clarify existing policy by stating that all direct furnishing
entities must be included within the provider directory.
We solicit comment on these proposals and may consider finalizing
revisions based on the comments received.
L. Ensuring Equitable Access to Behavioral Health Benefits Through
Section 1876 Cost Plan and MA Cost Sharing Limits (Sec. Sec. 417.454
and 422.100)
Traditional Medicare benefits (that is, Medicare Parts A and B)
include a wide range of mental health and substance use disorder
services (collectively called ``behavioral health services'').\93\ Per
section 1876(c)(2)(A) of the Act and Sec. Sec. 417.416 and
417.440(b)(1) and section 1852(a)(1) of the Act and Sec. Sec. 422.100
and 422.101, respectively, Section 1876 Cost Plans (Cost Plans) and
Medicare Advantage (MA) plans (including employer group waiver plans
(EGWPs)) must cover these Medicare Parts A and B services, subject to
limited exclusions.\94\ As part of CMS's behavioral health strategy, we
aim to ensure equitable access to behavioral health services across all
of Medicare, including for MA and Cost Plan enrollees, and to
effectively expand access to these services in both
programs.95 96 We believe improving
[[Page 99402]]
equitable access to behavioral health services is especially crucial
for MA enrollees because: (1) beneficiaries in Traditional Medicare pay
20 percent coinsurance (with zero cost sharing for opioid treatment
program services) while MA enrollees may be charged up to 50 percent
coinsurance (or actuarially equivalent copayment) for the same
behavioral health services, (2) lower-income bene[filig]ciaries are
more likely to be diagnosed with mental health conditions and may not
receive the behavioral health services they need, suggesting potential
affordability concerns,97 98 and (3) based on contract year
2024 plan data: \99\
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\93\ McGinty, Beth. ``Medicare's Mental Health Coverage: What's
Included, What's Changed, and What Gaps Remain,'' Commonwealth Fund,
Mar. 2, 2023. Retrieved from: https://www.commonwealthfund.org/publications/explainer/2023/mar/medicare-mental-health-coverage-included-changed-gaps-remain.
\94\ For example, MA plans are not required to provide hospice
services--a service covered in Traditional Medicare.
\95\ CMS's behavioral health strategy is available at: https://www.cms.gov/cms-behavioral-health-strategy.
\96\ Fleet, Alexa. Improving Behavioral Health Care For Older
Americans: If Not Now, When? June 2022. Retrieved from: https://www.healthaffairs.org/content/forefront/improving-behavioral-health-care-older-americans-if-not-now.
\97\ American Counseling Association. More Than 30 Years of
Mental Health Care Inequity: Restricted Access to Providers for
Medicare Beneficiaries. August 2021. Retrieved from: https://www.counseling.org/docs/default-source/government-affairs/medicare-issue-brief.pdf.
\98\ Carter, Julie; Medicare Rights Center. ``Coverage Gaps Keep
Medicare Beneficiaries from Needed Care.'' June 2024. Retrieved
from: https://www.medicarerights.org/medicare-watch/2024/06/13/coverage-gaps-keep-medicare-beneficiaries-from-needed-care.
\99\ This is based on March 1, 2024, contract year 2024 plan
data (excludes employer, D-SNPs, and MSAs) of the plan's maximum
cost sharing (including no cost sharing) and reflects plans with
coinsurance and copayment amounts.
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Between 23 percent and 25 percent of all MA plans charge
in-network cost-sharing amounts that are greater than cost sharing in
Traditional Medicare for: mental health specialty services, psychiatric
services, and partial hospitalization (as shown in table 8).
Between 42 percent and 71 percent of all MA plans charge
in-network cost-sharing amounts that are greater than cost sharing in
Traditional Medicare for: outpatient substance use disorder services
and opioid treatment program services (as shown in table 8).
MA enrollees in plans charging cost-sharing amounts
greater than cost sharing in Traditional Medicare can expect to pay
between $7 and $21 more on average in cost sharing per visit for those
services received in-network for: mental health specialty services,
psychiatric services, and partial hospitalization in comparison to
beneficiaries in Traditional Medicare (as shown in table 10).
MA enrollees in plans charging cost-sharing amounts
greater than cost sharing in Traditional Medicare can expect to pay
between $30 and $47 more on average in cost sharing per visit for those
services received in-network for: mental health specialty services,
psychiatric services, and partial hospitalization in comparison to
beneficiaries in Traditional Medicare (as shown in table 10).
Improving equitable access to behavioral health services by
providing in-network cost sharing for MA and Cost Plan enrollees that
is in line with Traditional Medicare cost sharing for these services
would positively impact a significant proportion of Medicare-eligible
beneficiaries. We believe this would have this positive impact because:
(1) about 25 percent of Medicare beneficiaries live with a mental
illness and roughly half of Medicare beneficiaries are enrolled in an
MA plan; 100 101 (2) the number of MA enrollees with a need
for behavioral health services will likely continue to grow alongside
increasing Medicare enrollment trends; \102\ and (3) improved access to
and compliance with behavioral health treatment may improve
beneficiaries' overall cost of care over time.103 104 While
enrollment in Cost Plans represents a small proportion of all Medicare-
eligible beneficiaries (approximately 169,000 as of July 2024,) \105\
we believe extending this proposal to Cost Plan enrollees is
appropriate because (1) CMS wants to improve equitable access to
behavioral health services across all Medicare program choices; and (2)
we expect the positive effects from improved access to behavioral
health services for MA enrollees will extend to Cost Plan enrollees as
current in-network cost sharing for these services may be as high as 50
percent coinsurance in these plans. Based on contract year 2024 Cost
Plan data: \106\
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\100\ Kaiser Family Foundation: Wyatt Koma et. al. One in Four
Older Adults Report Anxiety or Depression Amid the COVID-19
Pandemic. October 2020. Retrieved from: https://www.kff.org/mental-health/issue-brief/one-in-four-older-adults-report-anxiety-or-depression-amid-the-covid-19-pandemic/.
\101\ McGinty, Beth. ``Medicare's Mental Health Coverage: What's
Included, What's Changed, and What Gaps Remain,'' Commonwealth Fund,
Mar. 2, 2023. As of February 5, 2024: https://www.commonwealthfund.org/publications/explainer/2023/mar/medicare-mental-health-coverage-included-changed-gaps-remain.
\102\ Kaiser Family Foundation: Freed, Meredith; Sroczynski,
Nolan; and Neuman, Tricia. Mental Health and Substance Use Disorder
Coverage in Medicare Advantage Plans. April 2023. Retrieved from:
https://www.kff.org/mental-health/issue-brief/mental-health-and-substance-use-disorder-coverage-in-medicare-advantage-plans/.
\103\ American Counseling Association. More Than 30 Years of
Mental Health Care Inequity: Restricted Access to Providers for
Medicare Beneficiaries. August 2021. Retrieved from: https://www.counseling.org/docs/default-source/government-affairs/medicare-issue-brief.pdf.
\104\ Milliman. Potential economic impact of integrated medical-
behavioral healthcare: Updated projections for 2017. February 2018.
Retrieved from: https://www.milliman.com/en/insight/potential-economic-impact-of-integrated-medical-behavioral-healthcare-updated-projections.
\105\ CMS. Contract Summary 2024. Data as of July 2024.
Retrieved from: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07.
\106\ This is based on March 1, 2024, contract year 2024 plan
data of the plan's maximum cost sharing (including no cost sharing)
and reflects plans with coinsurance and copayment amounts. It does
not consider inpatient hospital cost sharing as Cost Plans are not
required to report information for all services, including Part A
inpatient hospital psychiatric services.
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Between 5 percent and 50 percent of all Cost Plans charge
in-network cost sharing amounts that are greater than cost sharing in
Traditional Medicare for one or more professional behavioral health
service categories (as shown in table 9).
Cost Plan enrollees in those plans can expect to pay
between $5 and $20 more on average in cost sharing per visit for those
services received in-network (depending on the service category) in
comparison to beneficiaries in Traditional Medicare (as shown in table
11).
We propose, beginning in contract year 2026, to require that in-
network \107\ cost sharing for behavioral health service categories be
no greater than that of Traditional Medicare for MA and Cost Plans
(including EGWPs). The authorities for this proposal are discussed in
detail in the following section of this proposed rule. Specifically,
CMS proposes to amend the existing requirements at Sec. Sec.
417.454(e) and 422.100(j) (that cost sharing for certain benefits not
exceed cost sharing in Original Medicare) to add the behavioral health
service categories: mental health specialty services, psychiatric
services, partial hospitalization, intensive outpatient services,
inpatient hospital psychiatric services (all length of stay scenarios),
outpatient substance use disorder services, and opioid treatment
program services.\108\ To this end, CMS is proposing behavioral health
cost-sharing standards in MA and Cost Plans that strike a balance
between: (1) improving the affordability of behavioral health services
for enrollees in a timely manner and (2) minimizing disruption to MA
enrollees access to care and coverage options.
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\107\ This proposal would also apply to out-of-network cost
sharing standards for D-SNP PPOs per Sec. 422.100(o).
\108\ In this proposal behavioral health services are generally
considered to be any service furnished for the diagnosis,
evaluation, or treatment of a mental health disorder, including
substance use disorders.
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As discussed in sections III.L.X.e.(4). and VII.E.3. of this
proposed rule, we solicit comment on: (1) whether CMS should apply
these proposed changes beginning in contract year 2026 or 2027, (2)
whether there should be a transition period from the existing contract
year
[[Page 99403]]
2025 behavioral health cost-sharing standards (in current regulations
at Sec. 422.100(f)(6)(i), (f)(6)(iii), and (f)(6)(iv)) to the proposed
cost-sharing standard for select behavioral health service categories,
and (3) how long any transition should be. We also solicit comment
regarding this proposal's potential impact on the ability of MA plans
to satisfy the existing actuarial equivalence requirements for the
entire Part A and B benefits package (that is, the package of basic
benefits) at section 1852(a)(1)(B) of the Act and Sec. 422.100(j)(1)
and (2) in section III.L.X.e.(4). of this proposed rule. Under this
proposal, the requirements at Sec. 422.100(f)(7)(iii), requiring CMS
to communicate and provide a public comment period on how we apply the
proposed cost-sharing standards each year prior to bid submission, such
as through Health Plan Management System (HPMS) memoranda prior to bid
submission, will apply to the proposed new behavioral health cost-
sharing limits.
a. Legal Authority
Section 1852 of the Act imposes requirements that apply to the cost
sharing and benefit design of MA plans. Section 1852(a)(1)(B)(iv)(VIII)
of the Act explicitly authorizes the Secretary to identify services
that the Secretary determines appropriate (including services that the
Secretary determines require a high level of predictability and
transparency for beneficiaries) to be subject to a cost-sharing limit
that is tied to the cost sharing imposed for those services under
original Medicare. Section 1852(b) of the Act also prohibits MA plan
designs that have the effect of discriminating against or discouraging
enrollment by beneficiaries based on their health needs. Sections
1856(b) and 1857(e) of the Act authorize CMS to set implementing
standards for Part C and adopt additional requirements as necessary,
appropriate and not inconsistent with Part C. Under this authority, we
propose to revise Sec. 422.100(j)(1)(i) and add new paragraphs
(j)(1)(i)(G) and (j)(1)(i)(H) to limit MA plan in-network cost sharing
for the following service categories as defined in the plan benefit
package: intensive outpatient services, mental health specialty
services, outpatient substance use disorder services, partial
hospitalization, psychiatric services, and inpatient hospital
psychiatric services (all length of stay scenarios currently specified
in paragraph (f)(6)(iv)) to that charged under Traditional Medicare.
This necessarily includes revising Sec. 422.100(f)(6)(iii),
(f)(6)(iv), and (j)(1)(i). First, at Sec. 422.100(f)(6)(iii)(A) we
propose to replace the reference to partial hospitalization with
rehabilitation services to serve as an example of a category subject to
the range of cost-sharing standards in paragraph (f)(6)(iii).
Second, at Sec. 422.100(f)(6)(iv) we propose to: (1) add a
reference to Sec. 422.100(j)(1)(i)(H) in paragraph (f)(6)(iv)(A) to
reflect the proposed cost-sharing standard for inpatient hospital
psychiatric services and (2) revise paragraphs (f)(6)(iv)(B) and
(f)(6)(iv)(D) to remove references to inpatient hospital psychiatric
services because cost sharing for inpatient hospital psychiatric
services will be addressed as specified in proposed new paragraph
(j)(1)(i)(H). Third, at Sec. 422.100(j)(1)(i) we propose to clarify
that the proposed behavioral health cost-sharing standards would not
apply until contract year 2026.
Similarly, we propose to add new paragraphs Sec. 417.454(e)(5) and
(e)(6) to limit in-network behavioral health cost sharing of Cost Plans
in the same manner as for MA plans. This necessarily includes
clarifying at Sec. 417.454(e): (1) when the proposed cost sharing
limit (that cost sharing may not be greater than cost sharing in
Traditional Medicare (original Medicare) for that benefit) will apply
for the additional categories of services and (2) the methods Cost Plan
organizations may use for coinsurance or copayment structures to abide
by the proposed behavioral health cost-sharing requirements for these
basic benefits. We also make a technical change to Sec. 417.454(e) to
clarify that the cost sharing limits apply to all Cost Plans by adding
references to Competitive Medical Plans (CMPs). These proposals reflect
CMS's authority to interpret and implement the requirement, at section
1876(c)(2) of the Act, that Cost Plans cover Part A and B benefits and,
at section 1876(i)(3)(D) of the Act, to add new contract terms and
conditions for Cost Plans that are not inconsistent with section 1876
as the Secretary may find necessary and appropriate.
In addition, in proposing to apply Traditional Medicare cost-
sharing amounts to opioid treatment program services or any other
service with zero cost sharing, we rely on our authority in section
1856(b)(1) and 1857(e)(1) of the Act. Section 1856(b)(1) of the Act
provides CMS authority to establish MA standards by regulation and
section 1857(e)(1) of the Act provides authority to impose additional
``terms and conditions'' found ``necessary and appropriate.'' Under
these authorities, we propose to add opioid treatment program services
in proposed new Sec. Sec. 417.454(e)(5) and 422.100(j)(1)(i)(G) to
limit MA and Cost Plan cost sharing for these services to that charged
under Traditional Medicare, meaning that no cost sharing could be
imposed for these services.
We also propose the following revisions to the cost-sharing
regulations at Sec. Sec. 417.454 and 422.100(f) and (j): (1) revise
language at Sec. 417.454(e)(1) to match terminology of chemotherapy
administration services with language at Sec. 422.100(j)(1)(i)(A), (2)
remove language at Sec. 422.100(f)(6)(iv)(D) that the total inpatient
benefit cost sharing must not exceed the MA plan's MOOP amount to
reflect how CMS has not applied this requirement, (3) remove paragraphs
(j)(1)(i)(C)(1) and (j)(1)(i)(C)(2) to consolidate the skilled nursing
facility cost-sharing standard information at Sec.
422.100(j)(1)(i)(C), and (4) clarify that the skilled nursing facility
per-day cost sharing for days 21 through 100 must not be greater than
one-eighth of the projected (or actual) Part A deductible amount for
the year at paragraph (j)(1)(i)(C). As such, this proposal codifies our
current practice with some revisions (such as, annually updating the
copayment limits for Cost Plans to remain actuarially equivalent to 50
percent coinsurance). Primarily, we propose these changes to increase
the level of transparency for these policies and provide more stability
and predictability for MA and Cost Plan organizations.
At new Sec. 417.454(f), we propose to codify the policy of a 50
percent coinsurance (or actuarially equivalent copayment) limit on in-
network basic benefits as applicable to Cost Plans as we believe
payment of less than 50 percent of total Cost Plan financial liability
discriminates against enrollees who need those services. For example,
setting limits on cost sharing for covered services and ensuring Cost
Plan organizations comply with these limits are important ways to
ensure that the cost sharing aspect of a plan design does not
discriminate against or discourage enrollment in a Cost Plan by
beneficiaries who have high health care needs. In addition, this 50
percent coinsurance (or actuarially equivalent copayment) limit on in-
network basic benefits is necessary and appropriate to apply to Cost
Plans pursuant to how these plans must, under section 1876(c)(2) of the
Act, furnish Part A and Part B services (with limited exceptions such
as for the hospice benefit) to their enrollees.
In making these revisions to clarify how the actuarially equivalent
copayment limits will be set for basic benefits, we expect Cost Plan
[[Page 99404]]
organizations should have: (1) greater knowledge about how cost-sharing
limits are set; and (2) a better ability to anticipate where the
copayment limits will be in future years. These additional proposals
reflect CMS's authority under sections 1856(b), 1857(e), 1876(c)(2),
and 1876(i)(3)(D) of the Act.
b. Behavioral Health Crisis
A Kaiser Family Foundation (KFF)/CNN Mental Health in America
survey found that 90 percent of Americans believe our nation is
experiencing a mental health crisis.\109\ This crisis grew more
challenging because of the COVID-19 pandemic. For example,
beneficiaries with severe mental illness experienced substantial
disruptions in care during the COVID-19 pandemic and these disruptions
were greater among certain populations, including historically
underserved racial and ethnic groups and low-income populations.\110\
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\109\ Kaiser Family Foundation: Lopes, Lunna et al. KFF/CNN
Mental Health In America Survey. October 2022. Retrieved from:
https://www.kff.org/report-section/kff-cnn-mental-health-in-america-survey-findings/.
\110\ Busch AB, Huskamp HA, Raja P, Rose S, Mehrotra A.
Disruptions in Care for Medicare Beneficiaries With Severe Mental
Illness During the COVID-19 Pandemic. JAMA Netw Open. 2022 Jan
4;5(1):e2145677. doi: 10.1001/jamanetworkopen.2021.45677. PMID:
35089352; PMCID: PMC8800078. Retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8800078/.
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Poor behavioral health outcomes are especially detrimental to older
adults. Addressing the behavioral health needs of beneficiaries during
this crisis is a key priority for CMS as illustrated by study findings
that:
Older adults have higher rates of suicide compared to
those under 55 years old and, between 2001 and 2021, suicide rates
significantly increased for men ages 55-74 (25 percent increase, from
21.2 to 26.6 per 100,000 population) and women ages 55-84 (44 percent
increase, from 3.9 to 5.6 per 100,000 population).\111\
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\111\ Garnett MF, Spencer MR, Weeks JD. Suicide Among Adults Age
55 and Older, 2021. NCHS Data Brief. 2023 Nov;(483):1-8. PMID:
38051033. Retrieved from: https://www.cdc.gov/nchs//data/databriefs/db483.pdf.
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Lower income Medicare beneficiaries (with household
incomes under $25,000) are more likely to have mental health conditions
than those with higher household incomes.112 113 114
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\112\ Friedman C. The mental health of Medicare beneficiaries
with disabilities during the COVID-19 pandemic. Rehabil Psychol.
2022 Feb;67(1):20-27. doi: 10.1037/rep0000427. Epub 2021 Nov 8.
PMID: 34748364. Retrieved from: https://psycnet.apa.org/record/2022-02246-001.
\113\ American Counseling Association. More Than 30 Years of
Mental Health Care Inequity: Restricted Access to Providers for
Medicare Beneficiaries. August 2021. Retrieved from: https://www.counseling.org/docs/default-source/government-affairs/medicare-issue-brief.pdf.
\114\ Kaiser Family Foundation: Wyatt Koma et. al. One in Four
Older Adults Report Anxiety or Depression Amid the COVID-19
Pandemic. October 2020. Retrieved from: https://www.kff.org/mental-health/issue-brief/one-in-four-older-adults-report-anxiety-or-depression-amid-the-covid-19-pandemic/.
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Older adults face significant barriers to access
behavioral health services including workforce shortages, issues of
affordability, and a shortage of services in the home and community
settings.115 116
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\115\ Fleet, Alexa. Improving Behavioral Health Care For Older
Americans: If Not Now, When? June 2022. Retrieved from: https://www.healthaffairs.org/content/forefront/improving-behavioral-health-care-older-americans-if-not-now.
\116\ HHS Office of Inspector General. ``A Lack of Behavioral
Health Providers in Medicare and Medicaid Impedes Enrollees' Access
to Care'' April 2024. Retrieved from: https://oig.hhs.gov/reports-and-publications/all-reports-and-publications/a-lack-of-behavioral-health-providers-in-medicare-and-medicaid-impedes-enrollees-access-to-care/.
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In addition, studies on behavioral health needs of MA enrollees
find:
About 13 percent to 28 percent of MA enrollees live with
mental illness.\117\
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\117\ McGinty, Beth. Medicare's Mental Health Coverage: What's
Included, What's Changed, and What Gaps Remain. March 2023.
Retrieved from: https://www.commonwealthfund.org/publications/
explainer/2023/mar/medicare-mental-health-coverage-included-changed-
gaps-
remain#:~:text=How%20prevalent%20are%20mental%20health,to%2050%20perc
ent%20receive%20treatment.
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On average, only 3 percent of MA enrollees received
treatment from a behavioral health provider in 2023.\118\
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\118\ HHS Office of Inspector General. ``A Lack of Behavioral
Health Providers in Medicare and Medicaid Impedes Enrollees' Access
to Care'' April 2024. Retrieved from: https://oig.hhs.gov/reports-and-publications/all-reports-and-publications/a-lack-of-behavioral-health-providers-in-medicare-and-medicaid-impedes-enrollees-access-to-care/.
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MA enrollees paid about $9 more on average for in-network
mental health services than for comparable physical-health
services.\119\
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\119\ Pelech, Daria and Hayford, Tamara. Health Affairs.
Medicare Advantage and Commercial Prices for Mental Health Services.
February 2019. DOI: 10.1377/hlthaff.2018.05226. Retrieved from:
https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05226?url_ver=Z39.88-2003&rfr_id=ori:rid:crossref.org&rfr_dat=cr_pub%20%200pubmed.
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MA enrollees who receive behavioral health services
typically see their provider five times a year while beneficiaries in
Traditional Medicare saw their behavioral health provider eight times a
year.
Other research emphasizes the negative impact high-cost sharing can
have on beneficiary utilization of high-value health services, clinical
outcomes, and total costs of care.120 121 122 These findings
are more striking for beneficiaries with disabilities or those with an
income just above the threshold Medicaid uses to determine eligibility
for additional coverage.\123\
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\120\ Fusco N, Sils B, Graff JS, Kistler K, Ruiz K. Cost-sharing
and adherence, clinical outcomes, health care utilization, and
costs: A systematic literature review. J Manag Care Spec Pharm. 2023
Jan;29(1):4-16. doi: 10.18553/jmcp.2022.21270. Epub 2022 Apr 7.
PMID: 35389285; PMCID: PMC10394195. Retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/ PMC10394195/.
\121\ Health Affairs: Shivani, A. et. al. Fine-Tuning Cost
Sharing As Part Of Health Reform December 3, 2021. DOI: 10.1377/
hblog20211130.358084. Retrieved from: https://www.healthaffairs.org/content/forefront/fine-tuning-cost-sharing-part-health-reform.
\122\ Parish WJ, Mark TL, Weber EM, Steinberg DG. Substance Use
Disorders Among Medicare Beneficiaries: Prevalence, Mental and
Physical Comorbidities, and Treatment Barriers. Am J Prev Med. 2022
Aug;63(2):225-232. doi: 10.1016/j.amepre.2022.01.021. Epub 2022 Mar
21. PMID: 35331570. Retrieved from: https://www.sciencedirect.com/science/article/pii/S0749379722001040?via%3Dihub.
\123\ Nelson, Hannah. Cost-Sharing Burden Limits Access to Care
for Medicare Members. April 2021. Retrieved from: https://healthpayerintelligence.com/news/cost-sharing-burden-limits-access-to-care-for-medicare-members.
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Considering these findings, HHS and CMS are pursuing policies that
can address barriers individuals may face in accessing mental health
and substance use disorder care.124 125 126 Some of the
policies CMS is pursuing to address these behavioral health access
concerns are summarized in the following section.
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\124\ Office of the Assistant Secretary for Planning and
Evaluation (ASPE). Issue Brief: HHS Roadmap for Behavioral Health
Integration. September 2022. Retrieved from: https://aspe.hhs.gov/sites/default/files/documents/4e2fff45d3f5706d35326b320ed842b3/roadmap-behavioral-health-integration.pdf.
\125\ CMS. CMS Action Plan to Enhance Prevention and Treatment
for Opioid Use Disorder. June 2021. Retrieved from: https:/
;www.cms.gov/files/document/action-plan-behavioral-health-strategy.pdf.
\126\ Kaiser Family Foundation: Meredith Freed, Juliette
Cubanski, and Tricia Neuman. FAQs on Mental Health and Substance Use
Disorder Coverage in Medicare. January 2023. Retrieved from: https://www.kff.org/mental-health/issue-brief/faqs-on-mental-health-and-substance-use-disorder-coverage-in-medicare/.
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c. CMS's Behavioral Health Strategy
CMS's vision is that beneficiaries and consumers with behavioral
health needs have access to person-centered, timely, affordable care
that enables optimal health and wellness.\127\ For example, in the
Calendar Year 2023 Physician Fee Schedule (87 FR 69404) \128\ and the
[[Page 99405]]
Calendar Year 2024 Physician Fee Schedule (88 FR 81540),\129\ CMS
finalized provisions effectively expanding access to the following
behavioral health services in Traditional Medicare:
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\127\ CMS's behavioral health strategy is available at: https://www.cms.gov/cms-behavioral-health-strategy.
\128\ ``Medicare and Medicaid Programs; CY 2023 Payment Policies
Under the Physician Fee Schedule and Other Changes to Part B Payment
and Coverage Policies; Medicare Shared Savings Program Requirements;
Implementing Requirements for Manufacturers of Certain Single-dose
Container or Single-use Package Drugs To Provide Refunds With
Respect to Discarded Amounts; and COVID-19 Interim Final Rules.''
Available at: https://www.federalregister.gov/documents/2022/11/18/2022-23873/medicare-and-medicaid-programs-cy-2023-payment-policies-under-the-physician-fee-schedule-and-other.
\129\ ``Medicare Program: Hospital Outpatient Prospective
Payment and Ambulatory Surgical Center Payment Systems; Quality
Reporting Programs; Payment for Intensive Outpatient Services in
Hospital Outpatient Departments, Community Mental Health Centers,
Rural Health Clinics, Federally Qualified Health Centers, and Opioid
Treatment Programs; Hospital Price Transparency; Changes to
Community Mental Health Centers Conditions of Participation, Changes
to the Inpatient Prospective Payment System Medicare Code Editor;
Rural Emergency Hospital Conditions of Participation Technical
Correction'' final rule with comment period. Available at: https://www.federalregister.gov/documents/2023/11/22/2023-24293/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment.
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Counseling and cognitive behavioral therapy--this was done
by codifying new benefit categories for mental health counselors,
marriage and family therapists.\130\
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\130\ The November 2022 final rule is available at: https://www.federalregister.gov/documents/2022/11/18/2022-23873/medicare-and-medicaid-programs-cy-2023-payment-policies-under-the-physician-fee-schedule-and-other.
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Buprenorphine treatment for beneficiaries with opioid use
disorder (OUD)--this was done by permitting the use of audio-only
communication technology to initiate treatment in cases where audio-
video technology is not available to the beneficiary, and all other
applicable requirements are met.\131\
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\131\ The November 2022 final rule is available at: https://www.federalregister.gov/documents/2022/11/18/2022-23873/medicare-and-medicaid-programs-cy-2023-payment-policies-under-the-physician-fee-schedule-and-other.
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Behavioral health care--this was done by paying for an
``Intensive Outpatient Program'' (IOP), which can be performed by
hospital outpatient departments, community mental health clinics,
Federally Qualified Health Centers (FQHCs), Opioid Treatment Providers
(OTPs), or Rural Health Clinics (RHCs).\132\
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\132\ The November 2023 final rule is available at: https://www.federalregister.gov/documents/2023/11/22/2023-24293/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment.
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In addition, in the April 2024 final rule,\133\ CMS finalized
expanding beneficiaries' access to additional behavioral health
providers in MA by requiring 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 to meet MA network
adequacy standards under a new facility-specialty type, ``Outpatient
Behavioral Health.'' We also recently announced the Innovation in
Behavioral Health Model to improve quality of care for Medicare and
Medicaid enrollees with mental health and substance use disorders.\134\
Through this model, CMS will support innovative approaches to connect
people with the physical, behavioral, and social supports needed to
manage these conditions.
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\133\ ``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.
Available at: https://www.federalregister.gov/public-inspection/2024-07105/medicare-program-medicare-advantage-and-the-medicare-prescription-drug-benefit-program-for-contract.
\134\ Centers for Medicare & Medicaid Services, 2024. ``CMS
Announces New Model to Advance Integration in Behavioral Health.''
Available at: https://www.cms.gov/newsroom/press-releases/cms-announces-new-model-advance-integration-behavioral-health.
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This proposal continues to advance CMS's behavioral health strategy
through changes to our MA and Cost Plan cost-sharing standards that we
believe would improve enrollee access to behavioral health services. A
brief history of the MA behavioral health cost-sharing standards
follows.
d. Regulatory History of Behavioral Health Cost-Sharing Standards
Section 422.100(f)(6) provides that cost sharing for basic benefits
offered through a MA plan must not exceed levels annually determined by
CMS to be discriminatory for such services, which CMS determines using
specific standards adopted through previous rulemakings. (All MA
organizations and Cost Plan organizations must also comply with
applicable Federal civil rights laws that prohibit discrimination,
including those that prohibit discrimination on the basis of race,
color, national origin, sex, age, and disability, such as section 1557
of the Affordable Care Act, Title VI of the Civil Rights Act of 1964,
section 504 of the Rehabilitation Act of 1973, and the Age
Discrimination Act of 1975.)
CMS imposes cost-sharing limits to ensure that the cost sharing
aspect of a plan's design does not discriminate against or discourage
enrollment of beneficiaries who have high health care needs and who
need specific services. CMS issued cost-sharing limits for covered
services and guidance addressing discriminatory cost sharing, as
applied to specific benefits and to categories of benefits, in the
annual Call Letter (prior to 2020) and in annual bidding instructions.
Prior to contract year 2023, the behavioral health service category
cost-sharing limits CMS set for MA plans were based on the following
limits:
Opioid treatment program services, outpatient substance
use disorder services, mental health specialty services, psychiatric
services, and partial hospitalization: 50 percent coinsurance for all
plans.
Inpatient hospital psychiatric services: 100 percent of
Medicare FFS cost sharing for plans with a mandatory MOOP type and 125
percent of Medicare FFS cost sharing for plans with a lower (voluntary)
MOOP type.
For contract year 2025 and prior years, CMS typically utilized
behavioral health professional and inpatient hospital cost-sharing data
validations of 50 percent coinsurance to guard against potentially
discriminatory benefit designs for Cost Plans.
CMS also set professional behavioral health service category
copayment limits that were in place without change for many years for
MA plans until contract year 2022. These copayment limits were
originally set to strike a balance between limiting beneficiary out-of-
pocket costs and the potential impact to plan design and costs. The
overarching goal of these copayment limits was to ensure beneficiary
access to affordable and sustainable benefit packages rather than to be
precisely tied to actuarially equivalent values to the coinsurance
limit each year. For MA plans, CMS began to annually update these
behavioral health cost-sharing limits for contract year 2023 through
contract year 2025 using the methodology in Sec. 422.100(f)(6) through
(f)(8) that was established in the April 2022 final rule. We also
solicited comment on potential future rulemaking to further limit MA
behavioral health service category cost-sharing standards in that final
rule.\135\
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\135\ ``Contract Year (CY) 2023 Medicare Advantage (MA) Maximum
Out-of-Pocket (MOOP) Limits and Service Category Cost Sharing
Standards Final Rule with Comment Period.'' Available at: https://www.federalregister.gov/documents/2022/04/14/2022-07642/medicare-program-maximum-out-of-pocket-moop-limits-and-service-category-cost-sharing-standards.
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[[Page 99406]]
(1) April 2022 Final Rule
The April 2022 final rule amended Sec. Sec. 422.100 and 422.113 to
establish the methodologies CMS uses to set annual cost-sharing limits
for MA plans \136\ for contract year 2023 and future years. As a
general matter, these MA cost sharing limitations do not apply to Cost
Plans. In the April 2022 final rule, CMS finalized a four-year
transition for professional service category MA cost-sharing limits,
beginning in contract year 2023, from 50 percent coinsurance to a range
of cost-sharing limits (30 to 50 percent coinsurance and actuarially
equivalent copayment amounts) based on MOOP type. This requirement
provides lower MOOP types the most cost sharing flexibility to
incentivize MA plans to establish lower MOOP amounts. The range of MA
cost-sharing limits established by the April 2022 final rule (30 to 50
percent coinsurance and actuarially equivalent copayments for contract
year 2026 and future years) apply to the following professional
behavioral health service categories: mental health specialty services,
psychiatric services, partial hospitalization, and intensive outpatient
program services. The April 2022 final rule also codified MA cost-
sharing limits for contract year 2023 and future years generally based
on the following for the other behavioral health service categories:
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\136\ The April 2022 final rule did not change Cost Plan cost-
sharing standards.
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50 percent coinsurance and actuarially equivalent
copayment amounts for the opioid treatment program services and
outpatient substance use disorder services categories.
100 percent of Medicare FFS cost sharing and actuarially
equivalent copayment amounts for plans with a mandatory MOOP type and
125 percent of Medicare FFS cost sharing and actuarially equivalent
copayment amounts up to the MOOP limit for plans with a lower
(voluntary) MOOP type for inpatient hospital psychiatric services.
In addition, the April 2022 final rule finalized the addition of a
third, intermediate MOOP type and MA cost-sharing standards specific to
this MOOP type. The MA cost-sharing standards for the intermediate MOOP
type are, in most cases, primarily based on the numeric midpoint
between the cost-sharing limits CMS sets for the mandatory and lower
MOOP types. Specifically, the behavioral health service category
contract year 2026 MA cost-sharing limits at Sec. 422.100(f)(6)(i),
(iii), and (iv) for the intermediate MOOP type are as follows:
40 percent coinsurance or an actuarially equivalent
copayment for mental health specialty services, psychiatric services,
partial hospitalization, and intensive outpatient program services.
50 percent coinsurance or an actuarially equivalent
copayment for the opioid treatment program services and outpatient
substance use disorder services categories.
A dollar value that reflects approximately 112.5 percent
of estimated Medicare FFS cost sharing for inpatient hospital
psychiatric services.\137\
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\137\ If the inpatient hospital psychiatric services dollar
limit for particular length of stay scenario(s) is set at the MOOP
limit for the other MOOP type(s), the percentage of estimated
Medicare FFS cost sharing that approximately represents the dollar
limit for the intermediate MOOP type in that length of stay scenario
may be less than 112.5%. This is because the dollar limit for the
intermediate MOOP type reflects the numeric midpoint of the actual
cost-sharing limits applied to the other MOOP types (before rounding
rules are applied).
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Per Sec. 422.100(f)(6)(ii), CMS also applies specific rounding
rules in calculating MA behavioral health service category copayment
limits for all MOOP types.
In the April 2022 final rule, we noted that CMS may pursue future
rulemaking to alter the methodology for calculating the MA MOOP and
cost-sharing limits finalized in that rule if: (1) there are
significant unforeseen impacts or negative consequences that need to be
addressed; or (2) additional changes outweigh the interests of
maintaining a settled methodology and sufficiently protect enrollees
from changes in cost sharing and benefits from one year to the next.
Related to this, CMS included a comment solicitation in the April 2022
final rule that is discussed in the following section.
(2) Behavioral Health Cost-Sharing Limits Comment Solicitation
CMS included a comment solicitation in the April 2022 final rule to
do all of the following:
Highlight the importance of in-network behavioral health
cost sharing.
Inform stakeholders that CMS may pursue future rulemaking
to further limit MA behavioral health service category cost-sharing
standards (compared to the standards set through the April 2022 final
rule).
Receive feedback to consider before pursuing potential
future rulemaking on this topic.
We shared that CMS was considering whether MA cost-sharing limits
for mental health care (such as mental health specialty services,
psychiatric services, partial hospitalization, opioid treatment program
services, and treatment for substance use disorders) should be subject
to additional cost-sharing limits, such as a requirement that cost
sharing for those services not exceed cost sharing in Traditional
Medicare. In response to the April 2022 final rule comment solicitation
on this topic, CMS received a few timely comments.\138\
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\138\ Public comments for this solicitation that were received
before the close of the comment period are posted at: https://www.regulations.gov/document/CMS-2020-0010-0667.
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A couple of commenters were supportive of lowering MA cost-sharing
limits for mental health services and treatment for substance use
disorders or setting limits that had parity with the cost sharing for
medical services. These commenters stated that changing the cost-
sharing limits for these services would: (1) prevent MA organizations
from discriminating against beneficiaries that use these services; (2)
improve health care treatment by making the mental health treatment
affordable for beneficiaries; and (3) align with the President's FY
2023 Budget and Unity Agenda that direct more resources to improving
access to mental health and substance use disorder treatment.
A commenter stated that CMS should ensure MA beneficiary cost
sharing for mental health and substance use disorder treatments are not
subject to additional non-quantitative treatment limits (NQTLs) (like
prior authorization and step therapy) in comparison to medical
services. This commenter also requested CMS:
Remove or reduce cost sharing for primary care services
overall and specifically for behavioral health services that are
provided in a primary care physician (PCP) setting to defined patient
populations (such as those living in mental health professional
shortage areas and underserved Black and Hispanic individuals); and
Ensure MA plans provide coverage and adequate payment for
integrated behavioral health services by PCPs and other licensed
behavioral health professionals in PCP settings.
This commenter stated these requests would: (1) provide cost
savings to patients and payers; (2) improve access to care and health
equity; (3) align with CMS' goal to have 100 percent of Medicare
beneficiaries in an accountable relationship by 2030; (4) increase
utilization of preventive services; and (5) improve beneficiary health
outcomes.
A couple of commenters were opposed to lowering MA cost-sharing
[[Page 99407]]
limits generally or specifically for mental health services. A
commenter stated that current anti-discriminatory measures (including
the non-discriminatory limits set by the April 2022 final rule, CMS's
discrimination reviews of each plan's benefit design, and the risk
adjustment aspect of the MA program designed to protect against
discrimination) are sufficient and mentioned MA plans produce better
beneficiary outcomes than Medicare FFS.
CMS considered these comments when developing this proposal and we
thank the commenters for their feedback.
e. Proposed Behavioral Health Cost-Sharing Standard: Cost Sharing No
Greater Than Original Medicare (Sec. 422.100(j)(1))
After considering: (1) the comments received on the April 2022
final rule comment solicitation related to behavioral health cost-
sharing limits; and (2) behavioral health-related research conducted
since the April 2022 final rule publication (discussed in section
III.L.b. of this proposed rule), CMS developed and considered changes
to in-network cost-sharing standards to propose for behavioral health
services (versus the standards for contract year 2026 and future years
in existing regulations). Our goal in choosing between these different
standards was to strike a balance between: (1) improving the
affordability of behavioral health services for enrollees in a timely
manner; and (2) minimizing disruption to enrollees' access to care and
coverage options. These different behavioral health cost-sharing
standards are described and evaluated in detail in section VII.E.3. of
this proposed rule. In brief, for MA plans, CMS evaluated each approach
through analyses primarily focused on the following:
Calculating the difference between the proposed and
existing MA behavioral health service category cost-sharing standards
for contract year 2026 and future years using illustrative actuarially
equivalent dollar values based on contract year 2025 Medicare FFS data
projections.
Estimating: (1) the number of MA plans that may reduce
their behavioral health service category cost sharing to comply with
the standard posed by the alternative; and (2) how much MA plan cost
sharing may be lowered for each service category on a weighted average
basis based on contract year 2024 MA plans with cost-sharing amounts
above the limits posed by each alternative.
Similar analyses were completed for cost plans.
Based on the analyses summarized in section VII.E.3. of this
proposed rule, CMS has determined that applying cost sharing no greater
than Traditional Medicare to the behavioral health service categories
(identified in the introduction of this section) beginning in contract
year 2026 would strike an appropriate balance between beneficiary
affordability and minimizing disruption to enrollees' access to care
and coverage options. As a result, CMS is proposing here to set the
professional MA behavioral health service category cost-sharing limits
beginning contract year 2026 (as discussed in the April 2022 final
rule, contract year 2026 is the last year of the range of cost-sharing
limits transition at Sec. 422.100(f)(6)(iii) and (f)(8) for MA)
because this proposal's intended outcome aligns with our behavioral
health strategy and outweighs the potential benefits of maintaining the
current, settled methodology.
We note this proposal would affect D-SNP PPOs because Sec.
422.100(o)(1) requires that, starting in 2026, an MA organization
offering a local PPO plan or regional PPO plan that is a D-SNP limit
cost sharing for out-of-network services to the cost-sharing limits
applicable to specific in-network services for all MA plans, as
described in Sec. 422.100(f)(6). Section 422.100(o)(2) also limits D-
SNP PPO out-of-network cost sharing to the cost-sharing limits for such
services established at Sec. 422.100(j)(1) when such services are
delivered in-network. These requirements were finalized in the April
2024 final rule.\139\ We propose to revise the last phrase of Sec.
422.100(o)(2) regarding regional PPO D-SNPs to align the cross-
references with the language that we have proposed to update in this
rulemaking. Specifically, we are proposing to update the cross-
reference in Sec. 422.100(o)(2) from ``excluding paragraph
(j)(1)(i)(C)(2)'' to ``excluding the last sentence of paragraph
(j)(1)(i)(C).''
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\139\ ``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)'' published in
the Federal Register April 23, 2024; Available at: https://www.federalregister.gov/documents/2024/08/06/2024-17024/medicare-program-changes-to-the-medicare-advantage-and-the-medicare-prescription-drug-benefit.
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We propose to update the cost sharing standards for several
categories of benefits, including behavioral health and non-behavioral
health related benefit categories, for Cost Plans to match the
standards for MA plans. The following sections describe the: (1)
proposed in-network behavioral health service category cost-sharing
limits and (2) potential impacts this proposal may have on contract
year 2026 plan cost-sharing amounts by service category. If this
proposal is finalized, CMS will continue to examine the affordability
and availability of behavioral health services for MA enrollees. This
may include monitoring the utilization of behavioral health services by
MA enrollees through encounter data (as discussed in section
III.L.e.(4). of this proposed rule) which may inform CMS's
understanding of the utilization of certain categories of services and
future rulemaking.
(1) Proposed In-Network Service Category Cost-Sharing Limits
Table 3 (MA plans) and table 4 (Cost Plans) compare existing and
proposed behavioral health in-network service category cost-sharing
standards for contract year 2026 and future years. In effect, these
tables summarize this proposal's impact to behavioral health service
category cost-sharing limits if finalized (based on contract year 2025
Medicare FFS data projections, the most recent data available at the
time of developing this proposal). Specifically, table 3 reflects this
proposal's impact to MA coinsurance limits and its potential impact to
the dollar limits (based on actuarially equivalent values to the
specified coinsurance limits or percentages of estimated Traditional
Medicare FFS cost sharing for inpatient hospital psychiatric services).
We note the illustrative dollar limits for the behavioral health
service categories in table 3 are similar to cost sharing for these
services in qualified health plans (QHPs) in the marketplace. For
example, QHPs are required to offer standardized options for 2024 with
set copayments for mental health and substance use disorder outpatient
office visits that range between $0 and $50 based on the plan level
(for example, bronze or silver).\140\ In comparison, based on the
information in table 3, the partial hospitalization copayment limit for
an MA plan with a lower MOOP type in contract year 2026 could decrease
from 50 percent coinsurance or $150 copayment to 20 percent coinsurance
or $60 copayment if this proposal is finalized (a $90 difference in the
[[Page 99408]]
copayment limit). Similarly, table 4 reflects this proposal's impact to
Cost Plan in-network cost-sharing limits.
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\140\ See table 9 and 10 on page 25850 and 25851 from, ``Patient
Protection and Affordable Care Act, HHS Notice of Benefit and
Payment Parameters for 2024'' final rule published April 27, 2023.
Retrieved from: https://www.federalregister.gov/documents/2023/04/27/2023-08368/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2024.
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We note that the dollar limits included in table 4 under the
existing cost sharing validations column do not reflect actuarially
equivalent values to the coinsurance percentage listed. This is because
Cost Plan cost sharing validations have been maintained for many years
at these amounts. As part of this proposal, copayment limits \141\ for
Cost Plans would be updated annually following the rules at Sec.
422.100(f)(7), including the subregulatory process specified at Sec.
422.100(f)(7)(iii) to reflect actuarially equivalent values to the
coinsurance limits based on the most recent Medicare FFS data
projections available and application of the rounding rules in
paragraph (f)(6)(ii). As a result, comparing the difference in
copayment limits between the existing and proposed standards in table 4
reflect the impacts from: (1) using updated Medicare FFS data
projections to set actuarially equivalent copayment limits and (2)
basing copayment limits on revised coinsurance limits specified in
Medicare FFS for these benefits. For example, in comparison to the $150
actuarially equivalent copayment value to 50 percent coinsurance in
table 3 for partial hospitalization services, table 4 reflects a $55
copayment limit in the existing cost sharing validations column for
this service category. This illustrates how this proposal will have
different levels of impact for Cost Plans than for MA plans in some
cases. Specifically for this example, based on the information in table
4, the partial hospitalization copayment limit for a Cost Plan in
contract year 2026 could change from 50 percent coinsurance or $55
copayment to 20 percent coinsurance or $60 copayment if this proposal
is finalized (a $5 increase in the copayment limit). We also note that
Cost Plan enrollees may continue to receive basic benefits at cost
sharing in Traditional Medicare by going out-of-network. Ensuring that
Cost Plan cost sharing does not exceed Traditional Medicare cost
sharing for these services avoids an incentive for Cost Plan enrollees
to go out-of-network, which might mean foregoing any coordination
services or efforts by the Cost Plan that come with using the Cost
Plan's network providers.
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\141\ As discussed in more detail subsequently in this section
of the proposed rule, this annual process to update the copayment
limits for Cost Plans would apply to all basic benefits.
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We emphasize that the dollar values in table 3 and the proposed
dollar limits in table 4 are illustrative (based on contract year 2025
Medicare FFS data projections). As a result, CMS expects the proposed
copayment and dollar limits illustrated in tables 3 and 4 would be
different in contract year 2026 and future years based on using updated
data to develop the actuarially equivalent values for the coinsurance
cost sharing limits that we are proposing. This may also include, as
discussed in the April 2022 Final Rule, changes to the approach to
calculate actuarially equivalent copayments in future years. For
example, CMS may change the calculation to consider a different list of
provider specialties, services, or facilities based on generally
accepted actuarial principles and practices outlined in Sec.
422.100(f)(7)(i). We would generally describe such changes in the
annual guidance described in Sec. 422.100(f)(7)(iii).
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Under this proposal, the requirement that cost-sharing limits
applicable for any service category cannot exceed the associated MOOP
limit would continue to apply for MA plans, including for the inpatient
hospital psychiatric length of stay scenarios at Sec.
422.100(f)(6)(iv). For example, in table 3, the illustrative MA
inpatient hospital psychiatric services dollar limits for each length
of stay scenario are all less than the contract year 2025 MOOP limits
(for example, the contract year 2025 lower MOOP limit is $4,150).\142\
However, if 100 percent of estimated Medicare FFS cost sharing for an
inpatient hospital psychiatric length of stay scenario resulted in a
dollar limit that exceeded the MOOP limit, CMS would set the MA dollar
limit for that scenario and MOOP type at the MOOP limit for that
contract year under this proposal. In essence, our proposal could
result in MA inpatient hospital psychiatric dollar limits that vary by
MOOP type if dollar limit calculations result in values that exceed
MOOP limit(s).
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\142\ ``Final Contract Year (CY) 2025 Standards for Part C
Benefits, Bid Review and Evaluation'' issued May 6, 2024. Available
at: https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly.
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In conjunction with proposing these behavioral health cost-sharing
standards, we propose to: (1) revise Sec. 417.454(e) to apply a limit
for cost sharing for certain benefit categories, similar to the MA cost
sharing standards, of cost sharing no greater than Traditional
Medicare, to Cost Plans; and (2) add new Sec. 417.454(f) to codify and
clarify our longstanding policy for Cost Plans that in-network cost
sharing be no greater than the 50 percent coinsurance (or actuarially
equivalent copayment) standard at Sec. 422.100(f)(6)(i) for which Cost
Plans have historically been subject as part of our PBP data
validations. We believe that these proposals will protect enrollees of
Cost Plans and create consistent flexibility in cost sharing standards
between MA and Cost Plans for the following non-behavioral service
categories: inpatient hospital acute services, home health, certain
categories of DME, and Part B drugs other than chemotherapy drugs.
Specifically, at Sec. 417.454(e) we propose to add paragraphs (5)
through (9) which reference those service categories and behavioral
health service categories. In addition, CMS proposes to add new
paragraph Sec. 417.454(f) which references the cost sharing standard
at Sec. 422.100(f)(6)(i) (the 50 percent coinsurance or actuarially
equivalent copayment cost sharing standard) as applicable as the in-
network basic benefit cost sharing standard for Cost Plans, excluding
benefits addressed at Sec. 417.454(e). Under these proposals, the Cost
Plan must use cost sharing that does not exceed specific coinsurance
thresholds. This may be achieved by the Cost Plan using coinsurance
that does not exceed the coinsurance limit or copayments that do not
exceed dollar values that are actuarially equivalent to the coinsurance
limit.
Under these proposals, CMS may annually update the copayment limits
for service categories subject to Sec. 417.454(e) or (f) to retain
actuarially equivalent values to the applicable coinsurance standard
for each service category. In annually setting these copayment limits,
we intend to not disincentivize Cost Plans from using copayments in
their plan designs. Specifically, CMS proposes to revise Sec.
417.454(e) to specify that when Cost
[[Page 99411]]
Plans use: (1) coinsurance, the coinsurance must not exceed the
coinsurance charged in original Medicare; or (2) copayments, the
copayment must not exceed the actuarially equivalent value calculated
for that benefit using the Medicare Advantage rules at Sec.
422.100(j)(1)(ii) and Medicare FFS data projections as defined in Sec.
422.100(f)(4)(i). Per Sec. 422.100(j)(1)(ii), CMS calculates copayment
limits using the rules specified in Sec. 422.100(f)(7) and (f)(8). If
CMS does not calculate a specific copayment limit, the plan would have
to establish a copayment that does not exceed an actuarially equivalent
value to the coinsurance required under original Medicare; such
actuarially equivalent value must be established in accordance with
Sec. 422.100(f)(7)(i) (which requires compliance with generally
accepted actuarial principles and practices) and based on the average
Medicare FFS allowed amount in the plan's service area or the estimated
total MA plan financial liability for that benefit for that contract
year. Under this proposal, the Cost Plan would have to comply with the
MA requirements specified in the cross-referenced regulations. Cross-
referencing the MA regulations would ensure consistency across the
programs for Medicare beneficiaries that elect Part A and B coverage
through one of these Medicare health plans and avoid repetitive and
lengthy regulation text being added to Sec. 417.454(e). This proposal
would therefore result in consistently updated actuarially equivalent
copayment limits for the applicable service categories across the MA
and Cost Plan programs.
The subregulatory process for how the actuarially equivalent
copayment limits are calculated and established is addressed at Sec.
422.100(f)(7) and would utilize the most recent Medicare FFS data
projections available (as defined in Sec. 422.100(f)(4)(i)) and
application of the rounding rules in paragraph (f)(6)(ii). This
includes the subregulatory notice and comment process outlined in Sec.
422.100(f)(7)(iii). Section 422.100(j)(1)(ii) also requires compliance
with paragraph (f)(8), the requirements for copayment limits during the
actuarially equivalent copayment transition from 2023 through 2025.
However, as the actuarially equivalent copayment transition concludes
before this proposal would be applicable, paragraph (f)(8) is not
relevant for Cost Plans. Table 5 shows the potential impact of these
proposals for Cost Plans based on the most recent Medicare FFS data
projections available for non-behavioral health related service
categories.
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(2) Potential Impacts To Plan Behavioral Health Cost Sharing Amounts
CMS considered the potential impact this proposal, if finalized,
may have on plans and enrollees related to their behavioral health
service category cost-sharing amounts. Tables 6 through 11 use contract
year 2024 MA and Cost Plan data and contract year 2025 Medicare FFS
data projections to roughly estimate these potential plan and enrollee
impacts. We excluded D-SNPs from this data as states cover Medicare
cost sharing for many dually eligible enrollees. However, we believe
our proposal will have a beneficial effect on access to care for dually
eligible individuals by increasing revenue for behavioral health
providers in any instances in which states do not cover the full cost
sharing amounts on their behalf. There could be state savings directly
attributable to behavioral health benefits as well if utilization
remains stable, which we expect given state coverage of dually eligible
beneficiary cost sharing.
Organizations establish plan copayment amounts based on many
variables that may change annually (including provider contracting
arrangements, managed care practices, and scope of supplemental benefit
offerings). As a result, CMS expects the values in tables 6 through 11
would be different in future years based on updated data (for example,
contract year 2025 MA plan data). In addition, CMS cannot fully predict
plan behavior and the MA organizations' reactions to the new behavioral
health cost sharing limits. Due to these inherent uncertainties, we
emphasize the potential plan and enrollee impacts discussed in this
section are rough estimates and solicit comment on the scope of changes
MA plans may make in response to this proposal if finalized.
Table 6 identifies the average MA plan cost sharing (weighted by
enrollment) by behavioral health service category of all contract year
2024 plans. CMS considered the difference between the MA plan cost
sharing values in table 6 and the proposed cost-sharing standards in
table 3 as an initial estimate of how likely this proposal would be to
require significant cost sharing changes by most MA plans for each
category. For example, all of the weighted average MA plan cost sharing
amounts for the three length-of-stay scenarios for the inpatient
hospital psychiatric service category are less than the proposed and
illustrative dollar limits in table 3. In contrast, as shown in table
6, the weighted average MA plan cost-sharing amount (25 percent
coinsurance or $36 copayment) for the ``outpatient substance use
disorder services'' service category exceeds the proposed 20 percent
coinsurance or $30 copayment limit in table 3. As a result, we consider
these comparisons as supportive evidence that this proposal would
directly result in most MA plans: (1) lowering their cost sharing for
the ``outpatient substance use disorder services'' category; and (2)
making nominal or no changes to their cost sharing for inpatient
hospital psychiatric services. We make additional comparisons and
interpretations based on contract year 2024 MA plan cost sharing values
in tables 8 and 10 to better understand the scope of changes certain MA
plans may make in response to this proposal for each category.
[[Page 99414]]
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Table 7 provides the same information as table 6 but for Cost
Plans. CMS considered the difference between the Cost Plan cost sharing
values in table 7 and the proposed cost-sharing standards in table 4 as
an initial estimate of the likelihood this proposal would require
significant cost sharing changes by most Cost Plans for each applicable
category.\143\ For example, as shown in table 7, the weighted average
Cost Plan cost sharing amount for the ``opioid treatment program
services'' service category exceeds the proposed zero cost sharing
standard in table 4. In contrast, as shown in table 7, the weighted
average Cost Plan cost sharing amount for the ``mental health specialty
services'' service category is lower than the proposed cost-sharing
standard in table 4. As a result, we consider these comparisons as
supportive evidence that this proposal would directly result in most
Cost Plans: (1) lowering their cost sharing for the ``opioid treatment
program services'' category; and (2) making nominal or no changes to
their cost sharing for mental health specialty services. We make
additional comparisons and interpretations based on contract year 2024
Cost Plan cost sharing values in tables 9 and 11 to better understand
the scope of changes certain Cost Plans may make in response to this
proposal for each applicable category.
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\143\ Cost Plans are not required to report information for all
Medicare and non-Medicare services, including Part A inpatient
hospital psychiatric services. Due to this lack of data, in
comparing the information in tables 4 and 7 we are only able to
evaluate potential professional behavioral health service category
cost sharing impacts for Cost Plans.
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[[Page 99415]]
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Table 8 identifies the number and percent of contract year 2024 MA
plans and enrollees with cost sharing greater than the proposal by
behavioral health service category. As shown in table 8, the behavioral
health service category with the most contract year 2024 MA plans that
have cost sharing greater than cost sharing in Traditional Medicare is
opioid treatment program services. CMS considers the information in
table 8 to be a rough estimate of the proportion of continuing MA plans
and enrollees that may experience lower behavioral health cost sharing
(by service category) if this proposal is finalized. For example, based
on information in table 8, we estimate that about 42 percent of MA
plans (and 41 percent of MA enrollees) may experience lower cost
sharing for outpatient substance use disorder services in contract year
2026 if this proposal is finalized. In contrast, we expect a greater
proportion of MA plans and enrollees would experience lower
professional behavioral health cost sharing if this proposal is
finalized. For example, based on table 8, we estimate that about 42
percent of MA plans (and 41 percent of MA enrollees) may experience
lower cost sharing for outpatient substance use disorder services in
contract year 2026 if this proposal is finalized. The information in
table 8 aligns with our general expectation that the greater the
decrease to existing cost-sharing standards from this proposal, the
more plans, enrollees, and provider contracts that will be directly
affected. The prior examples fit with this expectation as this proposal
would lower MA cost-sharing standards for--
Inpatient hospital psychiatric services from 125 percent
to 100 percent of estimated Medicare FFS cost sharing (only for MA
plans with the lower MOOP type); and
Outpatient substance use disorder services from 50 percent
coinsurance to 20 percent coinsurance (or an actuarially equivalent
copayment) for all MA plans (regardless of MOOP type).
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Table 9 provides the same information as table 8 but for Cost
Plans. In comparison to the findings from table 8, table 9 shows that
substantially fewer Cost Plans and enrollees would be impacted by this
proposal. For example, based on information in table 9, we estimate
that 5 percent of Cost Plans (and about 1 percent of their enrollees)
may experience lower outpatient substance use disorder services cost
sharing in contract year 2026 (compared to the cost sharing they
experience in contract year 2024) if this proposal is finalized. In
contrast, this is
[[Page 99416]]
substantially less than the 42 percent of MA plans that may lower cost
sharing for this service category (as shown in table 8). As a result,
based on the findings in table 9, we believe Cost Plans would not be
substantially incentivized to leave the market if this proposal is
finalized given the likely limited breadth of impact.
[GRAPHIC] [TIFF OMITTED] TP10DE24.014
Column D in table 10 reflects the difference between: (1) the
weighted average MA plan cost sharing by behavioral health service
category of the plans identified in table 8; and (2) the proposed cost-
sharing limit for each category. Table 11 shows the same information as
table 10 but for Cost Plans. If this proposal is finalized, CMS
considers the values in Column D of tables 10 and 11 as a rough
estimate of how much, on a weighted average basis, enrollee cost
sharing may decrease for each behavioral health service category in
continuing plans that did not previously establish cost sharing amounts
equal to or less than Traditional Medicare. For example, as shown in
table 10, $30.38 is the estimated average difference in cost sharing
for the ``outpatient substance use disorder services'' service category
between: (1) the $60.38 weighted average cost sharing for this service
category of contract year 2024 MA plans with cost sharing amounts
greater than the proposed standard; and (2) this proposal's $30
illustrative copayment limit for that category (which reflects the
actuarially equivalent copayment value to the 20 percent coinsurance
standard in Traditional Medicare for this benefit, based on contract
year 2025 Medicare FFS data projections). In comparison for this same
service category, table 11 reflects a $10.00 difference in cost sharing
between Cost Plan cost sharing amounts (those above the proposed limit
identified in table 9) and the $30 illustrative copayment limit for the
``outpatient substance use disorder services'' service category (based
on contract year 2025 Medicare FFS data projections). Comparing tables
10 and 11 in this manner supports our belief that Cost Plans will be
less impacted by this proposal if finalized compared to MA plans.
BILLING CODE 4120-01-P
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[[Page 99418]]
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BILLING CODE 4120-01-C
Based on tables 6, 8, and 10, CMS expects this proposal (if
finalized) may result in a large proportion of continuing MA plans
making significant
[[Page 99419]]
changes to their cost sharing for the ``opioid treatment program
services'' service category in comparison to the other behavioral
health service categories (on average). This is because, as shown in
tables 6, 8, and 10, the ``opioid treatment program services'' service
category has the:
Highest percent of contract year 2024 MA plans and
enrollees with cost sharing above the proposed standard (coinsurance
percentage and illustrative actuarially equivalent copayment or dollar
limit).
Of the professional behavioral health service categories,
largest cost sharing difference between the weighted average MA plan
cost sharing and the proposed limit for that category for: (1) all MA
plans; and (2) MA plans with cost sharing above the proposed cost-
sharing standard.
Similar findings may be made for this service category for Cost
Plans based on the information in tables 7, 9, and 11. As a result,
this proposal (if finalized) has the potential to meaningfully improve
access to opioid treatment programs as a significant proportion of MA
and Cost Plan enrollees would likely experience substantively lower
cost sharing for these services. While a decrease of $47 on average may
be substantial for some MA plans (or $20 on average for Cost Plans),
research finds that patients with severe alcohol and other drug
problems report completing only two serious recovery attempts (median)
before remission.\144\ As a result, we expect lower cost sharing will
increase utilization of opioid treatment program services and thus
provide more beneficiaries with the services they need to achieve
remission. In addition, a study shows that every dollar spent on
substance use disorder treatment saves $4 in health care costs.\145\
Finally, we note that over the past two decades, the number of overdose
deaths in the older adult population has quadrupled.\146\ As a result,
applying the Traditional Medicare limit of zero cost sharing could have
a significant positive impact on enrollees' ability to access those
services and address the opioid use disorder crisis. We acknowledge
this proposal of zero cost sharing also increases the cost liability
for MA and Cost Plan organizations to cover opioid treatment program
services. However, we believe this increase in cost liability is not as
much of a concern as it otherwise would be for a highly utilized
service (such as physical therapy). In other words, we find the
increase in cost liability for MA and Cost Plan organizations to cover
opioid treatment program services as outweighed by the potential
positive enrollee outcomes described previously in this section. Given
the expected positive impacts of applying the Traditional Medicare
limit of zero cost sharing to opioid treatment program services, this
proposed limit reflects an additional term or condition necessary and
appropriate for the MA program, and not inconsistent with the Part C
statute, which CMS has the authority to impose under section 1857(e)(1)
of the Act.
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\144\ Kelly JF, Greene MC, Bergman BG, White WL, Hoeppner BB.
How Many Recovery Attempts Does it Take to Successfully Resolve an
Alcohol or Drug Problem? Estimates and Correlates From a National
Study of Recovering U.S. Adults. Alcohol Clin Exp Res. 2019
Jul;43(7):1533-1544. doi: 10.1111/acer.14067. Epub 2019 May 15.
PMID: 31090945; PMCID: PMC6602820.
\145\ Substance Abuse and Mental Health Services Administration
(US); Office of the Surgeon General (US). Facing Addiction in
America: The Surgeon General's Report on Alcohol, Drugs, and Health
[internet]. Washington (DC): US Department of Health and Human
Services; 2016 Nov. CHAPTER 7, VISION FOR THE FUTURE: A PUBLIC
HEALTH APPROACH. Available from: https://www.ncbi.nlm.nih.gov/books/NBK424861/.
\146\ Chatterjee, Rhitu. ``Mental health care is hard to find,
especially for people with Medicare or Medicaid.'' April 2024.
Retrieved from: https://www.npr.org/sections/health-shots/2024/04/03/1242383051/mental-health-care-shortage-medicare-medicaid-hhs-inspector-general.
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We also believe tables 6 through 11 support the proposed MA and
Cost Plan cost-sharing standard changes for the other behavioral health
service categories. For instance, the MA data suggests that this
proposal would result in either: (1) somewhat nominal reductions to
plan cost sharing amounts for several behavioral health service
categories across a substantive proportion of plans and enrollees or
(2) substantive reductions to plan cost sharing amounts for certain
inpatient hospital psychiatric length of stay scenarios for a small
proportion of plans and enrollees. Similarly, for Cost Plans, we find
that the data in tables 7, 9, and 11 suggest that this proposal would
result in either: (1) moderate reductions to plan cost sharing amounts
for opioid treatment program services across a substantive proportion
of plans and enrollees or (2) nominal reductions to plan cost-sharing
amounts for most of the other behavioral health service categories for
a small proportion of plans and enrollees. For example, based on tables
8 and 10, approximately 24 percent of MA plans (or 4.5 million or 21
percent of MA enrollees) could have a reduction in cost sharing by
about $7 per visit on average for mental health specialty services
based on this proposal and contract year 2024 plan data. In comparison,
based on tables 9 and 11, approximately 8 percent of Cost Plans (or
5,070 or 3 percent of Cost Plan enrollees) could have a reduction in
cost sharing by about $5 per visit on average for this service
category. CMS finds either of these consequences for mental health
specialty services plan cost sharing amounts would further our progress
towards improving access to behavioral health services across MA and
Cost Plans. As a result, we find the burdens or costs that this
proposal would impose on MA and Cost Plans are outweighed by the
potential positive beneficiary outcomes.
By reducing costs for mental health specialty services by nominal
amounts for each visit, we expect an increase in utilization of these
services. This service category includes costs from social workers and
psychologists, which are the behavioral health providers most utilized
by enrollees in 2023.\147\ Considering the combined effects of lower MA
and Cost Plan cost sharing amounts across the behavioral health service
categories, we also expect positive health outcome effects and improved
enrollee access to these services.
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\147\ HHS Office of Inspector General. ``A Lack of Behavioral
Health Providers in Medicare and Medicaid Impedes Enrollees' Access
to Care'' April 2024. Retrieved from: https://oig.hhs.gov/reports-and-publications/all-reports-and-publications/a-lack-of-behavioral-health-providers-in-medicare-and-medicaid-impedes-enrollees-access-to-care/.
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We reiterate that the information in tables 6 through 11 reflects
an estimate of this proposal's potential impact to MA and Cost Plans
and enrollees in contract year 2026 based on the most recent data
available at the time of developing this proposal. If this proposal is
finalized, plans may make changes to their plan designs within the
limits of applicable statutes and regulatory requirements discussed in
the following section.
(3) Statutory and Regulatory Limitations on Benefit Design Changes
In the annual MA bids or for a new contract year for Cost Plans,
plan benefit design changes may be made in response to multiple
factors, including new cost-sharing requirements. If this proposal is
finalized, MA and Cost Plan organizations have the flexibility to
offset any potential cost changes related to providing behavioral
health services (if they were not already establishing cost-sharing
amounts at or below cost sharing in Traditional Medicare). For example,
MA and Cost Plan organizations may choose to change aspects of their
benefit designs in a manner that would distribute the impact across all
enrollees such as changing
[[Page 99420]]
premium, supplemental benefits, and MOOP amount, as applicable, or make
cost-sharing changes to other service categories. However, it is also
possible that market forces will play a role in the organization
deciding among potential plan benefit design changes. In addition,
these organizations may choose to adjust profit margins rather than
change benefits and/or premiums.
MA organizations may make changes to their plan benefit design that
comply with existing statutory and regulatory requirements. This
includes sections 1852(a)(1)(B)(i) and 1852(b)(1) of the Act. Section
1852(a)(1)(B)(i) of the Act provides that the MA organization must
cover, subject to limited exclusions, the benefits under Parts A and B
(that is, basic benefits as defined at Sec. 422.100(c)) with cost
sharing that does not exceed or is at least actuarially equivalent to
cost sharing in original Medicare in the aggregate; this is repeated in
a bid requirement under section 1854(e)(4) of the Act. We have
addressed and implemented this requirement in several regulations,
including Sec. Sec. 422.100(j)(2), 422.102(a)(4), and 422.254(b)(4).
Section 1852(b)(1) of the Act prohibits discrimination by MA
organizations on the basis of health status-related factors and directs
that CMS may not approve an MA plan if CMS determines that the design
of the plan and its benefits are likely to substantially discourage
enrollment by certain MA eligible individuals. We have relied on this
to establish certain minimum standards for MA plans, including cost
sharing standards, designed to ensure that MA cost sharing designs and
structures are not established in a way that discourages enrollment by
Medicare beneficiaries with high health needs (whether overall or for
specific categories of covered benefits).
In addition, section 1854(a)(5) and (6) of the Act provide that CMS
is not obligated to accept every bid submitted and may negotiate with
MA organizations regarding the bid, including benefits. Under section
1854(a)(5)(C)(ii) of the Act, CMS is also authorized to deny a plan bid
if the bid proposes too significant an increase in enrollee costs or a
decrease in benefits from one plan year to the next. While this
proposal does not limit our negotiation authority with respect to MA
organizations' bid submissions (Sec. 422.256), it would provide cost-
sharing standards for an acceptable benefit design for CMS to apply in
reviewing and evaluating bids.
MA and Cost Plan organizations must also comply with applicable
Federal civil rights laws that prohibit discrimination, including those
that prohibit discrimination on the basis of race, color, national
origin, sex, age, and disability, such as section 1557 of the
Affordable Care Act, Title VI of the Civil Rights Act of 1964, section
504 of the Rehabilitation Act of 1973, and the Age Discrimination Act
of 1975.
None of the proposals in this proposed rule limit application of
such anti-discrimination requirements. As a result, CMS believes these
existing statutory antidiscrimination requirements, regulatory
actuarial equivalence requirements for MA plans, and the competitive
nature of the MA and Cost Plan programs will prevent potentially
concerning changes organizations could otherwise make in response if
this proposal is finalized. However, as discussed in the following
section, we solicit comment on whether implementing this proposal
beginning in contract year 2026 would sufficiently protect enrollees
from potentially disruptive changes in access to care (including cost
sharing and benefits) and coverage options from one year to the next.
(4) Comment Solicitations
As discussed in sections III.L.e.(2). and (3). and VII.E.3. of this
proposed rule, CMS believes applying cost sharing no greater than
Traditional Medicare as the cost-sharing standard for the behavioral
health service categories will not result in significant negative
disruption to many enrollees or MA and Cost Plan organizations. This is
in part because as shown in:
Table 6: The weighted average behavioral health cost
sharing--of all contract year 2024 MA plans--reflects amounts that are
less than the proposed standards for the behavioral health service
categories, with two exceptions for the ``opioid treatment program
services'' and ``outpatient substance use disorder services'' service
categories.
Table 7: The weighted average behavioral health cost
sharing--of all contract year 2024 Cost Plans--reflects amounts that
are less than the proposed standards for the behavioral health service
categories, with one exception for ``opioid treatment program
services'' service category.
Table 10: The weighted average behavioral health cost
sharing of contract year 2024 MA plans for only plans with cost sharing
above the proposed standard is not significantly greater than our
proposal for most of the professional service categories.
Table 11: The weighted average behavioral health cost
sharing of contract year 2024 Cost Plans for only plans with cost
sharing above the proposed standard is not significantly greater than
our proposal for most of the professional service categories.
As shown in table 6, the weighted average contract year 2024 MA
plan cost sharing is about 9.5 percent coinsurance or $29 copayment for
the ``opioid treatment program services'' and about 25 percent
coinsurance or $36 copayment for ``outpatient substance use disorder
services'' service categories. In comparison, as shown in table 10, the
proposed behavioral health cost-sharing standards for these categories
would eliminate cost sharing for ``opioid treatment program services''
and establish 20 percent coinsurance or a $35 copayment limit
(illustrative dollar value that is actuarially equivalent to 20 percent
coinsurance based on contract year 2025 Medicare FFS data projections)
for the ``outpatient substance use disorder services'' categories. As a
result, if the proposed behavioral health cost-sharing standards are
finalized, we expect most continuing MA plans will not have to
significantly adjust their benefit designs to come into compliance. In
addition, based on our findings from tables 7 and 11 we also expect
most continuing Cost Plans will not be significantly impacted by this
proposal as most plans are currently in compliance with the proposed
requirements.
Conversely, there are a subset of plans that established cost
sharing amounts significantly above the weighted average values in
table 6. Specifically, 3 percent of MA plans (impacting 3 percent of
enrollees) established cost sharing greater than 30 percent coinsurance
(or approximately $92 copayment) for partial hospitalization. In these
cases, this proposal may have a more significant impact by lowering the
cost sharing limit for this service category to 20 percent coinsurance
or $60 copayment. Given the potential for this proposal to impact some
MA and Cost Plans more significantly, we considered whether CMS should
apply--
These proposed changes beginning in contract year 2026 or
2027; or
A transition period from the existing contract year 2025
behavioral health cost-sharing limits to the proposed cost-sharing
standard for select behavioral health service categories, and if so,
how long the transition should be.
For example, CMS considered whether a potential transition period
is warranted for service categories with substantial changes to the
cost sharing standard so MA and Cost Plans have sufficient time to
address potential changes in bidding that stem from this proposal (if
finalized) and other,
[[Page 99421]]
unrelated policy changes occurring at the same time (such as, new
changes stemming from IRA Part D requirements and CMS's annual updates
to the risk adjustment model and plan payments). In making this
consideration, CMS evaluated MA encounter data to determine the
potential impact this proposal may have on enrollee utilization of
these behavioral health services. This data was not available for Cost
Plans. Specifically, we compared the average length of stay and the
percent of enrollees with any utilization of the various behavioral
health service categories based on whether the MA enrollee's plan had
cost sharing amounts for those services equal to, or less than, cost
sharing in Traditional Medicare. The results of this analysis are
provided in tables 12 and 13 for the most recent year of MA encounter
data available at the time of developing this proposal, contract year
2023.
[GRAPHIC] [TIFF OMITTED] TP10DE24.017
[GRAPHIC] [TIFF OMITTED] TP10DE24.018
Based on the information in tables 12 and 13, CMS finds that the
data suggests that this proposal may result in small increases to per-
enrollee utilization of certain behavioral health services but could
also decrease the average duration or length of stay of these services.
For example, table 12 shows that the percent of MA enrollees with any
utilization of mental health specialty services, psychiatric services,
and outpatient substance abuse services increased nominally if the
enrollee was in a plan with cost sharing equal to or less than
Traditional Medicare in comparison to plans with cost sharing greater
than Traditional Medicare. For these same service categories, table 13
shows that enrollees in plans with cost sharing equal to or less than
Traditional Medicare had shorter average length of stays or number of
visits in comparison to enrollees in plans with cost sharing greater
than Traditional Medicare for these services. As a result, we believe
this proposal will not produce an immediate drastic change in
utilization of the behavioral health service categories to the extent
that a transition period is warranted. However, we solicit comment on
this assumption.
f. Proposed Regulation Changes
Thus, we propose the following changes to Sec. Sec. 417.454 and
422.100:
Revise language at Sec. 417.454(e) to clarify: (1) when
the proposed new cost sharing limits--that is, the additional
categories of basic benefits for which cost sharing may not be greater
than cost sharing in original Medicare for that benefit--would apply
and (2) the methods by which Cost Plan organizations (HMO or CMP) may
abide by the requirements in this paragraph when they use coinsurance
or copayment structures for these basic benefits.
[[Page 99422]]
Revise language at Sec. 417.454(e)(1) to match
terminology of chemotherapy administration services with language at
Sec. 422.100(j)(1)(i)(A) applying the same cost sharing limit to MA
plans.
Add Sec. 417.454(e)(5) to reflect proposed cost-sharing
standard that Cost Plans may not establish cost sharing that exceeds
cost sharing in Traditional Medicare for the following behavioral
health service categories: intensive outpatient services, mental health
specialty services, opioid treatment program services, outpatient
substance use disorder services, partial hospitalization, and
psychiatric services.
Add Sec. 417.454(e)(6) to reflect proposed cost-sharing
standard that Cost Plans may not establish cost sharing for inpatient
hospital acute and psychiatric services (all length of stay scenarios)
that exceeds cost sharing for these services in Traditional Medicare.
Add Sec. 417.454(e)(7) through (e)(9) to reflect proposed
cost-sharing standard that Cost Plans may not establish cost sharing
for home health services, certain categories of DME, and drugs covered
under Part B other than chemotherapy drugs that exceeds cost sharing
for these services in Traditional Medicare.
Add Sec. 417.454(f) to codify and clarify our
longstanding policy for Cost Plans that in-network cost sharing be no
greater than the 50 percent coinsurance (or actuarially equivalent
copayment) standard applied to MA plans for basic benefits without
otherwise specified cost-sharing standards.
Replace the partial hospitalization example with
occupational therapy at Sec. 422.100(f)(6)(iii)(A) to reflect the
proposed cost-sharing standard of cost sharing no greater than original
Medicare for the partial hospitalization service category.
Add a regulation reference to paragraph (j)(1)(i)(H) at
Sec. 422.100(f)(6)(iv)(A) to reflect the proposed new paragraph which
would apply cost sharing no greater than original Medicare to inpatient
hospital psychiatric services.
Remove language specific to inpatient hospital psychiatric
services and associated lengths of stay scenarios at Sec.
422.100(f)(6)(iv)(B) and (D) to reflect the proposed cost-sharing
standard.
Remove language at Sec. 422.100(f)(6)(iv)(D) that the
total inpatient benefit cost sharing must not exceed the MA plan's MOOP
amount for clarity.
Add language to Sec. 422.100(j)(1)(i) that the
requirement for cost sharing to not exceed cost sharing under original
Medicare applies on different dates for different benefits categories
as proposed in paragraphs under paragraph (j)(1)(i).
Add language to Sec. 422.100(j)(1)(i)(C) that the Part A
deductible amount referred to is for the year.
Remove Sec. 422.100(j)(1)(i)(C)(2) and move language from
paragraph (j)(1)(i)(C)(1) to paragraph (j)(1)(i)(C) to consolidate
skilled nursing facility cost-sharing standard information.
Add Sec. 422.100(j)(1)(i)(G) to reflect proposed cost-
sharing standard of cost sharing no greater than original Medicare for
the following behavioral health service categories: intensive
outpatient services, mental health specialty services, opioid treatment
program services, outpatient substance use disorder services, partial
hospitalization, and psychiatric services for contract year 2026 and
subsequent years.
Add Sec. 422.100(j)(1)(i)(H) to reflect proposed cost-
sharing standard of cost sharing no greater than original Medicare for
inpatient hospital psychiatric services (all length of stay scenarios)
for contract year 2026 and subsequent years.
Revise language at Sec. 422.100(o)(2) that references
paragraph (j)(1)(i)(C)(2) to reference paragraph (j)(1)(i)(C) in
relation to regional PPO dual eligible special needs plans.
We solicit comment on these proposals.
M. Ensuring Equitable Access--Enhancing Health Equity Analyses: Annual
Health Equity Analysis of Utilization Management Policies and
Procedures (Sec. 422.137)
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).\148\ 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, in 2022, CMS announced ``Advance Equity'' as the first pillar of
its Strategic Plan.\149\ 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.'' \150\
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\148\ https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
\149\ https://www.federalregister.gov/d/2022-26956/p-228.
\150\ https://www.cms.gov/pillar/health-equity.
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In April 2024, CMS published the ``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)'' \151\ final
rule (89 FR 30448) (hereinafter referred to as the April 2024 final
rule). In the April 2024 final rule, CMS explained that we have
received feedback from interested parties, including people with
Medicare, patient groups, consumer advocates, and providers that
utilization management (UM) practices in Medicare Advantage (MA),
including the use of prior authorization, can sometimes create a
barrier for patients in accessing medically necessary care. Further, as
explained in detail in the April 2024 final rule, some research
indicated that the use of prior authorization may disproportionately
impact individuals who have been historically underserved,
marginalized, and adversely affected by persistent poverty and
inequality (89 FR 30566).152 153
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\151\ https://www.federalregister.gov/documents/2024/04/23/2024-07105/medicare-program-changes-to-the-medicare-advantage-and-the-medicare-prescription-drug-benefit.
\152\ https://www.hmpgloballearningnetwork.com/site/frmc/commentary/addressing-health-inequities-prior-authorization; and
https://www.ncbi.nlm.nih.gov/pmc/articles/ PMC10024078/.
\153\ https://www.federalregister.gov/d/2023-24118/p-600.
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Under section 1852 of the Act, MA organizations are generally
allowed to use utilization management tools, such as prior
authorization.\154\ Authority for
[[Page 99423]]
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.
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\154\ Sections 1852(c)(1)(G) and (c)(2)(B) of the Social
Security Act, and the MA regulations at 42 CFR 422.4(a)(1)(ii) and
422.138, expressly reference a MA plan's application of utilization
management tools, like prior authorization and other ``procedures
used by the organization to control utilization of services and
expenditures.'' MA plans may require prior authorization on medical
items and services, except for certain services, including emergency
services, urgent care, and stabilization services. For preferred
provider organization (PPO) plans, prior authorization is prohibited
on plan-covered services from out-of-network providers (see Sec.
422.4(a)(1)(v)(D)).
---------------------------------------------------------------------------
In the April 2024 final rule, CMS added two health equity related
requirements to Sec. 422.137. First, 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. Second, at Sec.
422.137(d)(6), we finalized that the UM committee must conduct an
annual health equity analysis of the use of prior authorization. The
analysis must examine the impact of prior authorization at the plan
level, on enrollees with one or more of the specified social risk
factors (SRF).\155\ The analysis must compare metrics related to the
use of prior authorization for enrollees with the specified SRFs to
enrollees without the specified SRFs. Further, the analysis must use
the outlined metrics, aggregated for all items and services, calculated
for enrollees with the specified SRFS, and for enrollees without the
specified SRFs, from the prior contract year, to conduct the analysis.
Finally, by July 1, 2025, and annually thereafter, the health equity
analysis must be posted on the plan's publicly available website in a
prominent manner and clearly identified in the footer of the website.
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\155\ Section 422.137(d)(6)(ii): (1) receipt of the low-income
subsidy or being dually eligible for Medicare and Medicaid (LIS/DE);
or (2) having a disability.
---------------------------------------------------------------------------
During the public comment period, CMS received a significant number
of comments on the requirement that the metrics for the health equity
analysis be aggregated for all items and services (89 FR 30569). Some
commenters expressed concern that because the proposed analysis would
consist of prior authorization metrics aggregated for all items and
services, it would not provide enough detail for true accountability
and could allow plans to hide disparities. For that reason, 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. At the time, we believed that there was
significant value in establishing baseline data because we recognized
that there was little publicly available information regarding the use
of prior authorization and its potential impact on specific
populations.
In the April 2024 final rule, we signaled our intent to propose
reporting and posting of disaggregated (that is, more granular) data on
these topics in the future. Furthermore, we stated that we agree that
disaggregation of the reported metrics for all items and services could
assist in increasing transparency and ensuring the most accurate data
regarding prior authorization is available.\156\ By proposing to
require the data to be disaggregated, CMS and MA organizations may more
readily identify trends related to the use of prior authorization and,
therefore, be able to more fully identify and address the impact of
prior authorization on enrollees with the specified SRFs. This
disaggregated data also will help inform future policymaking.
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\156\ https://www.federalregister.gov/d/2024-07105/p-1232.
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For these reasons, we propose at Sec. 422.137(d)(6)(iii)(A)
through (H) to revise the required metrics for the annual health equity
analysis of the use of prior authorization to require the following:
The percentage of standard prior authorization requests
that were approved, reported by each covered item and service.
The percentage of standard prior authorization requests
that were denied, reported by each covered item and service.
The percentage of standard prior authorization requests
that were approved after appeal, reported by each covered item and
service.
The percentage of prior authorization requests for which
the timeframe for review was extended, and the request was approved,
reported by each covered item and service.
The percentage of expedited prior authorization requests
that were approved, reported by each covered item and service.
The percentage of expedited prior authorization requests
that were denied, reported by each covered item and service.
The average and median time that elapsed between the
submission of a request and a determination by the MA plan, for
standard prior authorizations, reported by each covered item and
service.
The average and median time that elapsed between the
submission of a request and a decision by the MA plan for expedited
prior authorizations, reported by each covered item and service.
We also seek comment on alternative ways to group items and
services for the purpose of reporting on these metrics, while still
allowing for meaningful disaggregation to increase transparency,
identify trends, and address the impact of prior authorization on
enrollees with the specified SRFs.
Because the required metrics are to be reported based on percentage
of prior authorization requests, and average and median time elapsed,
CMS does not believe the health equity analysis and accompanying report
will result in potential enrollee privacy issues. However, out of an
abundance of caution, CMS is considering whether to include a provision
to allow suppression of certain data points should disaggregation
present an issue regarding enrollee privacy. For example, if reporting
by each covered item and service would result in such a small data set
that it could put enrollee privacy at risk, an MA plan would be
permitted to suppress that data set. CMS solicits feedback on whether
cell suppression is necessary in order to ensure that enrollee privacy
is protected and on how to ensure that this suppression would be done
in a uniform manner. Based on feedback received during the public
comment period, we may consider revising any potential final policy to
account for these potential privacy concerns.
We also received comments on the April 2024 final rule stating
concerns that the analysis would be challenging for enrollees and the
public to navigate and understand. At the time, we determined that this
would not present
[[Page 99424]]
a significant issue because the data was required to be aggregated for
all items and services. However, because we are now proposing that MA
organizations report the metrics by each covered item and service, we
believe an executive summary of the results of the analysis is
necessary to ensure that the public and plan enrollees can navigate and
understand the data more fully. Therefore, we propose at Sec.
422.137(d)(7)(v) that the results of the health equity analysis include
an executive summary. The executive summary must include the following
elements: additional context that may be necessary or helpful for
understanding the results of the analysis; clarifying information that
is relevant to the results of the analysis, or that could help the
public understand the analysis more fully; and an overview of the
information produced by the analysis, including key statistics and
results. We propose that MA plans must also ensure that accompanying
language is not misleading or misrepresentative of the findings of the
analysis. We solicit comment on additional requirements to be included
in the executive summary, including, but not limited to, how this
information could be formatted and presented in a uniform manner across
all MA plans, adherence to plain language principals and accessibility
standards, and consumer centered design standards. We also solicit
comment on how the data produced by the analysis could be formatted to
ensure consistency and uniformity across MA plans, and to ensure
usability by enrollees and the public.
CMS is considering adding ``having a mental health or substance use
disorder diagnosis'' to the list of social risk factors that MA plans
must use to conduct the annual health equity analysis. We solicit
comment on this addition and whether this appropriately addresses a gap
in the existing social risk factors. We also solicit comment on whether
this is something that MA plans would be able to operationalize, any
potential barriers or challenges CMS should consider in policy
development and reporting, and how MA plans might overcome these
barriers.
We welcome comment on the proposal and may revise the final policy
based on comments received.
N. Medicare Advantage Network Adequacy (Sec. 422.116)
Section 1852(d)(1)(A) of the Social Security Act allows MA
organizations 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 in a manner that
assures continuity in the provision of benefits. 1852(d)(1)(D) of the
Act requires MA organizations to provide access to appropriate
providers for medically necessary treatment and services. In Sec.
422.116, CMS codified a means of compliance with these statutory
requirements by requiring network-based MA plans to demonstrate that
they have an adequate contracted provider network that is sufficient to
provide access to covered services in accordance with access standards
described in 1852(d)(1) and in Sec. Sec. 422.112(a)(10) and Sec.
422.114 and by meeting the network adequacy standards at Sec.
422.116(a)(2). MA organizations must maintain an adequate contracted
network of providers regardless of whether a provider or facility type
is included in the network adequacy standards at Sec. 422.116.
1. Defining County
Network adequacy is assessed at the county level, including county-
equivalents, across all geographic areas in the United States and its
territories. CMS uses the county level for purposes of determining the
number and type of providers and facilities, based on time and
distance, that an MA organization must contract with to ensure there is
adequate access to Part A and B services for beneficiaries. The minimum
number, specialty type, and time and distance requirements are codified
at Sec. 422.116(d) and (e). CMS's longstanding policy and
interpretation of existing network adequacy regulations uses the term
``county'' to mean the areas designated by the Census Bureau as the
primary political and administrative division of States. The Census
Bureau also considers certain geographic areas as county-equivalents.
County-equivalents include, but are not limited to, boroughs, certain
designated cities, parishes, municipalities and the District of
Columbia. CMS uses the Census Bureau's designation of counties and
county-equivalents in establishing network adequacy standards to ensure
consistency in the application of CMS' network adequacy requirements
across the country.
For purposes of network adequacy, CMS is proposing to codify its
longstanding policy of treating county equivalents the same as counties
for network adequacy purposes by defining ``county'' in Sec. 422.116.
In Sec. 422.116, we propose to create a new (a)(1) and redesignate the
current (a)(1) through (a)(4) as (a)(2) through (a)(5). We further
propose to define ``county'' in new (a)(1) as ``the primary political
and administrative division of most States and includes functionally
equivalent divisions called ``county equivalents'' as recognized by the
United States Census Bureau (for economic census purposes)''. Note that
we have also proposed to modify the definition of service area in Sec.
422.2 in C-E of this section to incorporate the proposed definition of
``county'' in Sec. 422.116(a)(1).
2. Limiting Exception Request Rationales
Under its authority to set standards to implement and carry out the
MA statute (in section 1856(b)(1) of the Act), CMS codified network
adequacy standards at Sec. 422.116 under the final rule, Medicare
Program; Contract Year 2021 Policy and Technical Changes to the
Medicare Advantage Program, Medicare Prescription Drug Benefit Program,
and Medicare Cost Plan Program, which appeared in the Federal Register
on June 2, 2020 (85 FR 33796), hereinafter referred to as the June 2020
final rule. CMS has also adopted specific access requirements in
Sec. Sec. 422.100(b), 422.112, 422.113 and 422.114 to ensure that MA
enrollees in various types of MA plans have access to covered services.
In the June 2020 final rule, we codified regulations allowing MA
organizations to submit exceptions to the network adequacy standards in
Sec. 422.116, including, the circumstances under which an MA
organization may request an exception (Sec. 422.116(f)(1)) and the
factors that CMS considers when evaluating an MA organization's request
for an exception (Sec. 422.116(f)(2)), including examples of how it
would be applied. We indicated that we would interpret the regulation
such that the MA plan would have to contract with telehealth providers,
mobile providers, or providers outside the time and distance standards,
but accessible to most enrollees (or consistent with the local pattern
of care), in order for the MA plan to request an exception by CMS (85
FR 33858).
Currently, subregulatory guidance, the Medicare Advantage and
Section 1876 Cost Plan Network Adequacy Guidance,\157\ indicates that
organizations may request exceptions utilizing the following valid
rationales:
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\157\ https://www.cms.gov/files/document/medicare-advantage-and-section-1876-cost-plan-network-adequacy-guidance12-12-2023.pdf.
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Provider is no longer practicing (for example, deceased,
retired).
[[Page 99425]]
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, and for which this exception is being
requested.
Provider has opted out of Medicare.
Provider does not contract with any organizations or
contracts exclusively with another organization.
Sanctioned provider on List of Excluded Individuals and
Entities.
Provider is at capacity and is not accepting new patients.
Other: Use of Original Medicare telehealth providers,
mobile providers, specific patterns of care in a community
We have explained in our Medicare Advantage and Section 1876 Cost
Plan Network Adequacy Guidance, that while the time and distance
standards vary by county and specialty type, and are generally
attainable across the country, there are unique instances where a given
county's supply of providers/facilities is such that an organization
would not be able to meet the network adequacy criteria. The exceptions
process allows MA organizations to provide evidence to CMS when the
health care market landscape has changed or is not reflected in the
current CMS network adequacy criteria. The organization must include
conclusive evidence in its exception request that the CMS network
adequacy criteria cannot be met because of changes to the availability
of providers/facilities, resulting in insufficient supply.
Per Sec. 422.116(f)(1)(i), an MA plan may request an exception to
network adequacy criteria when both of the following occur: (A) certain
providers or facilities listed in the Provider Supply file are not
available for the MA plan to meet the network adequacy criteria for a
given county and specialty type; and (B) the MA plan has contracted
with other providers and facilities who are located beyond the limits
in the time and distance criteria, but are available and accessible to
most enrollees, consistent with the local pattern of care.
As part of CMS's evaluation of MA networks using Sec. 422.116, MA
organizations must first submit their Health Service Delivery (HSD)
tables, containing all their network providers, to CMS. CMS processes
and reviews the network submissions against our established regulatory
standards through use of an automated system located in the Health Plan
Management Systems (HPMS) network management module. This automated
module within HPMS evaluates the networks based on CMS' current network
time and distance standards. Once the evaluation is complete, CMS,
through HPMS, provides MA organizations with an Automated Criteria
Check (ACC) report. The ACC report contains CMS's determination of
whether the standards in Sec. 422.116 have been met or not met, and
the report displays where the MA organization's specific county/
specialty combinations, within the given service area, are passing and
failing those standards. MA organizations may decide to submit an
exception request for those parts of their network submission that were
found to be failing our standards by using the exception request
template found in the HPMS in accordance with CMS procedural
instructions.
After submission, CMS evaluates exception requests based on the
criteria noted in Sec. 422.116(f)(2), including whether the current
access to providers and facilities is different than that in the HSD
reference and provider supply files for the year (see Sec.
422.116(a)(4)(ii)), whether the organization demonstrates that the
network access is consistent with or better than the original Medicare
pattern of care, and whether approval is in the best interest of the
beneficiaries. The exception request is then either approved or denied.
Once the CMS exception request review is complete, the results of CMS's
determination are uploaded into HPMS with an approval or denial status
for MA organizations to view. If an exception request is denied, CMS
will provide feedback with the exception disposition, including, as
applicable, a sampling of the providers that CMS lists in the Provider
Supply File that are available for the MA organization to contract with
that would allow the organization to meet the time and distance
standards for the specific county/specialty type. MA organizations must
resubmit all previously approved exception requests whenever CMS
requests an organization to upload its HSD tables to review an MA
organization's network(s).
To continue to strengthen our network adequacy process and the
rules related to exception requests to our network adequacy standards,
CMS is proposing to codify our long-standing network adequacy exception
request rationales, with one change. We propose to eliminate the
rationale that the ``provider does not contract with any organization
or contracts exclusively with another organization'' (meaning MA
organization) as a basis for an exception. It is important for CMS to
ensure consistent and equitable access to healthcare services for all
Medicare Advantage enrollees. In removing this rationale, CMS aims to
limit the reasons that an organization could be able to by-pass the
established network adequacy criteria for a given specialty/county and
provide greater incentives for MA organizations to establish contracts
with providers that are located within our established time and
distance standards.
Therefore, CMS is proposing to codify the following as valid
rationales when an MA plan submits substantial and credible evidence,
in the form and manner requested by CMS, to demonstrate that an
exception request under Sec. 422.116(f)(1)(i) should be considered:
Provider is no longer practicing (for example, deceased,
retired).
Provider does not provide services at the office or
facility address listed in the Provider Supply file in paragraph
(a)(4)(ii) of this section.
Provider does not provide services for the specialty type
listed in the Provider Supply file in paragraph (a)(4)(ii) of this
section.
Provider has opted out of Medicare (in compliance with
Sec. 422.204(b)(4)).
Provider is a sanctioned provider on the List of Excluded
Individuals and Entities (in compliance with Sec. 422.204); or
provider is on the CMS preclusion list (in compliance with Sec.
422.222);
Provider is at capacity and is not accepting new patients.
One of the listed rationales may be used to explain the reason that
an MA plan has failed to demonstrate that its network meets the minimum
requirements of Sec. 422.116(a) through (e) but MA organizations
should provide CMS with as fulsome of an explanation as possible,
including supporting documentation, regarding why an exception should
be granted under the standards in Sec. 422.116(f).
Our current subregulatory guidance states that CMS considers
certain exception rationales under an ``other'' category. Currently,
the ``other'' category permits organizations to request an exception
for ``provider does not contract with any organization'', ``the
provider has the potential to cause beneficiary harm'', and ``the
provider is inappropriately credentialed.'' CMS is proposing to
eliminate the ``other'' category and eliminate the exception rationale
of ``provider does not contract with any organization,'' as described
above. CMS is also eliminating ``provider has the potential to cause
beneficiary harm'' because this exception rationale is already covered
under CMS' evaluation of any exception, which includes ensuring the
exception is in the best interest of the beneficiary as noted in Sec.
422.116(f)(2)(iii). Finally, CMS is retaining the last exception
currently
[[Page 99426]]
under ``other'' in guidance. This exception ``the provider is not
properly credentialed'' is being incorporated under the proposed
exception rationale of provider does not provide services for the
specialty type listed in the Provider Supply file.
Our current subregulatory guidance also describes as exception
rationales factors such as use of Original Medicare telehealth
providers, mobile providers, and specific patterns of care in a
community. When CMS evaluates these exception rationales, we consider
whether network access is consistent with or better than the
Traditional Medicare pattern of care and whether approval of an
exception is in the best interest of beneficiaries, under Sec.
422.116(f)(2). These factors may be relevant to demonstrate that
network access is consistent with or better than the Traditional
Medicare pattern of care (Sec. 422.116(f)(2)(ii)) or that approval of
the exception is in the best interests of beneficiaries (Sec.
422.116(f)(2)(iii)). Our guidance states that for organizations using
Traditional Medicare telehealth providers, services must meet the
requirements for ``telehealth services'' under section 1834(m) of the
Act (for example, provider types, eligible originating sites,
geography, and currently approved list of Medicare telehealth
services), as well as the requirements for ``communication technology-
based services'' not subject to the section 1834(m) limitations (brief
communication technology-based service/virtual check-in, remote
evaluation of pre-recorded patient information, and inter-professional
internet consultation). The MA organization must demonstrate that it
meets all applicable requirements. Our guidance also states that if an
MA organization uses mobile providers (for example, mobile x-ray
suppliers, orthotics and prosthetics mobile units), they must be
qualified and furnish services through scheduled appointments. In
addition, organizations requesting an exception using the ``pattern of
care'' rationale described in Sec. 422.116(f)(2)(ii) are required to
providesubstantial and credible evidence that shows that the supply of
providers/facilities is insufficient, as well as the reason that the MA
organization does not contract with the available providers/facilities
within the time and distance. The MA organization must show that the
pattern of care in the area is unique and can demonstrate their
contracted network is consistent with or better than the Original
Medicare pattern of care. CMS will consider an MA organization's reason
for not contracting with an available provider/facility if such a
contract is not in the best interest of the beneficiaries in the
applicable service area.
We note that, as we have indicated in our subregulatory guidance,
CMS will not accept an organization's assertion that it cannot meet
current CMS network adequacy criteria because of an ``inability to
contract,'' meaning they could not successfully negotiate and establish
a contract with a provider/facility. The non-interference provision at
section 1854(a)(6)(B)(iii) of the Act states that the Secretary may not
require 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, we are not assuming the role of arbitrator or judge
regarding the bona fides of contract negotiations between an MA
organization and available providers or facilities.
CMS notes that with these proposals we are codifying long-standing
rules related to network adequacy exception request rationales, with
one change to eliminate the rationale that a ``provider does not
contract with any organization or contracts exclusively with another
organization''; therefore, we do not believe there is any additional
paperwork burden to be considered. We welcome comment on these
proposals, including the exhaustive list of exception request
rationales proposed here, and whether there are additional rationales
to consider that are in the best interest of beneficiaries. In
addition, we are soliciting comment on potential unintended
consequences from this proposal, including potential changes in the
provider landscape, that could limit plan choice and/or availability in
certain areas of the country.
3. Plan Benefit Package Level Reviews
Finally, CMS is considering whether conducting network adequacy
reviews at the MA plan benefit package level would provide greater
assurances regarding the adequacy of an MA organization's network at
the more discrete, plan level service area. Our current practice is to
conduct network adequacy reviews of an MA organization's network at the
contract level, by county type. Reviewing the plan-level network may
result in a more accurate portrayal of an enrollee's experience since,
for example, while an MA organization's contract may exceed CMS's
minimum provider number requirements some providers and facilities that
participate in a contract's network may not be available to enrollees
in a particular plan under that contract. This situation could
therefore result in some MA contracts satisfying current network
adequacy requirements, but an individual plan not satisfying current
network adequacy requirements, resulting in a beneficiary having access
to an inadequate number of providers in a given plan. We note that the
CMS network adequacy time and distance standards in Sec. 422.116 would
not change but would instead be applied at the plan benefit package
level.
In the June 2020 final rule, CMS indicated in preamble that we
conduct network adequacy reviews at the contract level, meaning we
evaluate the adequacy of the MA organization's network across all the
plan benefit packages within the contract for the plan types as defined
in Sec. 422.2 offered for that contract; we do not separately or
singularly evaluate the network of a specific plan benefit package. We
indicated at the time that conducting network reviews at the contract
level allowed us to consider the broadest availability of contracted
providers and facilities for an MA organization while also providing
administrative efficiency for both MA organizations and CMS. While this
is still our current practice, we are considering whether network
evaluations at the plan benefit package level, for active contracts
only, would be more appropriate to help CMS ensure more consistent and
thorough oversight of MA provider networks.
We point out that CMS already has the authority to conduct plan
benefit package level reviews based on our current regulatory language.
Section 422.116(a)(1)(i) requires that a network-based MA plan as
described in Sec. 422.2, but not including MSA plans, must demonstrate
that it has an adequate contracted provider network that is sufficient
to provide access to covered services in accordance with access
standards. We solicit comment on this potential change in methodology
and the impact on the counties served by MA organizations, including
any considerations for rural counties, and whether there could be
additional ways for CMS to strengthen our evaluation of an adequate
network for MA organizations, specifically individual plans within a
contract. We also solicit comment on the effort required by MA
organizations to submit network data at the individual plan benefit
package level. In addition, we solicit comment on whether SNP PBPs, as
part of product offerings within a contract, offer limited network
options that meet our standards or contract with the same provider
network as non-SNP PBPs under the same contract. If CMS chooses
[[Page 99427]]
to review active contracts at the plan benefit package level, we will
indicate that change by updating the associated Paperwork Reduction Act
(PRA) CMS-10636 forms, where we can seek public comment on proposed
collections of information.
O. Promoting Informed Choice--Expand Agent and Broker Requirements
Regarding Medicare Savings Programs, Extra Help, and Medigap
(Sec. Sec. 422.2274 and 423.2274)
Sections 1852(c) and 1860D-4(a) of the Act require MA organizations
and Part D sponsors to provide certain information to current MA and
Part D plan (PDP) enrollees concerning MA plan and PDP benefits,
coverage, plan rules, and other information that could inform potential
enrollment changes. Additionally, section 1851(h)(4) requires MA
organizations to conform to fair marketing standards in relation to
marketing activities for MA plans, including standards that CMS may
establish pursuant to section 1856. Likewise, section 1860D-
1(b)(1)(B)(vi) of the Act extends these fair marketing standard
requirements to Part D sponsors. These statutory provisions provide CMS
the authority to implement regulatory requirements on MA organizations
and Part D sponsors to ensure plan benefits and cost sharing
information are discussed with beneficiaries to ensure they have an
accurate picture of their enrollment options and help them make
informed decisions when considering their health care coverage. We note
that such requirements are also consistent with CMS's own statutory
obligation, at section 1851(d) of the Act, to disseminate information
to current and prospective Medicare beneficiaries on coverage options,
including information comparing MA plans' premiums and cost sharing, to
promote informed decision-making. Section 1860D-1(c) of the Act
specifies corresponding dissemination requirements for current and
prospective Part D eligible individuals regarding PDP comparisons.
As described 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 (88 FR
22120), hereinafter referred to as the April 2023 final rule, CMS
listened to a considerable number of marketing and enrollment audio
calls between agents and brokers and beneficiaries (both current and
prospective beneficiaries). Many of these calls indicated that agents
and brokers failed to ask pertinent questions to help a beneficiary
enroll in a plan that best fits their health care needs. During our
review, we repeatedly heard instances in which agents only reviewed the
beneficiary's health care providers and prescription drugs with them,
which likely is not sufficient information for a beneficiary to
consider when determining which health care option might best fit their
needs. Other examples we heard included agents failing to ask the
beneficiary if they had a preferred primary care provider or
specialist, failing to confirm whether or not the preferred provider
was in the plan's network, failing to discuss what pharmacies are in-
network, as well as failing to ask if the beneficiary preferred copays
or coinsurance, or preferred lower monthly premiums, or slightly higher
monthly premiums as a trade-off for lower out of pocket costs for
appointments, as an example. Before enrolling a beneficiary in an MA,
MA-PD, or Part D plan, in addition to discussing topics like the
beneficiary's health care providers, prescription drugs, copays,
coinsurance, monthly premiums, and out of pocket costs prior to
enrolling a beneficiary in an MA, MA-PD, or Part D plan, agents and
brokers should also discuss costs of other healthcare services, plan
benefits, and the beneficiary's specific health needs. Covering these
topics with each beneficiary prior to their enrollment in a new plan,
as discussed in the April 2023 final rule, helps ensure the beneficiary
is enrolling into a plan that best meets their needs.
Based on these considerations, CMS finalized a new paragraph
(c)(12) of Sec. Sec. 422.2274 and 423.2274 in the April 2023 final
rule, which defined a CMS-developed list of topics that MA
organizations and Part D sponsors must ensure agents and brokers of
first tier, downstream, and related entities (FDRs) that represent the
MA organizations and Part D sponsors discuss with beneficiaries during
the marketing and sale of an MA or MA-PD plan or PDP and prior to their
enrollment in a new plan. Since the finalization of Sec. Sec.
422.2274(c)(12) and 423.2274(c)(12), as part of our monitoring and
oversight of the MA program, we have listened to and evaluated
marketing and enrollment audio calls to understand the effectiveness of
the new rule's implementation. As part of our monitoring and review
efforts, we proactively evaluate the issues we uncover and consider
appropriate revisions to our rules that may help improve the
beneficiary experience so they have a more accurate picture of their
enrollment options as they pertain to making an MA or Part D enrollment
decision and can make more informed health care choices. For instance,
after reviewing audio calls, we noticed gaps in information provided to
beneficiaries surrounding low-income subsidy (LIS) eligibility and
Medicare Savings Programs (MSPs) that would be beneficial to make an
informed enrollment choice. We have also received feedback during
meetings with State Health Insurance Assistance Program (SHIP)
counselors who expressed concerns with beneficiaries not fully
understanding how enrollment into an MA or MA-PD plan can impact future
availability of Medicare Supplement Insurance (Medigap) coverage. In
addition, a Commonwealth Fund study involving agents and brokers found
that beneficiaries who work with agents and brokers are often unaware
of their guaranteed issue (GI) rights or the rules around underwriting
with Medigap when switching from an MA plan to traditional Medicare,
which can lead to significant confusion.\158\ We believe expanding upon
the CMS-developed lists provided at Sec. Sec. 422.2274(c)(12) and
423.2274(c)(12) to require this additional information will help
beneficiaries better understand how their health care choice will
address their individual needs.
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\158\ https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents.
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Sections 422.2274(c)(12) and 423.2274(c)(12) require that MA
organizations and Part D sponsors, as part of their oversight of their
FDRs, ensure that agents and brokers operating on their behalf discuss
a specified list of questions and topics with a potential beneficiary
prior to completing an enrollment. In the following paragraphs, we
propose adding three topics, LIS, MSP, and Medigap, to that list. In
addition, we are proposing to update Sec. Sec. 422.2274(c)(12) and
423.2274(c)(12) to also provide that agents and brokers pause to ask
whether a beneficiary has any outstanding questions prior to an
enrollment decision being made. And finally, we are proposing
corresponding technical changes to Sec. Sec. 422.2274(c)(12) and
423.2274(c)(12) to put the newly proposed and existing requirements
into a more organized and reader-friendly format.
1. Low-Income Subsidy (LIS)
CMS regulations at Sec. 423.773 define the requirements for full
and partial LIS Part D eligible individuals in accordance with section
1860D-14 of the Act as amended by section 11404 of
[[Page 99428]]
the Inflation Reduction Act of 2022 (IRA). This recent statutory change
provided the full LIS for those who only qualified for the partial LIS
prior to 2024, which means an increased number of beneficiaries are
eligible to receive ``Extra Help'' paying their monthly premium, yearly
deductible, and prescription drug cost sharing. In the April 2023 final
rule, in accordance with the IRA of 2022, CMS amended Sec.
423.773(b)(1) to require that, to be eligible for the full LIS for plan
years beginning on or after January 1, 2024, an individual must have an
income below 150 percent of the Federal poverty line (FPL). To
coordinate with this change, CMS also amended Sec. 423.773(d) to
specify that the requirement that an individual have an income below
150 percent of the FPL to be eligible for the partial LIS applies only
to plan years beginning before January 1, 2024, effectively sunsetting
the partial LIS after 2023 and significantly increasing the number of
beneficiaries who can get full help paying for their prescription
drugs.
Since the new requirements at Sec. 423.773 went into effect, as of
January 1, 2024, LIS eligibility criteria have increased the number of
beneficiaries who can get full extra help paying for their premium,
deductible, and prescription drugs costs. We believe that agents and
brokers have a responsibility to inform a beneficiary of the new LIS
eligibility criteria prior to their enrollment in an MA, MA-PD or Part
D plan because being LIS eligible may impact a beneficiary's premium,
coinsurance, deductibles, and other costs. Therefore, we are proposing
to modify Sec. Sec. 422.2274(c)(12) and 423.2274(c)(12) to include LIS
eligibility criteria as an additional topic that agents and brokers
must address before enrolling a beneficiary in an MA, MA-PD or Part D
plan, so that all eligible beneficiaries can make fully informed
enrollment decisions including decisions about applying to receive
extra help in paying for this important coverage. Specifically, at
Sec. 422.2274(c)(12), we propose to add the phrase ``low-income
subsidy eligibility (that is, at a minimum, explaining the eligibility
requirements as defined at Sec. 423.773 and the effect on drug costs
if eligible, and identifying resources where they can get more
information on applying)'' to the existing list of required topics,
before the phrase ``costs of health care services.'' At Sec.
423.2274(c)(12), we propose to add the phrase ``low-income subsidy
eligibility (that is, at a minimum, explaining the eligibility as
defined at Sec. 423.773 and the effect on drug costs if eligible, and
providing resources to the beneficiary about where they can go for more
information on applying)'' to the existing list of required topics,
before the term ``premiums.'' We believe that agents and brokers should
provide this additional information since it may impact a beneficiary's
enrollment decision. As part of this proposed requirement, agents and
brokers would be required to identify resources to the beneficiary
about where the beneficiary can obtain more information regarding their
potential eligibility for LIS or get help applying for LIS. For
example, agents and brokers could offer existing CMS links and
resources that provide guidance on eligibility on LIS and how a
beneficiary can apply for LIS.\159\ This information may be an
essential factor in a beneficiary's decision to enroll in an MA, MA-PD
or Part D plan, or Medicare Savings Programs (MSP).
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\159\ https://www.cms.gov/medicare/enrollment-renewal/part-d-plans/low-income-subsidy/eligibility-low-income-subsidy.
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We also are proposing to add a requirement that agents and brokers
review, prior to a beneficiary's enrollment in an MA, MA-PD, or Part D
plan, existing resources for state programs, including MSPs, that can
help with health care costs. MSPs are Medicaid eligibility groups
through which states cover Medicare premiums and, in many cases, cost
sharing for eligible beneficiaries. This proposed requirement to
discuss resources for state programs is a relevant addition alongside
the proposed LIS eligibility requirement because most LIS-eligible
beneficiaries may find other information about additional help with
health care costs useful for making an informed decision about their
health care coverage and enrollment options. Most beneficiaries
eligible for LIS are also eligible for MSPs. With this new requirement,
we would not expect agents and brokers to provide all necessary details
for a beneficiary to make a final decision about applying for help from
a state program.\160\ However, we would expect agents and brokers to
explain that state programs that can help with premiums and cost
sharing costs exist, and additionally expect agents and brokers would
be equipped to offer contact information for the state as a resource
for a beneficiary to receive more information about their options and
eligibility for those states where the agent is licensed and appointed
to sell, as required under Sec. Sec. 422.2274(b)(1) and
423.2274(b)(1). We would encourage agents and brokers to use CMS-
developed materials to communicate important information to
beneficiaries about relevant state programs. For instance, the CMS MSP
web page describes Federal limits for each MSP and contains a link to
easily contact state representatives.\161\ Specifically, we propose to
create Sec. Sec. 422.2274(c)(12)(v) and 423.2274(c)(12)(iv) to add the
phrase ``resources for state programs, including Medicare Savings
Programs,'' to the existing list of required topics.
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\160\ See section 1144(c)(3) of the SSA. Under Federal law, when
an individual applies for LIS benefits and consents, their
information is transmitted to the state to initiate an application
of the individual for MSP benefits.
\161\ United States Centers for Medicare & Medicaid Services,
Medicare Savings Programs, https://www.medicare.gov/basics/costs/help/medicare-savings-programs.
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2. Medicare Supplemental Insurance (Medigap)
In addition to LIS eligibility and resources for state programs, to
further promote informed decision-making for beneficiaries, we are
proposing that agents and brokers be required to discuss with
beneficiaries the potential impact enrolling into a MA plan can have on
Medigap Federal guaranteed issue rights. If a beneficiary chooses to
enroll in Traditional Medicare with a Medigap plan during their Medigap
Open Enrollment Period OEP) or in certain limited situations outside of
their Medigap OEP, they have Medigap protections or Medigap Federal GI
rights. In situations where the Medigap Federal GI rights apply, the
Medigap insurance company must sell the beneficiary a Medigap policy,
must cover all of the beneficiary's preexisting health conditions, and
cannot charge more for a Medigap policy because of the beneficiary's
past or present health problems.\162\
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\162\ See section 1882(s)(3)(A) of the SSA.
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Over the years, CMS has received feedback from congressional
offices, SHIPs and Medicare beneficiary advocacy organizations from or
on behalf of Medicare beneficiaries who have enrolled into an MA plan
without understanding the impact doing so can have on selecting a
Medigap plan in the future. For example, we have heard about
beneficiaries who, based on personal preference, have decided to enroll
into Traditional Medicare with a Medigap plan after having previously
enrolled in an MA plan, only to find that they are unable to do so, or
that the cost outside of the MA ``trial right'' periods, which are some
of the situations where the Medigap Federal GI rights apply,\163\ is
not affordable. To
[[Page 99429]]
better ensure that beneficiaries are equipped with pertinent
information on the impact on their Medigap Federal GI rights when
making an MA plan enrollment decision, at Sec. 422.2274(c)(12)(vi), we
are proposing to require than an agent or broker convey information
regarding Medigap Federal GI rights to beneficiaries who are enrolling
into an MA plan when first eligible for Medicare, or those who are
dropping a Medigap plan to enroll into an MA plan for the first time.
Specifically, at Sec. 422.2274(c)(12)(vi)(A)(1), we are proposing to
require that an agent or broker convey that the beneficiary generally
has a 12-month period under Federal law in which they can disenroll
from the MA plan and switch back to Traditional Medicare and purchase a
Medigap plan with Medigap Federal GI rights.\164\ For purposes of this
discussion and proposal, we refer to both of these situations that
trigger Medigap Federal GI rights as ``MA `trial right' periods.'' As
noted previously, when seeking to purchase a Medigap plan in a
situation where the Medigap Federal GI rights apply, the insurance
company selling it must cover all preexisting health conditions and
can't charge a beneficiary more for a Medigap policy because of past or
present health problems. It is therefore important that beneficiaries
have information about the impact on their Medigap Federal GI rights
when making an MA plan enrollment decision.
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\163\ The MA ``trial right'' period and other Federal Medigap GI
rights are described in CMS' Choosing a Medigap Policy: A Guide to
Health Insurance for People with Medicare. See section 3 of the
Centers for Medicare & Medicaid Services, Choosing a Medigap Policy:
A Guide to Health Insurance for People with Medicare, https://www.medicare.gov/publications/02110-medigap-guide-health-insurance.pdf.
\164\ See sections 1882(s)(3)(b)(v) and (vi) of the SSA. Under
Federal law, this trial right period may be extended for up to 2
years in certain circumstances involving involuntary termination of
the beneficiary's MA plan coverage within the first 12 months of
enrollment. See section 1882(s)(3)(F) of the SSA.
---------------------------------------------------------------------------
Under this proposal, at Sec. 422.2274(c)(12)(vi)(A)(2), the agent
or broker would also be required to explain that, in general, if a
beneficiary enrolled in an MA plan decided to switch back to
Traditional Medicare outside of their MA ``trial right'' period, they
are not guaranteed the right under Federal law to purchase a Medigap
plan and if they do, the insurance company can take all previous and
preexisting health conditions into consideration, resulting in the
beneficiary likely paying more. In addition, under this proposal, we
would encourage agents and brokers to use and refer a beneficiary to
beneficiary-focused CMS materials, like the annual Choosing a Medigap
Policy: A Guide to Health Insurance for People with Medicare, which
includes information on MA ``trial right'' periods and Federal Medigap
GI rights.\165\ We note that while this proposal focuses on the Medigap
Federal GI rights for beneficiaries in their MA ``trial right''
periods, agents and brokers would be encouraged to also provide
information on state laws regarding Medigap GI rights for those states
where the agent or broker is licensed and appointed to sell, as
proposed under Sec. 422.2274(c)(12)(vi)(B), as states can, and many
do, offer additional GI rights. We note that, unlike the first two
proposed topics discussed (LIS and MSP), the proposed requirement for
agents and brokers to discuss the Medigap Federal GI rights for
beneficiaries in their MA ``trial right'' periods would only be
applicable to the sale an MA or MA-PD plan and would not be applicable
to PDP sales.
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\165\ Centers for Medicare & Medicaid Services and National
Association of Insurance Commissioners, Choosing a Medigap Policy: A
Guide to Health Insurance for People with Medicare, https://www.medicare.gov/publications/02110-medigap-guide-health-insurance.pdf.
---------------------------------------------------------------------------
3. Pausing for Additional Questions
We are also proposing to add a requirement that agents and brokers
pause to ask the beneficiary, prior to finalizing the enrollment,
whether the beneficiary has any remaining questions related to the
beneficiary's enrollment in a plan. During our review of audio calls
between agents and brokers and beneficiaries, CMS has learned that
agents and brokers do not always ask beneficiaries if they have any
questions about the topics discussed or other related questions that
may not have been mentioned. Agents and brokers are required to cover a
number of different topics prior to enrolling a beneficiary into an MA,
MA-PD or Part D plan. The required topics are designed to ensure the
beneficiary is fully informed about the choice they are making. The
breadth of information that is presented during enrollment appointments
may be intimidating to a beneficiary, and CMS has observed indications
of this in our review of audio calls. We noticed some beneficiaries
were confused regarding whether their current coverage would be ending,
which was not addressed by the agent prior to the enrollment being
completed. In other calls, some beneficiaries appear to be confused
about plan networks and if their provider is part of a plan's network.
We observed that a beneficiary may not feel comfortable or empowered to
ask questions of an agent and broker unprompted. Additionally,
mirroring what we heard in our review of audio calls, a recent United
States Senate Committee on Finance report found that beneficiaries were
sometimes confused because they enrolled into a new plan but were
unaware that their provider was not in the plan's network until they
started using the new plan.\166\ In addition, a Commonwealth Fund study
reported that one significant complexity for beneficiaries when
choosing a plan is that they ``make decisions that result in trade-offs
they are not likely to fully understand.'' \167\ Therefore, we believe
that requiring agents and brokers to pause to proactively ask
beneficiaries about whether they have questions about the topics the
agent and broker has discussed, or other questions related to
enrollment in an MA, MA-PD or Part D plan will further promote informed
decision-making among beneficiaries. We understand that many agents and
brokers may do this already as a routine part of sales calls with
beneficiaries. However, through our observations, we have seen enough
instances where this does not happen effectively or at all, with a
detrimental impact to the beneficiary who is then enrolled in a plan
that does not best fit their health needs in part because they did not
have a clear opportunity to ask questions, that we believe this
proposed regulation is appropriate. Specifically, at Sec.
422.2274(c)(12), we propose to delete the ``and'' that comes before
``specific health care needs'' and create Sec. 422.2274(c)(12)(xi) to
say, ``conclude by pausing to ask if the beneficiary has any questions
about the topics discussed in paragraph (c)(12) of this section or
others, including those related to enrollment.'' At Sec.
423.2274(c)(12), we propose to delete the ``and'' that comes before
``services and incentives'' and create Sec. 423.2274(c)(12)(vii) to
say, ``conclude by pausing to ask if the beneficiary has any questions
about the topics discussed in paragraph (c)(12) of this section or
others, including those related to enrollment.'' Similar to the
rationale described in the April 2023
[[Page 99430]]
final rule regarding Sec. Sec. 422.2274(c)(12) and 423.2274(c)(12), if
agents and brokers are required to cover the topics described in this
proposal with beneficiaries prior to their enrollment, we expect that
beneficiaries will be more knowledgeable about their Medicare options
as well as the MA, MA-PD or Part D plans that are available to them
together with the associated costs, and thus better prepared to make an
informed choice. Agents and brokers are uniquely positioned to help
beneficiaries select and enroll in a Medicare option that best fits
their health care needs. Given the complex nature of Traditional
Medicare, and the Parts C and D programs, we believe our proposed
additional topics to discuss with a beneficiary, together with the
proposed requirement to pause to ask if the beneficiary has any
additional questions is critical to ensuring beneficiaries make fully
informed enrollment decisions.
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\166\ United States Senate Committee on Finance, Deceptive
Marketing Practice Flourish in Medicare Advantage, page 9. [https://www.finance.senate.gov/imo/media/doc/Deceptive%20Marketing%20Practices%20Flourish%20in%20Medicare%20Advantage.pdf] (November 2, 2022).
\167\ Riaz Ali, Aimee Cicchiello, Morgan Hanger, Lesley Hellow,
Ken Williams, Gretchen Jacobson, How Agents Influence Medicare
Beneficiaries' Plan Choices, (Commonwealth Fund, [April 21, 2021])
[https://www.commonwealthfund.org/publications/fund-reports/2021/apr/how-agents-influence-medicare-beneficiaries-plan-choices]
(August 21, 2024).
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4. Technical Changes
We are also proposing technical changes to Sec. Sec.
422.2274(c)(12) and 423.2274(c)(12) to put the newly proposed and
existing requirements into a more organized and reader-friendly format.
Specifically, we are proposing to create Sec. Sec. 422.2274(c)(12)(i)
through (iii) and (vii) through (x) and 423.2274(c)(12)(i) and (ii) and
(vi) and (vii) to list the requirements individually instead of in
paragraph form. We are then proposing to include those three new topics
(LIS, MSP, Medigap), as discussed in this proposal, to be included as
new Sec. Sec. 422.2274(c)(12)(iv) through (vi), respectively. The two
newly proposed topics (LIS, MSP) under Sec. 423.2274(c)(12) will be
included as new Sec. Sec. 423.2274(c)(12)(iii) and
423.2274(c)(12)(iv), respectively. Finally, the newly proposed
requirement that an agent pause to ask the beneficiary if they have any
questions would be included as new paragraphs Sec. 422.2274(c)(12)(xi)
and 423.2274(c)(12)(vii).
In addition, we are also proposing a minor technical correction to
Sec. 422.2274(c)(12) to delete the redundant word ``regarding'' before
``pharmacies.''
We expect these proposed changes to impose a negligible amount of
additional information collection requirements (that is, reporting,
recordkeeping, or third-party disclosure requirements) on impacted
organizations in terms of the updating of their existing processes
related to their oversight of FDRs to ensure agents and brokers
communicate information about LIS, MSPs, and Medigap to beneficiaries
and discuss the beneficiary's enrollment-related questions before they
enroll in a new plan. Including these proposed requirements under
Sec. Sec. 422.2274(c)(12) and 423.2274(c)(12) requires four additional
items for agents and brokers to cover, but they can be covered during
calls or appointments they already have prior to a beneficiary's
enrollment in an MA, MA-PD or Part D plan. We are not proposing that
agents and brokers use standardized language to review LIS eligibility,
resources for state programs, or Medigap, nor that they must schedule a
separate appointment to meet this requirement. We do not expect these
proposed requirements to require significant additional training for
agents and brokers or MA organizations. Also, adding beneficiary
questions as a required topic further clarifies the purpose of
paragraph (c)(12), which is that FDRs that represent the MA
organization must fully discuss a beneficiary's needs in a health plan
prior to enrollment.
Furthermore, we believe this burden does not need to be submitted
to the Office of Management and Budget (OMB) based on the currently
approved control number 0938-0753 (CMS-R-267), which states the
following in relation to Sec. 422.2274: ``The time, effort, and
financial resources necessary to comply with the following collection
of information requirements would be incurred by persons during the
normal course of their activities and, therefore, should be considered
usual and customary business practices. Consequently, the information
collection requirements and burden are exempt (5 CFR 1320.3(b)(2)) from
the requirements of the PRA.'' Consequently, there is no need for
review by OMB under the authority of the PRA of 1995 (44 U.S.C. 3501 et
seq.). In addition, this provision is not expected to have any economic
impact on the Medicare Trust Fund.
We welcome comment on our proposed amendments to Sec. Sec.
422.2274(c)(12) and 423.2274(c)(12), and we thank commenters in advance
for their feedback.
P. Format Medicare Advantage (MA) Organizations' Provider Directories
for Medicare Plan Finder (Sec. Sec. 422.111 and 422.2265)
CMS continues to take steps to improve the usability of Medicare
Plan Finder, strengthen oversight of plan marketing materials, and
require agents and programs share information intended to ensure
enrollees are able to make informed choices about their Medicare,
Medicare Advantage, and Part D coverage. Policymakers, MedPAC, and
other researchers have raised concerns about the increase in the number
of plans having a detrimental impact on choice and competition, leading
to confusion and difficulty for beneficiaries as they compare plans and
choose an option.168 169 170 171 Plans differ on multiple
dimensions, including covered services, premiums, service-specific
cost-sharing, and provider networks, and evidence shows that too much
choice complexity, particularly on financial dimensions, hinders
beneficiaries' ability choose a plan that best meets their
needs.172 173 174 175 176 Moreover, even modest increases in
the number of options can further impair consumer choice,\177\ reduce
enrollment,\178\ and can lead to premium increases.\179\ On
[[Page 99431]]
the other hand, facilitating plan comparison shopping through reduced
complexity can lead to improved plan selection and more effective
competition. CMS continues to consider opportunities to support
consumer choice as part of broader efforts to strengthen the MA
program.
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\168\ MedPAC (2023). ``Report to Congress: Medicare and the
Health Care Delivery System'' June 2023.
\169\ Rollins, Eric (2023). ``Standardized benefits in Medicare
Advantage plans'' MedPAC presentation, September 7, 2023. Downloaded
from https://www.medpac.gov/document/standardized-benefits-in-medicare-advantage-plans/ on September 11, 2024.
\170\ Lieberman, Steven M., Loren Adler, Erin Trish, Joseph
Antos, John Bertko, Paul Ginsburg (2018). ``A Proposal to Enhance
Competition and Reform Bidding in the Medicare Advantage Program.''
\171\ Pearson, Joshua and Rayna Stoycheva (2023). ``Medicare vs.
Medicare Advantage: Trends and Challenges for Older Adults in
Navigating Medicare Enrollment Decisions'' Harkin Institute Report,
October 2023, Number 23-2.
\172\ Taylor, Erin Audrey, Katherine Grace Carman, Andrea Lopez,
Ashley N. Muchow, Parisa Roshan, Christine Eibner (2016). ``Consumer
Decisionmaking in the Health Care Marketplace.'' Rand Research
Report.
\173\ Johnson. Eric, Ran Hassin, Tom Baker, Allison T. Bajger,
Galen Treuer (2013). ``Can Consumers Make Affordable Care
Affordable? The Value of Choice Architecture.'' PLoS ONE 8(12):
e81521.
\174\ Abaluck, Jason and Jonathan Gruber (2011). ``Choice
Inconsistencies among the Elderly: Evidence from Plan Choice in the
Medicare Part D Program.'' American Economic Review 101 (June 2011):
1180-1210.
\175\ Kling, Jeffrey, Sendhil Mullainathan, Eldar Shafir, Lee
Vermeulen, Marian Wrobel (2012). ``Comparison Friction: Experimental
Evidence from Medicare Drug Plans'' The Quarterly Journal of
Economics, Volume 127, Issue 1, February 2012, Pages 199-235.
\176\ Bhargava, S., Loewenstein, G. & Sydnor, J. (2017). Choose
to lose: Health plan choices from a menu with dominated options.
Quarterly Journal of Economics, 132(3), 1319-1372.
\177\ Bundorf, M. Kate, and Helena Szrek, ``Choice Set Size and
Decision Making: The Case of Medicare Part D Prescription Drug
Plans,'' Medical Decision Making, Vol. 30, No. 5, September-October
2010, pp. 582-593.
\178\ McWilliams JM, Afendulis CC, McGuire TG, Landon BE (2011).
Complex Medicare advantage choices may overwhelm seniors--especially
those with impaired decision making. Health Affairs Sep;30(9):1786-
94.
\179\ Ericson, Keith (2014). ``Consumer Inertia and Firm Pricing
in the Medicare Part D Prescription Drug Insurance Exchange.''
American Economic Journal: Economic Policy, February 2014, 6(1): 38-
64.
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To reiterate, it is important that, when Medicare beneficiaries are
exploring their options, they have the information they need to make
the best choice for their needs. When deciding between Traditional
Medicare and MA, one key factor is that CMS requires MA plans to have a
provider network. Provider directories allow beneficiaries and their
caregivers to weigh Medicare options and decide if a certain provider
network meets their needs, such as to check if their existing
physicians are in the network, what other contracted providers are
available to deliver other medical care, amongst a myriad of other
factors. As the landscape of MA has evolved, CMS has implemented rules,
and made modifications to those rules, to ensure that people with
Medicare and the trusted individuals they rely on to aid in their
decision making, have the information necessary to make decisions about
their Medicare options, including many of the required materials and
disclaimers found under Sec. 422.2267(e), as well as the requirements
under Sec. 422.2265(b) and (c) that certain content and materials are
made available on the MA organization's website.
We believe that additional regulatory changes are now required to
allow the agency to ensure that CMS is leveraging technological methods
to streamline the beneficiary experience so that beneficiaries have the
information they need to make the best choice for their needs,
including MA provider directories. CMS proposes to make changes that
will allow MA provider directories to be viewable on Medicare Plan
Finder (MPF) for the 2026 Annual Enrollment Period (AEP). In addition,
to ensure the accuracy of the data being submitted, we propose to
require MA organizations to attest to the accuracy of the provider
directory data being submitted. In total, we believe these proposed
changes will result in an advancement of informed beneficiary choice
and transparency benefitting people with Medicare, while also promoting
robust competition within the Medicare market, aligned with the
President's July 2021 Executive Order on Promoting Competition in the
American Economy.\180\
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\180\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
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Section 1851(d)(1) of the Act states that the Secretary shall
provide for activities to broadly disseminate information to current
and prospective Medicare beneficiaries on MA plan coverage options to
promote an active, informed selection among such options. Specifically,
per section 1851(d)(2)(A)(ii) of the Act, at least 15 days before the
beginning of each annual, coordinated election period, the Secretary
shall provide MA-eligible individuals with a list identifying the MA
plans that are (or will be) available to residents of the areas in
which they reside, including certain information concerning such MA
plans, presented in a comparative form. This information is described
in section 1851(d)(4) of the Act and includes plan benefits, premiums,
service area, quality and performance indicators, and supplemental
benefits. Section 1851(d)(4)(A)(vii) of the Act, also sets forth that
information comparing MA plan options must specifically include the
extent to which an enrollee may select among in-network providers and
the types of providers participating in the plan's network. In
addition, section 1851(d)(7) of the Act provides that MA organizations
shall provide CMS with such information about the MA organization and
each MA plan that it offers, as may be required for the preparation of
the information described in section 1851(d)(2)(A) of the Act.
Section 1852(d)(1) of the Act requires access to services and
states that MA organizations offering an MA plan may select the
providers from whom the benefits under the plan are provided if the MA
organization complies with several conditions including access to
appropriate providers (section 1852(d)(1)(D) of the Act). Regulations
at Sec. 422.116(a)(1) further clarify this obligation by providing
network adequacy access requirements for MA plans. Specifically,
network-based MA plans must demonstrate an adequate contracted provider
network that is sufficient to provide access to covered services in
accordance with access standards at section 1852(d)(1) of the Act.
Additionally, MA organizations must attest that they have an adequate
network for access and availability of a specific provider or facility
type that CMS does not independently evaluate in a given year (Sec.
422.116(a)(1)(i)).
Section 1852(c)(1)(C) of the Act further requires MA plans to
disclose the number, mix, and distribution of plan providers. Based on
this statutory requirement, CMS has implemented regulations at Sec.
422.111(b)(3)(i) that require MA plans disclose the number, mix, and
distribution (addresses) of providers from whom enrollees may
reasonably be expected to obtain services; each provider's cultural and
linguistic capabilities, including languages (including American Sign
Language) offered by the provider or a skilled medical interpreter at
the provider's office. Together, these regulations establish the
overarching requirements for the MA provider directory content.
The Interoperability and Patient Access final rule (85 FR 25633)
became effective on June 30, 2020, and requires MA organizations,
beginning on January 1, 2021, to make standardized information about
their provider networks accessible through a Provider Directory
Application Programming Interface (API) that conforms with CMS/HHS
technical standards at Sec. 422.119(c). The Interoperability and
Patient Access final rule, also included in Sec. 422.120 that the
Provider Directory API must be accessible via a public-facing digital
endpoint on the MA organization's website to ensure that this
information is viewable and accessible to prospective and current
enrollees as well as third-party application developers, who can create
services to help patients find providers for care and treatment.
Requirements at Sec. 422.120 further specify that the MA plan's
directory of contracted providers must be complete and accurate and
include names, addresses, phone number, specialties and (as applicable
for MA-PDs) the number of pharmacies in the network and mix of pharmacy
types. MA organizations must ensure this information is updated within
30 calendar days of receiving provider directory information or
updates. Provider Directory API technical standards were also modified
for more specificity in the Interoperability and Patient Access final
rule (89 FR 8974) which was effective on February 8, 2024.
To comply with the previously referenced statutory and regulatory
requirements, CMS has taken a two-prong approach. CMS implemented MPF
as an online resource where current and prospective beneficiaries and
their caregivers can explore their Medicare coverage options. On MPF,
individuals can look for Medicare Advantage and Part D plans and make
informed choices based on the
[[Page 99432]]
information provided, such as plan benefits, premiums, deductibles, and
star ratings to name a few. While CMS has implemented improvements to
MPF over the years to incorporate more data, MPF does not currently
include information on MA plans' contracted provider networks, such as
the specific providers with which a plan contracts and from which an
enrollee may receive health care services. In addition to creating MPF,
CMS has implemented regulations that require each MA organization to
disclose or otherwise make available certain required information,
including hardcopy and electronic provider directory requirements under
Sec. 422.2267(e)(11), as well as a searchable online directory as
required under Sec. 422.2265(b)(4). Through these requirements, the
provider directory information is made available to prospective and
existing MA plan enrollees so they may view MA plans' in-network
providers and other relevant information as required under Sec.
422.111(b)(3)(i), such as the provider's specialty, location, and
cultural and linguistic capabilities in the MA organization's online
PDF or printable version (Sec. 422.2265(b)(3)). While this schema
meets the statutory requirements using plan websites and MPF, in their
current form to make enrollment decisions, is cumbersome. When
prospective and current MA plan enrollees use provider directories and
MPF today to help them make enrollment decisions, they must toggle
between different MA plan websites and MPF to find and review the
plans' provider directories to determine if the providers they
currently see are in the various plans' networks, as well as review the
information provided by MPF.
In order to simplify and streamline the Medicare beneficiary
experience when shopping for an MA plan, we are proposing to expand on
the existing requirements applicable to MA organizations regarding
their provider directories at a newly established Sec. 422.111(m) to
include a new provision to require MA organizations to submit or
otherwise make available their plan provider directory data, that is
the requirements found under Sec. 422.111(b)(3)(i), available to CMS/
HHS in a format, manner, and timeframe that CMS/HHS determines in order
for the MA organization's provider directory data to be integrated
online by CMS/HHS for display on MPF. In addition, we are proposing to
include a requirement that MA organization update the provider
directory data that is submitted or otherwise make available to CMS for
this purpose within 30 days of receiving information from providers of
a change, which mirrors the current standard for updating provider
directory data found under Sec. 422.2267(e)(11).
As previously noted, CMS has adopted regulations to implement
requirements applicable to MA organizations for publicly accessible,
accurate, and timely provider directory information through the
Interoperability and Patient Access final rule. The provider directory
requirements of the Interoperability and Patient Access final rule aide
in establishing the groundwork for MA plan provider directory
information to be readily accessible for MA organizations to submit to
CMS for inclusion on MPF.
While publishing MA plan provider directory information on MPF is
an important step, doing so in a way that ensures that beneficiaries
are accessing accurate information, is a critical part of improving the
Medicare beneficiary experience while using MPF. In order to enhance
the accuracy of the information that will be published online by CMS/
HHS on MPF, we are also proposing to add new subparagraph Sec.
422.111(m)(4), which would require an MA organization attest that the
information being submitted to CMS/HHS under this new requirement is
accurate and consistent with data submitted to comply with CMS's MA
network adequacy requirements at Sec. 422.116(a)(1)(i). Given the
significance of the choice that a beneficiary is making based on the
information provided by the MA organization, it is critical to include
this attestation requirement to ensure that the information being
submitted by MA organizations is accurate and consistent with data
submitted to comply with CMS's MA network adequacy criteria when it is
submitted to CMS for the purpose of incorporating it into MPF. It is
imperative that MA organizations' provider directory data remains
consistent with the contracted provider network data submitted to CMS
in order to provide sufficient access to covered services.
Furthermore, with regard to the attestation, because provider
directory data changes so frequently, we understand that it may be
impractical to require an attestation with each update. CMS is
considering how to best balance the need for accountability of accurate
data with the burden of the attestation. If this proposed rule is
finalized, we will operationalize it by publishing a provider directory
data submissions guide that would include operational guidance, which
will explain how the attestation process will be implemented. We
currently envision an attestation when the data is first made available
to CMS, and then a yearly attestation thereafter. We ask commenters for
feedback on the attestation process, including the intervals for the
attestation.
It is important to highlight that our proposals at new proposed
Sec. 422.111(m) would closely mirror the provider directory submission
requirements at 45 CFR 156.230(c) for Qualified Health Plan (QHP)
issuers on the federally facilitated Exchange (FFE). Currently, 45 CFR
156.230(c) requires issuers seeking certification to offer QHPs on the
FFE to submit provider and formulary information in a format and manner
and at times determined by HHS/CMS to HHS/CMS. This information is then
used to feed HealthCare.gov and its Direct Enrollment partner websites
to allow consumers to filter available QHPs based on the providers and
drugs covered by those QHPs. As discussed previously, we are proposing
to take a substantially similar approach for MA organizations. Given
that many health insurance carriers offer both MA plans an QHPs, we
believe this is a reasonable approach. We note that these proposals
apply only to MA organizations (not Part D sponsors). Additionally, to
operationalize the proposed Format Provider Directories for Medicare
Plan Finder provision at Sec. 422.111(m), we anticipate that 2025 plan
year directory data will need to be made available online for testing
purposes in the summer of 2025, and 2026 plan year data would need to
be available online on October 1, 2026. We therefore propose an
applicability date of July 1, 2025, for this provision.
Additionally, this proposed rule fits within one of the important
pillars of CMS's Strategic Plan to ``Advance Equity'' as it will help
ensure that provider directory information, including a provider's
cultural and linguistic capabilities (as CMS currently requires for MA
provider directories), which are especially important to underserved
communities, will be more readily available to people with Medicare
when considering their Medicare choices. Ultimately, we believe our
proposal would streamline the MPF online platform and promote informed
beneficiary choice and market competition.
We welcome comment on our proposed creation of Sec. 422.111(m) and
we thank commenters in advance for their feedback.
[[Page 99433]]
Q. Promoting Informed Choice--Enhancing Review of Marketing &
Communications (Sec. Sec. 422.2260 and 423.2260)
Over the past decade and a half, as the MA and Part D marketing and
communications landscape has changed and evolved, CMS has modified our
regulations, including our marketing and communications standards,
definitions, and submission requirements, to strengthen and enhance
CMS' ability to monitor and oversee MA organizations and Part D
sponsors, including the different modalities and distribution channels
used by the MA and Part D industry to market and communicate
information about product offerings. However, additional regulatory
changes are required for CMS to keep pace with the ever-changing MA and
Part D marketing and communications landscape.
Section 1851(h)(1) of the Act prohibits MA organizations from
distributing marketing materials and application forms to (or for the
use of) MA eligible individuals unless the document has been submitted
to the Secretary at least 45 days (10 days for certain materials) prior
to use and the document has not been disapproved. Additionally, section
1851(h)(4) requires MA organizations to conform to fair marketing
standards in relation to marketing activities for MA plans, including
standards that CMS may establish pursuant to section 1856. While the
Act requires the submission and review of the marketing materials and
applications, it does not provide a definition of what materials fall
under the term marketing. Section 1856(b)(1) of the Act authorizes CMS
to adopt, through rulemaking, standards that are consistent with,
implement and carry out the Medicare Advantage statutory provisions.
Section 1860D-1(b)(1)(B)(vi) of the Act directs that the Secretary use
rules similar to and coordinated with the MA rules at section 1851(h)
for approval of marketing material and application forms for Part D
plan sponsors. Section 1860D-4(l) of the Act applies certain
prohibitions under section 1851(h) to Part D sponsors in the same
manner as such provisions apply to MA organizations.
With regard to 1876 cost plans, similar to section 1851(h) of the
Act, section 1876(c)(3)(C) of the Act focuses on CMS's review and
approval process for marketing materials rather than providing an
exhaustive list of the types of materials that are considered marketing
or promotional information and materials. Specifically, section
1876(c)(3)(C) of the Act states that no brochures, application forms,
or other promotional or informational material may be distributed by
cost plans to (or for the use of) individuals eligible to enroll with
the organization under this section unless (i) at least 45 days before
its distribution, the organization has submitted the material to the
Secretary for review; and (ii) the Secretary has not disapproved the
distribution of the material. Consistent with these statutory
requirements, CMS reviews all such materials submitted by section 1876
cost plans and disapproves such materials upon determination that the
material is materially inaccurate or misleading or otherwise makes a
material misrepresentation. As part of the implementation of section
1876(c)(3)(C) of the Act, the regulation governing marketing activities
for cost plans at 42 CFR 417.428(a) refers to the MA marketing
procedures and requirements set forth in 42 CFR part 422, subpart V.
Consequently, pursuant to CMS's authority in section 1876(c)(3)(C) to
regulate section 1876 cost plan marketing, as well as the authority in
section 1876(i)(3)(D) to specify new section 1876 contract terms, and
as established in Sec. 417.428, the proposed changes regarding MA and
Part D marketing discussed in this section would also apply to section
1876 cost plans.
Under current regulations at Sec. Sec. 422.2260 and 423.2260,
communications ``means activities and use of materials created or
administered by the MA Organization or Part D sponsor or any downstream
entity to provide information to current and prospective enrollees.
Marketing is a subset of communications.'' In regulations at Sec. Sec.
422.2260 and 423.2260, marketing ``means communications materials and
activities that meet both the following standards for intent and
content.'' The intent standard, as defined under Sec. Sec.
422.2260(1)(i) and 423.2260(1)(i), are communications materials and
activities that intend, ``as determined under paragraph (1)(ii) of this
definition, to do any of the following'' to ``(A) draw a beneficiary's
attention to a MA or Part D plan or plans, (B) influence a
beneficiary's decision-making process when making a MA or Part D plan
selection, (C) influence a beneficiary's decision to stay enrolled in a
plan (that is, retention-based marketing).'' In addition, Sec. Sec.
422.2260(1)(ii) and 423.2260(1)(ii) state that, ``In evaluating the
intent of an activity or material, CMS will consider objective
information including, but not limited to, the audience of the activity
or material, other information communicated by the activity or
material, timing, and other context of the activity or material and is
not limited to the MA organization's or Part D sponsor's stated
intent.''
The current content standards, as defined under Sec. Sec.
422.2260(2) and 423.2260(2), provide that to meet the regulatory
definition of marketing, communications materials and activities must
also include or address content regarding (i) the plan's benefits,
benefits structure, premiums or cost sharing, (ii) measuring or ranking
standards (for example, Star Ratings or plan comparisons), or (iii),
for MA plans only, rewards and incentives as defined under Sec.
422.134(a). Communications that do not meet both of these regulatory
intent and content standards do not fall within the current regulatory
definition of marketing, and as a result, such materials are not
subject to the specific submission, review, and distribution
requirements for marketing materials provided in Sec. Sec. 422.2261(b)
and 423.2261(b).
Prior to 2018, for over two decades, CMS had a broad regulatory
definition of marketing at Sec. Sec. 422.2260 and 423.2260 which
stated that marketing materials include any informational materials
targeted to Medicare beneficiaries which: promote the MA organization
or Part D plan, or any MA plan offered by the MA organization, inform
Medicare beneficiaries that they may enroll, or remain enrolled in, an
MA or Part D plan offered by the MA or Part D organization, explain the
benefits of enrollment in an MA or Part D plan, or rules that apply to
enrollees, explain how Medicare services are covered under an MA or
Part D plan, including conditions that apply to such coverage and may
include, but are not limited to a broad list of materials defined in
the regulation (from general audience materials such as general
circulation brochures, newspapers, magazines, television, radio,
billboards, yellow pages, or the internet to letters to members about
contractual changes; changes in providers, premiums, benefits, plan
procedures etc.). The marketing materials definition excluded certain
ad hoc enrollee communications materials that were targeted to current
enrollees, were customized or limited to a subset of enrollees or apply
to a specific situation, did not include information about the plan's
benefit structure; and applied to a specific situation or cover claims
processing or other operational issues. This broad definition of
marketing meant that MA organizations and Part D sponsors prospectively
submitted to CMS for review the majority of beneficiary-facing
materials they used.
[[Page 99434]]
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, published in the Federal Register on April
16, 2018, (83 FR 16440), hereinafter referred to as the ``April 2018
final rule,'' CMS included and defined ``communication requirements''
in the scope of part 422, subpart V, and part 423, subpart V, and
amended Sec. Sec. 422.2260 and 423.2260 to add a new definition of
``marketing'' alongside the original definition of ``marketing
materials.'' With this change, marketing became a subset of
communications and was defined as ``activities and use of materials
that meet the following: conducted by the MA organization or downstream
entities, intended to draw a beneficiary's attention to a MA plan or
plans, intended to influence a beneficiary's decision-making process
when selecting a MA plan for enrollment or deciding to stay enrolled in
a plan (that is, retention-based marketing).'' CMS also revised the
list of marketing materials excluded from submission to CMS and subject
to review, to encompass all materials that ``do not include information
about the plan's benefit structure or cost sharing or do not include
information about measuring or ranking standards (for example, star
ratings).'' \181\ In creating this delineation, only those
communications that met the new definition of marketing and marketing
materials were subject to more stringent requirements, including the
need for submission to and review by CMS.
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\181\ 83 FR 16627.
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To better focus CMS's review of such marketing materials, the April
2018 final rule aimed to narrow the scope of materials that fell under
the marketing definition to those that had the highest likelihood of
misleading or confusing beneficiaries into making an adverse enrollment
decision. Such materials were subject to the more stringent marketing
requirements, including submission requirements, hence allowing CMS the
ability to focus on materials most likely to negatively impact a
beneficiary's enrollment experience. In this April 2018 final rule, CMS
reasoned that certain materials in existence at the time, that fell
within the definition of marketing materials, ``pose[d] little to no
threat of a detrimental enrollment decision,'' \182\ and would be
unlikely to lead a beneficiary to request additional information or
make an enrollment decision, such as those that did not mention certain
types of content such as benefit structure, cost sharing, measuring or
ranking standards.\183\ Thus, CMS excluded from the new definition of
marketing materials those materials that did not contain such
information and aimed to focus the material submission requirements
``on materials and activities that aim to influence enrollment
decisions'' \184\ and ``that present the greatest likelihood for a
negative beneficiary experience.'' \185\ In addition, the April 2018
final rule said that materials that included certain content tied to
the updated definition of marketing, such as information about the
plan's benefit structure or cost sharing or information about measuring
or ranking standards (for example, star ratings), but did not otherwise
meet the marketing definition, would not be considered marketing.\186\
As the final rule explained, ``the goal of this proposal is to exclude
member communications that convey important factual information that is
not intended to influence the enrollee's decision to make a plan
selection or to stay enrolled in their current plan.'' \187\ An example
of this in practice would be a postcard mailed to current enrollees
letting them know that they can obtain a flu shot at zero cost sharing,
which prior to the April 2018 final rule, would have been considered a
marketing material and submitted to CMS for review even though it was
likely to have had little impact on an enrollment decision.
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\182\ 83 FR 16626.
\183\ 83 FR 16626-83 FR 16627.
\184\ 83 FR 16626.
\185\ 83 FR 16626.
\186\ 83 FR 16627.
\187\ 83 FR 16627.
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In September 2018, CMS further clarified these definitions, in
section 20.1 of the Medicare Communications & Marketing Guidelines
(MCMG). The MCMG provided examples to distinguish between marketing and
communications and explained that CMS would evaluate the intent and
content of all marketing activities and materials to ensure they met
the definition of marketing. The MCMG clarified that marketing
activities and materials are distinguished from communications
activities and materials based on these standards.\188\ These standards
were subsequently codified in the ``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'' final rule, published in the Federal Register on
January 19, 2021 (86 FR 5864), hereinafter known as the ``January 2021
final rule.'' In addition to codifying the guidance from the MCMG, CMS
further revised and streamlined the communications and marketing
definitions and the intent and content standards. At that time, our
objective in updating the intent and content standards of the marketing
definition, and the stricter submission and review requirements
associated with these new, revised standards, was to enable CMS to more
effectively focus CMS's review on the materials that were most likely
to impact a beneficiary's enrollment decision.
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\188\ https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY2019-Medicare-Communications-and-Marketing-Guidelines_Updated-090518.pdf.
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In 2023, CMS continued to pursue rulemaking to further strengthen
beneficiary protections to address the growth of misleading advertising
practices, including by those entities that circumvent our rules by
carefully crafting advertisements with messaging that by design,
allowed these entities to avoid our requirements for submission to and
approval by CMS prior to their use in the marketplace. 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 codified provisions that prohibit marketing ads
from including the mention of benefits not available in a service area
\189\ and requiring third-party marketing organizations (TPMOs) to
state the number of organizations and plans they represent in the
service area in which they are marketing.\190\
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\189\ 88 FR 22240.
\190\ 88 FR 22253.
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Yet, even with these changes, CMS continues to see, through CMS
monitoring efforts, marketing misrepresentation complaints from
beneficiaries and outreach from stakeholders that we consider to be
related to advertisements on television, mail, and the internet. For
example, CMS has observed television ads that instill a sense of
urgency combined with a narrative that leads the beneficiary to believe
they are not receiving important benefits they are entitled to by
touting the availability of information about Medicare options if the
viewer calls a
[[Page 99435]]
phone number. Yet, the information about Medicare options in such
advertisements is described in such a broad, generic and non-specific
manner that these advertisements are arguably considered communications
rather than marketing under our current rules. These broad, generic and
non-specific advertisements can potentially mislead and confuse
beneficiaries. For example, advertisements positioned as an opportunity
to review a beneficiary's options, or their current plan benefits or
possible changes to their current plan, may pull potential enrollees
into the ``chain of enrollment,'' even though the materials or the
language used in the television advertisement are not considered to be
marketing under our rules. Because these advertisements are so general
and do not meet our current marketing definition, these are able to
effectively circumvent CMS's more stringent marketing requirements
under which the materials would be subject to CMS's review and approval
prior to their use, or in the case of File and Use, as defined under
Sec. Sec. 422.2261(b)(3) and 423.2261(b)(3), not be used until 5 days
following their submission.
As stated above, CMS is concerned that the current narrow
definition of marketing has created a loophole that has been used by MA
organizations, Part D sponsors and their downstream entities and
resulted in the proliferation of misleading and confusing marketing
practices that currently fall outside our scope of review.
Specifically, since the time these rules that narrowed the definition
of marketing were finalized, CMS has observed a shifting landscape of
misleading marketing practices in MA and Part D, including television,
web-based and direct mail advertisements that clearly attempt to draw a
beneficiary's attention to a plan or plans, or influence a
beneficiary's enrollment decisions, such as by alluding to potential
plan or benefit changes, or touting ``new'' benefits or non-specific
``Medicare options.'' A common factor for such ads is that they
encourage a beneficiary to call a 1-800 number. As noted earlier, these
ads, that do not mention or address any of the subjects listed in the
content standard within CMS's marketing regulations in Sec. Sec.
422.2260 and 423.2260, such as plan benefits or ranking standards, do
not technically meet the definition of marketing because these
advertising practices use generic messaging that do not mention
specific benefits and therefore do not require submission to CMS.
However, such materials still include a call to attention, as described
in the ``Advertisement (Ad)'' definition at Sec. Sec. 422.2260 and
423.2260, like calling a 1-800 number for more information. Moreover,
the ads initiate an enrollment trajectory by setting beneficiary
expectations that the beneficiary will call a number and be presented
with Medicare choice options, which invariably means Medicare Advantage
plan choices since the TPMO that receives the calls may only be selling
a select number of MA plans, which can then lead to a beneficiary
making a Medicare Advantage plan enrollment decision. CMS has reviewed
marketing misrepresentation complaints and listened to agent sales
calls where a beneficiary contacts a 1-800 number to learn more
information from an advertisement, only to be led to an enrollment into
a plan that does not best meet their health care needs, ultimately
resulting in a complaint to CMS.
To further illustrate this type of communication ad, CMS has seen
TPMO television ads which, without mentioning an MA plan by name, ask
the viewer to call a toll-free number to find out whether the viewer's
Medicare plans will be changing and whether that change might include
potential rising costs or changes to the provider networks. The ad will
list a 1-800 number and encourage the viewer to call to find out the
answers to whether there have been any changes to their Medicare plan.
Similarly, CMS has seen TPMO websites that appear and purport to be
educational, providing information on what MA or Part D is and how it
works, while not mentioning any particular benefits and thus, not
falling into the narrower definition of marketing. Yet, the website
will also include an opportunity to collect and share a beneficiary's
information with a third-party, in order to market MA or Part D plans
to the beneficiary which leads to a beneficiary providing their consent
to be contacted and likely marketed to. Unlike advertisements that meet
the definition of marketing, these more generic advertisements do not
mention specific plans or benefits, yet through tactics that can be
misleading or confusing, encourage a beneficiary to contact a 1-800
number where they unknowingly step into a chain of enrollment they were
likely not expecting.
Coinciding with these concerning trends, CMS has seen a sharp
increase in beneficiary complaints of marketing misrepresentation since
the issuance of the April 2018 final rule that made changes to and
narrowed the marketing definition. These complaints corroborate the
concerns with the marketing practices described in the previous
paragraphs. Marketing misrepresentation complaints rose from
approximately 9,000 complaints in 2018 to approximately 41,000 by 2021,
a four-fold increase since 2018. While the volume of marketing
misrepresentation complaints declined in 2022 to roughly 36,000, the
number of complaints was still over three times greater, at
approximately 32,000 in 2023, than in 2018.\191\ As noted earlier, many
of these complaints detail beneficiaries' negative enrollment
experience after calling a 1-800 number based on an ad. In fact,
through CMS monitoring efforts of agent sales beginning in 2022, CMS
has reviewed a representative sample of over 400 agent sales calls and
associated marketing misrepresentation complaints in the CTM. Of the
calls CMS has reviewed to date, approximately 33% of the agent sales
calls include beneficiaries mentioning that they saw an ad on
television or received something in the mail which prompted them to
call. Complaints by beneficiaries who called or were contacted by 1-800
numbers seen through an ad often detail the beneficiary having a
negative enrollment experience and opting to change the enrollment that
was transacted on the phone call. As examples, there are some
beneficiary complaints where a beneficiary describes being unwittingly
enrolled into a plan without their consent when they called for more
information. Other beneficiaries describe receiving inaccurate
information regarding the plan they were being switched into and later
learning their providers were out of network. Yet, when CMS conducted
further investigations into these ads, we found that many of the ads in
question were not submitted to CMS as marketing materials, and
generally would be considered to be communications that did not require
submission to CMS under our narrower definition of marketing.
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\191\ Complaints Tracking Module (CTM) Marketing
Misrepresentation Reports from 2018 to 2024.
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As previously mentioned, because the ads in question were not
submitted to CMS, it hampers our ability to determine an ad's origin,
and in the case of TPMO ads, what MA organizations or Part D sponsors
are associated with the TPMO. Additionally, since these advertisements
are not submitted to CMS, CMS is unable to review to confirm whether
the advertisement contains any misleading information. CMS believes
stronger oversight and collection of materials that can influence a
beneficiary's decision making will ensure that CMS can better
[[Page 99436]]
protect beneficiaries against misleading, inaccurate or confusing
marketing tactics, in addition to expediting our ability to more
quickly act on non-compliant ads associated with beneficiary
complaints.
When CMS created the content and intent standards beginning with
the April 2018 final rule, we did not foresee advertisements that did
not, as an example, contain a plan's benefits, benefits structure,
premiums, or cost sharing, leading to negative enrollment experiences.
At the time, the bulk of advertisements were being created by a single
plan, rather than a TPMO representing multiple plans. As stated
earlier, the statutory requirements under section 1851(h)(1) of the Act
provide CMS with the authority to review and approve materials most
likely to mislead or confuse beneficiaries and lead to a negative
enrollment experience. However, since the April 2018 final rule, CMS
has observed a shifting MA and Part D marketing landscape, which
alongside growing marketing misrepresentation complaints and changing
marketing trends and tactics, requires an updated marketing definition
that can better target the materials that mislead or confuse
beneficiaries into making an adverse enrollment decision. This includes
advertisements which encourage a beneficiary to call to review their
plan changes or gather information, and sets a trajectory that
ultimately leads to beneficiaries being unwittingly enrolled in a new
plan with negative consequences. To date, CMS continues to receive
concerning complaints related to misleading and confusing
advertisements and marketing tactics, which are resulting in negative
beneficiary enrollment experience.
To further emphasize the need to expand our oversight, in 2023, CMS
disapproved roughly half of all television ads that were submitted by
TPMOs to CMS for prospective review.\192\ This begs the question, if
this is true for materials that are being submitted to and reviewed by
CMS under the current regulatory definition of marketing, what is the
state of those materials that are not being submitted because of the
limitations on the scope of our existing regulation? As noted earlier,
CMS has received many complaints where a beneficiary calls a 1-800
number after viewing a TV ad and ends up being enrolled in a plan that
results in adverse effects. According to a KFF report on the state of
TV marketing activities, during the 2023 open enrollment period (10/1/
2022 to 12/7/2022), English language Medicare ad airings totaled
643,852 with 86% or 556,068 of these television ads advertising MA
plans.\193\ The report cited that viewers of programs across the top 20
markets saw an average of between 4 to 6 ads per day, depending on the
network affiliation, and regular viewers of specific TV programs could
expect to see 6-8 ads per day.\194\ It is clear from this report that
beneficiaries are inundated with TV ads.
---------------------------------------------------------------------------
\192\ HPMS Marketing Review Module Reports.
\193\ Jeannie Fuglesten Biniek, Alex Cottrill, Nolan Sroczynski,
Meredith Freed, Tricia Neuman, Breeze Floyd, Laura Baum, and Erika
Franklin Fowler, How Health Insurers and Brokers Are Marketing
Medicare, (KFF, [September 20, 2023]) [https://www.kff.org/report-section/how-health-insurers-and-brokers-are-marketing-medicare-report/#flooded-with-ads] (August 6th, 2024).
\194\ How Health Insurers and Brokers Are Marketing Medicare,
(KFF, [September 20, 2023]) [https://www.kff.org/report-section/how-health-insurers-and-brokers-are-marketing-medicare-report/#flooded-with-ads] (August 6th, 2024).
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As previously mentioned, when CMS has investigated TV ads based on
complaints or concerns expressed by advocacy organizations, the ads
could not be found in the HPMS marketing module, the system used to
collect and review marketing materials. The takeaway from this
investigative work is that a number of TV ads, intended to draw a
beneficiary's attention to MA or Part D plans and to ultimately
influence a beneficiary's decision-making process when making a MA or
Part D plan selection, were not submitted to CMS by the creator and MA
and Part D plans associated with these ads determined that the ads were
not marketing as defined under Sec. Sec. 422.2260 and 423.2260. CMS
believes broader oversight of the ads beneficiaries are confronted
with, even if the ads do not contain content on specific topics such as
benefits, co-pays or star ratings, will provide additional protections
against misleading marketing practices. In these proposals, CMS is
seeking to expand oversight over the materials that plans, and their
downstream entities, use in their marketing activities that intend to
draw a beneficiary to a plan or influence a beneficiary's enrollment
decisions. CMS expects that this approach, if finalized, would provide
CMS with greater insight into the shifting landscape of MA and Part D
advertising and the materials that are outside of the scope of the
materials currently submitted to CMS for review.
Similar trends were also reported by State oversight agencies, as
detailed in a 2022 report from the United States Senate Committee of
Finance titled Deceptive Marketing Practices Flourish in Medicare
Advantage. The report shares data from State insurance commissioners
and State Health Insurance Assistance Programs (SHIPs), with most of
these entities reporting a similar increase in complaints from 2020 to
2021,\195\ the same timeframe wherein CMS first reported that
beneficiary complaints had doubled. In the report, which included data
from 14 states, ``ten states reported that mail advertisements were a
source for complaints, nine states reported that robocalls and
telemarketers were a source for complaints, and eight states reported
that television advertisements were a source for complaints.'' \196\ As
one of many examples that illustrate the misleading marketing
beneficiaries experience, states reported complaints about mailers that
would appear to be official Medicare notices and ``serve the explicitly
misleading purpose of prompting beneficiaries to ``initiate contact,''
so that MA marketing prohibitions can be circumvented.'' \197\ Based on
these reports, alongside beneficiary complaints and CMS marketing
oversight and review of agent sales calls, it appears that various
entities, including TPMOs, have exploited the current content
requirements of our marketing definition as a means of skirting CMS
oversight, with detrimental effects for beneficiaries and the
marketplace. CMS's existing regulations at Sec. Sec. 422.2261(c)(2)
and 423.2261(c)(2) provide that CMS may collect certain non-marketing
communications materials. However, these mechanisms appear to be
insufficient to provide appropriate oversight of MA and Part D
marketing activities under the circumstances outlined above because
without the requirement for these materials to be submitted, CMS is
typically only able to address concerning materials of this nature
after a complaint or concern has been received. In order to proactively
monitor these materials and more efficiently review potentially
misleading marketing materials before they are seen by beneficiaries,
we believe that amending CMS's marketing regulations to allow
[[Page 99437]]
for a more comprehensive review of the materials used by MA
organizations, Part D sponsors, and their TPMOs, to market MA and Part
D plans is appropriate to ensure beneficiaries are protected.
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\195\ United States Senate Committee of Finance, Deceptive
Marketing Practices Flourish in Medicare Advantage, page 6. https://www.finance.senate.gov/imo/media/doc/Deceptive%20Marketing%20Practices%20Flourish%20in%20Medicare%20Advantage.pdf.
\196\ Deceptive Marketing Practices Flourish in Medicare
Advantage, https://www.finance.senate.gov/imo/media/doc/Deceptive%20Marketing%20Practices%20Flourish%20in%20Medicare%20Advantage.pdf, page 11.
\197\ Deceptive Marketing Practices Flourish in Medicare
Advantage, https://www.finance.senate.gov/imo/media/doc/Deceptive%20Marketing%20Practices%20Flourish%20in%20Medicare%20Advantage.pdf, page 11.
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In light of the facts and circumstances set forth above, and in
accordance with our statutory authority to review marketing materials
and application forms, and to develop marketing standards under these
sections, we are proposing to eliminate the content standard, as
described in Sec. Sec. 422.2260(2) and 423.2260(2) of the marketing
definition, so that all communications materials and activities that
meet the existing intent standard are considered marketing for purposes
of CMS's MA and Part D marketing and communications regulations. This
proposed change would improve CMS oversight over the full scope of
materials and activities that are intended to draw a beneficiary's
attention to one or more specific MA plans, Part D plans or other
plans, influence a beneficiary's decision-making process when making a
MA or Part D plan selection or influence a beneficiary's decision to
stay enrolled in a plan. CMS expects that this broader level of
oversight will further strengthen beneficiary protections against
misleading or confusing marketing tactics so that CMS can better ensure
that MA organizations, Part D sponsors and their downstream entities
are not providing misleading, inaccurate, or confusing information to
current or potential enrollees, or engaging in activities that could
misrepresent the MA organization or Part D sponsor, in accordance with
Sec. Sec. 422.2262 and 423.2262. By expanding CMS's oversight of these
materials, CMS can more readily review ads related to marketing
misrepresentation complaints and quickly act on them, without concern
over whether the material has been submitted. Additionally, submission
of all materials that are intended to draw a beneficiary's attention to
a plan or influence a beneficiary's decisions will also enable CMS to
more readily address materials that are attempting evade CMS submission
requirements while attempting to influence beneficiary enrollment
decision making. Further, by ensuring these materials are included in
CMS submission and review processes, CMS can more effectively, speedily
and reliably detect problematic materials that seem to be designed to
circumvent CMS's existing submission requirements and may negatively
impact a beneficiary's enrollment experience.
The MCMG provides a few scenarios to illustrate distinctions
between communications or marketing materials under CMS's current
regulatory definitions of those two terms. One scenario provided in the
MCMG discussed a flyer that reads, ``Swell Health is now offering
Medicare Advantage coverage in Nowhere County. Call us at 1-800-BE-
SWELL for more information.'' As the MCMG explains, under the current
marketing definition, this flyer would not be considered a marketing
material because it does not include specific plan benefits, benefits
structure, ranking standards or any other element of the current
content standard within the marketing definition.\198\ However, under
the proposed update to the marketing definition, this material would be
considered marketing because of its intent to draw a beneficiary's
attention to a plan or plans. Alternatively, the MCMG discusses a
scenario where a letter is sent to current enrollees reminding them to
get their flu shot. In the letter, it says that ``Swell Health
enrollees can get their flu shot for $0 copay at a network pharmacy . .
.'' \199\ Under the current definition of marketing, this material is
not considered marketing as it does not meet the intent standard to
``draw a beneficiary's attention to a MA plan or plans, influence a
beneficiary's decision-making process when making a MA plan selection,
or influence a beneficiary's decision to stay enrolled in a plan (that
is, retention-based marketing).'' Instead, the material is solely
intended to encourage current enrollees to get the flu shot. Therefore,
under the proposed changes to the marketing definition, this material
would remain a communications material. If the plan were to be
advertising this, say through a flyer, this would change the intent and
hence be considered a marketing material as the intent would be to draw
a beneficiary's attention to an MA plan through advertising their
access to certain benefits. However, a material that is solely
explaining benefits to a current enrollee for educational purposes
would not be considered marketing under our proposed definition.
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\198\ https://www.cms.gov/files/document/medicare-communications-marketing-guidelines-2-9-2022.pdf.
\199\ https://www.cms.gov/files/document/medicare-communications-marketing-guidelines-2-9-2022.pdf.
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In the April 2018 final rule, when updating the marketing and
communications definitions, we finalized ``an exclusion from marketing
materials that provides that unless CMS provides otherwise, materials
required under Sec. Sec. 422.111 and 423.128 are not marketing
materials.'' \200\ While CMS is proposing to expand the materials
defined as marketing, CMS intends to retain the material designations
for required materials listed under Sec. Sec. 422.2267(e) and
423.2267(e) and continue excluding those materials required under
Sec. Sec. 422.111 and 423.128, that are defined as communications,
from requirements to submit for CMS review, unless otherwise noted in
our regulation. Where relevant, all required materials listed under
Sec. Sec. 422.2267(e) and 423.2267(e), CMS required materials and
content, have been defined as either marketing or communications. Since
these materials are required, CMS has a clear understanding of the
intent behind each material and whether it should be designated as
communications or marketing. Therefore, we are also proposing to
reference in the marketing definition the exception for required
materials specified in Sec. Sec. 422.2267(e) and 423.2267(e), which
will maintain the material designation as provided by CMS. Those
materials that are currently identified as communications will continue
to be defined as communications and will continue to follow the same
submission and review process as prior to this proposed rule. As an
example, in Sec. Sec. 422.2267(e)(4) and 423.2267(e)(4), the Pre-
Enrollment checklist (PECL) is defined as a standardized communications
material and is not currently required to be submitted to CMS for
review. CMS wants to make it clear that even with the proposed changes
to the marketing definition in this rule, the PECL would continue to be
considered a communications material and not be required to be
submitted to CMS for review. Separately, there are certain
communications materials that CMS indicates in Sec. Sec. 422.2267(e)
and 423.2267(e) as required to be submitted for review (such as the
Evidence of Coverage). This proposed rule will not include any changes
to this process or to the non-marketing communications materials that
are required to be submitted for review.
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\200\ 83 FR 16629.
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We are proposing conforming edits to the definition of
``Advertisement (Ad)'' in Sec. Sec. 422.2260 and 423.2260 to align
with the proposed updates to the definition of marketing. Specifically,
we are proposing to remove the second sentence from the advertisement
definition, as the content standard will be eliminated from the
marketing definition. Advertisements, as with all other materials and
activities, will be subject to the considerations set forth in
[[Page 99438]]
the proposed revised definition of marketing. With that said,
considering the nature of advertisements pertaining to MA and Part D,
CMS believes that most, if not all, advertisements pertaining to MA and
Part D created or administered by an MA organization or Part D sponsor
or any downstream entity operating on their behalf, will fall under the
proposed updated marketing definition. However, even though these
materials will now need to be submitted to CMS, the overall burden will
be tempered by the fact that we anticipate the majority of them will be
accepted as File and Use per Sec. Sec. 422.2261(b)(3) and
423.2261(b)(3) where plans may distribute or make available certain
types of marketing materials, designated by CMS based on the material's
content, audience, and intended use, as they apply to potential risk to
the beneficiary, 5 days following the submission. Additionally, we are
proposing to consolidate the remaining definition of marketing to
exclude extraneous numbering, which is no longer needed, as a result of
the elimination of the content standard. Under Sec. Sec. 422.2260 and
423.2260, we will consolidate the remaining portion of the definition
currently under sections (1)(i) and (1)(ii) to simply be a two-sentence
definition in line with the rest of this section.
Finally, to combat any ambiguity with the intent standard of the
marketing definition, we emphasize that in evaluating the intent of an
activity or material, CMS may look beyond and broadly consider the MA
organization's or Part D sponsor's ``stated intent,'' as described
under current Sec. Sec. 422.2260(1)(ii) and 423.2260(1)(ii), which
will be consolidated through the proposed update to the marketing
definition. This means that, under this proposed rule, the activities
or materials of an MA organization or Part D sponsor may meet the
regulatory definition of marketing even if it is not immediately
apparent to the recipient of such materials or activities that they are
intended to be influencing a beneficiary's decision-making process when
making a plan selection, influencing a beneficiary's decision to stay
enrolled in a plan or drawing a beneficiary's attention to a plan or
plans. In evaluating such activities and materials, CMS will continue
to consider the corollary result of any call to attention that aims to
``draw a beneficiary's attention to a MA or Part D plan or plans,
influence a beneficiary's decision-making process when making a MA or
Part D plan selection, or influence a beneficiary's decision to stay
enrolled in a plan (that is, retention-based marketing).'' As an
example, if a television advertisement says, ``Questions about
Medicare, call 1-800-LEARN-MORE,'' and the call results in MA or Part D
plans being discussed as an option, the advertisement would fall under
Sec. Sec. 422.2260 and 423.2260 and be considered marketing under this
proposed rule because the intent of the advertisement is ultimately to
draw a beneficiary's attention to an MA or Part D plan or to encourage
a beneficiary to call the number and speak to someone about enrollment
and plan choice options.
In summary, this proposal would enhance CMS's oversight of the
marketing and communications materials and activities most likely to
influence a beneficiary's enrollment decision. CMS believes that the
content standard within the marketing definition is limiting CMS's
ability to review and target materials that are negatively influencing
a beneficiary's enrollment experience. By removing the content standard
from the marketing definition at Sec. Sec. 422.2260 and 423.2260, CMS
can better ensure that communications activities and materials that are
intended to ``draw a beneficiary's attention to a MA plan or plans or
Part D plans, influence a beneficiary's decision-making process when
making a MA plan or Part D plan selection, or influence a beneficiary's
decision to stay enrolled in a plan (that is, retention-based
marketing)'' will fall under the definition of marketing, and that
materials are submitted to CMS and subject to review under Sec. Sec.
422.2261 and 423.2261. Our goal is to ensure that beneficiaries are
protected from misleading marketing so that they receive the best
information to enroll in a plan that best meets their health care
needs. We solicit comments on our proposed amendments to update the
marketing definition at Sec. Sec. 422.2260 and 423.2260, and we thank
commenters in advance for their feedback. We are also soliciting
specific comment on the potential or alternative financial impacts of
this proposal.
R. Timely Submission Requirements for Prescription Drug Event (PDE)
Records (Sec. 423.325)
CMS requires that Part D sponsors submit certain prescription drug
claims information to CMS for specified Medicare Part D-related
purposes as described in the Social Security Act (the Act). In
accordance with the authority under sections 1860D-15(c)(1)(C), 1860D-
15(d)(2) and 1860D-15(f) of the Act, CMS conditions Medicare Part D
program payments to Medicare Part D plans upon the disclosure and
provision of information needed to carry out payment. In addition,
section 1860D-15(f)(2)(A) of the Act allows CMS to utilize information
collected under section 1860D-15(f) of the Act for the purposes of, and
to the extent necessary in, conducting oversight, evaluation, and
enforcement under Title XVIII of the Act and carrying out section
1860D-15 of the Act or the Medicare Drug Price Negotiation Program
(``Negotiation Program'') under Part E of Title XI of the Act. Under
sections 1860D-14A(c)(1)(C) and 1860D-14C(c)(3) of the Act, CMS
collects information from Part D sponsors that allows for discounts
under the Coverage Gap Discount Program and Manufacturer Discount
Program, respectively, to be provided to applicable beneficiaries for
applicable drugs. Part D sponsors submit this prescription drug claims
information to CMS on prescription drug event (PDE) records through the
CMS Drug Data Processing System (DDPS).\201\
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\201\ OMB 0938-0982, CMS-10174, expiration February 28, 2025
(available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202403-0938-002).
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A PDE record is data summarizing the final adjudication of a Part D
dispensing event that is reported to CMS by the Part D sponsor using a
CMS-defined file layout.\202\ CMS requires that PDE records are
accurate, complete, and truthful since they are used for the purposes
of obtaining Federal reimbursement.\203\ These records are critical not
only for accurate payment, but also for a wide range of sponsor
compliance assessment activities, and other Part D program integrity
audits. To that end, CMS performs checks (or edits) on the PDE data to
validate and help ensure its accuracy.\204\ This process results in the
PDE records being accepted or rejected by CMS. Accepted PDE records may
be subsequently adjusted or deleted by the Part D sponsor by submitting
adjustment PDE records or deletion PDE records to CMS.\205\ Rejected
PDE records must be reviewed, resolved, and, if appropriate,
[[Page 99439]]
resubmitted by the plan to CMS. The resubmitted PDE record goes through
the same editing process and results in CMS accepting or rejecting the
resubmitted PDE record.
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\202\ The PDE file layouts are available at https://www.csscoperations.com/internet/csscw3.nsf/DID/M7XCJKG0JI.
\203\ 42 CFR 423.505(k)(3).
\204\ For PDE edits, see generally, DDPS Edit Lookup, available
at https://www.csscoperations.com/internet/csscw3.nsf/DIDC/
FGSMOX8LWK~Prescription%20Drug%20Program%20(Part%20D)~References
(click Download).
\205\ For additional information and examples that result in
adjustment and deletion PDE records, see HPMS memorandum, PDE
Guidance for Post Point-of-Sale Claim Adjustments, July 3, 2013,
available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/post%20pos%20adjustments_247.pdf.
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CMS uses accepted PDE records in the Part D payment reconciliation
described at Sec. 423.336 and 423.343(c) and (d), reopenings of Part D
payment reconciliations described at Sec. 423.346, the Coverage Gap
Discount Program invoicing process described generally at Sec.
423.2315, and the Manufacturer Discount Program invoicing process.\206\
PDE records for selected drugs (as described at section 1192(c) of the
Act) will also be used to administer the Negotiation
Program.207 208 In order for CMS to make payments, conduct
oversight, administer the various programs under Medicare Part D and
the Negotiation Program, as well as perform other statutory
obligations, the PDE records must be received from Part D sponsors in a
timely manner. Part D sponsors that do not submit PDE data in a timely
manner (as explained in the following Background and Requirements
sections) may be determined to be out of compliance consistent with
Sec. 423.505(n)(1)(i) and may be subject to compliance actions
described at Sec. 423.505(n)(3).
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\206\ HPMS memorandum, Medicare Part D Manufacturer Discount
Program Final Guidance, November 17, 2023 (available at https://www.cms.gov/files/document/manufacturer-discount-program-final-guidance.pdf).
\207\ Medicare Drug Price Negotiation Program: Revised Guidance,
Implementation of Sections 1191--1198 of the Social Security Act for
Initial Price Applicability Year 2026 https://www.cms.gov/files/document/revised-medicare-drug-price-negotiation-program-guidance-june-2023.pdf.
\208\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191--1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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In this rule, we propose to codify the general PDE submission
timeliness guidance that currently applies and that addresses three
types of PDE submissions: initial PDE records submitted after a
pharmacy claim is received by the Part D sponsor (hereinafter referred
to as ``initial PDE records''), adjustment and deletion PDE records
that update previously submitted records that have been accepted by
CMS, and records to resolve PDE records that were rejected by CMS.\209\
Further, we propose to codify a specific PDE submission timeliness
requirement for initial PDE records when those PDE records are for
selected drugs.
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\209\ HPMS memorandum, Revision to Previous Guidance Titled
``Timely Submission of Prescription Drug Event (PDE) Records and
Resolution of Rejected PDEs'', October 6, 2011, available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms_memo_pde_timeliness_clarification_240.pdf.
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1. Background--General PDE Submission Timeliness
CMS has always required that Part D sponsors submit their PDE data
to CMS in a timely manner. Timely PDE submissions assist in the
effective quality review of PDE data prior to CMS using the data in
payment reconciliations and invoicing to manufacturers for the Coverage
Gap Discount Program and Manufacturer Discount Program (hereinafter
referred to collectively as the discount programs). We conduct analysis
and validation of PDE data on an ongoing basis and identify data
quality issues for Part D sponsors' review and action. This pre-
reconciliation data quality review initiative promotes accuracy in the
plan-reported financial data used in the Part D payment reconciliation
and the invoice and reconciliation processes for the discount programs.
Accordingly, in 2011, we released guidance on the timely submission
of PDE records. On May 16, 2011, CMS released a memorandum ``Timely
Submission of Prescription Drug Event (PDE) Records and Resolution of
Rejected PDEs.'' \210\ The guidance described the PDE submission
timeframes for initial PDE records, adjustment and deletion records,
and records to resolve PDE records that CMS rejected through the PDE
editing process. After consideration of industry comments, CMS modified
the PDE submission timeframes and released revised PDE submission
timeliness guidance on October 6, 2011.\211\ As described in that
guidance, initial PDE records are due within 30 days following the date
the claim is received by the Part D sponsor or the date of service,
whichever is greater. Adjustment and deletion PDE records are due
within 90 days following discovery of the issue requiring a change to
the PDE. Resolution of rejected PDE records are due within 90 days
following the receipt of rejected record status from CMS. We propose to
codify PDE submission timeframes similar to those timeframes described
in the October 2011 guidance and refer to those timeframes as the
General PDE Submission Timeliness Requirements.
---------------------------------------------------------------------------
\210\ HPMS memorandum, Timely Submission of Prescription Drug
Event (PDE) Records and Resolution of Rejected PDEs, May 16, 2011,
available at https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memo-qtr1-4.
\211\ HPMS memorandum, Revision to Previous Guidance Titled
``Timely Submission of Prescription Drug Event (PDE) Records and
Resolution of Rejected PDEs'', October 6, 2011, available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms_memo_pde_timeliness_clarification_240.pdf.
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2. Background--Selected Drugs PDE Submission Timeliness
On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) (Pub.
L. 117-169) was signed into law. It established the Negotiation Program
to negotiate maximum fair prices (MFPs) for certain high expenditure,
single source drugs and biological products (i.e., selected drugs). The
requirements for this program are described in sections 1191 through
1198 of the Act, as added by sections 11001 and 11002 of the IRA.
Under section 1193(a) of the Act, participating manufacturers must
not only provide access to the MFP for a selected drug to MFP-eligible
individuals (as defined in section 1191(c)(2) of the Act), but they
must also provide access to the MFP to pharmacies, mail order services,
and other dispensing entities with respect to such MFP-eligible
individuals who are dispensed the selected drug during a price
applicability period (as defined in section 1191(b)(2) of the Act).
This distinguishes the Negotiation Program from Part D programs such as
the Coverage Gap Discount Program and the Manufacturer Discount Program
where there is no such statutory requirement for the manufacturer to
provide a specified price to a pharmacy or other dispensing entity. CMS
stated in section 40.4 of the Medicare Drug Price Negotiation Program:
Final Guidance, Implementation of Section 1191--1198 of the Social
Security Act for Initial Price Applicability Year 2027 and Manufacturer
Effectuation of the Maximum Fair Price in 2026 and 2027 (hereinafter
referred to as the final guidance) that a Primary Manufacturer (as
defined in section 40 of the final guidance) must provide access to the
MFP in one of two ways: (1) prospectively ensuring that the price paid
by the dispensing entity when acquiring the drug is no greater than the
MFP; or (2) retrospectively providing reimbursement for the difference
between the dispensing entity's acquisition cost and the MFP.\212\
---------------------------------------------------------------------------
\212\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191--1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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[[Page 99440]]
To help operationalize dispensing entity access to the MFP, in
section 40.4 of the final guidance, CMS stated it will engage with a
Medicare Transaction Facilitator (MTF) to facilitate the exchange of
data and payment between Primary Manufacturers and dispensing entities
and to support the verification that the selected drug was dispensed to
an MFP-eligible individual. The MTF will use the PDE records submitted
by Part D sponsors to CMS through DDPS to verify that the selected drug
was dispensed to an MFP-eligible individual. Additionally, the MTF will
furnish Primary Manufacturers with certain claim-level data elements,
including from PDE records, confirming that a selected drug was
dispensed to an MFP-eligible individual and identifying which
dispensing entity dispensed the selected drug to the MFP-eligible
individual. In the final guidance, unless the dispensing entity's
acquisition cost for the selected drug is equal to or less than the
MFP, or, as detailed in section 40.4.5 of the final guidance, the
Primary Manufacturer establishes that section 1193(d)(1) of the Act
(related to 340B discounts) applies, CMS requires that the Primary
Manufacturer transmit payment of an amount that provides access to the
MFP within 14 calendar days of when the MTF sends the claim-level data
elements that verify the selected drug was dispensed to an MFP-eligible
individual to the Primary Manufacturer (``14-day prompt MFP payment
window''). CMS notes that the 14-day prompt MFP payment window aligns
with the timing requirement in the longstanding prompt pay rules in
Part D for plan sponsors.\213\ However, dispensing entities should be
aware that they may not receive payment from a Part D plan sponsor for
the Part D claim on the same date that the Primary Manufacturer
provides a retrospective MFP refund to the dispensing entity. Due to
operational differences between the Part D program and the Negotiation
Program, the respective prompt payment windows for a particular
dispensed prescription may start on different dates for the Part D
sponsor and the Primary Manufacturer.
---------------------------------------------------------------------------
\213\ See 42 CFR 423.520, Prompt Payment by Part D Sponsors,
which requires Part D sponsor to transmit payment to pharmacies
within 14 days after receiving an electronic Part D claim that is a
clean claim.
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To help ensure prompt payments by Primary Manufacturers to
dispensing entities to provide access to the MFP, initial PDE records
for selected drugs under the Negotiation Program necessitate a PDE
submission timeliness requirement that is different from the general
PDE submission timeliness requirement for initial PDE records. Under
the current general PDE submission timeliness requirements, dispensing
entities could wait up to approximately six weeks to receive access to
the MFP (e.g., 30 calendar days for the Part D sponsor to submit PDE
data to the DDPS, plus approximately one to three days for the PDE data
to move from DDPS to the MTF to the Primary Manufacturer, plus up to an
additional 14 days for the Primary Manufacturer to transmit an MFP
refund payment). If the Primary Manufacturer does not prospectively
make the MFP available to the dispensing entity, then the lag between
when the dispensing entity receives payment from the Part D plan and
when the dispensing entity receives the MFP refund payment from the
Primary Manufacturer could impose a financial strain on dispensing
entities given that anticipated MFP refunds could be a material percent
of the dispensing entity's purchase price. To mitigate potential
financial hardship on dispensing entities such as pharmacies, which
could impact Part D beneficiary access to selected drugs, and more
closely align MFP refund payments with the timing requirements in the
longstanding prompt pay rules in the Part D program, CMS believes it is
necessary to create a specific new requirement for PDE submission
timeliness requirements for selected drugs. Therefore, CMS is proposing
to shorten the PDE submission timeliness requirements for selected
drugs to reduce the maximum amount of time a dispensing entity could
wait to receive access to the MFP.
On May 3, 2024, when CMS released draft guidance describing the
implementation of the Negotiation Program for initial price
applicability year 2027 and manufacturer effectuation of the MFP in
2026 and 2027 (draft guidance), CMS noted that it was evaluating a PDE
submission timeliness requirement for PDE records that is different
from the general PDE submission timeliness requirement for initial PDE
records.\214\ To ensure that dispensing entities receive timely payment
of MTF refunds, CMS stated that it was evaluating whether the 30-day
window for Part D sponsors to submit PDE records should be shortened to
7 days of receipt of the claim to help ensure dispensing entities
receive timely payment of MFP refunds.
---------------------------------------------------------------------------
\214\ Medicare Drug Price Negotiation Program: Draft Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price (MFP) in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-draft-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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CMS received and reviewed comments from interested parties on the
draft guidance related to the consideration of a shorter PDE submission
timeliness requirement for selected drugs and addressed those comments
on page 53 of the final guidance.\215\ To inform policy development for
this rulemaking, CMS re-reviewed all comments received on the topic of
PDE submission timeliness requirements. Many commenters supported CMS
shortening the PDE submission window and agreed with the 7-day
timeliness requirement or recommended other timeliness requirements
shorter than 30 calendar days. Some commenters recommended CMS not
change the PDE reporting general timeliness requirement and keep the
30-day window for selected drugs. Many commenters noted that shortening
the PDE submission window could increase the volume of claim
adjustments and reversals during and after the 14-day prompt MFP
payment window. These commenters noted that it typically takes
pharmacies up to 14 days to reverse a claim when a beneficiary does not
pick up a prescription and asked CMS to provide more detail on how the
MTF will address claim reversals and adjustments. One commenter noted
that if CMS shortens the PDE submission window, plan sponsors would
need additional implementation time to revise agreements and internal
processes. While CMS addressed these comments in final guidance by
stating that it intends to propose to shorten the current 30-day window
for plans to submit PDE records for selected drugs to 7 calendar days,
CMS also received several comments posing technical questions on the
PDE reporting process and DDPS operations, and offering input on other
PDE operational matters, which CMS considered out of scope for final
guidance. However, CMS recognizes the importance of public feedback on
potential operational concerns surrounding a shorter PDE submission
window for selected drugs. CMS is soliciting comments in this proposed
rule on the operational considerations of shortening the timeframe for
initial PDE records for selected drugs to 7 calendar days, including
potential challenges
[[Page 99441]]
Part D sponsors may face in implementing the proposed timeframe.
---------------------------------------------------------------------------
\215\ Insert link to final guidance when it is available.
---------------------------------------------------------------------------
CMS is also soliciting comments on whether it should shorten the
submission timeline for selected drugs for adjustment and deletion PDE
records, and for records to resolve PDE records that were rejected by
CMS. CMS is particularly interested in comments on operational
feasibility, as well as comments that address whether a shorter
submission timeline would help facilitate timely payments by Primary
Manufacturers to dispensing entities, or whether the 90-calendar day
submission timeframe for adjustments and deletions and/or for the
resolution of rejected records is sufficient for the purpose of the
Negotiation Program.
We propose to codify this 7-calendar day timeframe for initial PDE
records for selected drugs and refer to this timeframe as the Selected
Drugs PDE Submission Timeliness Requirement.
3. Requirements--General PDE Submission Timeliness
We propose to codify the existing 30-day and 90-day general PDE
submission timeframes, with two slight modifications. First, we propose
that the 30-day and 90-day requirements refer to calendar days, as
opposed to business days. Second, we propose to modify the timing of
the initial PDE records submission, which currently begins from the
date the claim is received by the Part D sponsor or the date of
service, whichever is greater. Given that the claim cannot be received
by the Part D sponsor (or its contracted first tier, downstream, or
related entity (for example, pharmacy benefit manager (PBM))) until on
or after the date of service, we propose to clarify that initial PDE
records must be submitted within 30 calendar days of when the Part D
sponsor (or its contracted first tier, downstream, or related entity)
receives the claim.
Based on our experience with the Part D program, these proposed 30-
calendar day and 90-calendar day PDE submission timeframes are
appropriate, striking a balance between allowing sufficient time for
the Part D sponsors to submit PDE records while providing sufficient
time for CMS to review and flag data quality issues that may require
action from the Part D sponsor prior to the PDE record being used in
the invoicing and reconciliation processes for the discount programs
and the Part D payment reconciliations. These proposed timeframes,
which CMS developed with industry feedback, have been in subregulatory
guidance since 2011 and have worked well for Part D sponsors and CMS.
Therefore, we propose the following general PDE submission
timeliness requirements. We propose that the Part D sponsor must submit
an initial PDE record within 30 calendar days from the date the Part D
sponsor receives the claim. We propose that the Part D sponsor must
submit adjustment or deletion PDE records within 90 calendar days of
the discovery or notification of an issue requiring a change to the
previously submitted PDE records. We propose that the Part D sponsor
must resolve rejected PDE records within 90 calendar days of the
rejection. We propose that these general PDE submission timeliness
requirements apply unless, for the initial PDE records submissions, the
proposed selected drugs PDE submission timeliness requirement applies.
4. Requirement--Selected Drugs PDE Submission Timeliness
We propose to establish a selected drugs PDE submission timeliness
requirement, in which CMS requires that a Part D sponsor must submit
initial PDE records for selected drugs (as described at section 1192(c)
of the Act) within 7 calendar days from the date the Part D sponsor (or
its contracted first tier, downstream, or related entity) receives the
claim. The proposed PDE submission timeliness requirement is consistent
with CMS' authority under section 1860D-15(f) of the Act, which
authorizes CMS to collect PDE data for the purposes of, and to the
extent necessary in, carrying out both section 1860D-15 of the Act and
part E of title XI of the Act (i.e., the Negotiation Program).
Figure 1 illustrates the general and selected drugs PDE submission
timeline requirements.
[GRAPHIC] [TIFF OMITTED] TP10DE24.019
CMS believes Part D sponsors are compliant with the longstanding
guidance pertaining to 30- and 90-day PDE submission timelines, and
thus, CMS does not expect the proposed change to result in additional
costs or savings and are not scoring these requirements in the
Regulatory Impact Analysis section. We are not imposing any new
reporting requirements for drugs other than selected drugs. We do not
believe that our proposal pertaining to 7-, 30-, and 90-day PDE
submission timeline will result in additional paperwork burden and have
not incorporated a burden increase in the Collection of Information
section.
5. Severability
The general PDE submission timeliness requirements and the selected
drugs PDE submission timeliness requirement provisions proposed herein
are separate and severable from one another. If either provision, once
finalized, 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 is our intention that such provision shall be severable from
this rule and not affect the remainder thereof, or the application of
such provision to other persons not similarly situated or to other,
dissimilar circumstances.
S. Medicare Transaction Facilitator Requirements for Network Pharmacy
Agreements
The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169),
enacted August 16, 2022, established the Medicare Drug Price
Negotiation Program (hereinafter the ``Negotiation Program'') to
negotiate maximum fair prices (MFPs) for certain high expenditure,
single source drugs
[[Page 99442]]
and biological products. The requirements for the Negotiation Program
are described in sections 1191 through 1198 of the Social Security Act
(hereinafter ``the Act''), as added by sections 11001 and 11002 of the
IRA. Sections 11001(c) and 11002(c) of the IRA direct the Secretary of
the United States Department of Health and Human Services (hereinafter
``the Secretary'') to implement the Negotiation Program provisions in
sections 11001 and 11002 of the IRA, including amendments made by such
sections, for 2026, 2027, and 2028 by program instruction or other
forms of program guidance. In accordance with the law, CMS issued the
Medicare Drug Price Negotiation Program: Draft Guidance, Implementation
of Sections 1191-1198 of the Social Security Act for Initial Price
Applicability Year 2027 and Manufacturer Effectuation of the Maximum
Fair Price (MFP) in 2026 and 2027 on May 3, 2024 (hereinafter ``draft
guidance''), and the Medicare Drug Price Negotiation Program: Final
Guidance, Implementation of Sections 1191-1198 of the Social Security
Act for Initial Price Applicability Year 2027 and Manufacturer
Effectuation of the Maximum Fair Price (MFP) in 2026 and 2027 on
October 2, 2024 (hereinafter ``final guidance'').\216\ In the final
guidance, CMS noted that it also planned to engage in rulemaking to
propose certain policies under Medicare Part D that relate to or have
implications for the Negotiation Program but involve exercising
authorities under the Act that are not subject to the IRA's program
instruction requirement. Accordingly, as discussed in more detail
below, in this rule, CMS proposes at Sec. 423.505(q) to require that
Part D sponsors' network contracts with pharmacies require such
pharmacies to be enrolled in the Negotiation Program's Medicare
Transaction Facilitator (MTF) Data Module (DM) (hereinafter ``MTF
DM'').
---------------------------------------------------------------------------
\216\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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1. Background on the Medicare Transaction Facilitator
Section 1193(a) of the Act instructs CMS to enter into agreements
(a ``Medicare Drug Price Negotiation Program Agreement,'' hereinafter
referred to as a ``Negotiation Program Agreement'') with willing
manufacturers of selected drugs (as described in section 1192(c) of the
Act) for a price applicability period (as defined in section 1191(b)(2)
of the Act). After entering into a Negotiation Program Agreement with
CMS and in accordance with section 1193(a) of the Act, any ``Primary
Manufacturer'' (as defined in section 40 of the final guidance) of a
selected drug that continues to participate in the Negotiation Program
and reaches agreement upon an MFP must provide access to the MFP to
MFP-eligible individuals (defined in section 1191(c)(2)(A) of the Act)
and to pharmacies, mail order services, and other dispensing entities
that dispense drugs covered under Medicare Part D (hereinafter
``dispensing entities'') with respect to such MFP-eligible individuals.
In section 40.4 of the final guidance, CMS stated that a Primary
Manufacturer must provide access to the MFP in one of two ways: (1)
prospectively ensuring that the price paid by the dispensing entity
when acquiring the drug is no greater than the MFP, or (2)
retrospectively providing reimbursement for the difference between the
dispensing entity's acquisition cost and the MFP. Consistent with
longstanding Part D prompt pay rules regarding payment by plan sponsors
to network pharmacies,\217\ CMS will require that a Primary
Manufacturer transmit payment of an amount that provides access to the
MFP within 14 calendar days of when certain claim-level data elements
are sent to the Primary Manufacturer by the MTF DM.
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\217\ See 42 CFR 423.520, Prompt Payment by Part D Sponsors,
which requires the Part D sponsor to transmit payment to network
pharmacies within 14 days after receiving an electronic Part D claim
that is a clean claim.
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In section 40.4 of the final guidance, CMS stated, based on CMS'
continuous engagement with and extensive feedback from interested
parties, for 2026 and 2027, CMS will engage with MTF contractors to
facilitate the exchange of data and payment between pharmaceutical
supply chain entities for the purposes of the Negotiation Program. The
MTF will have two distinct modules, the MTF DM and the MTF Payment
Module (hereinafter ``MTF PM''), a voluntary option to pass payment for
MFP refunds from Primary Manufacturers to dispensing entities. The
combined data and payment facilitation functionalities present in the
MTF DM and the MTF PM will attempt to address the interests expressed
by dispensing entities and manufacturers in a single platform for
transmitting the data necessary for program administration and
supporting MFP refund payments to create greater efficiency,
standardization, and predictability in the execution of a high volume
of continuous payments.
The MTF DM will facilitate the exchange of certain claim-level data
elements and claim-level payment elements for selected drugs to support
the verification that the selected drug was dispensed to an MFP-
eligible individual, as described in section 40.4.2 of the final
guidance. The data supplied by the MTF DM to Primary Manufacturers will
have been verified by both the Part D sponsor and CMS' Drug Data
Processing System (DDPS) resulting in dual verification of both an
individual's eligibility for Part D, and Part D coverage of the
selected drug for each claim being transmitted. For context, when a
Part D plan sponsor receives a claim for a selected drug from a
dispensing entity, the Part D plan sponsor verifies that the
beneficiary listed on the claim paid by the Part D plan sponsor is
enrolled in Medicare Part D and coverage is provided under Part D for
the dispensed drug. After the Part D plan sponsor verifies Medicare
eligibility and coverage of the selected drug, the plan pays the
dispensing entity no more than the MFP plus any dispensing fees for the
selected drug. Then, the Part D plan sponsor sends the data on the Part
D claim as a Prescription Drug Event (PDE) record (i.e., claim summary
records submitted by Medicare Part D plan sponsors to CMS for every
prescription filled by a dispensing entity for a Medicare Part D
beneficiary) to DDPS. CMS uses DDPS to perform verification steps to
validate that the individual was an eligible Part D enrollee at the
time of the claim, as described in section 40.4.2.1 of the final
guidance. After CMS verifies MFP eligibility for the individual related
to the claim, DDPS will transmit the PDE record for the Part D claim
for the selected drug to the MTF DM. Therefore, because MFP eligibility
status has been twice validated before the data elements are sent from
the MTF DM to the Primary Manufacturer, the data elements will have
been verified as involving a selected drug that was dispensed to an
MFP-eligible individual.
As stated in section 40.4.2.1 of the final guidance, enrollment in
the MTF DM will be mandatory for Primary Manufacturers. CMS will
require all Primary Manufacturers to register with the MTF DM by a
deadline to be specified by CMS and to maintain the functionality
necessary to receive certain claim-level data elements from the MTF DM
and return certain claim-
[[Page 99443]]
level payment elements to the MTF DM. Each Primary Manufacturer will be
required to sign data use, privacy, and security agreements with CMS
and comply with data use, privacy, and security requirements to protect
the data elements received from and transmitted to the MTF.
As discussed in section 40.4.2.2 of the final guidance and in more
detail below, dispensing entity enrollment in the MTF DM is also needed
for necessary operations related to administration of the Negotiation
Program and the Part D program. Dispensing entity enrollment in the MTF
DM allows for several key functionalities that help ensure accurate
Part D claims information and payment and continued access for
beneficiaries and dispensing entities to selected drugs. These
functionalities include the collecting and sharing of banking
information from dispensing entities to Primary Manufacturers; creating
and sending of Electronic Remittance Advice that uses the X12 835
standard adopted under the Health Insurance Portability and
Accountability Act of 1996 (hereinafter ``ERAs'') (for electronic
transfer of funds) or remittances (for paper checks) to dispensing
entities; a streamlined ability to submit complaints and disputes
regarding selected drugs dispensed; and an opportunity for dispensing
entities to identify themselves as anticipating material cashflow
concerns at the start of a price applicability period with respect to
selected drugs as a result of potential delays created by reliance on
retrospective MFP refunds within the 14-day prompt MFP payment window.
Accordingly, CMS proposes to require Part D plan sponsors to include in
their network pharmacy agreements provisions requiring dispensing
entities to be enrolled in the MTF DM.
If a Primary Manufacturer elects to utilize the MTF PM, then the
MTF PM will complement the data-related activities of the MTF DM and
facilitate payment of an MFP retrospective refund on MFP-eligible
claims of selected drugs from the participating Primary Manufacturer to
the dispensing entity. Specifically, as discussed in section 40.4.3 of
the final guidance, the MTF PM will (1) provide Primary Manufacturers
with a mechanism for electronic transfer of funds or payment by paper
check to facilitate MFP refund payments from Primary Manufacturers to
dispensing entities; and (2) provide Primary Manufacturers with a
credit/debit ledger system to track the flow of MFP refunds and to
handle reversals, adjustments, and other claim revisions inevitable in
a dynamic claim payment system. Participation in the MTF PM will be
voluntary for Primary Manufacturers, which will have the option of
passing MFP refund payments to dispensing entities through the MTF PM
or using their own processes outside of the MTF PM to effectuate the
MFP. Primary Manufacturers that elect to use the MTF PM to pass through
payments will be required to execute MTF agreements with the MTF PM
outlining each party's rights, responsibilities, and potential
liabilities associated with the transfer and receipt of funds through
the MTF PM.
2. Network Pharmacy Contracts With Part D Plan Sponsors
CMS has broad contracting authority with respect to Part D plan
sponsors under section 1860D-12 of the Act. As applied to the Part D
program through section 1860D-12(b)(3)(D) of the Act, section
1857(e)(1) of the Act authorizes the Secretary to adopt contract terms
and conditions as necessary and appropriate and not inconsistent with
the Part D statute. Additionally, section 1860D-12(b)(3)(D)(i) of the
Act specifies that information provided to the Secretary under the
application of section 1857(e)(1) of the Act may be used (in relevant
part) for the purposes of carrying out the Part D program or Part E of
Title XI of the Act (i.e., the Negotiation Program). Pursuant to these
authorities, CMS proposes to require plan sponsors (or first tier,
downstream, or related entities, such as PBMs, on the sponsors' behalf)
to include in their network participation agreements with contracting
pharmacies a provision that requires the pharmacy to be enrolled in the
MTF DM (or any successor to the MTF DM) in a form and manner to be
determined by CMS. CMS emphasizes that under the proposed regulation,
such provision must require the pharmacy ``to be enrolled'' in the MTF
DM, as opposed to merely requiring the pharmacy ``to enroll'' in the
MTF DM, to establish an ongoing obligation that the pharmacy maintain
its enrollment in the MTF DM. CMS also proposes that such provision
must require the pharmacy to maintain and certify to CMS that the
enrollment information provided in the MTF DM is accurate, complete,
and up to date, pursuant to applicable terms and conditions of
participation with the MTF DM, in a form and manner to be determined by
CMS. CMS proposes amending Sec. 423.505 by adding paragraph (q) to
codify this requirement.
Consistent with section 1860D-12(b)(3)(D) of the Act, such a
requirement would be necessary and appropriate and not inconsistent
with the Part D statute. As previously mentioned, the MTF DM will
contain several key functionalities that are necessary and appropriate
for operations related to administration of the Negotiation Program and
the Part D program. Through each of the functionalities outlined below,
dispensing entity enrollment in the MTF DM would help ensure continued
access to selected drugs that are covered under Part D for
beneficiaries and dispensing entities and help maintain the accuracy of
Part D claims information and payment.
First, the MTF DM will provide dispensing entities enrolled in the
MTF DM with remittances or ERAs to reconcile MFP refund payments when a
Primary Manufacturer chooses to pass payment to the dispensing entity
through the MTF PM. Interested parties strongly requested that
electronic MFP refunds be accompanied by an ERA or remittance. To meet
standards in the creation of an accurate ERA or remittance, up-to-date
banking information for a dispensing entity will be needed. Dispensing
entities will be asked to provide up-to-date banking information during
MTF DM enrollment. For Primary Manufacturers that make payments outside
of the MTF PM, CMS plans to make available through the MTF DM
dispensing entities' bank account information and designated
destination for ERAs or remittances, as applicable.
These ERAs or remittances will assist dispensing entities in
closing out their open accounts receivable, thereby minimizing cashflow
interruptions. Specifically, the information contained in the ERA or
remittance will connect claims payment determination and amount with
how the payment was made, including the electronic funds transfer
information, if applicable. Consistent with each dispensing entity's
own standard business practices, CMS expects dispensing entities to
review their accounts receivables for each claim for which a Primary
Manufacturer owes an MFP refund and determine whether a Primary
Manufacturer has paid all the claims the dispensing entity believes are
MFP-eligible claims, in the amounts the dispensing entity believes are
sufficient to effectuate the MFP. Moreover, CMS has consistently heard
from interested parties that without an ERA or remittance, MFP refund
payments may be rejected, and, in these scenarios, dispensing entities
would not have means to reconcile received payments against outstanding
MFP-eligible claims.
Second, there will be streamlined access for dispensing entities
enrolled in the MTF DM to submit complaints and disputes within the MTF
DM to
[[Page 99444]]
help identify issues with timely MFP refund payment, supporting
dispensing entities to continue efficient operations and prevent undue
financial hardship, while maintaining accuracy of Part D claims
information and payment. Allowing dispensing entities streamlined
access to this system will support the administration of the
Negotiation Program and Part D program. Through the MTF DM, a
dispensing entity can submit a complaint concerning claims for selected
drugs that potentially require an MFP refund, which CMS will review.
Additionally, all Primary Manufacturers will be required to utilize the
MTF DM to report to the MTF DM information (claim-level payment
elements) about how the Primary Manufacturer has made the MFP available
for each claim for which the Primary Manufacturer received data from
the MTF DM or indicate why no MFP refund payment has been made on a
claim. While dispensing entities are encouraged to remediate with the
manufacturer directly if they believe that they have not received a
retrospective refund payment that effectuates the MFP, dispensing
entities may use the complaints process within the complaint and
dispute system in the MTF DM to alert CMS.
Third, the MTF DM will serve as a central repository for
information about dispensing entities enrolled in the MTF DM that
anticipate material cashflow concerns due to the reliance on
retrospective MFP refunds within the 14-day prompt MFP payment window.
Interested parties have noted that small pharmacies that rely primarily
on prescription revenue to maintain business operations would face
material cashflow pressures due to the shift from payment by the Part D
plan sponsor to a combination of Part D plan sponsor payment plus a
potentially lagged MFP refund. Based on this input, CMS is concerned
that this challenge will be most acute in the transition period when
MFPs for selected drugs first become effective in January 2026 and at
the start of each subsequent initial price applicability year when MFPs
for new selected drugs first become effective (i.e., at the start of a
price applicability period with respect to a selected drug). CMS does
not anticipate this challenge to continue with respect to a selected
drug once MFP refunds for that selected drug are flowing and dispensing
entities become accustomed to the 14-day prompt MFP payment window.
Consider a scenario in which the dispensing entity purchases a selected
drug at a price discounted from the wholesale acquisition cost (WAC),
for example, at WAC minus four percent, for ten units. Initially, this
expenditure creates a temporary cashflow gap. However, upon receiving
the MFP refund payment, the dispensing entity's upfront cost is offset,
effectively restoring its financial position. Assuming a consistent
utilization rate for the drug, any temporary negative cashflow should
be balanced by the subsequent MFP refund payment. The timing and
consistency of this pattern should lead to stable cashflow and avoid a
long-term cash deficit over time. During MTF DM enrollment, CMS will
ask dispensing entities to self-identify whether they are a dispensing
entity that anticipates having material cashflow concerns. CMS expects
dispensing entities of the types that have raised material concerns
about cashflow related to the effectuation of MFP--such as sole
proprietor rural and urban pharmacies with high volume of Medicare Part
D prescriptions dispensed, pharmacies who predominantly rely on
prescription revenue to maintain business operations, long-term care
pharmacies, 340B covered entities with in-house pharmacies, and I/T/U
pharmacies--may self-identify through this process. This information
will be provided to Primary Manufacturers to assist in the development
of their MFP effectuation plans, which must include a process for
mitigating material cashflow concerns for dispensing entities. The MTF
DM will also be available to dispensing entities enrolled in the MTF
that need to update their self-identification with respect to material
cashflow concerns, as CMS anticipates that indication could change over
time.
Fourth, CMS intends that dispensing entities will be able to view
the status of MFP refunds from Primary Manufacturers through the MTF
DM. The ability to track MFP refunds could also help dispensing
entities better manage their cashflow or aid their financial planning
to meet other administrative burdens or operational costs.
Fifth, the MTF DM will collect and share bank account information
belonging to dispensing entities enrolled in the MTF DM with Primary
Manufacturers that pay MFP refunds to dispensing entities outside the
MTF PM. Through CMS' engagement with interested parties, both
manufacturers and dispensing entities have expressed the concern that
they typically do not have direct financial relationships with one
another, increasing dispensing entities' risk of experiencing payment
delays. As such, during MTF DM enrollment, CMS will ask dispensing
entities to provide their bank account information. CMS believes that
the collecting and sharing of dispensing entities' bank account
information with Primary Manufacturers will address interested parties'
concerns related to the lack of an established channel to support MFP
refund payments made outside the MTF PM, and help dispensing entities
to continue efficient operations.
In sum, CMS believes that enrollment in the MTF DM by dispensing
entities would facilitate continued beneficiary and dispensing entity
access to selected drugs that are covered Part D drugs. Manufacturers
and dispensing entities have asked the agency to undertake a role in
assuring that MFP refund payments to dispensing entities can be made
efficiently, and the development of an MTF DM has an important role in
that process. With less financial uncertainty, dispensing entities are
better positioned to keep dispensing selected drugs covered under Part
D. Given the wide number and scope of dispensing entities that dispense
drugs to Part D beneficiaries--which is currently approximately 60,000-
plus community pharmacies and 80,000-plus dispensing entities in
total--this proposed requirement will help reach the maximum number of
entities that serve Medicare beneficiaries. Requiring network pharmacy
agreements to require enrollment by pharmacies in the MTF DM will help
promote successful MFP effectuation under the Negotiation Program and
facilitate continued access to selected drugs covered under Part D for
Medicare beneficiaries.
For the reasons stated above, CMS proposes to require plan sponsors
(or first tier, downstream, or related entities, such as PBMs, on the
sponsors' behalf) to include in their network participation agreements
with contracting pharmacies a provision that requires the pharmacy to
be enrolled in the MTF DM (or any successor to the MTF DM), which would
entail an ongoing obligation that the pharmacy maintain its enrollment
in the MTF DM, in a form and manner to be determined by CMS. CMS also
proposes that such provision must require the pharmacy to maintain and
certify to CMS that the enrollment information provided in the MTF DM
is accurate, complete, and up to date, pursuant to applicable terms and
conditions of participation with the MTF DM, in a form and manner to be
determined by CMS. CMS seeks comment on this proposal.
[[Page 99445]]
3. Overview for Dispensing Entity Enrollment in the MTF DM
As of the date of the publication of this proposal in the Federal
Register, CMS is still determining the exact process for enrollment of
dispensing entities in the MTF DM and welcomes feedback on factors CMS
should incorporate into this process. Currently, for 2026 and 2027, CMS
may use existing databases to identify contact information for
dispensing entities that dispense prescription drugs to Medicare
beneficiaries or participate in one or more parts of the Medicare
program. CMS may use that information to facilitate the process for
dispensing entities to enroll in the MTF DM. CMS may also use that
information to conduct outreach activities to dispensing entities such
that they are aware of the MTF, including the benefits, functions, and
process for enrollment, and, if finalized, this proposed contractual
requirement to be enrolled in the MTF DM. Regardless of whether CMS
conducts any outreach to dispensing entities, under this proposal, the
plan sponsor would remain responsible for ensuring that its network
agreements with pharmacies include a provision that requires the
pharmacy to be enrolled in the MTF DM in a form and manner to be
determined by CMS.
When enrolling in the MTF DM, the dispensing entity would enter,
certify, and maintain its enrollment information, including but not
limited to: (1) legal business name and address; (2) Tax Identification
Number (TIN) and/or NPI; (3) financial institution details, including
address and contact information; (4) financial institution routing
number; (5) deposit or account number with financial institution; (6)
type of registered financial account; and (7) secure location for
making available the ERA or remittance, as applicable. During MTF DM
enrollment, CMS would allow dispensing entities to identify themselves
as anticipating material cashflow concerns at the start of a price
applicability period with respect to selected drugs as a result of
potential delays created by reliance on retrospective MFP refunds
within the 14-day prompt MFP payment window. The dispensing entity's
(and, as applicable, their third-party support entity's) banking
information would be shared with Primary Manufacturers to establish
accurate ERA for electronic MFP refund payments (or remittance advice
for paper checks) made outside of the MTF PM.
CMS would require each dispensing entity to execute an agreement
package during the MTF enrollment process, which, for example, may
include an MTF agreement with CMS and a participation agreement with
CMS' MTF DM contractor. Under the terms and conditions of participation
in the MTF DM, the dispensing entity would be responsible for
maintaining MTF enrollment information in the MTF DM and be subject to
audits conducted by CMS or its agents. If any of the dispensing
entity's enrollment information in the MTF DM changes, the dispensing
entity would also be required to update and recertify the information
in the MTF DM. CMS intends to publish copies of draft MTF terms and
conditions of the agreement package on the CMS IRA website.\218\
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\218\ See: https://www.cms.gov/inflation-reduction-act-and-medicare.
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T. Proposed Regulatory Changes to Medicare Advantage (MA) and Part D
Medical Loss Ratio (MLR) Standards (Sec. Sec. 422.2401, 422.2420,
422.2430, 422.2450, 422.2452, 422.2454, 422.2460, 422.2480, 422.2490,
423.2401, 423.2420, 423.2430, 423.2450, 423.2452, 423.2454, 423.2480,
423.2490)
1. Background
Section 1103 of Title I, Subpart B of the Health Care and Education
Reconciliation Act (Pub. L. 111-152) amended section 1857(e) of the Act
to add a medical loss ratio (MLR) requirement to Medicare Part C (MA
program). An MLR is expressed as a percentage, generally representing
the percentage of revenue used for patient care rather than for such
other items as administrative expenses or profit. Because section
1860D-12(b)(3)(D) of the Act incorporates by reference the requirements
of section 1857(e) of the Act, these MLR requirements also apply to the
Medicare Part D program. In the May 23, 2013, Federal Register, we
published a final rule titled ``Medicare Program; Medical Loss Ratio
Requirements for the Medicare Advantage and the Medicare Prescription
Drug Benefit Programs'' (78 FR 31284) (hereinafter referred to as the
May 2013 Medicare MLR final rule), in which we codified the MLR
requirements for MA organizations and Part D prescription drug plan
sponsors (``Part D sponsors'') (including organizations offering cost
plans that offer the Part D benefit) in the regulations at 42 CFR part
422, subpart X, and part 423, subpart X.
Generally, the MLR for each MA and Part D contract reflects the
ratio of costs (numerator) to revenues (denominator) for all enrollees
under the contract. For an MA contract, the MLR reflects the percentage
of revenue received under the contract spent on the following
categories of expenditures: incurred claims for all enrollees,
prescription drug costs for those enrollees in MA plans under the
contract offering the Part D benefit, quality initiatives that meet the
requirements at Sec. 422.2430, and amounts used to reduce Part B
premiums. The MLR for a Part D contract reflects the percentage of
revenue received under the contract spent on incurred claims for all
enrollees for Part D prescription drugs and on quality initiatives that
meet the requirements at Sec. 423.2430. The percentage of revenue that
is used for other items such as administration, marketing, and profit
is excluded from the numerator of the MLR for MA and Part D (see
Sec. Sec. 422.2401 and 423.2401; 422.2420(b)(4) and 423.2420(b)(4);
422.2430(b) and 423.2430(b)).
The MLR calculation, prior to any credibility adjustment, can be
depicted as the following general formula:
MRL = (Incurred Claims + Quality Improving Activities) / (Revenue -
Certain Taxes and Fees)
In the May 2013 Medicare MLR final rule, we codified at Sec. Sec.
422.2410 and 423.2410 the requirements for 2014 and subsequent years
that MA organizations and Part D sponsors are subject to financial and
other sanctions for failure to meet the requirement that they have an
MLR of at least 85 percent. Specifically, CMS set forth that, if we
determine that a contract of an MA organization or Part D sponsor has
an MLR that is less than 0.85 for a contract year, the contract has not
met the MLR requirement and the MA organization or Part D sponsor must
remit to CMS an amount equal to the product of (1) the total revenue of
the MA or Part D contract for the contract year multiplied by (2) the
difference between 0.85 and the MLR for the contract year (see
Sec. Sec. 422.2410 and 423.2410). We also established at Sec. Sec.
422.2460 and 423.2460 that, for each contract year, each MA
organization and Part D sponsor must submit an MLR Report to CMS that
included the data needed from the MA organization or Part D sponsor to
calculate and verify the MLR and remittance amount, if any, for each
contract such as the amount of incurred claims, expenditures on quality
improving activities, non-claims costs, taxes, licensing and regulatory
fees, total revenue, and any remittance owed to CMS under Sec.
422.2410 or Sec. 423.2410.
To facilitate the submission of MLR data, CMS developed a
standardized MLR Report template that MA organizations and Part D
sponsors are
[[Page 99446]]
required to populate with their data and upload to the Health Plan
Management System (HPMS), starting with contract year (CY) 2014 MLR
reporting. For any given reporting year (calendar year), MA
organizations and Part D sponsors must submit their MLR Reports in
December of the year following the reporting year, or another time as
determined by CMS. Based on the data entered by the MA organization or
Part D sponsor for each component of the MLR numerator and denominator,
the MLR reporting software would calculate an unadjusted MLR for each
contract. The MLR reporting software would also calculate and apply a
credibility adjustment provided for in Sec. Sec. 422.2440 and
423.2440, based on the number of member months entered into the MLR
Report, in order to calculate the contract's adjusted MLR and
remittance amount (if any). The credibility adjustment takes into
account the specific circumstances of contracts with lower enrollment
and reduces the probability that an MA organization or Part D sponsor
with relatively smaller enrollment has to pay a remittance in a given
year due to the propensity for random fluctuations in claims each year.
In addition to the numerical fields used to calculate the MLR and
remittance amount, the MLR Report template included narrative fields in
which MA organizations and Part D sponsors provided detailed
descriptions of the methods used to allocate expenses, including how
each specific expense met the criteria for the expense category to
which it was assigned.
In the final rule titled ``Medicare Program; Contract Year 2019
Policy and Technical Changes to the Medicare Advantage, Medicare Cost
Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit
Programs, and the PACE Program'' (83 FR 16440), which appeared in the
April 16, 2018, Federal Register (hereinafter referred to as the April
2018 final rule), we finalized a proposal to modify the MLR reporting
requirements by significantly reducing the amount of MLR data that MA
organizations and Part D sponsors submit to CMS on an annual basis,
starting with contract year 2018. Specifically, the reporting
requirement was changed to collect the minimum amount of information
needed for Medicare MLR reporting: the organization name, contract
number, adjusted MLR, and the remittance amount.
In light of subsequent experience overseeing the administration of
the Medicare MLR program while relying on the simplified MLR reporting
requirements, and after further consideration of the potential impacts
on beneficiaries and costs to the government and taxpayers when CMS has
limited access to detailed MLR data, we proposed to reinstate the
detailed MLR reporting requirements that were in effect for contract
years 2014 through 2017. This detailed reporting required the
submission of the underlying data used to calculate and verify the MLR
and any remittance amount, such as incurred claims, total revenue,
expenditures on quality improving activities, non-claims costs, taxes,
and regulatory fees. We also proposed some modifications to the
reinstated reporting requirements. These modifications included three
types of changes to the MLR Reporting Tool. First, the MLR Reporting
Tool's formulas were revised to incorporate changes to the MLR
calculation such as adding categories for fraud reduction expenses in
the section for Activities that Improve Healthcare Quality. Second, CMS
separated out certain items that were consolidated, for example, the
low-income cost-sharing subsidy amounts were added as an information-
only line in the MLR Reporting Tool. Third, CMS included expenditures
related to supplemental benefits in the MLR Reporting Tool. These
modifications were proposed in the rule titled ``Medicare Program;
Contract Year 2023 Policy and Technical Changes to the Medicare
Advantage and Medicare Prescription Drug Benefit Programs'' (87 FR
1842), which appeared in the March 7, 2022, Federal Register
(hereinafter referred to as the March 2022 proposed rule) and finalized
in the final rule titled ``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'' (87 FR 27704), which appeared in the May 9, 2022, Federal
Register (hereinafter referred to as the May 2022 final Medicare rule).
The factors that led us to make these changes included the growth
of the MA and Part D programs, the related growth in MLR remittances,
and the growth in the number of contracts that failed to meet the MLR
requirement during the period when MA organizations and Part D sponsors
had reduced reporting requirements. When the proposed rule titled
``Medicare Program; Contract Year 2019 Policy and Technical Changes to
the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service,
the Medicare Prescription Drug Benefit Programs, and the PACE Program''
(82 FR 56336), which appeared in the November 28, 2017, Federal
Register (hereinafter referred to as the November 2017 proposed rule),
to eliminate the detailed Medicare MLR reporting requirements was
released, MA organizations and Part D sponsors had submitted MLR data
for CYs 2014 and 2015. Total remittances for all contracts for the two
years averaged $29.6 million, and an average of 16 contracts failed to
meet the minimum Medicare MLR requirement. By the time CMS issued the
April 2018 final rule, annual average remittances for CYs 2014 through
2016 totaled $91.8 million, and an annual average of 21 contracts
failed to meet the MLR requirement. Thereafter, for CYs 2017 through
2019, the average amount of annual remittances more than doubled to
$204.9 million, and the average number of contracts that failed to meet
the MLR requirement nearly doubled to 40 contracts per year.
In the May 2013 Medicare MLR final rule, we also codified sanctions
at Sec. Sec. 422.2410 and 423.2410 as set forth in statute.
Specifically, the statute imposes several levels of sanctions for
failure to meet the 85 percent minimum MLR requirement, including
remittance of funds, a prohibition on enrolling new members, and
ultimately, contract termination. The minimum MLR requirement creates
incentives for MA organizations and Part D sponsors to reduce
administrative costs, such as marketing costs, profits, and other uses
of the revenue received by plan sponsors and helps ensure that
taxpayers and enrolled beneficiaries receive value from Medicare health
and drug plans.
Section 1001(5) of the 2010 Patient Protection and Affordable Care
Act (Pub. L. 111-148), as amended by section 10101(f) of the 2010
Health Care and Education Reconciliation Act (Pub. L. 111-152), also
established new MLR reporting and rebate requirement under section 2718
of the Public Health Service Act that applies to health insurance
issuers (issuers) of private health insurance coverage in the employer
group and individual markets as of CY 2011. We will refer to the MLR
requirements that apply to issuers of private insurance as the
``commercial MLR rules.'' Regulations implementing the commercial MLR
rules are published at 45 CFR part 158.
In a 2016 rule titled ``Medicaid and Children's Health Insurance
Program (CHIP) Programs; Medicaid Managed Care, CHIP Delivered in
Managed Care, and Revisions Related to Third Party
[[Page 99447]]
Liability'' (81 FR 27853), which appeared in the May 6, 2016, Federal
Register, we also established Medicaid and CHIP managed care
regulations at Sec. Sec. 438.8(k) and 457.1203(f) respectively, that
require managed care plans to annually submit reports of their MLR to
States, and, at Sec. Sec. 438.74 and 457.1203(e) respectively, we
require States to submit annually a summary of those reports to CMS
based on our authority under sections 1903(m)(2)(A)(iii), 1902(a)(4),
and 2101(a) of the Act.
In the May 2013 Medicare MLR final rule, we stated that we would
use the commercial MLR rules as a reference point for developing the
Medicare MLR requirements because the intent of the provisions is
comparable. We observed that maintaining consistency between the
commercial MLR rules and Medicare MLR rules serves to limit burden on
organizations that participate in both markets and makes commercial and
Medicare MLRs as comparable as possible for comparison and evaluation
purposes. In the March 2022 proposed rule, we reiterated our
longstanding policy of attempting to align the Medicare MLR
requirements with the commercial MLR requirements to limit burden on
organizations that participate in both markets.\219\ We also cited this
policy when we amended our regulations to authorize the public release
of the Part C and Part D MLR data that we collect for a contract year
under Sec. Sec. 422.2460 and 423.2460 in the rule titled ``Medicare
Program; Revisions to Payment Policies Under the Physician Fee Schedule
and Other Revisions to Part B for CY 2017; Medicare Advantage Bid
Pricing Data Release; Medicare Advantage and Part D Medical Loss Ratio
Data Release; Medicare Advantage Provider Network Requirements;
Expansion of Medicare Diabetes Prevention Program Model; Medicare
Shared Savings Program Requirements'' (81 FR 80170), which appeared in
the November 15, 2016, Federal Register. At the same time, in
developing the Medicare MLR regulations, we have recognized that some
aspects of the regulation for commercial plans needed to be tailored to
fit the unique characteristics of the MA and Prescription Drug plan
(PDP) markets. For example, Medicare MLRs are reported on a contract
basis, rather than by state and market.
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\219\ https://www.federalregister.gov/d/2022-00117/p-656.
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In this proposed rule, we propose to make certain modifications to
the MLR reporting requirements and to add requirements based upon MLR
audit examinations in the Medicare Part C and Part D programs. The
overall goal of the modifications is to do all of the following:
Further align the Medicare MLR program with the commercial
and Medicaid MLR programs.
Improve the accuracy of MA and Part D MLR reporting.
Safeguard the integrity of the Medicare program.
Ensure beneficiaries receive value from the MA and Part D
programs.
Specifically, we propose to amend Sec. 422.2420(b)(2)(xi) to
establish clinical or quality improvement standards for provider
incentives and bonus arrangements included in the MA MLR numerator. We
propose to amend Sec. Sec. 422.2430(a) and 423.2430(a) to prohibit
administrative costs from being included in quality improving
activities in the MA and Part D MLR numerators. We also propose to
amend Sec. Sec. 422.2420(d)(2)(i) and 423.2420(d)(2)(i)) to impose
additional requirements for the allocation of expenses in the MLR.
Additionally, we propose to add new paragraphs Sec. Sec. 422.2450,
422.2452, 422.2454, 423.2450, 423.2452, and 423.2454 to establish new
audit and appeals processes for MLR compliance. We also propose to add
Sec. Sec. 422.2490(b)(6) and 423.2490(b)(6), to add an exclusion to
the data release, to exclude from release the DIR information reported
within the MLR data as part of incurred claims. Furthermore, we propose
to exclude unsettled balances from the Medicare Prescription Payment
Plan from the MLR numerator at Sec. 423.2420(b)(4)(iii). We are
issuing a request for information on whether CMS could and should adopt
policies regarding how the MA and Part D MLRs are calculated to help
enable policymakers to address concerns surrounding vertical
integration in MA and Part D. Finally, we are proposing to amend
Sec. Sec. 422.2460(a) and 422.2490(b) to explicitly provide that the
MLR reporting includes detailed information regarding provider payment
arrangements. These proposals are described in detail below.
2. Proposal To Require Clinical or Quality Improvement Standards for
Provider Incentive and Bonus Arrangements To Be Included in the MA MLR
Numerator (Sec. 422.2420)
Section 1857(e)(4) of the Act requires the Secretary to determine
for a contract year whether an MA organization has failed to have an
MLR of at least 85 percent. Because section 1860D-12(b)(3)(D) of the
Act incorporates by reference the requirements of section 1857(e) of
the Act, these MLR requirements also apply to the Medicare Part D
program. However, the statute does not specify how the Secretary must
calculate the MLR. Accordingly, in the May 2013 Medicare MLR final
rule, we established regulations specifying how we calculate the MLR
for MA and Part D contracts.
For MA and Part D contracts, we identify the elements that are
required to be included in the MLR numerator for a contract at
Sec. Sec. 422.2420(b) and 423.2420(b). Specifically, under Sec. Sec.
422.2420(b)(1) and 423.2420(b)(1), MA organizations and Part D sponsors
must include in the MLR numerator incurred claims (as defined in
paragraphs (b)(2) through (b)(4) for both programs); expenditures under
the contract for activities that improve health care quality, which are
referenced at paragraph (b)(1)(iii), and described in detail at
Sec. Sec. 422.2430 and 423.2430; and, under Sec. 422.2420(b)(1)(ii),
for the MA program, the amount to reduce the Part B premium, if any,
for all MA plans under the contract for the contract year.
For the MA program, incurred claims include direct claims that the
MA organization pays to providers (including under capitation
contracts) for covered services that are provided to all enrollees
under the contract. Under Sec. 422.2420(b)(2)(xi), incurred claims for
clinical services and prescription drug costs must include ``the amount
of incentive and bonus payments made to providers,'' which includes
paid and accrued medical incentives and bonuses. Currently, incentive
and bonus payments made to providers are included as incurred claims in
the MLR numerator regardless of whether they are tied to clinical or
quality improvement standards for providers.
While many types of provider incentives and bonuses can reward
higher-quality care to enrollees, MLR examinations in other markets
have found some incentive or bonus payments to providers are not based
on quality or performance metrics. For example, as noted in the final
rule titled ``Patient Protection and Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for 2023'' (87 FR 27208), which appeared
in the May 6, 2022, Federal Register (hereinafter referred to as the
May 2022 commercial final rule), commercial examinations have found
issuers reporting incentive or bonus payments to affiliated providers
that are not based on quality or performance metrics, but rather,
involve transferring excess premium revenue to providers to circumvent
MLR rebate requirements. In addition, as discussed in the final rule
titled ``Medicaid Program; Medicaid and
[[Page 99448]]
Children's Health Insurance Program (CHIP) Managed Care Access,
Finance, and Quality'' (89 FR 41002), which appeared in the May, 10,
2024, Federal Register (hereinafter referred to as the May 2024
Medicaid final rule), Medicaid reviews of States' oversight of managed
care plan MLR reporting found many managed care plans' contracts with
network providers did not base incentive payments on a requirement for
the provider to meet quantitative clinical or quality improvement
standards or metrics.
Given these findings, we revised the commercial MLR regulations at
45 CFR 158.140(b)(2)(iii) to only permit issuers to include provider
incentive and bonus payments in their MLR numerator if they are tied to
clearly defined, objectively measurable, and well-documented clinical
or quality improvement standards for these costs to qualify as
expenditures in the MLR numerator in the May 2022 commercial final
rule.\220\ Similarly, effective July 9, 2024, we revised the Medicaid
and CHIP regulations at 42 CFR 438.3(i), 438.8(e)(2), 457.1201, and
457.1203 to specify that only those provider incentives and bonuses
tied to clearly defined, objectively measurable, and well-documented
clinical or quality improvement standards that apply to providers may
be included in incurred claims for MLR reporting in the May 2024
Medicaid final rule.
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\220\ https://www.govinfo.gov/content/pkg/FR-2022-05-06/pdf/2022-09438.pdf.
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Given the similarities between the commercial MLR regulations when
these findings were made and current MA MLR regulations, we believe
that the concerns identified about incentive or bonus payments to
providers not being based on quality or performance metrics in the
commercial market are also applicable to the MA market. If MA
organizations or Part D sponsors use incentive or bonus payments to
providers to inflate their MLRs by including such payments for the sole
purpose of meeting the MLR and not for clinical or quality improvement
purposes, that would conflict with the purpose of the MLR requirement.
Generally, the purpose of the MLR requirement is to create incentives
for MA organizations and Part D sponsors to reduce administrative
costs, as well as reduce funding for activities such as marketing,
profits, and other business functions and thereby ensure that taxpayers
and enrolled beneficiaries receive maximum value from Medicare health
plans. If incentive and bonus payments are not tied to clinical or
quality improvement purposes, taxpayers and enrolled beneficiaries
would not receive any value from such payments.
Furthermore, we believe that aligning our regulations with the
commercial and Medicaid regulations would be consistent with our
longstanding policy of modeling Medicare MLR rules on commercial MLR
rules and would limit the burden on organizations that participate in
multiple markets and promote comparability of commercial, Medicaid, and
Medicare MLRs for comparison and evaluation purposes.
As such, we propose to amend Sec. 422.2420(b)(2)(xi) such that
only those provider incentives and bonuses made, or expected to be
made, that are tied to clearly defined, objectively measurable, and
well documented clinical or quality improvement standards that apply to
providers may be included in incurred claims in the numerator for MA
MLR reporting and remittance purposes.
While we believe that concerns about incentive or bonus payments to
providers not based on quality or performance metrics in the MA market
and our longstanding policy of alignment with the commercial MLR rules
support amending the MA MLR rules to reflect the commercial MLR rules
for provider incentive and bonus payments, we believe that certain
unique characteristics of the Part D program may counsel against a
similar change for that program at this time. Specifically, under Sec.
423.2420(b)(2)(i), for MA contracts that include MA-PD plans and for
PDP contracts, incurred claims include only drug costs that are
``actually paid'' by the Part D sponsor. The concept of ``actually
paid'' is defined at Sec. 423.308 and refers to Part D costs that must
be actually incurred by the Part D sponsor, net of any direct or
indirect remuneration (DIR) from any source. Therefore, the amount
reported in the MLR numerator as direct drug costs incurred by the
sponsor must be net of all DIR (including discounts, charge backs or
rebates, cash discounts, free goods contingent on a purchase agreement,
up-front payments, coupons, goods in kind, free or reduced-price
services, grants, or other price concessions or similar benefits
offered to some or all purchasers) from any source (including
manufacturers, pharmacies, enrollees, or any other person) that would
serve to decrease the costs incurred by the Part D sponsor.
DIR that serves to increase the costs incurred by the Part D
sponsor--referred to as negative DIR--is included in the MLR numerator
when it meets the requirements at Sec. 423.308 for amounts that are
actually paid.\221\ Negative DIR includes incentive and bonus payments
made to pharmacies and other Part D providers. Because incentive and
bonus payments made under the Part D program are already accounted for
as DIR, Part D sponsors are not subject to a separate requirement to
include such payments in the MLR numerator. Revising the Part D MLR
regulations to require that incentive and bonus payments be tied to
clinical or quality improvement standards could potentially require
changes to the definition of drug costs that are ``actually paid,''
which, in turn, could affect other processes outside of the MLR that
rely on that definition which is out of the scope of this provision.
Furthermore, CMS believes that incentive and bonus payments made under
the Part D program are generally tied to pharmacy performance metrics.
Accordingly, we do not believe that it is necessary to amend the Part D
MLR regulations at this time. However, we seek comments on whether
interested parties believe there are additional considerations that
should motivate CMS to consider adding Sec. 423.2420(b)(2)(x) to
mirror the proposed change to Sec. 422.2420(b)(2)(xi).
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\221\ For additional discussion of negative DIR, please review
the Final Medicare Part D DIR Reporting Guidance, which is released
by CMS annually.
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We seek comment on these proposals, including whether any
modifications to the credibility adjustment may be necessary.
3. Proposal To Prohibit Administrative Costs From Being Included in
Quality Improving Activities in the MA and Part D MLR Numerator
(Sec. Sec. 422.2430 and 423.2430)
Under Sec. Sec. 422.2420(b)(1)(iii) and 423.2420(b)(1)(ii), MA
organizations and Part D sponsors must include expenditures under the
contract for activities that improve health care quality, also known as
quality improvement activities (QIAs), in the numerator for MA and Part
D contract MLRs. QIAs are described in detail for both programs at
Sec. Sec. 422.2430 and 423.2430, respectively. As specified at
paragraph (a)(2) of Sec. Sec. 422.2430 and 423.2430, a QIA must be
designed to improve health outcomes, implement activities to prevent
hospital readmissions, implement activities to improve patient safety,
implement wellness and health promotion activities, or enhance the use
of health care data to improve quality, transparency, and outcomes.
[[Page 99449]]
As specified at paragraph (a)(3) of Sec. Sec. 422.2430 and
423.2430, a non-claims expense incurred by an MA organization or Part D
sponsor may be accounted for as a quality improvement activity only if
the activity falls into one of the categories described previously and
meets all of the following requirements:
It must be designed to improve health quality.
It must be designed to increase the likelihood of desired
health outcomes in ways that are capable of being objectively measured
and of producing verifiable results and achievements.
It must be directed toward individual enrollees or
incurred for the benefit of specified segments of enrollees or provide
health improvements to the population beyond those enrolled in coverage
as long as no additional costs are incurred due to the non-enrollees.
It must be grounded in evidence-based medicine, widely
accepted best clinical practice, or criteria issued by recognized
professional medical associations, accreditation bodies, government
agencies or other nationally recognized health care quality
organizations.
In addition, under paragraph (a)(4) of Sec. Sec. 422.2430 and
423.2430, QIAs include Medication Therapy Management Programs that meet
the requirements of Sec. 423.153(d), as well as fraud reduction
activities, including fraud prevention, fraud detection, and fraud
recovery.
Sections 1857(e)(4) and 1860D-12(b)(3)(D) of the Act require MA
organizations and Part D sponsors to report to CMS the MLR for each
contract for each contract year and meet a minimum MLR requirement of
85 percent. Under Sec. Sec. 422.2460(a) and 423.2460(a), the MLR
report to CMS must include the data needed by the MA organization or
Part D sponsor to calculate and verify the MLR, including the incurred
claims, quality improving activity expenditures, non-claims costs,
taxes, licensing and regulatory fees, total revenue, and any remittance
owed to CMS. However, Sec. Sec. 422.2430 and 423.2430 do not specify
the types of expenses that may be reported as a QIA expense or the
extent to which the expenses must relate to a QIA.
The commercial MLR audit examinations have found QIA expenses to be
a high-risk reporting area with ``wide discrepancies in the types of
expenses that issuers include in QIA expenses and creates an unequal
playing field among issuers.'' \222\ The commercial MLR examinations
found some issuers were including only direct expenses such as salaries
of the staff performing the quality improving functions in QIA
expenses, while other issuers were including indirect expenses such as
overhead, the full salaries of employees who were conducting QIA only
part of the time, IT infrastructure that supports regular business
functions such as billing, office space, marketing, lobbying, third-
party vendor profits, and company parties and retreats, including
catering and travel.\223\ These examinations also found that some
issuers allocated indirect expenses such as overhead, marketing,
lobbying, and third-party vendor profits to count as QIA expenses. In
addition, many issuers did not have an accurate method to quantify the
actual cost attributable to each QIA expense category and were often
arbitrarily reporting or apportioning indirect expenses without
adequate documentation or support. As discussed in the May 2024
Medicaid final rule, including such indirect expenses not directly
related to activities that improve health care quality inflates the MLR
numerator, and inconsistent MLR reporting undermines the integrity of
the MLR programs.\224\
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\222\ https://www.federalregister.gov/d/2022-09438/p-1778.
\223\ https://www.federalregister.gov/d/2022-09438/p-1779.
\224\ https://www.federalregister.gov/d/2024-08085/p-1255.
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To clarify the types of QIA costs that may be included in MLR
calculations, in the May 2022 commercial final rule, we amended the
commercial regulations for QIA expenditures in 45 CFR 158.150(a),
effective July 1, 2022, to provide that ``only expenditures directly
related to activities that improve health care quality may be included
in QIA expenses.'' In addition, we updated the Medicaid and CHIP MLR
QIA reporting requirements in the May 2024 Medicaid final rule to add a
reference to the same commercial regulation that prohibits the
inclusion of overhead or indirect expenses that are not directly
related to health care quality improvement activity expenditures. As
stated in the May 2024 Medicaid final rule, the difference in standards
could have posed a potential administrative burden for managed care
plans that participate in Medicaid, CHIP, and the commercial markets
because managed care plans and issuers may include different types of
expenses in reporting QIA.\225\
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\225\ https://www.federalregister.gov/d/2024-08085/p-1297.
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Given the similarities between current Medicare MLR rules and the
commercial and Medicaid MLR rules in place when we identified
discrepancies in the types of expenses issuers of commercial plans and
Medicaid managed care plans reported in QIA, we believe that the
concerns identified are also applicable to the MA and Part D markets.
Furthermore, we believe that aligning our regulations with the
commercial and Medicaid requirements would be consistent with our
longstanding policy of modeling Medicare MLR rules on commercial MLR
rules and would limit the burden on organizations that participate in
multiple markets and promote comparability of commercial, Medicaid, and
Medicare MLRs for comparison and evaluation purposes. For these
reasons, we propose to amend Sec. Sec. 422.2430(a) and 423.2430(a) to
specify that only expenditures directly related to activities that
improve health care quality may be included as quality improving
activity expenses for purposes of MA and Part D MLR reporting.
We seek comment on these proposals.
4. Proposal To Codify Current Requirements That MA and Part D MLR
Reports Include a Description of How Expenses Are Allocated Across
Lines of Business (Sec. Sec. 422.2420 and 423.2420)
Under Sec. Sec. 422.2420(d) and 423.2420(d), MA organizations and
Part D sponsors, respectively, must allocate each MLR expense under one
category and allocation to each category must be based on generally
accepted accounting methods. MA organizations and Part D sponsors must
also report expenditures that benefit multiple contracts on a pro rata
or proportional share basis.
Current Medicare MLR reporting instructions require MA
organizations and Part D sponsors to include descriptions of the
methodologies used to allocate expenses included in the calculation of
the MLR. More specifically, as described in the MA and Part D MLR
reporting instructions, the MLR Report workbook should be ``used by
organizations to describe the methods used to allocate expenses, as
reported on the MLR Report, including incurred claims, health care
quality improvement expenses, Federal and state taxes and licensing or
regulatory fees, and non-claims costs.'' \226\ The MLR reporting
instructions further state that ``a detailed description of each
expense element should be provided, including how each specific expense
meets the criteria for the type of expense in which it is
categorized.''
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\226\ https://www.cms.gov/medicare/health-drug-plans/medical-loss-ratio.
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Commercial regulations at 45 CFR 158.170(b) and Medicaid and CHIP
[[Page 99450]]
regulations at 42 CFR 438.8(k)(1)(vii) and 457.1203(f) similarly
require details on expense allocation in MLR reporting around the types
of expenditures that were allocated, how the expenses met the criteria
for inclusion in the MLR, and the methods used to allocate expenses.
Like the Medicare MLR regulations, the commercial and Medicaid and CHIP
regulations further require that issuers and managed care plans that
operate multiple lines of business must submit information on the types
of expenditures allocated to each line of business.
As noted in the April 2018 final rule (82 FR 56459), consistent
with our general approach when developing the original Medicare MLR
requirements of aligning those requirements with the commercial MLR
requirements to the greatest extent possible, we attempted to model the
Medicare MLR reporting format on the tools used to report commercial
MLR data in order to limit the burden on organizations that participate
in both markets. As a result, the fields in the MA and Part D MLR
Report workbook are similar to the fields on the commercial MLR
reporting form, including fields for descriptions of the methodologies
used to allocate expenses included in the calculation of the MLR.
We are proposing to align the Medicare MLR regulations with the
commercial and Medicaid MLR requirements related to information on
allocation of expenses and with current Medicare MLR reporting
practices. Specifically, we propose to codify requirements that MA
organizations and Part D sponsors report a detailed description of the
methods used to allocate expenses, including incurred claims,
expenditures on QIA, licensing and regulatory fees, and State and
Federal taxes and assessments. Furthermore, we propose that the
detailed description of each expense element must include how each
specific expense meets the criteria for the type of expense in which it
is categorized as well as the method by which it was aggregated and
allocated. We propose adding this requirement to the Medicare MLR
regulations at Sec. Sec. 422.2420(d)(2)(i) and 423.2420(d)(2)(i).
We seek comment on these proposals.
As proposed, this provision is consistent with our current Medicare
MLR reporting guidance and the requirements that were in place for CYs
2014 through 2017. This provision codifies an existing requirement in
the reporting instructions and makes a clarification that is not
expected to place additional requirements on MA organizations and Part
D sponsors. As such, the proposed regulations Sec. Sec.
422.2420(d)(2)(i) and 423.2420(d)(2)(i) do not create any additional
burden for MA organizations or Part D sponsors. MA organizations' and
Part D sponsors' compliance with the MLR reporting requirements is
already evaluated through the current MLR desk review process described
at Sec. Sec. 422.2480 and 423.2480. In addition, the burden associated
with the submission of MLR data is already approved under the OMB
control number 0938-1232 (Medical Loss Ratio Annual Reports, MLR
Notices, and Recordkeeping Requirements (CMS-10476)). We have not
incorporated this provision in the Collection of Information section of
this proposed rule, nor are we are scoring this provision in the
Regulatory Impact Analysis section because MA organizations and Part D
sponsors are already complying with the proposed regulations.
5. Proposal To Establish Standards for MA and Part D MLR Audit
Examinations (Sec. Sec. 422.2401, 422.2450, 422.2452, 422.2454,
422.2480, 423.2401, 423.2450, 423.2452, 423.2454, and 423.2480)
As stated in 42 CFR 422.503(d), 422.504(d)-(e), 422.2480,
423.504(d), 423.505(d), and 423.2480, MA organizations' and Part D
sponsors' MLR reports are subject to review and audit by CMS or by any
person or organization that CMS designates. As part of the review and
audit process, CMS or its representative may request additional
documentation supporting the information contained in the MLR report.
MA organizations and Part D sponsors must provide this information in a
timely manner.
Currently, as described at Sec. Sec. 422.2480 and 423.2480, CMS
conducts desk reviews and analyses of the reported MLR data to identify
omissions or suspected inaccuracies and communicate findings to MA
organizations and Part D sponsors in order to resolve potential
compliance issues. If an issue is identified during desk review, the
MLR report may be corrected and resubmitted in order to resolve the
identified issue, or the inquiry may be resolved by the MA organization
or Part D sponsor providing additional explanation or supporting
information sufficient to satisfy the inquiry and complete the desk
review.
With the growth of the MA and Part D programs, greater scrutiny to
ensure that MA organizations and Part D sponsors are appropriately
spending funds to provide care to enrollees is increasingly important.
Given the findings from the commercial and Medicaid MLR audit
examinations, such as for QIA reporting, as discussed previously, we
expect there may be similar reporting issues in the Medicare MLR
program. In addition to ensuring compliance with the applicable
requirements for calculating and reporting MLR information, we believe
that audit examinations could help identify areas where submitters
might be able to reduce reporting errors. MLR audits will improve the
accuracy of MA organizations' and Part D sponsors' annual MLR
submissions, safeguard the integrity of the Medicare program, and
ensure beneficiaries receive value from the MA and Part D programs.
We propose new regulations and amendments to existing regulations
to establish standards for the MA and Part D MLR audit examinations.
These changes would more fully align the Medicare MLR regulations with
longstanding operational practices of commercial and Medicaid MLR
oversight, which consists of audit examinations, an appeal process for
remittances determined to be owed as the result of an audit, and
compliance actions when necessary.
More specifically, we propose specifications for how CMS will
conduct MA and Part D MLR audit examinations in addition to the MLR
desk review process discussed previously and in regulations Sec. Sec.
422.2480 and 423.2480. Under our existing authority, we propose
requiring MA organizations and Part D sponsors selected for MLR audit
examinations to provide detailed MLR data and underlying records that
can be used to substantiate amounts included in the calculation of each
contract's MLR. We also propose calling audit examinations for only
those contracts with an MLR greater than 85 percent. Currently, CMS
provides MA organizations and Part D sponsors with opportunities to
correct MLR data through the MLR desk review process or through other
self-reporting mechanisms, such as contacting CMS directly. Following
the completion of the desk review process, consistent with the MLR
regulations at Sec. Sec. 422.2460(d) and 423.2460(d), the MLR is
considered to have been reported once and is not reopened as a result
of any payment reconciliation process. In addition, as stated in the
May 2013 Medicare MLR final rule, if an MA organization or Part D
sponsor reports that a contract's MLR for a contract year does not meet
the 85 percent standard, a remittance amount is collected and that MLR
is considered final. As such, the MLR audit examinations would not
include
[[Page 99451]]
contracts that previously paid remittances as the result of an MLR
below 85 percent. As described further in this proposed rule, if
through the audit process, it is determined that a contract did not
meet the 85 percent threshold, we would recalculate the MLR based on
audit examination findings to determine appropriate remittances and
would not reopen MLR reports for submission of corrections. CMS may
conduct Medicare MLR audit examinations in 2025 and the compliance
actions that result from the audits and provisions in this rule would
take effect in 2026.
The following sections outline our proposal to establish
regulations for an MA and Part D MLR audit process, an MLR audit
remittance calculation and payment process if an MLR audit remittance
is determined to be owed, and an appeal process for MA organizations
and Part D sponsors to dispute the MLR audit remittance if requested.
The last section outlines the compliance actions CMS may take as the
result of MLR audit findings and proposed modifications to existing
regulations to allow for future flexibility to pursue additional
compliance actions if necessary.
a. MA and Part D MLR Audit Process
We propose to add Sec. Sec. 422.2450 and 423.2450 to regulations
to establish the audit process to validate MA organization and Part D
sponsors' MLR compliance. At Sec. Sec. 422.2450(a) and 423.2450(a) we
propose that CMS will provide at least 15 calendar days advance notice
of its intent to conduct an audit of an MA organization or Part D
sponsor. At Sec. Sec. 422.2450(b) and 423.2450(b), we propose that all
audits would include an entrance conference during which the scope of
the audit would be presented and an exit conference during which the
initial audit findings would be discussed. At Sec. Sec. 422.2450(c)
and 423.2450(c), we propose that all requested audit documentation
would be provided by MA organizations or Part D sponsors to CMS within
30 calendar days of the audit entrance conference. CMS may extend, at
CMS's discretion, the time for an MA organization or Part D sponsor to
provide the documentation requested.
At Sec. Sec. 422.2450(d) and 423.2450(d), we propose that CMS
would share its preliminary audit findings with the MA organization or
Part D sponsor, and the MA organization or Part D sponsor would then
have 30 calendar days to respond to such findings. CMS may extend, at
CMS's discretion, the time for an MA organization or Part D sponsor to
submit such a response. At Sec. Sec. 422.2450(e) and 423.2450(e), we
propose that if the MA organization or Part D sponsor does not dispute
the preliminary findings within the 30-day timeframe proposed at
Sec. Sec. 422.2450(d) and 423.2450(d), then the audit report becomes
final. However, if the MA organization or Part D sponsor disputes the
preliminary findings within the 30-day timeframe proposed at Sec. Sec.
422.2450(d) and 423.2450(d), CMS would review and consider such
response before finalizing the audit findings. At Sec. Sec.
422.2450(f) and 423.2450(f), we propose that CMS would send a copy of
the final audit report to the MA organization or Part D sponsor as well
as issue corrective actions that the MA organization or Part D sponsor
must undertake as a result of the audit findings. At Sec. Sec.
422.2450(g) and 423.2450(g), we propose that if CMS determines as the
result of an audit that an MA organization or Part D sponsor has failed
to pay remittances it is obligated to pay pursuant to Sec. Sec.
422.2470 and 423.2470, CMS may order the MA organization or Part D
sponsor to pay those remittances in a manner consistent with new
regulations Sec. Sec. 422.2452 and 423.2452 described in the
subsequent section of this proposed rule.
We seek comment on these proposals.
b. MLR Audit Remittance Process and Payment of MLR Audit Remittance
We propose to add Sec. Sec. 422.2452 and 423.2452 to establish the
process for notifying MA organizations and Part D sponsors of the MLR
audit remittance and how the MLR audit remittance would be collected in
association with MLR audit examinations.
To support these new regulations, we propose to amend Sec. Sec.
422.2401 and 423.2401 to add two definitions relevant for the
establishment of the MLR audit remittance process.
We propose to add a definition for the term MLR audit remittance
process, which is the process by which CMS would calculate the MLR
audit remittance for a contract that has failed to meet the 85 percent
minimum MLR requirement as the result of an MLR audit examination and
notify the MA organization or Part D sponsor about the remittance. The
process includes collecting the MLR audit remittance indicated in the
final audit report issued by CMS, receiving responses from MA
organizations or Part D sponsors requesting an appeal of the MLR audit
remittance, and taking actions to adjudicate an appeal (if requested)
and receive MLR remittances from MA organizations and Part D sponsors.
Per these definitions, CMS would calculate and notify MA
organizations and Part D sponsors of the MLR audit remittance
associated with the MLR audit examination findings. In the new
regulations, at paragraph (a) of Sec. Sec. 422.2452 and 423.2452, we
propose that CMS would send the final audit report to MA organizations
and Part D sponsors with the MLR audit remittance, if applicable.
Specifically, proposed paragraphs (a)(1), (a)(2), (a)(3), and (a)(4)
state that, if applicable, the notice would contain the following
information: a MLR audit remittance; relevant banking and financial
mailing instructions for MA organizations and Part D sponsors that owe
CMS an MLR audit remittance that would be transferred to the Treasury
General Fund; relevant CMS contact information; and a description of
the steps for the MA organizations or Part D sponsor to request an
appeal of the MLR audit remittance calculation.
At paragraph (b) of Sec. Sec. 422.2452 and 423.2452, we propose to
establish that MA organizations and Part D sponsors would have 15
calendar days from the date of issuance of the final audit report to
request an appeal. We propose at paragraphs (b)(1) and (b)(2) of these
new sections that, if an MA organization or Part D sponsor agrees with
the MLR audit remittance, no response from the MA organization and Part
D sponsor for that part of the audit report would be required, and
that, if an MA organization or Part D sponsor does not request an
appeal within 15 calendar days, CMS would not consider any subsequent
requests for appeal of the MLR audit remittance.
At paragraph (c) of Sec. Sec. 422.2452 and 423.2452, we propose to
establish the actions that would take place if an MA organization or
Part D sponsor does not appeal the MLR audit remittance. At paragraph
(c)(1), we propose that an MA organization or Part D sponsor that owes
money and does not appeal would have to remit payment in full within
120 calendar days from issuance of the final audit report. 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
final audit report would be subject to having any debts owed to CMS
referred to the Department of the Treasury for collection.
If an MA organization or Part D sponsor does not appeal the MLR
audit remittance indicated in the final audit report within 15 calendar
days of the issuance of the final audit report, no subsequent requests
for appeal would be considered.
We seek comment on these proposals.
[[Page 99452]]
c. Process for Appealing the MLR Audit Remittance
We propose to add Sec. Sec. 422.2454 and 423.2454 to regulations
to establish that an MA organization or Part D sponsor may request an
appeal of the calculation of the MLR audit remittance amount and the
process and requirements for making such a request associated with MLR
audit examination findings.
At paragraph (a) of Sec. Sec. 422.2454 and 423.2454, we propose to
establish requirements that would apply to MA organizations' and Part D
sponsors' requests for appeal of the MLR audit remittance calculation.
Specifically, at paragraph (a)(1), we propose to establish the
process under which an MA organization or Part D sponsor could request
reconsideration of the MLR audit remittance. We propose to specify that
the 15 calendar day period for filing the request would begin on the
date the final audit report from CMS is issued. We believe that would
provide organizations with sufficient time to request an appeal, as MA
organizations and Part D sponsors would be aware of the amounts that
factor into the MLR audit remittance at the time the final audit report
is issued. Requiring a request for appeal within this timeframe would
help ensure accurate and timely payment of the MLR audit remittance.
CMS would not accept requests for appeal that are submitted more
than 15 calendar days after the date of issuance of the final audit
report. As noted previously, if an MA organization or Part D sponsor
does not reply within 15 calendar days, they would be deemed to accept
the MLR audit remittance indicated in the final audit report.
If an MA organization or Part D sponsor agrees with the MLR audit
remittance, no response to that part of the audit exam report would be
required. Failure to request an appeal within 15 calendar days of the
date of issuance of the final audit report would indicate acceptance of
the MLR audit remittance.
We also propose that MA organizations and Part D sponsors would
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 MLR audit remittance is incorrect. We further
specify that CMS would not consider, and MA organizations and Part D
sponsors should not submit, new data or data that was submitted to CMS
after the final audit report was issued, unless requested by CMS.
In addition, to establish a review process under which MA
organizations and Part D sponsors may request a reconsideration of
CMS's MLR audit remittance calculation, we propose to add two
additional levels of appeal: (1) an informal hearing conducted by the
CMS Office of Hearings to review CMS's determination, following a
request for appeal of the reconsideration of CMS's determination, and
(2) a review by the CMS Administrator of the hearing officer's
determination if there is an appeal of the CMS hearing officer's
determination. We believe that these levels of appeal would afford MA
organizations and Part D sponsors sufficient opportunities to present
objections to the calculation of the MLR audit remittance in MLR audit
examinations.
At paragraph (a)(1)(iii), we propose to establish that the CMS
reconsideration official would review the MLR audit remittance
calculation and evidence timely submitted by the MA organization or
Part D sponsor supporting the assertion that the CMS calculation of the
MLR audit remittance is incorrect. We further propose to establish that
the CMS reconsideration official would inform the MA organization or
Part D sponsor of their decision on the reconsideration in writing and
that their decision would be final and binding unless the MA
organization or Part D sponsor requests a hearing officer review.
At paragraph (a)(2), we propose to establish that MA organizations
and Part D sponsors that disagree with CMS's reconsideration decision
under paragraph (a)(1) of this section would be able to request an
informal hearing by a CMS hearing officer.
Specifically, at paragraph (a)(2)(i), we propose that MA
organizations and Part D sponsors would have to submit their requests
for an informal hearing within 15 calendar days from the date of
issuance of the reconsideration decision. At paragraph (a)(2)(ii), we
propose that MA organizations and Part D sponsors would have to include
in their request a copy of CMS's reconsideration decision, the specific
findings or issues with which they disagree, and the reasons for which
they disagree. At paragraph (a)(2)(iii), we propose to establish the
informal hearing procedures. Specifically, we propose that the CMS
hearing officer would 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 would provide a copy of the
record of the reconsideration decision to the hearing officer. We
further propose that the hearing would be conducted by a hearing
officer who would neither receive testimony nor accept new evidence. We
finally propose that the hearing officer would be limited to the review
of the record that the CMS reconsideration official had when making the
reconsideration decision. At paragraph (a)(2)(iv), we propose that the
CMS hearing officer would send a written decision to the MA
organization or Part D sponsor explaining the basis for the decision.
At paragraph (a)(2)(v), we propose to establish that the hearing
officer's decision would be final and binding, unless the decision is
reversed or modified by the CMS Administrator.
We further propose to establish at paragraph (a)(3) that MA
organizations and Part D sponsors that disagree with the hearing
officer's decision would be able to request a review by the CMS
Administrator.
At paragraph (a)(3)(i), we propose that MA organizations and Part D
sponsors would 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 but would
not be able to submit evidence in addition to the evidence submitted
during CMS's reconsideration. At paragraph (a)(3)(ii), we propose that
the CMS Administrator would 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 propose that if the
Administrator declines to review the hearing officer's decision, the
hearing officer's decision would be final and binding.
We propose at paragraph (a)(3)(iii) that, if the Administrator
elects to review the hearing officer's decision within 30 calendar days
of receiving the request, the Administrator would 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 paragraph (a)(3)(iv), we
propose that the Administrator's determination would be final and
binding and no other requests for review would be considered.
At paragraph (b), we propose to establish the matters subject to
appeal and that an MA organization or Part D sponsor bears the burden
of proof. At paragraph (b)(1), we propose to establish that the MA
organization or Part D sponsor appeal would be limited to CMS's
calculation of the MLR audit remittance. At paragraph (b)(2), we
propose that the MA organization or Part D sponsor would bear the
burden
[[Page 99453]]
of proof by providing evidence demonstrating that CMS's audit
examination findings for the MLR audit remittance are incorrect.
At paragraph (b), we propose to establish the matters subject to
appeal and that an MA organization or Part D sponsor bears the burden
of proof. At paragraph (b)(1), we propose to establish that the MA
organization or Part D sponsor appeal would be limited to CMS's
calculation of the MLR audit remittance. At paragraph (b)(2), we
propose that the MA organization or Part D sponsor would bear the
burden of proof by providing evidence demonstrating that CMS's audit
examination results for the MLR audit remittance require further
review. The MA organizations and Part D sponsors may not challenge the
underlying methodology for the MLR audit remittance calculation.
Proposed paragraph (d) would clarify that nothing in this section
would limit an MA organization or Part D sponsor's responsibility to
comply with any other applicable statute or regulation.
We seek comment on these proposals.
d. MLR Audit Compliance Actions
To address issues of noncompliance as identified through an MLR
audit, CMS would pursue certain actions depending on the audit results.
If an audit examination finds inaccurate MLR data was reported and that
the recalculated MLR (based on the audit finding(s)) is less than 85
percent, CMS proposes to determine remittances owed, send a remittance
notice, issue a Corrective Action Plan (CAP) consistent with
regulations Sec. Sec. 422.504 and 423.505, and require a detailed
response from the MA organization or Part D sponsor outlining how the
plan would address the audit finding(s).
If an audit examination finds inaccurate MLR data was reported but
the MLR remains greater than 85 percent when recalculated based on the
audit finding(s), CMS proposes to issue progressive noncompliance
actions consistent with the regulations at Sec. Sec. 422.504(m) and
423.505(n), depending on the plan's previous record of compliance and
the gravity of the violation (for example, violation frequency, level
of financial impact). CMS also proposes to require the MA organization
or Part D sponsor to address the audit finding(s) and explain the
corrective actions they have taken or plan to take. CMS reserves the
right to review the actual implementation of the MA organization's or
Part D sponsor's plan to provide correct MLR data in future MLR annual
reporting forms, examinations, or as otherwise may be appropriate, to
ensure noncompliance issues are being or have been addressed.
Finally, we propose to amend Sec. Sec. 422.2480(d) and 423.2480(d)
to establish that if CMS finds MLR data to be reported in an untimely
and inaccurate manner, we may pursue intermediate sanctions in
accordance with 42 CFR part 422, subpart O and 42 CFR part 423, subpart
O. This amendment will provide us with flexibility in the future to
take additional actions if audit examinations uncover instances where
MLR data is not reported in a timely and accurate manner in compliance
with 42 CFR part 422, subpart X and part 423, subpart X. It will also
encourage MA organizations and Part D sponsors to approach their MLR
calculations with greater precision. We seek comment on this proposal.
6. Proposal To Change Medicare MLR Regulations Authorizing Release of
Part C and Part D MLR Data (Sec. Sec. 422.2490 and 423.2490)
Part C MLR data defined at Sec. 422.2490(a) and Part D MLR data
defined at Sec. 423.2490(a) refers to the data the MA organizations
and Part D sponsors submit to CMS in their annual MLR Reports, as
required under existing Sec. Sec. 422.2460 and 423.2460. For the
purpose of the data release under Sec. Sec. 422.2490 and 423.2490, we
currently exclude certain categories of information from the release of
Part C and Part D MLR data, as described at Sec. Sec. 422.2490(b) and
423.2490(b). Specifically, CMS excludes four categories of information
from the release of Part C and Part D MLR data. First, at Sec. Sec.
422.2490(b)(1) and 423.2490(b)(1), we exclude from release any
narrative information that MA organizations and Part D sponsors submit
to support the amounts that they include in their MLR Reports, such as
descriptions of the methods used to allocate expenses. Second, at
Sec. Sec. 422.2490(b)(2) and 423.2490(b)(2), we exclude from release
any plan-level information that MA organizations and Part D sponsors
submit in their MLR Reports. Third, at Sec. Sec. 422.2490(b)(3) and
423.2490(b)(3), we exclude from release any information that could be
used to identify Medicare beneficiaries or other individuals. Fourth,
at Sec. Sec. 422.2490(b)(4) and 423.2490(b)(4), we exclude from
release any MLR review correspondence.
At Sec. Sec. 422.2490(b)(6) and 423.2490(b)(6), we propose to add
an exclusion to the data release, to exclude from release the DIR
information reported within the MLR data as part of incurred claims. We
are proposing this exclusion to align with the disclosure requirements
regarding DIR data as required by section 1860D-15(f) of the Act.
7. Proposal To Exclude Medicare Prescription Payment Plan Unsettled
Balances From the MLR (Sec. Sec. 422.2420 and 423.2420)
The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169) made
several additions and amendments to the Act that affect the structure
of the defined standard Part D drug benefit. Section 11202 of the IRA
(Maximum Monthly Cap on Cost-Sharing Payments under Prescription Drug
Plans and MA-PD Plans) added a new section 1860D-2(b)(2)(E) to the Act
requiring all Medicare prescription drug plans to offer their Part D
enrollees the option to pay out-of-pocket (OOP) Part D drug costs
through monthly payments over the course of the plan year instead of at
the pharmacy point of sale (POS) beginning January 1, 2025. Section
1860D-2(b)(2)(E)(v)(VI) of the Act specifies that any unsettled
balances with respect to amounts owed under the Medicare Prescription
Payment Plan ``shall be treated as plan losses and the Secretary shall
not be liable for any such balances outside of those assumed as losses
estimated in plan bids.''
Section 11202(c) of the IRA directs the Secretary to implement the
Medicare Prescription Payment Plan for 2025 by program instruction or
other forms of program guidance. In accordance with the law, CMS
released guidance establishing critical operational and technical, and
communication requirements for the Medicare Prescription Payment Plan
for 2025. In the Medicare Prescription Payment Plan: Final Part Two
Guidance on Select Topics, Implementation of section 1860D-2 of the
Social Security Act for 2025, and Response to Relevant Comments, CMS
established that, consistent with the inclusion of plan losses in the
administrative expense portion of the Part D bid, unsettled balances
from the Medicare Prescription Payment Plan will be considered
administrative costs for purposes of the MLR calculation and therefore
be excluded from the MLR numerator.
CMS does not have program instruction authority to implement the
Medicare Prescription Payment Plan beyond 2025, so we are pursuing
rulemaking to codify the requirements of the program for 2026 and
subsequent years. In this proposed rule, with respect to the treatment
of unsettled balances from the Medicare Prescription Payment Plan, we
propose to exclude unsettled balances from the Medicare Prescription
Payment Plan from the
[[Page 99454]]
MLR numerator at Sec. Sec. 422.2420(b)(4)(i)(D) and
423.2420(b)(4)(i)(D).
8. Request for Information on MLR and Vertical Integration
MLR reporting may be less transparent for integrated medical
systems where the MA organization or Part D sponsor is a subsidiary,
owner, or affiliate in such a system. In these situations, there may be
reduced transparency when an MA organization or Part D sponsor reports
an MLR based only on their own direct expenditures due to the
relationships between these related entities and the potential that
payments made to related parties may, in some cases, be inflated to
ensure the MA organization or Part D sponsor meets its MLR reporting
requirements, obscuring the actual MA and Part D-related profits made
by the integrated system as a whole. Policymakers, MedPAC, and other
researchers have raised concerns that large MA organizations are
becoming more vertically integrated by acquiring hospitals, physician
practices, pharmacy benefit managers, specialty pharmacies, and other
related health care businesses.227 228 Furthermore, there is
evidence that this vertical integration is associated with higher
health and prescription drug expenditures.229 230
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\227\ https://www.cms.gov/newsroom/fact-sheets/cms-letter-plans-and-pharmacy-benefit-managers.
\228\ www.ftc.gov/system/files/ftc_gov/pdf/pharmacy-benefit-managers-staff-report.pdf, page 45.
\229\ https://www.medpac.gov/wp-content/uploads/2023/06/Jun23_MedPAC_Report_To_Congress_SEC.pdf, page 17.
\230\ https://www.medpac.gov/wp-content/uploads/2024/03/Mar24_MedPAC_Report_To_Congress_SEC.pdf, page 365.
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In addition to the proposed regulatory changes, we are issuing a
request for information seeking comment from the public on whether CMS
could and should adopt policies, and if so, what potential policies it
could or should adopt, regarding how the MA and Part D MLRs are
calculated to help enable policymakers to address concerns surrounding
vertical integration in MA and Part D. Based on the information we
receive, CMS will consider additional rulemaking or guidance for future
contract year rulemaking. Specifically, we are requesting comment,
data, and examples regarding the following potential policies:
Establish parameters in MLR reporting that limit the
amount of transfer payments that are incurred between related parties
that can be included in the numerator, such as by limiting the amount
for any service included in the numerator to be under a relative
benchmark.
Revise definition of incurred claims to include profits
earned by related parties as indirect remuneration to a Part D sponsor
or MA organization and not allowable for inclusion in the MLR
numerator.
Revise definition of incurred claims to include payments
that are net of direct or indirect remuneration by or to the Parent
Organization, in addition to the Part D sponsor.
Establish a framework for assessing transfer payments made
to or by related parties by expanding related-party reporting
requirements in the MLR. CMS specifically invites comment on the kind
of information CMS could collect about transfer payments to be able to
assess what portions of such payments should be reported in the MLR
numerator.
We also request comment on the type of information we
could collect to better define types of vertical integration or related
party relationships that exist in the health insurance market.
Other frameworks or policies not enumerated here.
Please note that this is a request for information only and is
issued solely for information and planning purposes.
9. Technical Correction (Sec. 422.2420)
In the course of this rulemaking, we noticed the need for a
technical correction at regulation Sec. 422.2420(c)(2)(iv), which
specifies that Federal income tax-exempt MA organization community
benefit expenditure payments may be deducted up to a specific limit
when calculating the MLR. The regulation text currently refers to Part
D sponsors in two places when it should refer to MA organizations, and
thus we propose to make the correction.
10. Proposal To Add Provider Payment Arrangement Reporting in the
Medicare MLR Reporting Regulations (Sec. Sec. 422.2460 and 422.2490)
Alternative payment models (APMs) have become increasingly
prevalent in the health care system.\231\ In addition, CMS continues to
test different value-based programs to pay providers based on quality,
rather than quantity of care.232 233 234 APMs are
arrangements under which providers have added incentives to provide
high-quality and cost-effective care, which can apply to a clinical
condition, episode of care, or patient population.\235\ Researchers and
stakeholders, through the Request for Information on MA data, have
raised concerns that there is limited public information available
about APMs outside of Traditional Medicare.236 237 In
addition, researchers have raised concerns that these payment
arrangements may not be transparent and could lead to increases in
reported claims spending in the Medicare MLR, particularly when the
insurer and provider are the same business entity or very closely tied
together.\238\ Furthermore, stakeholders have called on CMS to collect
more data on value-based payment arrangements between providers and
plans. \239\
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\231\ https://www.techtarget.com/revcyclemanagement/answer/Value-Based-Reimbursement-Grows-as-Providers-Take-on-More-Risk.
\232\ https://hcp-lan.org/workproducts/apm-methodology-2023.pdf.
\233\ https://www.cms.gov/medicare/quality/value-based-programs.
\234\ https://www.cms.gov/priorities/innovation/
about#:~:text=The%20CMS%20Innovation%20Center's%20models,Advantage%20
or%20Medicare%20Part%20D.
\235\ https://qpp.cms.gov/apms/overview.
\236\ https://www.ajmc.com/view/all-payer-value-based-contracting-in-organizations-with-medicare-acos.
\237\ https://www.regulations.gov/document/CMS-2024-0008-0001/comment.
\238\ https://www.brookings.edu/articles/medicare-advantage-spending-medical-loss-ratios-and-related-businesses-an-initial-investigation/.
\239\ https://www.govinfo.gov/content/pkg/FR-2024-01-30/pdf/2024-01832.pdf.
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Therefore, to improve transparency and oversight of the use of
Medicare Trust Fund dollars, we are proposing to collect additional
details regarding plan expenditures categorized by different provider
payment arrangements.\240\ Building on the existing Medicare Part C
reporting requirements, we propose simplified provider payment
arrangement categories for ease of reporting as we believe the
streamlined categories will provide sufficient information to help
inform the accuracy of MLR submissions, and value of services provided
to MA enrollees.\241\ Specifically, we propose to amend Sec.
422.2460(a) so the regulation text explicitly provides that the MLR
report submitted to CMS includes aggregate expenditures by provider
payment arrangement type in MA. Under our proposed amendment, paragraph
(a) of Sec. 422.2460 would state that, except as provided in paragraph
(b), for each contract year, each MA organization must submit to CMS,
in a timeframe and manner we specify, a report that includes the data
needed to calculate and verify the MLR and remittance amount, if any,
for each contract,
[[Page 99455]]
including the amount of incurred claims for Medicare-covered benefits,
supplemental benefits, provider payment arrangements, and prescription
drugs; expenditures on quality improving activities; non-claims costs;
taxes; licensing and regulatory fees; total revenue; and any remittance
owed to CMS under Sec. 422.2410.
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\240\ https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-422/subpart-X/section-422.2420.
\241\ https://www.cms.gov/files/document/cy2024-part-c-reporting-requirements.pdf.
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If our proposal to amend our regulations to require additional MLR
data is finalized, we intend to make changes to the MLR Reporting Tool.
We will revise the MLR Reporting Tool to add separate fields to capture
various categories of expenditures for provider payment arrangements.
Specifically, we propose to collect the following sample list of three
categories of provider payment arrangements ordered from lowest to
highest financial accountability for providers: FFS, APMs, and
population-based payments. These proposed categories of provider
payment arrangements are based on the Health Care Payment Learning &
Action Network (HCPLAN) APM framework and ongoing measurement effort in
order to reduce the reporting burden on stakeholders.\242\ FFS payment
arrangements are typically based on FFS payments in which providers are
paid for each service that is billed by the patient's insurer and may
or may not be linked to pay-for-performance or quality payments to
improve quality performance such as care coordination fees or bonuses
for reporting data. APMs may include upside and/or downside risk such
as shared-savings linked to utilization, a clinical episode, or
procedure-based bundled payments. Providers who meet quality, and cost
or utilization targets may receive shared savings, and/or be held
financially accountable for missing performance measures designed to
deliver care to patients at the right time, place, and level of
intensity. Finally, in population based payments providers are paid
through capitated payments for comprehensive treatment of specific
conditions, bundled services such as oncology care, or a global budget
that is not condition specific, but is linked to quality. These
comprehensive payment arrangements are designed to pay providers a
percentage of, or the full premium. Providers are then fully
financially accountable for the delivery of person-centered care
through coordinated preventive health, health improvement, acute and
chronic care services.243 244
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\242\ https://www.cms.gov/priorities/innovation/innovation-models/health-care-payment-learning-and-action-network.
\243\ https://hcp-lan.org/workproducts/apm-methodology-2023.pdf.
\244\ https://hcp-lan.org/workproducts/apm-refresh-whitepaper-final.pdf.
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We believe it is appropriate for CMS to retain flexibility to
modify the scope of the data fields and the specific list of provider
payment arrangements required to be reported on the MLR Reporting
Template. Maintaining this flexibility will allow CMS to collect data
that is sufficiently detailed to enable us to understand benefit
expenditures and verify and increase accountability for the accuracy of
MLR calculation. We believe the proposed amendment to Sec. 422.2460(a)
will provide us with the flexibility to modify the scope of data fields
and categories required for expenditures under various provider payment
arrangements. The intent of this proposed rule is not to create a
static MLR report; rather this rule is intended to enable reporting
requirements that support the program needs, such as supporting MLR
calculation, verifying data reporting accuracy, gaining insight into
expenditures under various provider payment arrangements, and providing
transparency into program expenditures.
Modifications to the MLR data requirements for expenditures under
provider payment arrangements will be set forth in a revision to the
MLR Paperwork Reduction Act package (CMS-10476, OMB 0938-1232) and made
available to the public for review and comment under the standard PRA
process which includes the publication of 60- and 30- day Federal
Register notices and the posting of the collection of information
documents on our PRA website. The sample list of provider payment
arrangements in the proposed rule should be viewed as examples of the
types of categories CMS is interested in collecting based on the APM
framework described above. We will set forth data reporting
requirements in a revised package as required by the PRA. This package
will be published in the Federal Register and be available for public
comment.
We solicit comment on whether the sample list of categories of
provider payment arrangements include the appropriate breakouts for
separating out incurred claims in the MLR Reporting Tool. We are
interested in feedback that addresses whether we should increase or
decrease the number of categories, as well as suggestions for
clarifications, alternative categories, or for consolidating
categories. Given the differences in provider payment arrangements
between MA and Part D, CMS is not proposing to add these requirements
to the Medicare MLR reporting for the Part D portion of MA-PD plans or
standalone Part D plans at this time at Sec. 423.2460(a). We are
interested in the extent to which the proposed payment arrangement
reporting in the Medicare MLR report applies to Part D and potential
provider payment arrangements for Part D.
Finally, we do not intend to release the provider payment
arrangements data we collect publicly unless it is deidentified and
reported as aggregate totals. Specifically, we propose to add an
exclusion to the data release at Sec. 422.2490(b)(7) to exclude any
provider payment arrangement data that is not reported on a
deidentified basis and that is not reported on an aggregate total
basis. We solicit comment on whether there is additional sensitivity
around expenditures under provider payment arrangements, such that
public release of data concerning those expenditures would be harmful.
U. Enhancing Rules on Internal Coverage Criteria Sec. 422.101
In the final 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,
and Programs of All-Inclusive Care for the Elderly,'' which appeared in
the Federal Register on April 12, 2023 (88 FR 22120) (hereinafter
referred to as the ``April 2023 final rule''), we codified regulations
that clarified the obligations and responsibilities for MA
organizations in covering basic benefits and established guardrails for
when MA organizations may develop and use coverage criteria to achieve
better alignment with Traditional Medicare.\245\ We clarified at Sec.
422.101(b)(2) that statutes and regulations that set the scope of
coverage in the Traditional Medicare program are applicable to MA
organizations in setting the scope of basic benefits that must be
covered by MA plans.\246\ We codified requirements for making medical
necessity determinations at Sec. 422.101(c)(1), which includes using
applicable coverage criteria in Traditional Medicare laws, CMS's
national coverage determinations (NCDs), applicable local coverage
determinations (LCDs), and--when Traditional Medicare coverage criteria
are not fully established--internal coverage criteria. We also codified
[[Page 99456]]
specific requirements at Sec. 422.101(b)(6) that determine when MA
organizations may use internal coverage criteria, what the criteria
must be based on, and rules for making the internal coverage criteria
publicly accessible. Finally, we codified enrollee protections related
to the use of prior authorization (at Sec. 422.112(b)(8)) and required
MA organizations to establish a utilization management committee that
reviews and approves all plan utilization management policies (at Sec.
422.137). These rules were applicable to coverage for MA organizations
beginning January 1, 2024.
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\245\ 88 FR 22189.
\246\ 88 FR 22187.
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Since the issuance of the April 2023 final rule, CMS has received
numerous questions about the application of these rules. As a result,
we issued a memo titled ``Frequently Asked Questions related to
Coverage Criteria and Utilization Management Requirements in CMS Final
Rule (CMS-4201-F),'' on February 6, 2024 (hereinafter referred to as
the ``February 2024 HPMS memo'') to provide answers to commonly asked
questions and provide additional clarifying information to MA
organizations about how these new rules apply to basic benefits.
Additionally, through CMS account manager engagement with MA
organizations, incoming inquiries from industry stakeholders, and our
ongoing 2024 program audits, we have learned a great deal about common
misunderstandings related to these new rules and where these new
policies could be further clarified with additional rulemaking to
achieve the intended goal of ensuring access to medically necessary
care for MA enrollees. Therefore, we are proposing here to build upon
and enhance the regulations from the April 2023 final rule,
specifically those related to the use of internal coverage criteria, by
defining the phrase ``internal coverage criteria,'' establishing policy
guardrails to preserve access to basic benefits, and adding more
specific rules about publicly posting internal coverage criteria
content on MA organization websites. MA organizations' coverage of and
responsibility to provide 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 provisions. These proposals will further
implement the requirements set forth in section 1852 of the Act and
Sec. Sec. 422.100 and 422.101, which require MA organizations to
furnish all reasonable and necessary Part A and B benefits and are
therefore proposed pursuant to CMS's authority under section 1856(b) of
the Act.
1. Using Internal Coverage Criteria To Interpret or Supplement General
Provisions
In the April 2023 final rule, we codified at Sec. 422.101(b)(6)(i)
that MA organizations may apply internal coverage criteria when
coverage criteria under Traditional Medicare are not fully established
in three specific circumstances. In Sec. 422.101(b)(6)(i)(A), we
explained that one circumstance when it is appropriate to use internal
coverage criteria is when additional, unspecified criteria are needed
to interpret or supplement general provisions in order to determine
medical necessity consistently. We required that MA organizations must
demonstrate that the additional criteria the MA organizations apply
provide clinical benefits that are highly likely to outweigh any
clinical harms, including from delayed or decreased access to items or
services. The NCDs and LCDs that MA plans must follow are developed
through rigorous evidence review processes \247\ with public input to
identify gaps or lack of clarity in a proposed policy; as a result, the
evidence-based coverage criteria are as specific as possible upon
finalization. It is only in the rare instance when an NCD or LCD is
lacking in specificity or clarity, that we would consider internal
coverage criteria to be permissible to interpret or supplement general
provisions under 422.101(b)(6)(i)(A). Our intent with this requirement
was to allow MA organizations to interpret or supplement the plain
language of existing and applicable Medicare coverage and benefit
criteria (as stated in applicable Medicare statutes, regulations, NCDs,
or applicable LCDs) when needed, but also only when the additional
criteria protect patient safety and outweigh any risks of harm or
decreased access to the items or services. However, we believe this
regulatory text needs to be refined to more clearly state our intent
about interpreting existing policies and to achieve our goal of
protecting patients without decreasing access to medically necessary
care.
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\247\ CMS National Coverage Analysis Evidence Review Guidance
Document (August 7, 2024) available at https://www.cms.gov/files/document/cms-evidence-review2024pdf.pdf;; Revised Process for Making
National Coverage Determinations 78 FR 48164 (August 7, 2013)
available at https://www.cms.gov/medicare/coverage/determinationprocess/downloads/fr08072013.pdf; and Medicare Program
Integrity Manual Chapter 13-Local Coverage Determinations (February
2, 2019) available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pim83c13.pdf.
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First, we propose to replace the term ``general provisions'' at
Sec. 422.101(b)(6)(i)(A) with ``the plain language of applicable
Medicare coverage and benefit criteria.'' The term ``general
provisions'' was meant to encapsulate all forms of applicable Medicare
coverage and benefit rules that exist in statute, regulation, NCD, or
applicable LCD. These general provisions already exist as Medicare
coverage policies at the time that the MA organization is required to
apply them to make a determination about coverage. We propose to add
the term ``plain language'' in regulation text to make it explicitly
evident that internal coverage criteria may only be used to supplement
or interpret already existing content within these Medicare coverage
and benefit rules. In other words, internal coverage criteria cannot be
used to add new, unrelated (that is, without supplementary or
interpretive value) coverage criteria for an item or service that
already has existing, but not fully established, coverage policies.
This also supports the current requirement at Sec.
422.101(b)(6)(ii)(C) that MA organizations must ``identify the general
provisions that are being supplemented or interpreted'' in the publicly
accessible material. It was our intent that the MA organization
identify the plain language of the applicable Medicare coverage and
benefit criteria that they are interpreting or supplementing in the
publicly available material and provide an explanation of the rationale
that supports the adoption and application of the internal coverage
criteria. Therefore, we also propose to make conforming edits to the
``publicly accessible'' requirements at Sec. 422.101(b)(6)(ii)(C) to
replace the term ``general provisions'' with ``the plain language of
applicable Medicare coverage and benefit criteria.''
Second, we propose to remove the existing requirement at Sec.
422.101(b)(6)(i)(A) that the MA organization must demonstrate that the
additional criteria provide clinical benefits that are highly likely to
outweigh any clinical harms, including from delayed or decreased access
to items or services. In our examination of publicly available internal
coverage criteria since the rule became effective on January 1, 2024,
we have found that an assessment about whether the criteria provide
clinical benefits that are highly likely to outweigh any clinical harms
is difficult to definitively prove through evidence and, as a result,
enforce as a policy. We have observed numerous instances of MA
organizations simply
[[Page 99457]]
and baldly stating that their internal coverage criteria provide
clinical benefits that are highly likely to outweigh any clinical
harms, but we have not seen much in the way of evidence in the
information provided by the MA organizations that definitively proves
this to be true. Often, the clinical benefits that are cited by the MA
organizations are simply the avoidance of potential risks or harms
associated with the relevant healthcare item or service at issue. We
have found that it is difficult to measure the probability that the
criteria cited and applied by the MA organizations will (or may) have a
net positive effect over the potential risks of not applying the
criteria. Further, the qualitative explanations that the MA
organizations have asserted as to why the benefits of the criteria used
are highly likely to outweigh any harms are not often supported with
reliable evidence. For these reasons, we propose to remove the
``clinical benefits that are highly likely to outweigh any clinical
harms'' requirement in both Sec. 422.101(b)(6)(i)(A) and (ii)(C), and
replace it with two important policy guardrails in new paragraph (iv)
that will apply to all internal coverage criteria adopted under
paragraph (b)(6)(i)--not just internal coverage criteria that are
authorized under Sec. 422.101(b)(6)(i)(A).
As a possible alternative, we solicit comment on replacing the
existing requirement at Sec. 422.101(b)(6)(i)(A) that the MA
organization must demonstrate that the additional criteria provide
clinical benefits that are highly likely to outweigh any clinical harms
with a requirement that the MA organization must demonstrate through
evidence that the additional criteria explicitly support patient
safety. We solicit comment on whether this approach is clearer than the
current standard and how we could define patient safety in a way that
MA organizations understand how to comply with the rule.
Finally, unrelated to our policy proposal to modify paragraph (A),
we propose to make a minor change at Sec. 422.101(b)(6)(i)(B) to state
that NCDs or applicable LCDs include flexibility that explicitly allows
for discretionary coverage by the MA organization in circumstances
beyond the specific indications that are listed in an NCD or applicable
LCD. The addition of the word ``discretionary'' is meant to make clear
that when an NCD or applicable LCD provides flexibility for the
Medicare Administrative Contractor (MAC) to cover or not cover the item
or service beyond the specific indications listed, the coverage or non-
coverage of the item or service by the MA organization is purely
discretionary and is not guaranteed.
2. Definition of Internal Coverage Criteria
In the April 2023 final rule, we codified at Sec. 422.101(b)(6)
that MA organizations may create publicly accessible internal coverage
criteria that are based on current evidence in widely used treatment
guidelines or clinical literature when coverage criteria are not fully
established in applicable Medicare statutes, regulations, NCDs or LCDs.
We further defined what we meant by ``coverage criteria are not fully
established'' and ``publicly accessible'' at Sec. 422.101(b)(6)(i) and
(ii), respectively, but we did not provide a definition of ``internal
coverage criteria.'' Over the past year, through engagements with
stakeholders, we have found that various MA organizations have
interpreted the meaning of ``internal coverage criteria'' differently.
For example, some MA organizations are not aware that coverage criteria
from third parties (entities other than CMS or the MA organization) can
be considered internal coverage criteria of the MA organization when
the organization adopts the criteria (or criterion) that contain
policies or measures that cannot be found in Medicare laws, NCDs, or
LCDs. Another MA organization believed that evidence found in articles
or studies cited in the bibliography section of an LCD, but not
discussed or listed in the coverage guidance section, could be applied
as part of the LCD and not considered internal coverage criteria of the
MA plan. A different MA organization wondered whether criteria and
policies found in CMS manual guidance should be considered internal
coverage criteria. Finally, some organizations are just not aware that
their long-established coverage policies contain internal coverage
criteria because they have been supplementing existing Traditional
Medicare policies for years to fill in gaps where coverage criteria do
not specify all possible circumstances where coverage of a Part A or
Part B item or service may be available for a beneficiary. These are
just some of the examples that we have been made aware of, and we
believe there are other misunderstandings throughout the plan
community. Therefore, we are proposing additional rules to define the
term and clarify what CMS considers ``internal coverage criteria.''
We propose new regulatory text at Sec. 422.101(b)(6)(iii) to
provide clarity on these topics for MA organizations and to further
protect beneficiaries by ensuring equal access to these basic benefits.
More specifically, we propose to define internal coverage criteria as
any policies, measures, tools, or guidelines, whether developed by an
MA organization or a third party, that are not expressly stated in
applicable statutes, regulations, NCDs, LCDs, or CMS manuals and are
adopted or relied upon by an MA organization for purposes of making a
medical necessity determination at Sec. 422.101(c)(1). We explain in
regulation text that this includes any coverage criteria that restrict
access to, or payment for, medically necessary Part A or Part B items
or services based on the duration or frequency, setting or level of
care, or clinical effectiveness of the care.
First and foremost, we find it important to reiterate that internal
coverage criteria are inherently ``internal'' to the MA plan that
utilizes them because they are a policy, measure, tool, or guideline
that does not exist in applicable Medicare coverage or benefit rules.
Further, other MA plans are not required to use the criteria and
therefore it would be an element of coverage specific to the MA plan.
This includes criteria used to further interpret or supplement the
plain language of applicable Medicare coverage and benefit criteria
because any coverage criteria or guidelines that are not contained in
the actual statutes, regulations, NCDs, or applicable LCDs, or
addressed in CMS manual guidance interpreting or explaining such
criteria or guidelines would be considered non-Medicare criteria. For
example, using information or evidence to form coverage criteria not
found in the plain language of an LCD, but found in an article or study
cited in the bibliography of an LCD, would be an example of an MA plan
using internal coverage criteria. Only coverage criteria and policies
found in the NCD, applicable LCD, related statutes or regulations, or
addressed in CMS manual guidance interpreting related statutes or
regulations, are not subject to the rules at Sec. 422.101(b)(6); all
other coverage criteria applied by an MA organization would be
considered internal coverage criteria.
Based on this proposed definition, we do not consider content and
information found in CMS published manuals (e.g., Medicare Managed Care
Manual, Medicare Program Integrity Manual, Medicare Benefit Policy
Manual) to be internal coverage criteria under Sec. 422.101(b)(6). As
we explained in the April 2023 final rule, these manuals contain
significant explanations and interpretations of Traditional Medicare
laws governing Part A and Part B benefits, most of it longstanding, to
[[Page 99458]]
provide instructions and procedures for day-to-day operations for those
responsible for administering the Medicare program and making coverage
decisions on individual claims. We expect that MA plans will consult
these manuals without the burden of having to justify their clinical or
evidentiary value as required for internal coverage criteria under
Sec. 422.101(b)(6) (both currently and under the revisions we are
proposing).
We have also received questions from MA organizations about whether
information in Referenced Local Coverage Determination articles are
considered internal coverage criteria when used to make coverage
decisions. Referenced Local Coverage Determination articles are issued
by Medicare Administrative Contractors (MACs) to provide coding/billing
guidelines and instructions for a particular LCD and do not contain
coverage criteria; that is the role of the LCD. We have observed that
MA organizations sometimes use these articles to see if specific item
or service codes are contained in the article, and when the code is not
listed, use the article as a basis to deny coverage. This is
inappropriate because the LCD provides the criteria that must be
satisfied for Medicare coverage; not the Referenced Local Coverage
Determination article. Simply because an item or service code is not
listed in the Referenced Local Coverage Determination article does not
mean the item or service is not covered by the LCD. Additionally,
Referenced Local Coverage Determination articles do not meet the
standard of ``current evidence in widely used treatment guidelines or
clinical literature'' because they do not exist to provide any clinical
value. As a result, we clarify here that information contained in
Referenced Local Coverage Determination articles may not be used as
internal coverage criteria when making coverage decisions on basic
benefits.
We clarify in the proposed regulation text at Sec.
422.101(b)(6)(iii) that criteria developed by a third-party may be
considered internal coverage criteria when used by an MA organization
in making medical necessity determinations. If the third-party coverage
criteria contain additional policies, measures, tools or guidelines
that do not exist in Medicare statute, regulation, manual, NCD or LCD,
it would be internal coverage criteria of the MA organization when used
or relied upon for the purpose of making a medical necessity decision
regardless of who developed or created the coverage criteria. We note
that many third-party developers of coverage criteria have synthesized
existing Medicare coverage criteria found in statute, regulation, or
NCD/LCD into proprietary workflows or tools and have filled in gaps or
supplemented the Medicare coverage policies with additional measures,
parameters, or policies in an attempt to more clearly identify and
specify when the item or services should be covered. We clarify in this
proposal that the application of additional measures or policies or
more specific parameters that further define Medicare coverage policies
are the application of internal coverage criteria under Sec.
422.101(b)(6)(i)(A) and, therefore, must meet all regulatory
requirements at Sec. 422.101(b)(6). In some circumstances, there may
be multiple parts of an NCD or applicable LCD that are being
supplemented or interpreted with internal coverage criteria by an MA
plan. Every instance where the plain language of a Medicare coverage
rule is interpreted or supplemented is considered internal coverage
criteria, and each instance must be based on current evidence in widely
used treatment guidelines or clinical literature and must be publicly
accessible. Therefore, we expect MA organizations to work closely with
these third parties to understand whether the proprietary third-party
criteria contain any standards or requirements that go beyond what is
found in existing Medicare coverage criteria. Later in this preamble,
we will discuss proposed requirements for how MA organizations should
identify items and services that contain internal coverage criteria by
listing them on their internal websites.
One of the ways that internal coverage criteria can go undetected,
and therefore would fail to be made publicly available by the MA
organization as required by Sec. 422.101(b)(6), is when the criteria
are built into an algorithm or software tool that generates a decision
without an explicit understanding by the MA organization of the
underlying factors that were considered by that algorithm or software
tool in the making of the decision. As mentioned in the February 2024
HPMS memo, an algorithm, artificial intelligence, or software tool can
be used to assist MA plans in making coverage determinations, but it is
the responsibility of the MA organization to ensure that the algorithm
or artificial intelligence complies with all applicable rules for how
coverage determinations by MA organizations are made.\248\ In section K
of this proposed rule, we propose to define ``automated system'' as any
system, software, or process that uses computation as whole or part of
a system to determine outcomes, make or aid decisions, inform policy
implementation, collect data or observations, or otherwise interact
with individuals or communities or both. Automated systems include, but
are not limited to, systems derived from machine learning, statistics,
or other data processing or artificial intelligence techniques, and
exclude passive computing infrastructure. Considering this definition
of automated system in the context of the February 2024 HPMS memo, the
MA organization must understand whether any internal coverage criteria
have been built into an automated system, and if so, the specific
details of the criteria that are built into the tool must be publicly
accessible and meet our evidentiary standards at Sec. 422.101(b)(6).
Furthermore, we are concerned that many automated systems can
exacerbate discrimination and bias. An MA organization cannot avoid or
evade responsibility for compliance with MA regulations and the MA
contract by using these automated systems and the MA organization
maintains ultimate responsibility for adhering to and otherwise fully
complying with all regulations and terms and conditions of the MA
organization's contract with CMS.
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\248\ February 2024 HPMS memo, page 2.
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In the proposed definition of internal coverage criteria to be
added at Sec. 422.101(b)(6)(iii), we use a non-exhaustive list of
types of internal coverage criteria--called policies, measures, tools,
or guidelines--that we have seen MA organizations use when making
medical necessity determinations. Use of other terms to describe the
internal coverage criteria would not change their underlying function
and how they are used by MA organizations. Under the proposed
definition at Sec. 422.101(b)(6)(iii), internal coverage criteria
include any coverage policies that restrict access to, or payment for,
medically necessary Part A or Part B items or services based on the
duration or frequency, setting or level of care, or clinical
effectiveness of the care. Again, these types of policies are only
considered internal when they are not articulated in applicable
Medicare coverage and benefit criteria. It is common that MA
organizations have policies such as these for health care items or
services that are not covered by applicable Medicare statutes,
regulations, NCDs, or LCDs. These types of policies are often used to
comply with section 1862(a)(1)(A) of the Act, which requires that Part
A and Part B benefits be reasonable and necessary for
[[Page 99459]]
the diagnosis or treatment of illness, or injury, or to improve the
functioning of a malformed body member. Additionally, MA organizations
are required to have measures that prevent, detect, and correct fraud,
waste, and abuse.\249\ Since internal coverage criteria may be used to
assess the appropriateness of the health care service and could result
in the denial of a medical necessity decision, it is important that
they be based on current evidence in widely used treatment guidelines
or clinical literature and made publicly available.
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\249\ 42 CFR 422.503(b)(4)(vi).
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It is important that we distinguish aspects of MA plan coverage
that do not qualify as internal coverage criteria under the proposed
definition. Utilization management processes and procedures are
interventions that take place before, during, and after the clinical
encounter \250\ and include prior authorization (or pre-authorization),
concurrent review, retrospective review, and claim review. MA
organizations are required by section 1852(g)(1)(a) of the Act to have
procedures for making determinations regarding whether an individual
enrolled in the plan is entitled to receive a health service. Unless
expressly prohibited by statute or regulation (for example, prior
authorization for emergency services), MA organizations can decide
which utilization management processes they wish to employ and are not
required to follow or practice the same utilization management
processes conducted by MACs in Traditional Medicare. These types of
utilization management decisions about when to apply these
interventions are not considered internal coverage criteria under Sec.
422.101(b)(6); but internal coverage criteria applied during one of
these interventions (i.e., prior authorization) are subject to the
rules at Sec. 422.101(b)(6). For example, Traditional Medicare may not
require prior authorization for a specific healthcare service, but an
MA organization may require prior authorization to confirm the presence
of diagnoses and ensure the service is medically necessary. (See Sec.
422.138.) In this case, any internal coverage criteria applied as part
of the prior authorization process will be subject to rules related to
internal coverage criteria, but the ability of the MA organization to
decide which items and services are subject to prior authorization is
not subject to rules on internal coverage criteria at Sec.
422.101(b)(6). Utilization management programs are necessary for MA
organizations to manage the utilization of covered item and services
and ensure that benefits are medically necessary in accordance with the
statute and applicable regulations.
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\250\ https://www.ncbi.nlm.nih.gov/books/NBK560806/.
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Another example of coverage policies that fall outside the scope of
internal coverage criteria are coverage requirements that are based on
whether a provider is in-network or out-of-network. An MA organization
that offers an MA coordinated care plan may specify the networks of
providers from whom enrollees may obtain services if the MA
organization ensures that all covered services, including supplemental
services, are available and accessible under the plan. In other words,
network-based MA plans may limit access to Medicare-covered items and
services via networks, as long as those networks provide adequate
enrollee access (see for example, Sec. Sec. 422.112(a)(1) and
422.114(a)) to services consistent with standards required by section
1852 of the Act (and other applicable laws) and established by CMS.
Therefore, if an enrollee obtains a health care service outside of the
plan's specified network, it may be subject to non-coverage depending
on the type of plan being offered (that is, Health Maintenance
Organization, Preferred Provider Organization) and the MA plan's
written policies on provider network coverage. Coverage limitations
based on network status are not internal coverage criteria under the
proposed definition.
3. Prohibitions
CMS understands that MA organizations need to have coverage
policies to make consistent medical necessity decisions and that
appropriate limitations on the use of these policies is necessary, so
we are relying on our authority under sections 1856(b) and 1857(e)(1)
of the Act to adopt regulatory limitations designed to implement and
carry out the obligations of MA plans to cover benefits while
protecting beneficiaries and ensuring their access to medically
necessary covered benefits. Section 1852(a) of the Act requires MA
plans to cover basic benefits and authorizes coverage of supplemental
benefits. Ensuring access to covered benefits is an important policy
goal for CMS in administering the MA program and we have concluded that
it is necessary and appropriate to adopt specific requirements for how
basic benefits are covered to ensure that MA enrollees receive the
items and services for which benefits are available under Parts A and
B. Therefore, based on these authorities, we are proposing two
requirements that prohibit the use of all internal coverage criteria.
First, we propose at Sec. 422.101(b)(6)(iv)(A) that a coverage
criterion is prohibited when it does not have any clinical benefit, and
therefore, exists to reduce utilization of the item or service. Section
1862(a)(1)(A) of the Act requires Traditional Medicare benefits to be
reasonable and necessary for the diagnosis or treatment of illness or
injury or to improve the functioning of a malformed body member. In the
absence of an NCD or LCD, these decisions are made on a case-by-case
basis after considering the individual's particular factual situation.
MA plans must consider clinical circumstances in making a decision as
to whether Part A and Part B items and services are reasonable and
necessary as well. Under this proposed requirement that the criterion
must have a clinical benefit, the internal criterion must have a value
that contributes to a determination of whether the benefit is
reasonable and necessary under the statute. For example, if the
evidence supporting use of an internal coverage criterion is rooted in
managing care to reduce utilization of an item or service to a less
costly alternative without any clinical value to the patient, the
internal coverage criterion would be a violation of this proposed rule.
Secondly, we propose at Sec. 422.101(b)(6)(iv)(B) that internal
coverage criterion is prohibited when the criterion is used to
automatically deny coverage of basic benefits without the MA
organization making an individual medical necessity determination as
required at Sec. 422.101(c)(1)(i). Internal coverage criteria that
neither considers the individual medical necessity of the patient nor
the clinical effectiveness of the care would be inconsistent with
sections 1862 and 1852(g)(1)(A) of the Act. For instance, a coverage
criterion that establishes a blanket policy to automatically deny
access to a covered benefit in every circumstance without consideration
of the enrollee's medical history, physician's recommendations,
clinical notes, and when appropriate, involvement of the organization's
medical director would be a violation of this rule. Unless there is
current evidence as described at Sec. 422.101(b)(6) that the health
care item or service is experimental or investigational, we would view
this blanket policy as being designed to reduce the utilization of the
item or service, establishing a barrier to potentially medically
necessary care without the MA organization making an individual medical
necessity
[[Page 99460]]
determination as required by law. This proposed rule is intended to
ensure that MA enrollees have equal access to Part A and Part B
benefits as other Medicare beneficiaries and that any coverage criteria
used by the MA plan is done so in accordance with principles that
support the reasonable and necessary standard under the Act.
Both prohibitions being proposed herein at 422.101(b)(6)(iv), which
apply to all internal coverage criteria used by an MA organization,
provide important guardrails to ensure appropriate access to benefits
in a way that CMS can objectively measure with evidence. We solicit
comment on whether there are other prohibitions on internal coverage
criteria that CMS should consider that support and promote access to
medically necessary care in the MA program. We remind MA organizations
that section 1852(b) of the Act and Sec. 422.110(a) prohibit an MA
organization from denying, limiting, or conditioning the coverage or
furnishing of benefits to individuals eligible to enroll in an MA plan
offered by the organization on the basis of any factor that is related
to health status. Additionally, Sec. 422.100(f)(2) provides that 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. As a result, an MA organization that uses
internal coverage criteria must comply with section 1852(b) of the Act,
Sec. 422.110(a), and Sec. 422.100(f)(2) and may not discriminate on
the basis of any factor that is related to the enrollee's health
status. CMS will continue to conduct routine monitoring and auditing of
MA organizations, and through these processes, may discover that
internal coverage criteria are being used that do not comply with rules
at Sec. 422.101(b)(6) or the anti-discrimination rules mentioned
herein. In these circumstances, CMS will utilize its current compliance
and enforcement processes to determine if any action should be taken
for the non-compliance and to remediate the issue. We have strengthened
our audit processes and will consider new compliance and reporting
activities to examine MA organization's compliance with these proposed
rules.
4. Public Availability
In the April 2023 final rule, we codified at Sec.
422.101(b)(6)(ii) that when MA organizations use internal coverage
policies, they must provide the internal coverage criteria in use, a
summary of evidence that was considered during the development of the
criteria, a list of sources of such evidence, and an explanation of the
rationale that supports the adoption of the coverage criteria in a
publicly accessible way. We did not require specific mechanisms for how
the information must be made publicly accessible in an effort to
provide MA organizations flexibility in complying with these new
requirements. We further explained in the February 2024 HPMS memo that
MA organizations are required to have a website under Sec.
422.111(h)(2) and that use of that website for purposes of posting this
information is appropriate. We further elaborated in the memo that
publicly accessible means generally accessible to CMS, enrollees,
providers, researchers, and other stakeholders without undue burden.
Transparency in this area provides a measure of protection for
enrollees and assurances that the coverage criteria are rational and
supportable by current, widely used treatment guidelines and clinical
literature.
With the importance of this protection in mind, we propose to add
more structure and detail to the public accessibility requirements to
ensure that MA organizations are making this information available in a
manner that is routinized and easy to follow. However, before we
discuss the details of newly proposed requirements, first we propose to
make an update to the terminology used in Sec. 422.101(b)(6) to change
the term ``accessible'' to ``available.'' We understand that
``accessible'' has other meanings and there are specific requirements
for accessibility of online materials under section 504 that could make
the term particularly confusing in this context. We believe that
``available'' more accurately describes our intent, which is that the
information is publicly available to the people who need it. Therefore,
we propose to update Sec. 422.101(b)(6) and Sec. 422.101(b)(6)(ii) by
replacing the word ``accessible'' with ``available.'' This change does
not negate or alter the obligations of MA organizations to ensure
accessibility of online materials in accordance with section 504 or
other laws.
Over the course of the past year, we have reviewed numerous MA
organization websites to observe how they are posting the currently
required content. We have seen a variety of different approaches; some
with dedicated web pages that organize the Medicare item or service by
vendor, and others that build the required content into very detailed
coverage policy documents. Both approaches often include hyperlinks to
vendor criteria that contain the content required under Sec.
422.101(b)(6)(ii). In total, we have found that the average person
faces difficulty accessing an MA organization's website for the purpose
of determining whether or not the MA plan applies internal coverage
criteria to the particular Medicare item or service. Therefore, we are
proposing requirements to make this required information more
understandable, readable, and easier to locate.
First, for consistency in terminology, we propose to update Sec.
422.101(b)(6)(ii) which currently states, ``For internal coverage
policies . . .'' to read ``For internal coverage criteria.'' Second, we
are proposing to update the requirements in paragraphs (b)(6)(ii)(A)-
(C) to be more specific about the information that must be publicly
accessible. In paragraph (A), which requires posting each internal
coverage criterion in use, we are adding that each internal coverage
criterion used by the MA organization in making medical necessity
decisions on Part A and Part B benefits must be clearly identified and
marked as internal coverage criterion of the MA plan within coverage
policies. We often see internal coverage criteria that are intertwined
with, or that expand upon, NCD or applicable LCD coverage policies
without any acknowledgement that the MA plan is applying additional
criteria beyond what is found in the applicable NCD or LCD. Therefore,
we are requiring that MA organizations examine and identify each
internal coverage criterion being used and mark or label it as such
within their policy documents for readers to understand that the
specific internal criterion noted is being applied and may be specific
to the MA plan. We are updating the word ``criteria'' to ``criterion''
to make it clear that we expect each single coverage criterion used to
be listed and identified, noting that there may be more than one
criterion that is applied to a given regulation, NCD, or applicable
LCD. In paragraph (B), we are proposing to add to the list of evidence
that supports the coverage criterion by requiring that the evidence be
connected to the internal coverage criterion with a corresponding
footnote. This will allow readers to understand which evidence supports
the use of which internal coverage criterion within the coverage
policies. In paragraph (C), we are making corresponding edits to mirror
the proposed changes previously discussed in Sec. 422.101(b)(6)(i)(A)
by replacing ``general provisions'' with ``the plain language of
applicable Medicare coverage and benefit criteria'' and
[[Page 99461]]
removing the ``clinical benefits that are highly likely to outweigh any
clinical harms'' requirement. Additionally, we are changing
``criteria'' to ``criterion'' in Sec. 422.101(b)(6)(ii)(C) to make it
clear that we require an explanation of the rationale that supports
adoption of each individual internal coverage criterion in use.
In new paragraph (D), we are proposing that by January 1, 2026, MA
organizations must publicly display on the MA organization's website a
list of all items and services for which there are benefits available
under Part A or Part B where the MA organization uses internal coverage
criteria when making medical necessity decisions. The list of items and
services on the website must include the information in paragraph
(b)(6)(ii)(A) through (C) (explicitly or by connecting directly to that
information through a hyperlink) and include the vendor's name when
using a third-party vendor's criteria. The MA organization's internal
coverage criteria web page must be displayed in a prominent manner and
clearly identified in the footer of the website. The web page must be
easily available to the 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, in a machine-readable
format with the data contained within that file being digitally
searchable and downloadable, and include a txt file in the root
directory of the website domain that includes a direct link to the
machine-readable file to establish and maintain automated access. We
believe that by making this information more easily available to
automated searches and data pulls, it will help third-parties and
researchers conduct studies to examine the clinical value of the
internal coverage criteria being used by MA plans.\251\
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\251\ We also note that the requirements for accessibility of
online materials under Section 504 of the Rehabilitation Act apply
to this information as well. See 29 U.S.C. 794; 45 CFR pt. 84.
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In addition to the public posting of this content, we are
considering an annual reporting to CMS of the information in Sec.
422.101(b)(6)(ii)(A)-(D) under our reporting requirements listed at
Sec. 422.516(a). We believe this information is critical to ensuring
appropriate access to Part A and Part B benefits in the MA program and
there is value in comparing use of internal coverage criteria across
all MA organizations. CMS would specify the format and collection of
this information through the normal Paperwork Reduction Act (PRA)
process. Further, we solicit comment on whether CMS should require a
specific format for the information posted on the MA organization
website and whether a standard template for the posted information
would be helpful.
Finally, we do not expect that any of the regulatory changes
proposed in this section will have an impact on the Medicare Trust
Fund. Use of internal coverage criteria by MA organizations is
optional, and when used, helps MA organizations make consistent medical
necessity decisions that are aligned with coverage rules in Traditional
Medicare. We believe that most MA organizations are using internal
coverage criteria that are supported by current evidence in widely used
treatment guidelines or clinical literature, and therefore we do not
believe that these regulatory proposals will significantly change
utilization patterns of Part A or Part B items or services. These
changes and protections promote transparency across MA organizations so
enrollees can make informed choices on plan selection and know when to
appeal an adverse coverage decision, and providers can be informed
about the criteria they must satisfy when seeking coverage of items and
services on behalf of their patients.
If finalized, these proposed rules would be applicable beginning
January 1, 2026. We solicit comments on all aspects of these proposals.
V. Clarifying MA Organization Determinations To Enhance Enrollee
Protections in Inpatient Settings (Sec. Sec. 422.138, 422.562,
422.566, 422.568, 422.572, 422.616, and 422.631)
We are proposing four modifications to existing regulations at 42
CFR part 422, subpart M, to clarify and strengthen existing rules
related to organization determinations. First, we are proposing to
clarify the rule that if an enrollee has no further liability to pay
for services furnished by a Medicare Advantage (MA) organization, a
determination regarding these services is not subject to appeal.
Specifically, we are clarifying that an enrollee's further liability to
pay for services cannot be determined until an MA organization has made
a determination on a request for payment. Second, we are proposing to
modify the definition of an organization determination to clarify that
a coverage decision made by an MA organization contemporaneously to
when an enrollee is receiving such services, including level of care
decisions (such as inpatient or outpatient coverage), is an
organization determination subject to appeal and other existing
requirements. Third, we are proposing to strengthen the notice
requirements to ensure that a provider who has made a standard
organization determination or integrated organization determination
request on an enrollee's behalf, or when it is otherwise appropriate,
receives notice of the MA organization's decision. Finally, we are
proposing a change to the reopening rules to curtail an MA
organization's authority to reopen and modify an approved authorization
for an inpatient hospital admission on the basis of good cause for new
and material evidence. We address each of these proposals in detail
below.
1. Clarifying When a Determination Results in No Further Financial
Liability for the Enrollee (Sec. 422.562)
Section 1852(g)(1)(A) of the Social Security Act (the Act) requires
an MA organization to have a procedure for making determinations
regarding whether an enrollee is entitled to receive a health service
and the amount (if any) that the individual is required to pay with
respect to such service. Under section 1852(g)(2) of the Act, an MA
organization must provide for reconsideration of an adverse
determination upon an enrollee's request. The existing regulations at
part 422, subpart M set forth the administrative appeals process
available to enrollees who wish to dispute an organization
determination made by an MA organization. Section 422.562(c) describes
limits on the applicability of the administrative appeals process in
part 422, subpart M. The limitation in Sec. 422.562(c)(1) states that
if an enrollee receives immediate QIO review (as provided in Sec.
422.622) of a determination of noncoverage of inpatient hospital care,
then the enrollee is not entitled to review of that issue by the MA
organization. The second limitation at Sec. 422.562(c)(2) states that
if an enrollee has no further liability to pay for services that were
furnished by an MA organization, a determination regarding these
services is not subject to appeal.
The organization determination and reconsideration regulations of
part 422, subpart M broadly distinguish between two categories of
decisions: coverage decisions (that is, a decision on whether the MA
organization will furnish, authorize, or arrange for an item, service,
or Part B drug) and payment decisions (that is, a decision whether to
pay or deny payment for services furnished to an enrollee). These
divergent categories of organization determinations have distinct
requirements related to processing timeframes (including the
applicability of processing timeframe extensions), the
[[Page 99462]]
parties eligible to submit an organization determination or
reconsideration request, notice requirements, and whether an MA
organization must expeditiously process an organization determination
or reconsideration request upon receiving a valid request.
When a coverage request is received, or when the MA organization
issues an unsolicited coverage decision related to ongoing services,
the MA organization will apply applicable coverage criteria and either
approve, furnish, arrange for, or deny coverage for the services at
issue. An approved coverage decision should result in the enrollee
receiving the services at issue and the MA organization making payment
to the treating provider when a request for payment is eventually
submitted. When a request for payment for furnished services is
received without a previously approved coverage decision, the MA
organization will apply coverage criteria and must either make payment
or deny the request within the timeframes specified in the ``prompt
payment'' provisions of Sec. 422.520. In addition, the MA organization
must calculate the enrollee's applicable cost-sharing and/or financial
liability for the furnished service (when issuing a partially or fully
adverse decision) including considering applicable beneficiary
protections related to plan-directed care. ``Plan-directed care''
occurs when a contracted provider furnishes a service or refers an
enrollee for a service that an enrollee reasonably believes is a plan-
covered service. Upon receiving plan-directed care, an enrollee cannot
be financially liable for more than the applicable cost-sharing for
that service (see Sec. 422.105). Accordingly, under existing Sec.
422.562(c)(2), if a payment determination related to services furnished
by a MA organization results in no remaining financial liability for
the enrollee, including adverse decisions that fall within the plan-
directed care beneficiary protections, the decision is not subject to
the appeal requirements of part 422, subpart M.\252\ This means that
neither the enrollee nor any other party may appeal an adverse payment
decision under subpart M after an MA organization determines the
enrollee is not financially liable for more than the applicable cost-
sharing of the services for which payment was requested.\253\
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\252\ We note that a state Medicaid agency has a specific right
to appeal an adverse payment decision for a qualified Medicare
beneficiary (QMB) or other full-benefit dually eligible individual
for services in which the state Medicaid agency has made payment or
may be liable, pursuant to Sec. 405.908 and incorporated into part
422, subpart M through Sec. 422.562(d)(1). The right for a state
Medicaid agency to appeal an adverse payment decision may exist even
when Sec. 422.562(c)(2) would otherwise preclude the right to
appeal.
\253\ We note that the provision at Sec. 422.562(c)(2) only
applies to services ``furnished by an MA organization'' which, as we
have explained, generally occurs when a contracted provider, as an
agent of the MA organization, renders covered services to an MA
organization's enrollee. Section 422.562(c)(2) does not limit the
right for parties to appeal adverse payment determinations related
to services provided by a non-contracted provider as non-contracted
providers are not considered agents of an MA organization due to the
lack of a mutual contractual relationship. Instead, non-contracted
providers may become assignees of an enrollee by formally agreeing
to waive any right to payment from the enrollee, in accordance with
Sec. 422.574(b), and then may utilize the administrative appeals
process established at Sec. Sec. 422.578 through 422.616 to appeal
adverse payment determinations in their capacity as an assignee of
the enrollee.
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CMS has historically interpreted the limitations of Sec.
422.562(c)(2) to apply to payment determinations, not coverage
decisions (that is, those addressed under Sec. 422.566(b)(3) and (4)).
From a practical perspective, a coverage decision will affect the care
an enrollee is to receive or is receiving in addition to the enrollee's
cost-sharing liability. Nevertheless, we have identified that some MA
organizations misapply the appeal limitation provision of Sec.
422.562(c)(2) to certain coverage decisions, specifically those related
to an enrollee's inpatient admission or level of care. These MA
organizations often improperly label these adverse coverage decisions
as ``contractual denials'' or ``payment decisions'' even though no
request for payment has been submitted and, oftentimes, the services
are still being rendered at the time of the MA organization's decision.
We have seen instances, for example, where an MA organization will deny
an enrollee coverage for ongoing inpatient services being received in a
contracted hospital and take the position that because MA beneficiary
protection policies on plan-directed care prevent the enrollee from
being financially liable for more than their applicable cost-sharing,
when a request for payment is ultimately submitted, Sec. 422.562(c)(2)
prevents the enrollee from appealing the coverage denial. Consequently,
these enrollees are left without an avenue to appeal decisions that
directly affect their immediate medical care and may also alter the
amount of their applicable cost-sharing if the enrollee's level of care
is changed from inpatient to outpatient during their hospital stay.
Further, the application of Sec. 422.562(c)(2) in this manner may also
contravene section 1852(g)(2) of the Act which requires MA
organizations provide reconsideration of denials of enrollee coverage,
in whole or in part, upon request by the enrollee involved.
To eliminate potential confusion related to identifying when
organization determinations may not be appealable due to the lack of
enrollee financial liability, we propose modifying Sec. 422.562(c)(2)
to clarify that the provision is only applicable to contracted provider
payment disputes arising from a claim payment decision in which the
enrollee has no additional financial liability. The reference to ``no
further liability to pay'' in 422.562(c)(2) means the enrollee's
financial liability will not be affected by whether the payment
determination is upheld or overturned. In scenarios where an enrollee
may still have a balance due for their cost sharing amount, this amount
would not be considered ``further liability to pay'' if this amount
would not be affected by resolution of the payment dispute.
Specifically, we are proposing to modify this paragraph to state
that, based on an MA organization's determination on a request for
payment, if an enrollee has no further liability to pay for services
that were furnished by an MA organization, a determination regarding
these services is not subject to appeal. In other words, we are
proposing to clarify that this limitation is only applicable if there's
been a claim payment determination, which necessarily requires a
submission of a claim or other request for payment from a contracted
provider or enrollee. Coverage decisions, whether approved or denied,
will continue to be subject to the subpart M appeals process. Under our
proposal, an enrollee would be considered potentially liable to pay for
a service until the MA organization makes a determination in response
to a request for payment, including the submission of a provider's
claim for the furnished service.
We believe the proposed clarification to Sec. 422.562(c)(2)
properly reestablishes the intent to exclude contracted provider
payment appeals from the subpart M administrative appeals process when
the enrollee no longer has any interest in the dispute because the
enrollee has received the services in question and has no further
liability to pay for those services. In addition, the proposed
clarification would safeguard enrollees' right to appeal adverse
coverage decisions that may affect the type, duration, or level of
services to be, or being, furnished. However, simply because a payment
decision does not implicate the subpart M administrative appeals
process, an MA organization is not discharged of its obligation to pay
its contracted providers for services
[[Page 99463]]
rendered. Section 1852(a)(1) of the Act and CMS regulations at Sec.
422.101(a) and (b) require all MA organizations to provide coverage of,
by furnishing, arranging for, or making payment for (emphasis added),
all items and services that are covered by Part A and Part B of
Medicare and that are available to beneficiaries residing in the plan's
service area. We expect MA organizations to establish networks of
providers to deliver plan-covered benefits and pay them in accordance
with terms of the contracts established. Failure to abide by contract
terms and contract disputes can have a negative impact on providers,
their ability to properly deliver benefits, and ultimately adversely
impact patients in the health care system.
2. Clarifying the Definition of an Organization Determination To
Enhance Enrollee Protections in Inpatient Settings (Sec. Sec. 422.138
and 422.566)
Section 1852(g)(1)(A) of the Act requires MA organizations to have
a procedure for making determinations regarding whether an enrollee is
entitled to receive health services or payment under the program. In
accordance with section 1852(g)(1)(A) of the Act, Sec. Sec. 422.566
through 422.572 establish the requirements related to organization
determinations. Existing Sec. 422.566(b) defines an organization
determination as any determination made by an MA organization that
falls within a prescribed set of discrete actions. These include, at
subsection (b)(3), an ``MA organization's refusal to provide or pay for
services, in whole or in part, including the type or level of services,
that the enrollee believes should be furnished or arranged for by the
MA organization'' and, at subsection (b)(4), the ``[r]eduction, or
premature discontinuation, of a previously authorized ongoing course of
treatment.'' Taken collectively, this means an organization
determination may be made prior to the receipt of services (for
example, prior authorization), after the receipt of services (for
example, payment requests), or during receipt of services (for example,
continuation or termination of services) the enrollee receives from
either contracted or non-contracted providers.
An ``organization determination,'' as defined by Sec. 422.566, is
a decision ``regarding the benefits an enrollee is entitled to receive
under an MA plan . . . and the amount, if any, that the enrollee is
required to pay for a health services'' to include, among other
actions, ``the MA organization's refusal to provide or pay for
services, in whole or in part, including the type or level of services,
that the enrollee believes should be furnished or arranged for by the
MA organization.'' When an MA organization makes an adverse
organization determination (for example, denying coverage for a
service), it must adhere to certain requirements that include providing
notice of the decision to the enrollee in a format prescribed by CMS
(see Sec. 422.568(e)), within designated timeframes (see Sec. Sec.
422.568 and 422.572), and, if the adverse decision was based on medical
necessity, ensuring the decision was reviewed by a physician or other
appropriate heath care professional with expertise in the field of
medicine appropriate for the services at issue (see Sec. 422.566(d)).
In accordance with Sec. 422.576, an ``organization determination is
binding on all parties unless it is reconsidered under Sec. Sec.
422.578 through 422.596 or is reopened and revised under Sec.
422.616.'' An enrollee or physician who is acting on behalf of the
enrollee (regardless of their affiliation with an MA organization) may
request an expedited reconsideration of an adverse organization
determination concerning the type or level of services that the
enrollee believes they should receive (see Sec. Sec. 422.578 and
422.584(a)). However, pursuant to Sec. 422.562(c)(2), if an ``enrollee
has no further liability to pay for services that were furnished by the
MAO, a determination regarding these services is not subject to
appeal.''
Historically, we have interpreted the definition of an organization
determination to include when an MA organization makes a coverage
decision on the appropriateness of an inpatient admission, or the
appropriateness of inpatient services (that is, a level of care
determination), contemporaneously with an enrollee's receipt of the
services at issue. This would be true whether the MA organization
ultimately approved the enrollee's admission to a facility, determined
that the enrollee's level of care in the same facility should be
reduced, or determined that the enrollee should be discharged (see
Sec. Sec. 422.620 through 422.624). Accordingly, these decisions would
have to comply with all applicable notice and appeal requirements for
organization determinations and would be binding on all parties unless
they are reconsidered under Sec. Sec. 422.578 through 422.596 or are
reopened and revised under Sec. 422.616.
We acknowledge that many MA organizations understand these
decisions are organization determinations subject to the existing rules
in subpart M including, but not limited to, timely notice of the
decision. However, through routine audits, feedback from the provider
community, and discussions with MA organizations, CMS has identified
circumstances where some MA organizations have misinterpreted the
organization determination provisions to exclude decisions that rescind
a previously authorized inpatient admission, deny coverage for
inpatient services, or downgrade an enrollee's hospital coverage from
inpatient to outpatient (often either simultaneously denying inpatient
coverage while approving coverage for outpatient observation services
or instructing the provider to only bill for outpatient services when
submitting a subsequent claim), when the decision is made concurrently
to the enrollee receiving such services. These types of decisions most
often occur while enrollees are receiving inpatient services in an in-
network hospital and are at times referred to as ``concurrent review
decisions,'' ``level of care determinations,'' ``clinical utilization
review decisions,'' or ``inpatient authorization denials.'' For the
sake of clarity and consistency in describing these types of decisions,
we will use the term ``concurrent review'' for purposes of this
rulemaking.
We understand MA organizations conduct concurrent review on
hospitalizations and other services that require review for continued
care, such as long-term care stays in SNFs, LTACHs, or IRFs, HHA
services, partial hospitalizations, or intensive outpatient programs.
Such review includes utilization management activities that occur
during inpatient level care, post-acute care, or an ongoing outpatient
course of treatment. In general, the concurrent review process includes
obtaining necessary clinical information from the treating physician
and other providers to determine medical necessity based on the
clinical status of the enrollee and applicable Medicare coverage
criteria. Concurrent review involves the evaluation of the
appropriateness of the ongoing level of care, including decisions
related to the extension of previously approved care.
We offer the following example to illustrate a common scenario we
have seen, although we note that certain details may vary depending on
the MA organization making the decision. An enrollee will present to an
in-network hospital and the treating physician will order the enrollee
admitted to an inpatient status. During the admission process, the
hospital will provide the enrollee's MA organization with a Notice of
Admission, in accordance with the contract between the hospital
[[Page 99464]]
and MA organization, that alerts the MA organization of the admission
but (in most circumstances) does not request approval for the
admission. After receiving the Notice of Admission, the MA organization
will monitor the enrollee's condition by reviewing the medical
documentation on its own accord and, when applicable, will notify the
hospital that it has made an adverse concurrent review decision related
to the enrollee's inpatient admission or receipt of inpatient services
on the basis that the enrollee's condition does not meet certain
inpatient coverage criteria. Accordingly, if the hospital submits an
inpatient claim for the services, whenever it ultimately submits a
request for payment, the MA organization will automatically deny
payment for inpatient services based on the concurrent review decision.
In its concurrent review decision, the MA organization may either
approve outpatient observation services for the enrollee or suggest
that the hospital bill the entire hospital stay as outpatient services.
If the treating physician disagrees with the decision, the physician
may engage the MA organization in a peer-to-peer discussion with a plan
physician or may appeal using the plan's internal dispute resolution
processes.\254\ It is important to note that in many circumstances the
MA organization does not inform the enrollee of the concurrent review
determination and the enrollee is not afforded the opportunity to
appeal the decision (or have an appeal submitted on their behalf) as
required. The result of the concurrent review is the hospital may
either continue to provide non-covered inpatient services or it may
reclassify the enrollee's hospital status from inpatient to outpatient.
Many times, the enrollee does not know a change in status has occurred
until they are required to pay the outpatient deductible and applicable
cost-sharing.\255\
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\254\ We have received conflicting information on the nature of
peer-to-peer discussions from MA organizations. Some describe the
process as solely educational in nature and that it has no bearing
on the prior decision. Other MA organizations appear to use the
discussion either to supplement or as a part of a contracted
provider's appeal.
\255\ We note that because an adverse concurrent review decision
is a denial of inpatient hospital coverage, such a decision could
also affect an enrollee's eligibility for covered post-hospital
extended care services furnished in a skilled nursing facility
(SNF). Section 1861(i) of the Act requires Medicare beneficiaries
receive at least 3 consecutive days in a covered inpatient hospital
stay within the preceding 30 calendar days in order to qualify for
covered skilled SNF care. While we understand that most, if not all,
MA organizations currently waive this coverage requirement, they are
not required to continue to do so in future plan years. Therefore,
if an MA organization that does not waive the 3-day inpatient
hospital stay requirement makes an adverse concurrent review
decision, the enrollee may not accrue the 3-day inpatient hospital
stay necessary to receive covered skilled SNF care they otherwise
could receive. A similar impediment to covered skilled SNF care
could occur for enrollees that have opted into Traditional Medicare
for the following year when an adverse concurrent review is made in
the last 30 days of the plan year.
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We have seen several different justifications for why an MA
organization may not process a determination to deny an enrollee's
inpatient admission, or deny coverage for inpatient services, made
concurrently to the provision of such services under the requirements
for other organization determinations. Some MA organizations have
posited that these concurrent reviews are outside the definition of an
organization determination because the timing of the decision is made
during an ongoing course of treatment. These MA organizations appear to
mistakenly believe that the existing definition of an organization
determination is limited to decisions made before services begin and
payment decisions that are made after a claim is submitted, and thus, a
decision on inpatient coverage made concurrent to the services being
rendered does not meet the definition of an organization determination
or need to comply with the applicable organization determination notice
and appeal right requirements.
We have also seen other situations where an MA organization
appropriately considers the downgrading of an enrollee from receiving
inpatient to outpatient services as an organization determination and
yet will still fail to provide proper notice of the decision to the
enrollee, process a timely appeal request, or both. We have received
many complaints from the provider community that when the enrollee's
treating physician requests an expedited reconsideration of an adverse
concurrent review decision, pursuant to Sec. 422.578, the MA
organization will not process the appeal for a myriad of reasons. Some
MA organizations have concluded that a level of care denial is not an
appealable subject matter, while others believe reconsideration
requests may not be processed while an enrollee is receiving the
services at issue. The most common reason cited by plans for not
processing appeals of adverse concurrent review decisions is the
erroneous view that concurrent reviews made while an enrollee is being
treated in an in-network hospital are ``contractual denials'' that are
ineligible for review under the administrative appeals process of part
422, subpart M. This line of reasoning relates to the provision at
Sec. 422.562(c)(2) which states that ``[i]f an enrollee has no further
liability to pay for services that were furnished by an MA
organization, a determination regarding these services is not subject
to appeal.'' MA organizations reason that because contracted providers
are contractually restricted from billing the enrollee for denied
services and must accept the contractual payment as ``payment in
full,'' coupled with the enrollee protections against financial
liability at Sec. Sec. 422.504(g) and 422.562(c)(2), a concurrent
review decision will ultimately result in the enrollee having no
further financial liability for the inpatient services being rendered
so there is no right to appeal the decision. As we have explained in
section III.W.1. of this proposed rule, this interpretation overlooks
the fact that the MA organization has made an adverse decision on the
authorization or provision of inpatient services which not only impacts
the type of care the enrollee receives but also directly impacts the
amount of deductible and cost-sharing for which the enrollee is liable,
when a request for payment is eventually submitted.
CMS does not agree with the above interpretations of the existing
organization determination and appeal regulations of part 422, subpart
M. In the past, we have addressed these types of misinterpretations and
non-compliance by MA organizations on a case-by-case basis as those
issues were presented to us. However, we realize that the inconsistent
application or misapplication of MA policies governing concurrent
review is becoming increasingly varied and widespread across the
industry, creating substantial confusion to MA organizations and, at
times, variable outcomes to providers and enrollees. In addition, we
recognize that the direct consequence of the misapplication of MA
policies is that many enrollees do not receive notice of a decision to
downgrade their level of care from inpatient to outpatient, nor are
they given opportunity to appeal such decisions as provided under Sec.
422.562(b)(4) (the right to a reconsideration of an adverse
organization determination by an MAO). After considering other options
available to CMS to clarify this matter, including increasing outreach
and updating non-regulatory guidance, we decided the most appropriate
and effective manner to address this issue is to clarify and strengthen
the existing
[[Page 99465]]
requirements related to organization determinations.
We, therefore, propose to clarify that decisions made based on the
review of an enrollee's need for continued care, commonly known as
concurrent review, are organization determinations under the rules at
Sec. 422.566(b). Specifically, we are proposing to revise Sec.
422.566(b)(3) to clarify that a decision by an MA organization made
pre-service, post-service, or concurrent with the enrollee's receipt of
services in an inpatient or outpatient setting is an organization
determination subject to the rules in part 422, subpart M which
includes providing the enrollee (and the provider, as appropriate) with
timely notice and applicable appeal rights. We note that while the
primary focus of the above discussion relates to the denial of
inpatient hospital coverage as a result of an MA organization's
concurrent review, our proposed clarification to the definition of an
organization determination is inclusive of all other types of services.
In addition to adding a reference to decisions made concurrently to
the enrollee's receipt of services, we are also proposing to add to
Sec. 422.566(b)(3) a reference regarding applicable decisions made
prior to the enrollee's receipt of services and after the services have
been completed. Similar to our previous discussion related to
concurrent review, we propose these additions to clarify that the
subject-matter of an MA organization decision dictates whether it has
made an organization determination, regardless of when in the continuum
of an enrollee seeking and receiving covered medical care the decision
is made. We use the term pre-service in proposed Sec. 422.566(b)(3) to
refer to a request for an MA organization to approve coverage for a
service before the service is received by the enrollee. An enrollee,
enrollee's representative, or a provider on behalf of an enrollee, has
the right to request the enrollee's MA organization approve an item,
service, or Part B drug in circumstances where there is a question
whether the item, service, or Part B drug will be covered. This right
to receive prior approval applies to services for which an MA
organization may require prior authorization as a condition for
coverage as well as services for which there is no prior authorization
requirement. When an MA organization receives a request for an item,
service, or Part B drug, it must process the request according to the
timeframes at Sec. 422.568(b) or Sec. 422.572(a).\256\
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\256\ Beginning January 1, 2026, a request for a service or item
that is subject to an MA organization's prior authorization
requirement must be processed within 7 calendar days. The timeframe
for processing requests for items and services not subject to an MA
organization's prior authorization requirement remains 14 calendar
days. See CMS-0057-F (89 FR 8976).
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The reference to post-service in our proposed addition to Sec.
422.566(b)(3) refers to applicable decisions that have been requested
(or made by an MA organization in the absence of an organization
determination request) after the enrollee has finished receiving the
services at issue. The vast majority of post-service organization
determinations are made in response to receiving a claim or other
request for payment from an enrollee or provider. We are, however,
aware that some MA organizations are denying payment for services
before receiving a claim or other request for payment. More
specifically, we have seen MA organizations decide on the
appropriateness of an enrollee's inpatient admission, or the
appropriateness of inpatient services, after an enrollee has been
discharged from the hospital but before a request for payment has been
received. These decisions have been referred to as ``retrospective
reviews'' and, similar to our previous discussion on concurrent review
decisions, many MA organizations making these decisions fail to comply
with all applicable organization determination requirements, including
providing appropriate notice and appeal rights to enrollees.
As a point of clarity, we regularly observe MA organizations making
retrospective organization determinations when performing a post-
payment review (a review that occurs after payment is made on the
selected claim in order to determine whether the initial determination
for payment was appropriate (see definition at Sec. 405.902)).\257\
The retrospective review decisions we are discussing here, however, are
not reviews of an MA organization's prior payment decisions but are
initial determinations impacting payment for inpatient hospital
services that are made after the enrollee has been released from a
hospitalization, but before a request for payment is received.
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\257\ Post-payment reviews are performed under the reopening
rules at Sec. Sec. 405.980-405.986 and 422.616 (see Sec. 405.929).
Pursuant to Sec. 422.616(d), when a payment determination is
revised on reopening (including through post-payment review), any
party may file an appeal of the revised determination. However,
similar to initial payment determinations, when an MA organization
revises a contracted provider payment determination that results in
no additional financial liability or cost-sharing for the enrollee,
Sec. 422.562(c)(2) precludes any party from appealing the revised
payment determination under the administrative appeals processes of
part 422, subpart M. Contracted providers may appeal adverse payment
determination revisions under the terms of the contract between the
provider and the MA organization.
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We have primarily observed MA organizations make retrospective
review decisions on inpatient hospital services in a similar fashion as
concurrent review. For example, an enrollee may be admitted as an
inpatient in a hospital contracted with the enrollee's MA organization.
During the hospital stay (or shortly thereafter), the MA organization
will become aware of the inpatient admission, generally upon the
hospital sending the MA organization a Notice of Admission. The
hospital will finish providing services and discharge the enrollee in
accordance with Sec. Sec. 422.620-422.622. At some point after
discharge, but before a claim for payment is submitted, the MA
organization will notify the hospital that it is denying payment for
all inpatient services and will instruct the hospital to submit an
outpatient claim, while sometimes simultaneously approving the provider
to bill for observation services. The MA organization does not send a
notice of the denial to the enrollee. The hospital receives an
opportunity to dispute the decision under the MA organization's
internal dispute resolution processes, but the enrollee has no
opportunity to dispute the decision under the rules of part 422 subpart
M.
We find that retrospective reviews are conducted very similarly to
concurrent reviews in that both reviews involve obtaining necessary
clinical information from the treating physician or other providers to
determine medical necessity for the services rendered, using the
clinical status of the enrollee and applicable Medicare coverage
criteria. In addition, both concurrent and retrospective review
decisions are often made without the MA organization first receiving a
request for coverage or payment. The primary difference between the two
review types is that concurrent review occurs while the services are
being rendered while retrospective review occurs after the services at
issue are fully furnished. This means that a concurrent review decision
concerns the delivery of care being received by the enrollee, while a
retrospective review decision concerns whether the MA organization will
make payment for the services the enrollee received. Put simply, a
concurrent review decision (whether made unsolicited or in response to
a request) is a coverage decision while a retrospective review decision
(whether made unsolicited or in response to a request) is a payment
decision.
[[Page 99466]]
An MA organization's refusal to pay for services, in whole or in
part, including the type or level of services, the enrollee believes
should be furnished or arranged for by the MA organization is an
organization determination under the rules at existing Sec.
422.566(b)(3). As we mentioned above, we have proposed adding
references to Sec. 422.566(b)(3) to clarify that the definition of an
organization determination includes decisions made before, during, and
after the enrollee's receipt of the services at issue. Under our
proposed clarifications to what actions constitute an organization
determination, a post-service payment decision, even if made without
the MA organization first receiving a payment request, is subject to
the rules in subpart M. In addition, as we explained in section
III.W.1. of this proposed rule, the regulations of part 422, subpart M
treat organization determinations related to coverage for services to
be or contemporaneously being rendered (coverage decisions) differently
from determinations related to payment for services already furnished
(payment decisions). As such, a retrospective review decision would be
subject to all applicable subpart M requirements related to payment
organization determinations, including those related to notice and
appeal rights. \258\
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\258\ While the focus of this discussion is on unsolicited
retrospective reviews, we acknowledge that enrollees or providers
may, at times, submit a request for ``authorization'' for services
which have already been fully rendered. Indeed, we understand that
some MA organizations currently permit the submission of late
``authorization'' requests for certain services subject to prior
authorization requirements within designated timeframes after a
service has been rendered and, if approved, would consider the
applicable prior authorization requirements met when separately
considering payment. However, as we have explained above, once a
service has been fully furnished, the only matter for an MA
organization to decide is whether to make payment and any resulting
enrollee financial liability or cost-sharing. Thus, similar to
unsolicited retrospective review decisions, post-service
authorization requests, whether permitted by MA organizations or
not, must be processed as payment requests, under the applicable
payment timeframes and policies. We note that our proposed policies
do not prevent MA organizations from waiving prior authorization
requirements on a case-by-case basis, based on good cause or any
other consideration, during the claim adjudication or subsequent
appeal processes when such processes are described in their EOC.
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In accordance with Sec. 422.568(d)(1), an MA organization must
give the enrollee written notice when denying payment in whole or in
part. The payment denial notice must use approved language in a
readable and understandable form (Sec. 422.568(e)(1)), state the
specific reasons for the denial (Sec. 422.568(e)(2)), inform the
enrollee of their right to appeal (Sec. 422.568(e)(3)), describe the
standard reconsideration process and the rest of the appeal process
(Sec. 42.568(e)(4)(ii)), and comply with any other notice requirements
specified by CMS (Sec. 422.568(e)(5)). CMS created the Notice of
Denial of Medical Coverage or Payment (form CMS-10003-NDMCP), more
commonly known as the Integrated Denial Notice (IDN), as a standardized
notice for MA organizations to use when making adverse coverage or
payment decisions. Alternatively, an MA organization may use the model
Explanation of Benefits (EOB), when making an adverse payment decision
as long as it includes the approved standard language from the
IDN.\259\ We explain in subregulatory guidance that an MA organization
must provide notice of an adverse payment decision to an enrollee using
the IDN or EOB when the enrollee submitted the request or through an
EOB when the payment request was submitted by a provider (the provider
would receive a corresponding remittance notice or similar
notice).\260\ We have not previously considered the proper notice for
MA organizations to use when making payment decisions without first
receiving a request for payment.
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\259\ An EOB is a model communication material which must also
contain the information required under Sec. 422.111(k).
\260\ See section 40.12.1 of the Parts C & D Enrollee
Grievances, Organization/Coverage Determinations, and Appeals
Guidance available at 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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As we previously discussed, it is our understanding that
retrospective review decisions are most often, if not exclusively, made
on inpatient services performed by hospitals that are contracted with
the MA organization. In most instances (excluding those which fall
outside the plan-directed care beneficiary protection), when an MA
organization makes a payment decision on contracted provider services,
existing Sec. 422.562(c)(2) would preclude a party's appeal of a
decision as the enrollee would generally have no additional financial
liability under the terms of the contract between the MA organization
and the provider. However, as we discussed in section III.W.1. of this
proposed rule, proposed Sec. 422.562(c)(2) would not be applicable
until an MA organization makes a decision on an enrollee's financial
liability in response to a request for payment. Under proposed Sec.
422.562(c)(2), an enrollee would not be precluded from appealing an
adverse retrospective review decision as the MA organization would not
yet have received a request for payment when the retrospective review
decision is made. We believe this would be an appropriate outcome as an
adverse retrospective review decision on inpatient hospital services
typically results in the MA organization instructing the hospital to
submit an outpatient claim (at times including an approval for
observation services), thereby changing the cost-sharing amount for
which the enrollee would be responsible. Cost-sharing, which may
include deductibles, co-payments, and co-insurance, varies across the
MA program, but most often has different requirements for inpatient and
outpatient hospital services. Therefore, whether a hospitalization is
billed as an inpatient or an outpatient stay would likely result in
different out-of-pocket costs for the enrollee. We note that the
difference in cost-sharing liability could be higher or lower for an
enrollee after an adverse retrospective review decision on inpatient
hospital services. The exact difference in amounts would depend on the
enrollee's cost-sharing requirements of their particular plan, the
length of their hospitalization, and, potentially, the amount and types
of services which were rendered. We believe that ensuring an enrollee
has adequate notice of an adverse MA organization payment decision,
which may negatively affect their out-of-pocket expenses for a
hospitalization, is paramount for providing a meaningful opportunity to
appeal. However, because we have not previously considered which
existing notice type (that is, the IDN or an EOB) would be most
appropriate for MA organizations to use when making a retrospective
review decision without first receiving a request, we are requesting
comments on the type of notice MA organizations should utilize to
ensure enrollees have adequate notice of the organization determination
and its implications on the enrollee's cost-sharing responsibilities.
Based on this feedback, CMS may consider clarifying in future guidance
how MA organizations can ensure compliance with existing notice
requirements when issuing retrospective review decisions prior to
receiving a request for payment.
Finally, we also propose to make a corresponding change at Sec.
422.138(c), to include concurrent reviews as a type of determination
subject to the rules at Sec. 422.138(c). Per CMS regulations at Sec.
422.138(c), if the MA organization approved the furnishing of a covered
item or service through a prior authorization or pre-service
determination of coverage or payment, it may not deny coverage later on
the basis
[[Page 99467]]
of lack of medical necessity and may not reopen such a decision for any
reason except for good cause (as provided at Sec. 405.986 of this
chapter) or if there is reliable evidence of fraud or similar fault per
the reopening provisions at Sec. 422.616. We propose to add concurrent
review decisions to Sec. 422.138(c) as subject to this requirement. In
the same way that a provider and patient reasonably rely upon an MA
organization's approval of a prior authorization before services are
rendered, an approval of inpatient or outpatient services during a
concurrent review is an organization determination that is relied upon
by the patient and provider to continue delivering medically necessary
services that they expect to be covered and paid for by the MA
organization. As a result, an MA organization should not be able to
later deny the services based on a lack of medical necessity if the
continued treatment had already been approved during a concurrent
review.
3. Strengthening Requirements Related to Notice to Providers
(Sec. Sec. 422.568, 422.572, and 422.631)
Section 1852(g)(1)(B) of the Act requires MA organizations to
provide an explanation of determinations regarding whether an
individual enrolled with a plan is entitled to receive a health service
under this section and the amount (if any) that the individual is
required to pay with respect to such service. In accordance with
section 1852(g)(1)(B) of the Act, Sec. 422.568 establishes the
timeframe and notice requirements for standard organization
determinations. Section 422.568(e)(5) establishes an additional
framework for promulgating expanded notice requirements. Under Sec.
422.568(f), if a MA organization fails to timely meet applicable notice
requirements, the failure constitutes an appealable adverse
organization determination.
Existing Sec. 422.568(d) requires MA organizations to provide
enrollees written notice if an MA organization decides to deny coverage
for a service or an item, Part B drug, or payment in whole or in part,
or decides to reduce or prematurely discontinue the level of care for a
previously authorized ongoing course of treatment. Section 422.568(e)
specifies that an MA organization's written notice of a coverage denial
must use approved notice language, state the specific reasons for the
denial, inform the enrollee of their right to request and the
procedures for requesting a standard or expedited reconsideration, and
must also comply with other notice requirements specified by CMS.\261\
CMS created the Notice of Denial of Medical Coverage or Payment (Form
10003-NDMCP), also known as the Integrated Denial Notice (IDN) as a
standardized denial notice that MA organizations may use to comply with
the written notice requirements of Sec. 422.568(e). This notice is
approved by the Office of Management and Budget, subject to Paperwork
Reduction Act procedures and is posted on the CMS website.\262\ While
MA organizations are required to provide timely notice of an approved
organization determination, written notice is not required. This means
that MA organizations may provide oral notice of approved coverage
decisions.
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\261\ Section 422.568(e) also regulates the notice requirements
for payment denials, which are largely the same, with the exception
that payment denial notices do not need to include information on
expedited reconsideration processes.
\262\ https://www.cms.gov/medicare/forms-notices/beneficiary-notices-initiative/ma-denial-notice.
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The existing notice requirements for standard organization
determinations at Sec. 422.568(b)(1) only specify that MA
organizations must provide the enrollee with notice of its decisions.
This is a notable difference from the requirements related to expedited
organization determinations at existing Sec. 422.572(a) and (b) that
require MA organizations to provide timely notice of any expedited
organization determination to the enrollee and the physician or
prescriber involved, as appropriate. Likewise, for Part B drug
requests, regulations at Sec. 422.568(b)(3) require notice to the
prescribing physician or other prescriber involved, as appropriate.
However, existing CMS guidance instructs MA organizations to notify
the provider, as well as the enrollee, whenever a provider submits an
organization determination on behalf of the enrollee (see section
40.12.1 of the Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance.\263\) Similar references are also
made in the text of the IDN, as CMS explains to enrollees that ``If
your doctor requested coverage on your behalf, [the MA organization
has] sent a copy of this decision to your doctor.''
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\263\ 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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We do not find a compelling reason that a provider should not
receive notice of a standard organization determination when the
provider submitted a request on behalf of an enrollee or when it is
otherwise appropriate for the provider to receive notice of the
determination. Indeed, under existing regulations at Sec.
422.566(c)(1)(ii), a provider is already permitted to request an
organization determination on an enrollee's behalf. This longstanding
policy is premised on a reasonable belief that an enrollee will welcome
and be informed of their provider or physician's willingness to pursue
an organization determination on their behalf. We see no reason that a
provider or physician to whom an enrollee has already entrusted their
care or has sought to request coverage for their care, should not
receive notice of an organization determination that directly affects
such care. In fact, we believe an enrollee's provider is often in the
best position to receive, explain, and timely act upon the MA
organization decision for an enrollee.
Similar requirements for integrated organization determinations
apply to applicable integrated plans at Sec. 422.631. Under Sec.
422.631(d)(1)(i), applicable integrated plans are required to send an
enrollee a written notice of any adverse decision on an integrated
organization determination (including a determination to authorize a
service or item in an amount, duration, or scope that is less than the
amount previously requested or authorized for an ongoing course of
treatment) within the timeframes set forth in Sec. 422.631(d)(2).
Existing Sec. 422.631(d)(1)(ii) states that an integrated organization
determination not reached within the timeframes specified constitutes a
denial and thus is an adverse decision. Section 422.631(d)(1)(iii)
specifies the integrated organization determination notice requirements
for applicable integrated plans must be written in plain language,
available in a language and format accessible to the enrollee, include
the date the determination was made and will take effect, the reason
for the determination, the enrollee's right to an integrated
reconsideration and to have someone file an appeal on their behalf,
procedures for an integrated reconsideration, circumstances for an
expedited resolution and enrollee's rights to continue benefits while
their appeal is pending. CMS created the coverage decision letter (CDL)
(Form CMS-10716), an OMB approved notice, for use by applicable
integrated plans to comply with the written notice requirements at
Sec. 422.631(d)(1)(iii). The existing notice requirements at Sec.
422.631(d)(1)(i) only specify that an applicable integrated plan must
provide the enrollee with notice of its decisions. However, integrated
organization determinations for Part B drug requests are governed by
the provisions at Sec. 422.568(b)(3) that require notice to the
[[Page 99468]]
prescribing physician or other prescriber involved, as appropriate.
Likewise, existing CMS guidance instructs applicable integrated plans
to notify the provider, as well as the enrollee.
We, therefore, propose strengthening requirements related to notice
of a standard organization determination at Sec. 422.568 in paragraph
(b)(1) and the introductory text for paragraph (d) and integrated
organization determinations at Sec. 422.631(d)(1)(i) to require MA
plans and applicable integrated plans to notify an enrollee's physician
or provider, as appropriate, of an organization determination or
integrated organization determination on a request for a non-drug item
or service (in addition to the existing requirement related to
notifying an enrollee). Note that ``as appropriate'' means, as with
similar requirements in Sec. Sec. 422.568(b)(3) and 422.572(a), that
notice should be given to the provider or prescriber who submitted an
organization determination request on behalf of an enrollee or in other
circumstances where it would be in the enrollee's best interest for
their provider or prescriber to receive notice of a decision related to
an enrollee-submitted request.
We are also proposing corresponding amendments to Sec. Sec.
422.568(f), 422.572(f), and 422.631(d)(1)(ii) to state that if the MA
organization or applicable integrated plan fails to provide the
enrollee, physician, or provider involved, as appropriate, with timely
notice of an organization determination or integrated organization
determination as specified in this section, this failure itself
constitutes an adverse organization determination and may be appealed.
We note that the proposed change at Sec. 422.572(f) is a technical
change to expedited organization determination requirements. Under
existing rules at Sec. 422.572(a), MA organizations are required to
provide notice of an expedited organization determination to the
physician or prescriber, as appropriate. However, existing Sec.
422.572(f), which establishes that a MA organization's failure to
timely meet expedited organization determination notice requirements
constitutes an adverse decision, only refers to the MA organization's
responsibility to provide timely notice to the enrollee. We, therefore,
propose a technical change to Sec. 422.572(f) to clarify that the
failure to provide timely notice of an expedited organization to the
enrollee and the physician or prescriber, when appropriate, would
itself constitute an appealable adverse organization determination.
In addition, we are proposing a technical change at Sec.
422.631(a) to reference the correct Part B drug regulation at Sec.
422.568(b)(3) rather than the current reference to Sec. 422.568(b)(2)
to govern the timeframes and notice requirements for integrated
organization determinations for Part B drugs. The final rule titled 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 Medicare Promoting
Interoperability Program,'' which appeared in the February 8, 2024,
Federal Register, redesignated Sec. 422.568(b)(2) as Sec.
422.568(b)(3).
We do not believe this proposal will have a substantial impact on
the practices of MA organizations or applicable integrated plans as we
are codifying longstanding guidance that we believe the majority of
plans already implement this practice based on the relatively few
complaints from providers and enrollees. In addition, we also
understand that due to the contractual relationship MA organizations
have with their providers, most contracted providers should already
receive notice of relevant organization determinations, including those
that the provider submitted on behalf of the enrollee. However, we note
that the few complaints that we do receive on this issue reinforce how
disruptive the lack of provider notice can be for enrollees attempting
to promptly receive covered medical services. When an enrollee is the
only party to receive written notice of a decision, not only can this
result in a delay in their receipt of approved medical care but could
also delay the submission of a valid appeal when coverage is denied.
We also believe this proposal will positively support our proposed
modification of the definition of an organization determination at
Sec. 422.566(b) by ensuring providers will always receive notice of a
decision notwithstanding when in the continuum of care the decision is
made. As discussed in section III.W.2. of this proposed rule, CMS has
identified that some MA organizations routinely misinterpret existing
organization determination provisions related to decisions that rescind
prior authorization of an inpatient admission, deny coverage for
inpatient services, or downgrade an enrollee's hospital coverage, from
inpatient to outpatient, when the decision is made concurrently to the
enrollee receiving such services. In these cases, the MA organizations
are not providing enrollees or their providers proper notice of the
adverse organization determination or providing appeal rights. Our
proposed clarifications to the definition of an organization
determination at Sec. 422.566(b)(3) seek to clarify that applicable
decisions made before, during, or after the enrollee's receipt of
services are organization determinations and thus are subject to notice
requirements pursuant to Sec. Sec. 422.568, 422.572 and 422.631. Our
proposal at Sec. Sec. 422.568 and 422.631 would, therefore, require
the MA organization or applicable integrated plan to provide notice to
the enrollee and physician or provider that must comply with the
standard organization determination or integrated organization
determination requirements. We note, however, that in the case of an MA
organization conducting pre-service or concurrent review for inpatient
services, our expectation is that the facts and circumstances around
that type of review will often satisfy the medical exigency standard.
Therefore, we expect in most circumstances an MA organization must
provide an expedited determination because applying the standard
timeframe for making a determination could seriously jeopardize the
life or health of the enrollee or the enrollee's ability to regain
maximum function, consistent with the provisions at Sec. Sec.
422.570(c)(2) and 422.631(c)(3).
4. Modifying Reopening Rules Related to Decisions on an Approved
Hospital Inpatient Admission (Sec. Sec. 422.138 and 422.616)
Under the regulations at Sec. 422.576, an organization
determination is binding on all parties unless it is reconsidered under
the rules at Sec. Sec. 422.578 through 422.596 or is reopened and
revised under Sec. 422.616. The reopening rules at Sec. 422.616
permit an organization or reconsidered determination made by an MA
organization that is otherwise final and binding to be reopened and
revised by the MA organization under the applicable rules in part 405,
subpart I at Sec. Sec. 405.980 through 405.986. The reopening rules in
part 405, subpart I are based on Sec. 1869(b)(1)(G) of the Act which
states that the Secretary may reopen or revise any initial
[[Page 99469]]
determination or reconsidered determination described in this
subsection under guidelines established in regulations. While the
reopening rules in Sec. Sec. 405.980 through 405.986 are applicable to
the Traditional Medicare program, the regulatory provisions at 42 CFR
part 405 historically have been cross-referenced in the managed care
regulations and have been applied to the MA program consistent with the
provisions at Sec. Sec. 422.562(d) and 422.616 since the inception of
the MA program (and to MA's predecessor, the Medicare+Choice program).
Thus, the ability of an MA organization to reopen and revise an
organization determination for the reasons set forth in regulation is
well established in the MA program. For purposes of this proposal, the
discussion is specific to the application of the reopening rules to
organization determinations made by an MA organization that involve
inpatient hospital admission decisions.
Section 422.616(b) permits a reopening at the instigation of any
party and, in accordance with Sec. 422.616(d), once an adjudicator
issues a revised determination, any party may file an appeal. Pursuant
to the applicable reopening regulations at Sec. 405.980(b), an
organization determination or reconsideration may be reopened by an MA
organization within 1 year from the date of the initial determination
or redetermination for any reason. However, in recently promulgated
prior authorization rules at Sec. 422.138(c), if an MA organization
approved the furnishing of a covered item or service through a prior
authorization or pre-service determination of coverage or payment, it
may not deny coverage later on the basis of lack of medical necessity
and may not reopen such a decision for any reason except for good cause
(as provided at Sec. 405.986) or if there is reliable evidence of
fraud or similar fault per the reopening provisions at Sec.
422.616.\264\ Under Sec. 422.138(c), in the case of an approved
organization determination for the furnishing of a covered item or
service made through prior authorization or a pre-service
determination, an MA organization is not permitted to reopen that
decision within 1 year from the date of determination for any reason as
is otherwise permitted at Sec. 405.980(b)(1). While the rules at Sec.
422.138(c) currently allow for reopening of a favorable prior
authorization decision within 4 years from the date of the initial
determination or redetermination for good cause, as defined in Sec.
405.986, we believe a proposed modification to the MA reopening rules
at Sec. 422.616 is necessary with respect to favorable organization
determinations on inpatient hospital admissions.
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\264\ See 88 FR 22120, 22185-22217.
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We are aware that some MA organizations are reopening and revising
or otherwise rescinding a prior approval for an inpatient hospital
admission based on a medical necessity determination during the
enrollee's receipt of the previously authorized services or during the
adjudication of the subsequent inpatient claim for payment. For
example, when deciding to admit an enrollee, the hospital requests and
receives approval for the admission from the enrollee's MA
organization. Later, however, the MA organization obtains and reviews
additional medical documentation and determines that the enrollee does
not meet the necessary criteria to support payment for inpatient
hospital services and rescinds or overrides its prior approval. As
discussed in the context of our proposal to strengthen the notice
requirements in Sec. 422.568, some MA organizations are not
consistently providing notice or appeal rights to the enrollee for
these decisions.
The rules at Sec. 405.980(b) permit reopening of a decision if
there is a finding of good cause as defined in Sec. 405.986. If good
cause is found, an organization determination may be reopened within 4
years from the date of the determination. Under the rules at Sec.
405.986, good cause may be established when (1) there is new and
material evidence that was not available or known at the time of the
determination and that may result in a different conclusion; or (2) the
evidence that was considered in making the determination or decision
clearly shows on its face that an obvious error was made at the time of
the determination or decision. New and material evidence is evidence
that was not readily available or known to the person or entity
requesting or initiating the reopening at the time the initial
determination was made by the MA organization and may result in a
different conclusion than reached in the initial determination. Such
evidence may include any record used in the furnishing of care and
supporting the medical necessity of such care. This includes, but is
not necessarily limited to, medical records, progress notes, and
physician orders. Under the reopening rules, a change of legal
interpretation or policy by CMS in a regulation, ruling, or general
instruction is not a basis for reopening an organization determination.
Under existing rules at Sec. 422.138(c), in cases where an
enrollee's inpatient admission into the facility is approved prior to
admission, this decision is binding and may not be reopened and revised
by the MA organization unless there is good cause for a reopening
pursuant to the rules at Sec. 405.986. The inpatient hospital
admission rules at Sec. 412.3(d)(1) and (3) are clear that the
coverage criteria set forth therein are based on the admitting
physician's expectation at the time of admission about whether the
hospital care will cross two-midnights or is otherwise appropriate, as
supported by the medical record. Since the physician's expectation at
the time of admission is based on the clinical information known at
that time as well as the documented medical record at the time of
admission, any subsequent clinical information obtained after an MA
organization has made its initial organization determination would not
have the effect of creating a good cause reopening on the basis of new
and material evidence that was not available or known at the time of
the determination or decision and that may result in a different
conclusion. As part of the organization determination process, it is
incumbent on the MA organization to obtain and review all relevant
clinical information to make an organization determination on a request
for inpatient hospital admission and to comply with requirements for
basic benefits as described in Sec. 422.101(b)(2).
Due to the ongoing issues we have seen with previously approved
inpatient hospital admissions later being inappropriately revised or
rescinded, and to augment the rules at Sec. 422.138(c), we propose to
amend Sec. 422.616(a) to state that the reopening provisions are
subject to the rules at Sec. 422.138(c) and propose a new paragraph
(e) of Sec. 422.616 that would place a limitation on reopening
determinations related to favorable inpatient hospital admissions.
Specifically, proposed Sec. 422.616(e) would state that if an MA
organization approved an inpatient hospital admission under the rules
at Sec. 412.3(d)(1) or (3), any additional clinical information
obtained after the initial organization determination cannot be used as
new and material evidence to establish good cause for reopening the
determination.
We believe these proposed amendments to the reopening rules at
Sec. 422.616 present a reasonable approach to curtailing the reopening
of approved hospital admission decisions and are consistent with the
rules on inpatient admission decision-making. Decisions on inpatient
admissions under Sec. 412.3(d)(1) or (d)(3) are based on whether the
complex medical factors documented in the clinical record
[[Page 99470]]
support the admitting physician's clinical expectation or judgment.
Section 412.3(d)(1) states that, except as specified in paragraphs
(d)(2) and (3) of Sec. 412.3, an inpatient admission is generally
appropriate for payment under Medicare Part A when the admitting
physician expects the patient to require hospital care that crosses two
midnights. Section 412.3(d)(1)(i) states that the expectation of the
physician should be based on such complex medical factors as patient
history and comorbidities, the severity of signs and symptoms, current
medical needs, and the risk of an adverse event. The factors that lead
to a particular clinical expectation must be documented in the medical
record to be granted consideration (with respect to determining the
appropriateness of payment for an inpatient stay). Section
412.3(d)(1)(ii) states that if an unforeseen circumstance, such as a
beneficiary's death or transfer, results in a shorter beneficiary stay
than the physician's expectation of at least two midnights, the patient
may be considered to be appropriately treated on an inpatient basis,
and payment for an inpatient hospital stay may be made under Medicare
Part A. The exception in Sec. 412.3(d)(2) relates to inpatient
admission for a surgical procedure specified by Medicare as inpatient
only under Sec. 419.22(n). The exception in Sec. 412.3(d)(3) states
that where the admitting physician expects a patient to require
hospital care for only a limited period of time that does not cross two
midnights, an inpatient admission may be appropriate for payment under
Medicare Part A based on the clinical judgment of the admitting
physician and medical record support for that determination. The
physician's decision is based on such complex medical factors as
patient history and comorbidities, the severity of signs and symptoms,
current medical needs, and the risk of an adverse event. In these
cases, the factors that lead to the decision to admit the patient as an
inpatient must be supported by the medical record in order to be
granted consideration.
Based on these rules, we believe it is appropriate to limit
reopening of a decision involving inpatient hospital admission by
prohibiting reopening for good cause based on new and material
evidence. Any additional clinical information obtained after the
initial organization determination cannot have the effect of creating a
good cause reopening because the determination was made based on what
was known by the physician and documented in the medical record at the
time of admission. Under the rules at Sec. 405.986(a)(2), good cause
for reopening may also be established if the evidence that was
considered in making the determination clearly shows on its face that
an obvious error was made at the time of the determination or decision.
This proposed rule does not seek to modify or limit the applicability
of reopening for obvious error per the rules at Sec. 405.986(a)(2)
with respect to favorable inpatient hospital admission decisions. For
example, there could be a situation where the admitting physician
documents something related to the enrollee's condition incorrectly
into the clinical record that the plan relied upon when making the
favorable decision and the facts and circumstances of such a mistake,
including the significance and materiality of the error, may support a
reopening of the favorable decision on the basis of obvious error. We
believe the need for a plan to reopen a favorable inpatient hospital
admission decision on the basis of obvious error under the rules at
Sec. 405.986(a)(2) should be a rare occurrence given the breadth of
clinical documentation that is considered when making a decision on an
inpatient hospital admission.
We acknowledge that our proposed limitation on the type of clinical
information that may be considered new and material evidence to form
the basis to reopen a favorable determination related to an inpatient
hospital admission is a departure from corresponding Traditional
Medicare reopening policies and would, at times, restrict certain
clinical information from forming the basis of new and material
evidence to reopen that would otherwise be available in Traditional
Medicare. While we strive to create and apply policies consistently
between the MA program and Traditional Medicare, the programs' inherent
differences require a tailored approach in this scenario. In
particular, under Traditional Medicare, an initial determination
related to an inpatient admission would only be made after a
beneficiary had received the service and a claim for payment has been
submitted (see Sec. 405.920) and, therefore, generally after a
beneficiary's medical record supporting that service has been fully
developed. In contrast, MA enrollees may receive a favorable
determination related to an inpatient hospital admission before or
contemporaneously to the enrollee's receipt of services (see Sec.
422.566(b)(3)). This means the enrollee's medical records are
continuing to be updated to reflect the changing medical circumstances.
Thus, it is more likely that clinical information obtained after an
initial organization determination could lead to an MA organization
reopening a decision for an enrollee than a beneficiary in Traditional
Medicare, even though the inpatient admissions criteria in Sec. 412.3
apply in the same manner to both programs. MA enrollees should be able
to rely upon an approved inpatient admission made in advance of the
receipt of services, or concurrently with the receipt of services,
despite changing medical circumstances. They should not be concerned
that an MA organization may revise or rescind an approved admission due
to clinical information that was not available or in existence when the
provider determined the need for admission and the MA organization
approved the admission.
Finally, for clarity in the applicability of the reopening rules to
prior authorization and pre-service determinations, we are proposing a
technical amendment to the parenthetical text in paragraph (c) of Sec.
422.138 to add a cross reference to the rules at Sec. 422.616,
including proposed new paragraph (e) related to decisions to approve an
inpatient hospital admission.
We are soliciting comments on the above proposals and will consider
the need to revise one or more of these approaches based on relevant
stakeholder feedback. With respect to the proposal to clarify that an
organization determination includes decisions made by an MA plan
concurrent with an enrollee's receipt of services and on a
retrospective basis after services have ended, we are specifically
soliciting comments on whether a notice other than the existing EOB may
be needed to convey written information to an enrollee on the
anticipated impact of the decision on the enrollee's financial
liability and the right to appeal.
W. Formulary Inclusion and Placement of Generics and Biosimilars
Multiple recent reports, actions, and findings published or taken
by entities outside CMS have raised concerns that Part D sponsors and
their PBMs engage in practices that favor, intentionally or
unintentionally, more expensive brand drugs and reference products over
generics, biosimilars, and other lower cost drugs in terms of formulary
placement or non-placement. For example, a March 2022 HHS OIG report
titled, ``Medicare Part D and Beneficiaries Could Realize Significant
Spending Reductions with Increased Biosimilar Use,'' found that, since
biosimilars were introduced in 2015,
[[Page 99471]]
use of and spending on these drugs in Part D has steadily increased.
However, the report also found that biosimilars are still used far less
frequently than their higher-cost reference product alternatives, and
that Part D spending on biologics with available biosimilars could have
decreased by $84 million in 2019, if all biosimilars had been used as
frequently as the most-used biosimilars. The report asserted that a
lack of biosimilar coverage on Part D formularies could limit the
potential for these drugs to reduce costs for Part D and beneficiaries.
The report noted that, in 2019, not all plan formularies covered
available biosimilars, and those formularies that did cover biosimilars
rarely encouraged their use over reference products through
preferential formulary tier placement and utilization management (UM)
tools.\265\
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\265\ https://oig.hhs.gov/reports/all/2022/ medicare-part-d-and-
beneficiaries-could-realize-significant-spending-reductions-with-
increased-biosimilar-use/.
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In addition, a July 2024 Federal Trade Commission (FTC) report
titled, ``Pharmacy Benefit Managers: The Powerful Middlemen Inflating
Drug Costs and Squeezing Main Street Pharmacies'' stated that an FTC
review of a number of contracts, including both commercial and Part D
contracts, and internal documents summarizing such contracts, revealed
``that some rebate contracts explicitly premise high rebates on the
exclusion of AB-rated generics. These generic exclusions can be
accomplished through `NDC blocks' of generic equivalents--that is, a
contractual prohibition on payments for generic drugs, as identified by
their National Drug Code or `NDC' number. These findings are consistent
with public comments that identify the practice of PBMs preferring
higher point-of-sale price branded products over generics, which may
raise out-of-pocket costs for patients.'' \266\
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\266\ https://www.ftc.gov/system/files/ftc_gov/pdf/pharmacy-benefit-managers-staff-report.pdf (page 68).
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Furthermore, in September 2024, the FTC filed an Administrative
Complaint against certain PBMs and related entities asserting
violations of the FTC Act based upon formulary and manufacturer rebate
practices relating to disfavoring certain lower cost insulin products
(some of which are biosimilars).\267\ Among other things, the complaint
alleges that these PBMs ``systematically prefer high list price insulin
products, with high rebates and fees, over similar low list price
products, with low rebates and fees, on formularies to inflate the
perceived value of their commercial drug formularies and offer higher
rebate guarantees.'' \268\ While this complaint did not involve the
Medicare Part D program, it is instructive as to PBM practices
generally, since the respondents also operate in the Part D space as
contractors to Part D sponsors.
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\267\ Compl., In re Caremark Rx, LLC et al., FTC Dkt. No. 9437,
https://www.ftc.gov/system/files/ftc_gov/pdf/d9437_caremark_rx_zinc_health_services_et_al_part_3_complaint_public_redacted.pdf.
\268\ Id. at ] 256.
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In addition to external organizations highlighting this issue, CMS
has previously stated that it had identified instances when Part D
sponsors did not include on their formularies generic alternatives when
available and issued guidance to address this issue. In the final CY
2020 Call Letter,\269\ in the section ``Improving Access to Generic and
Biosimilar Medicines'' that discussed tier composition policy, CMS
stated, ``The use of cost-effective therapeutic alternatives like
generic and biosimilar medicines is critical to the current and long-
term success of Medicare Part D. . . .CMS will continue to encourage
Part D sponsors to prioritize formulary placement for generics and
biosimilars through favorable tier placement relative to branded
products. . . . [W]hile CMS analysis of CY 2019 formularies shows
robust access to cost-effective generic medications and that Part D
sponsors have been achieving very high generic dispensing and
substitution rates, we do note that there are limited instances when
Part D sponsors are not including generic alternatives when available.
Instead, sponsors are only covering the brand drugs, which decreases
generic substitution and increases beneficiary costs.'' \270\
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\269\ https://www.cms.gov/medicare/health-plans/medicareadvtgspecratestats/downloads/announcement2020.pdf (pages
210-211).
\270\ With respect to generic substitution, CMS noted that a
significant number of states have passed legislation requiring
pharmacies to substitute lower cost generic drug products for brand
name drug products where available, and that there are laws to
encourage generic and biosimilar uptake, including the Hatch-Waxman
Act and state generic substitution laws.
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In the final CY 2020 Call Letter, CMS also stated that we would
continue to monitor beneficiary access to generic alternatives,
utilization of multi-source brand drugs when generics are available,
and situations where the brand drug is situated more favorably in
comparison to the generic with regards to tiering and UM, and that we
would consider future policy changes should this trend continue.\271\
As part of such monitoring, CMS has identified cases when an equivalent
generic or biosimilar is not included on the formulary when it is
available. There are also occasions when the generic is included on the
same or higher formulary tier as the brand drug, and occasions when a
biosimilar is included on the same or higher formulary tier as the
reference product.
---------------------------------------------------------------------------
\271\ Id.
---------------------------------------------------------------------------
These reports, actions, and findings continue to be concerning
because of the potential for higher out-of-pocket prescription drug
costs for Medicare beneficiaries when lower cost generics and
biosimilars are excluded from formularies or are placed on the same or
higher formulary tiers as the more expensive brand-name drug or
reference product. Furthermore, the patterns described in the reports,
actions, and findings may exist for other lower cost drugs. Because
such formulary decisions risk increasing out-of-pocket costs for
enrollees, CMS believes these reports, actions, and findings may be
indicative of UM programs that are not cost-effective and therefore out
of compliance with Part D requirements.
We remind sponsors that section 1860D-4(c)(1)(A) of the Act
requires a Part D sponsor to have in place, directly or through
appropriate arrangements, with respect to covered Part D drugs, ``[a]
cost-effective drug utilization management program, including
incentives to reduce costs when medically appropriate, such as through
the use of multiple source drugs (as defined in section
1927(k)(7)(A)(i) of the Act).'' This statutory requirement is codified
at Sec. 423.153(b), which states that Part D sponsors must have
established ``a reasonable and appropriate drug utilization management
program'' that, among other requirements, ``[i]ncludes incentives to
reduce costs when medically appropriate.''
Given the concerns highlighted by the preceding reports, actions,
and findings, CMS finds it necessary to clarify that, to be compliant
with Part D requirements, Part D plan formularies must provide
beneficiaries with broad access to generics, biosimilars, and other
lower cost drugs. We view such access as a necessary component of a
reasonable and appropriate drug UM program that is cost-effective and
that includes incentives to reduce costs when medically appropriate. In
other words, the plain language in section 1860D-4(c)(1)(A) of the Act
and current Sec. 423.153(b) makes clear that a UM program cannot be
considered cost-effective or inclusive of incentives to reduce costs if
it broadly excludes or restricts access to generics, biosimilars, and
other lower cost drugs that can reduce costs in a medically appropriate
manner and improve the cost efficiency
[[Page 99472]]
of drug utilization. This does not mean that a sponsor is required to
include all generics and biosimilars associated with a brand drug or
reference product on the formulary, or if they are included, that they
all be placed on a more preferred formulary tier relative to the brand
drug or reference product. Nor do we require that a sponsor forego UM
edits (for example, prior authorization (PA) and step therapy (ST)) on
generics and biosimilars. Instead, we are making it a point of emphasis
that broad access to generics, biosimilars, and other lower cost drugs
is a necessary component of having a reasonable, appropriate, and cost-
effective UM program.
Broad access to generics, biosimilars, and other lower cost drugs,
refers not only to formulary inclusion, but also tier placement and UM
practices such as PA, ST, and quantity limits (QL). This is because a
drug UM program may not be cost-effective even if the plan broadly
includes generics, biosimilars, and other lower cost drugs on the
formulary, if tier placement and other UM restrictions effectively
limit access to these drugs compared to their more expensive branded
versions and reference products. The idea that a cost-effective UM
program includes formulary placement and tiering, and UM practices
(including PA, ST, and QL), is consistent with the plain text of
section 1860D-4(c)(1)(A) of the Act. For example, a plan that generally
includes on formulary higher cost drugs and biologicals, while broadly
excluding their lower cost generics and biosimilar alternatives, cannot
reasonably claim to have a ``cost-effective'' UM program that
incentivizes reduced costs, when medically appropriate, including
through the use of multiple source drugs. The concept of the UM program
encompassing formulary inclusion, tier placement, and various UM
practices has been a fundamental component of the Part D program since
its inception. The January 2005 final rule establishing the Part D
program stated, ``While drug utilization management is common practice,
plans appropriately employ a number of different approaches (for
example, formularies, step therapy, tiered cost sharing, prior
authorization) and different combinations of those approaches. . .'' 70
FR 4277-4278. Also, the Prescription Drug Benefit Manual, Chapter 7,
Section 60.1--General Rule (Effective 9-1-2008), states that ``Common
utilization management tools include formularies, prior authorization
requirements, and promotion of lower cost generics.'' \272\
---------------------------------------------------------------------------
\272\ https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/dwnlds/chapter7pdf (page 28).
---------------------------------------------------------------------------
CMS currently conducts an extensive formulary review process to
ensure Part D sponsors provide an adequate formulary consistent with
Sec. 423.120(b)(2). Although we have been monitoring beneficiary
access to generics and biosimilars, we now plan to include an
additional step in the formulary review process to check that Part D
sponsors provide broad access to generics, biosimilars, and other lower
cost drugs. Specifically, CMS will holistically review whether a plan's
formulary and UM practices with respect to these drugs constitute a
drug UM program that is ``cost-effective,'' ``reasonable and
appropriate,'' and inclusive of ``incentives to reduce costs.'' This
review would encompass an evaluation of whether the formulary includes
generics, biosimilars, and other lower cost drugs, when available, for
brand drugs and reference products, and whether the generics,
biosimilars, and other lower cost drugs are placed on a lower formulary
tier than the brand drugs or reference products. In addition, CMS would
review whether a formulary incorporates fewer utilization controls on
brand drugs and reference products than on lower cost alternatives. CMS
would use its authority to negotiate the terms and conditions of
submitted Part D sponsors' bids under section 1860D-11(d)(2) of the Act
if a plan's proposed formulary does not appear to provide broad access
to generics, biosimilars, and other lower cost drugs in order to ensure
such access for Part D beneficiaries and compliance with Part D
requirements in section 1860D-4(c)(1)(A) of the Act and Sec.
423.153(b)(1).
In conjunction with our formulary review process, CMS intends to
continue to monitor and analyze plan sponsors' inclusion of generics,
biosimilars and other lower cost drugs on formularies. CMS seeks
comments on: (1) the prevalence of manufacturer rebates and the extent
to which such rebates influence formulary decisions that reduce Part D
beneficiaries' access to generics, biosimilars, and other lower cost
drugs; and (2) whether further programmatic actions within CMS's
current statutory authority are necessary to prevent Part D formularies
from excluding or disfavoring coverage of generics, biosimilars, and
other lower cost drugs. Based on this feedback, CMS may consider
further steps in future rulemaking or guidance to promote broad access
to generics, biosimilars, and other lower cost drugs for Part D
beneficiaries.
IV. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality
Rating System (Sec. Sec. 422.166 and 423.186)
A. Introduction
CMS develops and publicly posts a 5-star rating system for Part
C,\273\ more commonly referred to as Medicare Advantage (MA), 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. 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 based on the collection of different types of
quality data under section 1852(e) of the Act to measure quality and
performance of contracts, such as CMS administrative data, surveys of
enrollees, and information provided directly from health and drug
plans. CMS 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/Part C 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 and 16527). As a result, the policies and regulatory
changes proposed here will apply to the quality ratings for MA plans,
cost plans, and Part D plans.
---------------------------------------------------------------------------
\273\ 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 \274\ 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,
[[Page 99473]]
where applicable, we are considering including the Universal Foundation
\275\ 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 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 following Part C measures to the
2024 Measures under Consideration list as part of the Pre-Rulemaking
Measure Review process as a step toward proposing use of these
Universal Foundation measures in the Star Ratings system through future
rulemaking: Adult Immunization Status, Depression Screening and Follow-
Up for Adolescents and Adults, and Social Need Screening and
Intervention.\276\ We have previously solicited feedback regarding
potentially proposing these measures as Star Ratings measures 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.
CMS is continuing to consider ways to streamline the measurement set
for the Part C and D Star Ratings program. We currently plan to solicit
comments through the 2026 Advance Notice and Rate Announcement process
on ways to focus the measurement set to improve the impact of the Star
Ratings program.
---------------------------------------------------------------------------
\274\ https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.
\275\ https://www.nejm.org/doi/full/10.1056/NEJMp2215539 and
https://www.cms.gov/medicare/quality/cms-national-quality-strategy/aligning-quality-measures-across-cms-universal-foundation.
\276\ Information on the Measures Under Consideration list for
2024 will be available here: https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
---------------------------------------------------------------------------
In this proposed rule, we are proposing to add or update the
following measures:
Initiation and Engagement of Substance Use Disorder
Treatment (IET) (Part C)
Initial Opioid Prescribing for Long Duration (IOP-LD)
(Part D)
Breast Cancer Screening (Part C)
Plan Makes Timely Decisions about Appeals (Part C) and
Reviewing Appeals Decisions (Part C)
We are also proposing how the health equity index (HEI) reward will
be calculated for contracts that are required by a state Medicaid
agency to move one or more D-SNP plan benefit packages from an existing
MA contract to an MA contract that only includes one or more D-SNPs
with a service area limited to that state, consistent with Sec.
422.107(e), beginning with the 2029 Star Ratings. Additionally, we are
proposing to clarify at Sec. Sec. 422.166(f)(3)(vi) and
423.186(f)(3)(vi) that in order for Institutional Special Needs Plan
(I-SNP)-only contracts to have the rating-specific HEI calculated,
these contracts must have data for at least half the measures included
in the rating-specific HEI for the subset of measures that I-SNP-only
contracts are required to report.
We are also proposing a couple of technical clarifications of the
existing rules related to how the HEI reward enrollment thresholds
described at Sec. Sec. 422.166(f)(3)(viii) and 423.186(f)(3)(viii) are
assessed in the case of contract consolidations for the second year
following the consolidation and changes to how the HEI score would be
calculated for contracts that have data discrepancies between their
submitted patient-level detail and summary-level data for HEDIS
measures included in the HEI. We are also proposing a clarification of
how the improvement measure hold harmless for the highest rating is
determined based on the rounded rating before the addition of the HEI
reward, if applicable, at Sec. Sec. 422.166(g) and 423.186(g), as well
as proposing a technical clarification at Sec. Sec.
422.162(b)(3)(iv)(A)(2) and (B)(2) and Sec. Sec.
423.182(b)(3)(iv)(A)(2) and (B)(2) to provide details about how the
enrollment-weighted measure score is calculated when a consumed or
surviving contract is missing data for a measure.
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), we proposed to remove
guardrails (that is, bi-directional caps that restrict upward and
downward movement of a measure's cut points for the current year's
measure-level Star Ratings compared to the prior year's measure-
threshold specific cut points) when determining measure-specific
thresholds for non-Consumer Assessment of Healthcare Providers and
Systems (CAHPS) measures (87 FR 79625-79626). We are considering
finalizing this proposal, in this rulemaking, to apply beginning with
the 2026 measurement year and 2028 Star Ratings because with the
implementation of Tukey outer fence outlier deletion, extreme outliers
are removed before the clustering algorithm is applied, which minimizes
the need for guardrails to achieve predictability and stability of cut
points. Additionally, the removal of guardrails would allow cut points
to adjust when there are unanticipated changes in performance across
the industry. We intend to address comments received regarding the
removal of guardrails to the December 2022 proposed rule in the final
rule.
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 Part C and D 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-
[[Page 99474]]
substantive updates. See also 83 FR 16534-16537. 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. In this rule, CMS is proposing to add the Initiation and
Engagement of Substance Use Disorder Treatment (Part C) and Initial
Opioid Prescribing for Long Duration (Part D) measures to the Star
Ratings program and to update the Breast Cancer Screening (Part C),
Plan Makes Timely Decisions about Appeals (Part C), and Reviewing
Appeals Decisions (Part C) measures for performance periods beginning
on or after January 1, 2026.
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 the National Committee for Quality Assurance
(NCQA) and Pharmacy Quality Alliance (PQA).
1. Adding Measures
a. Initiation and Engagement of Substance Use Disorder Treatment (IET)
(Part C)
We propose to add the Initiation and Engagement of Substance Use
Disorder Treatment (IET) measure beginning with the 2028 Star Ratings
covering the 2026 measurement year. Adding the IET measure to the Part
C Star Ratings would further align the Part C Star Ratings with the
Universal Foundation as discussed in the CY 2024 and CY 2025 Rate
Announcements.\277\
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\277\ See Announcement of Calendar Year (CY) 2024 Medicare
Advantage (MA) Capitation Rates and Part C and Part D Payment
Policies (cms.gov) pages 162-163 and Announcement of Calendar Year
(CY) 2025 Medicare Advantage (MA) Capitation Rates and Part C and D
Payment Policies (cms.gov) page 137.
---------------------------------------------------------------------------
The IET measure is a composite measure that averages two separate
rates: Initiation of Substance Use Disorder Treatment and Engagement of
Substance Use Disorder Treatment. Prior to measurement year 2022, this
measure was called Initiation and Engagement for Alcohol and Other Drug
Abuse or Dependence Treatment and the individual rates have been
reported on the Part C and Part D Star Ratings display page beginning
with the 2012 performance period (2014 display page). For measurement
year 2022, NCQA made several updates to the IET measure, including
updating its name. Since many individuals with substance use disorder
(SUD) attempt treatment multiple times before they are able to
successfully engage, the measure was changed from ``member-based'' to
``episode-based'' to allow for each recovery attempt to count
independently, which should result in a more valid representation of
engagement with SUD treatment for health plan populations. The length
of the negative SUD history period was increased from 60 days to 194
days to limit the number of members receiving ongoing treatment who
fall into the denominator. Emergency department visits and medically
managed withdrawal services were removed from the negative SUD history
period because emergency department visits and withdrawal services
alone are not suggestive of ongoing or planned treatment for
individuals with SUD and thus do not signal that a member is already
engaged in comprehensive care. The requirement that psychosocial
treatment accompany pharmacotherapy was also removed to align with the
most current clinical practice guidelines (for example, allowing for
patients who may not accept concomitant psychosocial treatment).
Finally, the adult age stratification was split between 18-64 years and
65+ years to better highlight any gaps in care between different age
groups.
CMS began reporting the two indicators or rates included in the
historical IET measure on the display page for the 2014 Star Ratings.
However, starting with the display page for the 2024 Star Ratings
covering the 2022 measurement year, we began reporting the updated
measure being proposed here, including the separate rates for
initiation and engagement that are part of the HEDIS measure and an
average of the two rates. As provided at Sec. Sec. 422.164(c)(3) and
(4) and 423.184(c)(3) and (4), as new performance measures are
developed and adopted, they are initially posted on the display page
for at least 2 years. We intend to use the period that the updated IET
measure was on the display page to meet this requirement.
To lessen the complexity in the Star Ratings program by minimizing
the number of new Star Rating measures, CMS is proposing to average the
initiation and engagement rates into one measure for reporting in the
Star Ratings program. A contract must have scores on both rates to
receive a score for this measure as we propose to use it in the Star
Ratings program. This is similar to how the data are reported for the
IET measure in the Quality Rating System for the Qualified Health Plans
on the Exchanges.\278\ The two rates of this composite measure will
continue to be reported as separate measures on the display page so as
to be available to plans for use in their quality improvement projects
after the composite IET measure is added to the Star Ratings pending
rulemaking.
---------------------------------------------------------------------------
\278\ The Quality Rating System public use file shows the
averaged rate of initiation and engagement: https://www.cms.gov/files/zip/qrs-nationwide-puf-py2023.zip.
---------------------------------------------------------------------------
We submitted the IET measure for inclusion in the 2023 Pre-
rulemaking Measure Review (PRMR) process, required under section 1890A
of the Act. The Consensus-Based Entity (CBE), which is currently
Battelle, convenes interested parties that participate in committees to
review measures as part of the PRMR process. Battelle utilized the
Novel Hybrid Delphi and Nominal Group multi-step process, which is an
iterative consensus-building approach aimed at a minimum of 75%
agreement among voting members, rather than a simple majority vote. The
final result from the committee's vote can be: Recommend, Recommend
with conditions, Do not recommend, or Consensus not reached. Consensus
not reached signals continued disagreement amongst the committee
despite being presented with perspectives from public comment,
committee member feedback, and discussion, and highlights the multi-
faceted assessments of quality measures. More details regarding the CBE
PRMR voting procedures may be found in Chapter 4 of the Guidebook of
Policies and Procedures for Pre-Rulemaking Measure Review and Measure
Set Review.\279\ Although the committee did support the IET measure
overall, there were diverging perspectives related to data collection
burden, the effect of patients refusing treatment on measure
performance, and exclusions. Approximately 29 percent (4 of the 14
voting members) \280\ did not recommend this measure resulting in the
committee not reaching consensus. Some members of the committee cited
data collection burden as a challenge to the feasibility of the measure
given interoperability barriers with electronic health record (EHR)
systems across
[[Page 99475]]
providers and specialties; however, this concern was not shared by all
committee members and some members noted that there was nothing
specific related to this measure that would result in data collection
issues. CMS has taken the CBE's input into consideration, but since MA
contracts have been collecting and reporting this measure for over 10
years, we do not anticipate that data collection burden will be an
issue with moving this measure from the display page to the Star
Ratings. Additionally, the issue of members refusing treatment is not
unique to this measure. Only one committee member, a patient
representative, mentioned that some patients may choose not to initiate
treatment and that this should not be counted against the plan;
however, for this measure there are not significant clinical reasons
for refusing treatment that would need to be accounted for in the
measure specification. Having considered the CBE's input, we are
proposing moving this measure from the display page to the Star Ratings
beginning with the 2028 Star Ratings covering the 2026 measurement
year.
---------------------------------------------------------------------------
\279\ https://p4qm.org/sites/default/files/2023-09/Guidebook-of-Policies-and-Procedures-for-Pre-Rulemaking-Measure-Review-%28PRMR%29-and-Measure-Set-Review-%28MSR%29-Final_0.pdf.
\280\ PRMR-2023-MUC-Recommendations-Report-Final-.pdf
(p4qm.org).
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b. Initial Opioid Prescribing for Long Duration (IOP-LD) (Part D)
As part of CMS' ongoing efforts to address the national opioid
crisis, we have implemented balanced drug utilization review (DUR)
policies and quality measurement strategies to help reduce prescription
opioid misuse in the Medicare Part D population while maintaining
medically necessary access. To support this goal, CMS proposes to add
the IOP-LD measure for the 2028 Star Ratings (2026 measurement year) in
accordance with Sec. 423.184(c) because it is an important measure to
promote safer prescription opioid use. The IOP-LD measure will be an
additional tool for Part D sponsors to monitor initial opioid
prescription exposure to reduce the risk for long-term opioid use and
opioid use disorder. Adequate management of pain and assessment after
opioid initiation is vital to minimize the risk of long-term opioid
use, opioid misuse, and overdose.
CMS began reporting the IOP-LD measure to Part D sponsors through
the Patient Safety reports starting in measurement year 2020 and has
publicly reported the measure on the Part D display page \281\ since
2023 (2021 performance data) in accordance with Sec. 423.184(c)(3).
Consistent with Sec. 423.184(c)(2), we announced in the Announcement
of Calendar Year (CY) 2021 Medicare Advantage (MA) Capitation Rates and
Part C and Part D Payment Policies,\282\ as well as in subsequent Rate
Announcements, that the IOP-LD measure would be considered in the
future for addition to the Star Ratings. The IOP-LD measure underwent
further review and evaluation during the 2023 PRMR process by the CBE
to provide recommendations for selecting quality and efficiency
measures for use in CMS programs as required by section 1890A of the
Act. A consensus for inclusion in the Part D Star Ratings was not
reached during the PRMR process for the IOP-LD measure. Approximately
36 percent (5 of the 14 voting members) did not recommend this measure,
resulting in the committee not reaching the 75 percent consensus
threshold as summarized in the PRMR 2023 Recommendations Report.\283\
As noted in the Report, committee members acknowledged the importance
of having a measure that assesses opioid prescriptions as a method of
harm reduction and that the measure may fill a gap in opioid safety in
the Star Ratings program. Committee members sought clarification on the
specifications and consideration of measure exclusions for patients
with complex medical needs. Some members of the committee expressed
concern for the adequacy of evidence and alignment with current
clinical guidelines for opioid prescribing. The committee also
discussed potential unintended consequences of measure implementation
on prescriber hesitancy, the quality of pain management, and harm for
patients who need long-term opioids. CMS discussed that the measure is
not intended to guide clinical decision-making for individual patients
and does not represent a prescribing limit.
---------------------------------------------------------------------------
\281\ Display Page Technical Notes and Measure Data available
at: https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
\282\ https://www.cms.gov/files/document/2021-announcement.pdf.
\283\ Pre-Rulemaking Measure Review Measures Under Consideration
2023 Recommendations Report: https://p4qm.org/sites/default/files/2024-02/PRMR-2023-MUC-Recommendations-Report-Final-.pdf.
---------------------------------------------------------------------------
We seek comments from a broad range of interested parties on the
proposal to add the IOP-LD measure to the Part D Star Ratings. The IOP-
LD measure is an important area of focus for the Medicare Part D
program and is supported by evidence-based literature and national
guidelines. The measure specifications are designed to reduce
unintended consequences and complement Medicare Part D opioid-related
policies.
Measure Specifications: The PQA is the measure steward. The IOP-LD
measure was endorsed by the PQA's membership and included a review by
the PQA's Patient and Caregiver Advisory Panel in 2018, with 100%
voting members in favor of the measure as important to patients and
caregivers.\284\ The National Quality Forum (NQF) Patient Safety
Standing Committee (NQF #3558) \285\ also endorsed the measure in 2019,
demonstrating that it meets high standards of evidence to impact
healthcare quality. The NQF Patient Safety Standing Committee
unanimously deemed the IOP-LD measure to meet the importance criterion,
with zero votes for ``low'' on any importance-related sub-criteria.
---------------------------------------------------------------------------
\284\ The Pharmacy Quality Alliance Patient & Caregiver Advisory
Panel Meeting Minutes. https://www.pqaalliance.org/assets/docs/PQA_2018_PCAP_Excerpt.pdf.
\285\ The Patient Safety Final Technical Report--Spring 2020
Cycle. https://www.qualityforum.org/Publications/2021/03/Patient_Safety_Final_Technical_Report_-Spring_2020_Cycle.aspx.
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CMS will use the PQA Measure Manual specifications and Value
Sets.\286\ The IOP-LD measure evaluates the percentage of Part D
beneficiaries, 18 years or older with at least one initial opioid
prescription for more than 7 cumulative days' supply. To prevent
misapplication, the following beneficiaries are excluded: (i) those
with cancer or sickle cell disease diagnoses and (ii) those who elected
to receive hospice care or are in palliative care at any time during
the measurement period or the 90 days prior to the index prescription
start date, which is the earliest date of service (DOS) for an opioid
medication during the measurement year. The IOP-LD period has a
lookback period, which is 90 days prior to each opioid prescription
claim. Therefore, beneficiaries with no opioid prescription claims in
the lookback period are defined as having a negative medication history
for opioids.
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\286\ Licensing and Using PQA Measures. https://www.pqaalliance.org/measure-licensing-use.
---------------------------------------------------------------------------
The initial opioid prescription is the earliest DOS for an opioid
prescription claim during the measurement year following a negative
medication history. The opioid initiation period is the 3-day period
when the numerator is assessed and ensures a comprehensive view of
initial opioid prescribing. The opioid initiation period includes the
date of the initial opioid prescription plus 2 days. All prescription
claims during the opioid initiation period are counted cumulatively
towards the days' supply total to avoid situations where a patient is
prescribed a long duration of opioids following a very brief initial
duration (that is, 1-3 days).
[[Page 99476]]
The IOP-LD measure is intended for retrospective population-level
performance measurement of Part D plan sponsors (at the contract-level)
and not to guide clinical decision-making for individual patients. The
measure does not address opioid dosage, only the duration of an initial
opioid prescription. Medications used for opioid use disorder (MOUD)
are not included in the IOP-LD measure; for methadone, only use for
pain is included.
The measure is not intended to impact current long-term opioid use.
Because this measure only captures initial opioid prescriptions in
individuals with no opioid history in the preceding 90 days, it is not
anticipated to result in unintended consequences related to
discontinuation or abrupt tapering of opioid use in current, long-term
users. We recognize that some beneficiaries may require a longer
duration for their initial opioid prescription based on the acute pain
condition being treated (for example, major surgery or injury).
Subsequent fills for opioids after the initial opioid prescription are
not factored into the measure. However, by design, the measure does
encourage re-evaluation of the benefits and risks for continued opioid
therapy, which is a recommendation in the updated Centers for Disease
Control and Prevention (CDC) Clinical Practice Guideline for
Prescribing Opioids for Pain, 2022 \287\ (``2022 CDC Guideline'').
Based on Recommendation 6 of the 2022 CDC Guideline, when opioids are
used to treat acute pain, no greater quantity of opioids should be
prescribed than needed for the expected duration of pain that is severe
enough to require opioids. However, when acute pain does continue
longer than the expected duration, prescribers, practices, and
clinicians ``should have mechanisms in place for the subset of patients
who experience severe acute pain that continues longer than the
expected duration. These mechanisms should allow for timely
reevaluation to confirm or revise the initial diagnosis and adjust pain
management accordingly.''
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\287\ https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm?s_cid=rr7103a1_w.
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Evidence for Measure: The duration of initial opioid exposure is
associated with a higher likelihood of long-term opioid use. There is a
consistent body of empirical evidence that a greater days' supply for
initial opioid prescriptions is associated with significant risks,
including increased risk of long-term opioid use, opioid misuse, and
overdose. In the 2022 CDC Guideline, the CDC reaffirmed their
recommendation on initial opioid prescription duration that ``when
opioids are needed for acute pain, clinicians should prescribe no
greater quantity than needed for the expected duration of pain severe
enough to require opioids.'' In the associated implementation
consideration text, the updated CDC Guideline notes that ``when the
diagnosis and severity of acute pain warrant use of opioids, clinicians
should prescribe no greater quantity than needed for the expected
duration of pain severe enough to require opioids'' and ``for many
common causes of nontraumatic, nonsurgical pain, when opioids are
needed, a few days or less are often sufficient.'' Furthermore, the
2022 CDC Guideline references an analysis conducted in 2014 \288\ that
found that the median durations of initial opioid analgesic
prescriptions for acute pain indications in primary care settings were
4 to 7 days, suggesting that in most cases, clinicians considered an
initial opioid prescription of 4 to 7 days' duration sufficient. In
April 2023, the Food and Drug Administration (FDA) announced that it
was requiring updates to the prescribing information of opioid pain
medicines to provide additional guidance on the use of opioids. In this
Drug Safety Communication,\289\ the FDA stated, ``Data also suggest
that many acute pain conditions treated in the outpatient setting
require no more than a few days of an opioid pain medicine, although
the dose and duration of treatment needed to adequately manage pain
will vary based on the underlying cause and individual patient
factors.''
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\288\ Mundkur ML, Franklin JM, Abdia Y, et al. Days' supply of
initial opioid analgesic prescriptions and additional fills for
acute pain conditions treated in the primary care setting--United
States, 2014. MMWR Morb Mortal Wkly Rep 2019;68:140-3. https://doi.org/10.15585/mmwr.mm6806a3.
\289\ https://www.fda.gov/media/167058/download.
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Existing evidence-based literature reinforces the CDC's
recommendations regarding the duration of initial opioid prescriptions.
A retrospective cohort study by Shah et al., found that the probability
of long-term opioid use increased with each additional day supplied
when initiating opioid therapy, following the third day supplied.\290\
The study examined 1,294,247 patients aged 18 years or older who met
the inclusion criteria and received initial opioid prescriptions,
defined as those with no opioid prescriptions in the preceding 6 months
of continuous enrollment. The study found that the probability of long-
term use was more than twice as high for individuals who received
greater than 7 days' supply, when compared to those with at least one
day's supply (13.5 percent vs. 6.0 percent).
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\290\ Shah A, Hayes CJ, Martin BC. Characteristics of Initial
Prescription Episodes and Likelihood of Long-Term Opioid Use--United
States, 2006-2015. MMWR Morb Mortal Wkly Rep. Mar 17
2017;66(10):265-269.
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A different retrospective study published by Shah et al., provided
further evidence that a greater days' supply for initial opioid
prescriptions was associated with a decreased likelihood of opioid
discontinuation.\291\ The study followed a total of 1,353,902 opioid
na[iuml]ve individuals who had at least one opioid prescription between
June 1, 2006, and December 31, 2014 and at least six months of
continuous pharmacy and medical enrollment without an opioid
prescription before their first opioid prescription. Among the 1.3
million study participants, 993,935 were enrolled for at least 1 year.
Out of the 993,935 study participants, 33,019 individuals (3.32
percent) continued opioid use for 365 days or longer. After controlling
for patient factors and underlying pain etiologies, the authors'
results suggested a dose-response relationship between days' supply and
likelihood of discontinuation. The hazard ratios for discontinuation of
opioids were 0.70 (95 percent confidence interval (CI) 0.70-0.71) for a
3-4 days' supply, 0.48 (95 percent CI 0.47-0.48) for a 5-7 days'
supply, 0.37 (95 percent CI 0.37-0.38) for an 8-10 days' supply, 0.32
(95 percent CI 0.31-33) for an 11-14 days' supply, 0.29 (95 percent CI
0.28-0.29) for 15-21 days' supply, and 0.20 (95 percent CI 0.19-0.20)
for 22 or more days' supply of opioids, where a 1-2 days' supply is the
reference group. This study also narrowed the sample by further
evaluating opioid-na[iuml]ve individuals to only those individuals who
were opioid na[iuml]ve for 12 months. This decreased the sample to
955,371 individuals and the results found the relationship between the
first opioid prescription and the likelihood of discontinuation from
opioids showed similar trends to the original study population.
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\291\ Shah A, Hayes CJ, Martin BC. Factors Influencing Long-Term
Opioid Use Among Opioid Naive Patients: An Examination of Initial
Prescription Characteristics and Pain Etiologies. J Pain. Nov
2017;18(11):1374-1383. doi:10.1016/j.jpain2017.06.010 at https://www.jpain.org/article/S1526-5900(17)30635-1/pdf.
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Another study by Hadlandsmyth replicated Shah et al.'s methodology
and researched the relationship between initial opioid exposure and
long-term
[[Page 99477]]
use.\292\ There were 19,600 Veteran's Health Administration patients
who received an initial opioid prescription (defined as the first
prescription with no opioid prescriptions in the preceding year) and
subsequently met the criteria for long-term opioid use within one year
of follow-up. The authors of this study compared their 2011 and 2016
data. Their results corroborated Shah's study that an association
exists between initial opioid exposure and the rate of long-term use.
This long-term opioid use appeared to persist even though the overall
rate of long-term opioid use may have decreased, therefore concluding
that cumulative days' supply was a strong predictor of long-term use
and limiting initial opioid use can potentially decrease the risk of
long-term opioid use. The study results found that in 2016, the overall
rate of continued opioid use 1 year after initial opioid exposure was
16.8 percent and in 2011 was 29.2 percent.
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\292\ Hadlandsmyth K, Lund BC, Mosher HJ. Associations between
initial opioid exposure and the likelihood for long-term use. J Am
Pharm Assoc (2003). Jan-Feb 2019;59(1):17-22. doi:10.1016/
j.japh.2018.09.005 at https://www.sciencedirect.com/science/article/pii/S1544319118304059?via%3Dihub.
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Additionally, a study by Mojtabai analyzed trends in prescription
opioid use among adults in the United States from 1999-2000 to 2013-
2014.\293\ The study found a significant increase in the prevalence of
prescription opioid use, driven by an increase in long-term use.\21\ By
2013-2014, nearly 80 percent of opioid users were classified as long-
term users.\21\ Long-term opioid use was linked to poorer physical
health status, concurrent use of benzodiazepines, and a history of
heroin use.\21\ These findings emphasize the growing prevalence and
implications of long-term opioid use in the U.S.\21\
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\293\ Mojtabai, R. (2018). National trends in long[hyphen]term
use of prescription opioids. Pharmacoepidemiology and drug safety,
27(5), 526-534 at https://pubmed.ncbi.nlm.nih.gov/28879660/.P>\21\
73 FR 20489-20490 in ``Medicare Program; Policy and Technical
Changes to the Medicare Prescription Drug Benefit'' published April
15, 2008 (73 FR 20486). However, CMS's longstanding interpretation
of the phrase ``[a]gents when used for. . .weight gain . . .''
(emphasis added) in the same section of the Act has not included
drugs used to treat acquired immunodeficiency syndrome (AIDS)
wasting and cachexia (73 FR 20490).
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Medicare Part D Opioid-Related Policy Alignment: Medicare Part D
sponsors must have concurrent DUR systems, policies, and procedures
designed to ensure that a review of the prescribed drug therapy is
performed before each prescription is dispensed to an enrollee in a
sponsor's Part D plan, typically at the point-of-sale (POS) (that is,
the pharmacy) or point of distribution as described in Sec.
423.153(c)(2). To help prevent and combat prescription opioid overuse
through improved concurrent DUR, sponsors are expected to implement
real-time opioid safety edits at the POS, including an edit to limit
initial opioid prescription fills for opioid na[iuml]ve beneficiaries
to no more than a 7 days' supply. Sponsors should not implement these
edits so that beneficiaries' access to MOUD, such as buprenorphine, is
impacted; sponsors should not include MOUD in this edit.
Sponsors should have procedures in place to allow the edit to be
overridden at POS if an enrollee is already taking opioids or is
exempt.\294\ \295\ For example, sponsors may not have opioid claims
history for new enrollees, especially at the start of a new contract
year, and they may experience a claim rejection due to the opioid
na[iuml]ve edit with their first opioid prescription over 7 days'
supply. Furthermore, beneficiaries who are residents of a long-term
care facility, are in hospice care or receiving palliative or end-of-
life care or have cancer or sickle cell disease should be excluded from
these reviews. A pharmacist can override a POS edit for an exemption or
for the enrollee not being opioid na[iuml]ve. A beneficiary or their
prescriber may also request a coverage determination from the plan for
a longer duration for their initial fill, including the right to
request an expedited or standard coverage determination in advance of
prescribing. Subsequent prescriptions filled within the plan's look
back window are not subject to the 7 days' supply limit, as the
enrollee will no longer be considered opioid na[iuml]ve.\296\ While the
opioid safety edit may help plan sponsors reduce prescription opioid
overuse across their enrollment population, it should not be
implemented by Part D plans as a one-size-fits-all prescribing limit or
as a substitute for individual clinical judgment. Implementation of
opioid safety edits, including the opioid na[iuml]ve edit, by Part D
sponsors, is monitored through the CMS Part D Reporting Requirements
(OMB 0938-0992), beneficiary complaints, and other sources of CMS
administrative data.
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\294\ HPMS memorandum, dated December 19, 2022, Medicare Part D
Opioid Safety Edit Reminders and Recommendations and Frequently
Asked Questions (FAQs) available at: https://www.cms.gov/files/document/cy-2023-opioid-safety-edit-reminders-and-recommendations.pdf.
\295\ HPMS memorandum, dated July 5, 2024, Contract Year (CY)
2025 Medicare Part D Opioid Safety Edits--Submission Instructions,
Recommendations, and Reminders available at: https://www.cms.gov/files/document/cy-2025-opioid-safety-edit-submission-instructions.pdf.
\296\ Medicare Part D Opioid Policies: Information for
Prescribers available at: https://www.cms.gov/medicare/coverage/prescription-drug-coverage-contracting/improving-drug-utilization-review-controls-part-d.
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The IOP-LD measure complements the opioid na[iuml]ve safety edit
because it is similarly focused on the duration of initial opioid
prescriptions to reduce risks, but the IOP-LD measure is retrospective.
Sponsors are also required to establish a drug management program (DMP)
for beneficiaries at-risk for misuse or abuse of frequently abused
drugs, and beneficiaries with potential patterns of opioid misuse or
with a history of opioid-related overdose are to be included in DMPs
per the established retrospective criteria. DMP requirements are
codified at Sec. 423.153(f). Under such programs, Part D sponsors
engage in case management of such beneficiaries by contacting their
prescribers to determine if a beneficiary is at risk.
The Medicare Part D opioid-related policies were carefully
developed to balance the need to address opioid misuse with the need to
maintain a positive patient-doctor relationship, to preserve access to
medically necessary drug regimens, and to reduce the potential for
unintended consequences. The IOP-LD measure is an additional tool for
sponsors to assess the effectiveness of Medicare Part D opioid-related
strategies to reduce the risk of long-term opioid use, opioid misuse,
or overdose.
Data-Driven Need: CMS routinely monitors the impact of the Medicare
Part D opioid-related policies. We have observed positive trends in our
population, especially after the opioid DUR--safety edit and DMP--
policies were enhanced beginning in 2019, but we must continue to use
available tools to proactively address potential misuse and overdose,
including quality measures.
The IOP-LD rates for Part D contracts can be improved. The average
IOP-LD rate across all contracts was about 16 percent for the 2021
measurement year (2023 display page) and 2022 measurement year (2024
display page). The average rates were 17 percent for MA-PDs and 13
percent for PDPs in the 2021 measurement year and 17 percent and 14
percent for MA-PDs and PDPs, respectively, in 2022. There was a range
of IOP-LD rates among contracts; some of the highest rates for this
measure by contract are 43 percent, 53 percent, and 64 percent.
Furthermore, based on the internal analysis of Part D prescription
drug event (PDE) data from 2018 to 2023 (extracted January 17, 2024),
the percentage of non-MOUD opioid Part D claims with 7 days' supply or
less positively increased from 18.4 percent in 2018 to 27.7 percent in
2023 after the implementation of enhanced opioid safety edits at POS in
2019, but the
[[Page 99478]]
number of claims were 10 million (2018), 12 million (2019), 11.5
million (2020), 12 million (2021), 12 million (2022), and 9.4 million
(2023).
The percentage of Part D enrollees who had at least one opioid Part
D claim in the year in PDE data decreased from 28.6 percent in 2018 to
20.6 percent in 2023 (not including MOUD).\297\ Similarly, the
percentage of non-MOUD opioid Part D claims (out of all covered Part D
claims) after exclusions decreased from 4.7 percent to 3.6 percent.
However, the number of users and claims remains a concern. The number
of non-MOUD opioid Part D users from 2018 to 2023 were 10.4 million
(2018), 9.8 million (2019), 9.1 million (2020), 9.3 million (2021), 9.3
million (2022), and 9.4 million (2023). The number of non-MOUD opioid
Part D claims from 2018 to 2023 were 55 million (2018), 51.3 million
(2019), 49.3 million (2020), 47.5 million (2021), 45.9 million (2022),
and 44.7 million (2023).
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\297\ CMS internal analysis excluded beneficiaries who elected
to receive hospice care, are in palliative care, who have cancer or
sickle cell disease, or who are in a long-term care setting.
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The PQA has developed other measures to address opioid misuse,
including the Use of Opioids at High Dosage in Persons without Cancer
(OHD), Use of Opioids from Multiple Providers in Persons without Cancer
(OMP), and Use of Opioids at High Dosage and from Multiple Providers in
Persons without Cancer (OHDMP) measures, which CMS has used for quality
and performance oversight. In 2019, the PQA updated these three
measures and CMS implemented the measure revisions in the Patient
Safety reports to Part D sponsors for the 2019 measurement year. These
three measures were added to the display page beginning in 2021 (then
using 2019 data).\298\
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\298\ See Announcement of Calendar Year (CY) 2020 Medicare
Advantage Capitation Rates and Medicare Advantage and Part D Payment
Policies and Final Call Letter available at: https://www.cms.gov/medicare/health-plans/medicareadvtgspecratestats/downloads/announcement2020.pdf. The ODHMP measure was retired from the 2022
display page as announced in the Announcement of Calendar Year (CY)
2022 Medicare Advantage (MA) Capitation Rates and Part C and Part D
Payment Policies available at: https://www.cms.gov/files/document/2022-announcement.pdf.
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These three measures share the same denominator criteria, based on
the number of member-years (MYs) of enrolled Part D beneficiaries with
two or more prescription claims for opioids, filled on at least two
unique dates of service, for at least 15 total cumulative opioid days'
supply over a period of 90 days or longer during the measurement
period.\299\ CMS currently adjusts Part D enrollment based on MYs \300\
to account for enrolled beneficiaries for only part of the contract
year. Upon reviewing the denominator data, there has been an increase
in the number of MYs of enrolled beneficiaries from almost 35.6 million
to about 42.7 million from 2017 to 2022 measurement years
(respectively, from 2019 to 2024 display page). However, the proportion
of MYs of enrolled beneficiaries receiving at least two fills of
prescription opioids and at least 15 days of supply of opioids over a
period of 90 days or longer has decreased from 17 percent in 2017 to 9
percent in 2022. Even with this reduction, roughly four million MYs of
enrolled beneficiaries still demonstrate long-term use of opioid
prescriptions.
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\299\ Refer to 2024 Medicare part C & D Display Measure
Technical Notes available at: https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
\300\ These measures will use continuous enrollment beginning in
measurement year 2025 (2027 display page) as announced in the
Announcement of Calendar Year (CY) 2025 Medicare Advantage (MA)
Capitation Rates and Part C and Part D Payment Policies available
at: https://www.cms.gov/files/document/2025-announcement.pdf.
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There is also continued concern for long-term opioid and illicit
opioid use leading to overdose and death. According to the CDC, there
are widening disparities among various population groups for overdose
death rates, which have recently been driven by illicitly manufactured
fentanyl use.\301\ In 2020, the overdose death rates per 100,000 people
increased by 44 percent for the Black population and 39 percent for
American Indian and Alaska Native (AI/AN) population compared to 2019.
Additionally, among Black males 65 years and older, the overdose death
rate was nearly seven times more than their White male counterparts of
the same age group.
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\301\ CDC Newsroom Release. Overdose death rates increased
significantly for Black, American Indian/Alaska Native people in
2020: https://www.cdc.gov/media/releases/2022/s0719-overdose-rates-vs.html.
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Additionally, officials from the Substance Abuse and Mental Health
Services Administration (SAMHSA), CDC, and the National Institute on
Drug Abuse published a study that followed a cohort of 136,762 Medicare
beneficiaries who experienced an index nonfatal drug overdose in
2020.\302\ This population consisted primarily of Hispanic (5.8
percent), non-Hispanic Black (10.9 percent), and non-Hispanic White
(78.8 percent) beneficiaries. The researchers followed the
beneficiaries 12 months after the initial index nonfatal drug overdose
and found that 23,815 beneficiaries (17.4 percent) had at least one
more nonfatal drug overdose and 1,323 beneficiaries (1.0 percent) died
of a fatal overdose. The study found that opioids were involved in 72.2
percent of these fatal drug overdoses.
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\302\ JAMA Internal Medicine: Overdose, Behavioral Health
Services, and Medications for Opioid Use Disorder After a Nonfatal
Overdose at https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2820177.
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Differences are seen in the Medicare Part D population based on
internal analysis of PDE and administrative claims data by CMS. In
2023, the percentages of non-MOUD opioid Part D users were 24 percent
for Black beneficiaries, 24 percent for AI/AN beneficiaries, and 22
percent for White beneficiaries. We found that overall, the number of
Part D beneficiaries with a primary opioid overdose claim decreased
from 32,120 in 2018 to 28,365 in 2023 (0.83 per 1,000 to 0.62 per 1,000
Part D beneficiaries). The opioid overdose rates varied among the Part
D population in 2023 (January 1, 2023 to December 31, 2023): 1.52 per
1,000 AI/AN Part D beneficiaries, 1.35 per 1,000 Black Part D
beneficiaries, and 0.57 per 1,000 White Part D beneficiaries. The
disparities in opioid overdose rates existing among different
population groups, as highlighted by CMS's internal data analysis,
underscore the urgency to address the widening gap in health outcomes.
As discussed in this preamble section, there is room for improvement
and variations in IOP-LD rates among Part D sponsors.
The IOP-LD measure is a preventative-focused quality measure that
addresses initial prescription opioid exposure to reduce the likelihood
of long-term opioid use and reduce the risk of opioid overdose. We
propose to add the Part D IOP-LD measure to the Star Ratings for the
2028 Star Ratings (2026 measurement year) and solicit comments on this
proposal.
2. Updating Measures
a. Breast Cancer Screening (Part C)
CMS is proposing a substantive update to the existing Breast Cancer
Screening measure because the measure steward, NCQA, is updating the
measure as a result of changes in the applicable clinical guidance. In
April 2024, the U.S. Preventive Services Task Force (USPSTF) issued
final updated guidance for the age at which breast cancer screenings
should begin.\303\ Subsequently, NCQA announced their intention to
update their breast cancer
[[Page 99479]]
screening measure for measurement year 2025 to include biennial
mammography screening for women aged 40-74 years at average risk of
breast cancer (see https://www.ncqa.org/blog/updates-to-breast-cancer-screening-age-range-for-hedis-my-2025/). As discussed in the CY 2025
Rate Announcement, CMS is proposing to expand the age range for the
Breast Cancer Screening measure to women aged 40-49, for an updated age
range of 40-74, for the 2027 and subsequent measurement years.\304\ 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). The legacy measure with the narrower age range of 50-74
years will remain available and used in Star Ratings until the updated
measure has been on the display page for two years and has been adopted
through rulemaking. For measures such as this, NCQA requires plans to
submit the data as the total rate and rates for each age stratification
so data will be available to calculate the legacy measure rate until
the expanded rate is adopted through rulemaking for the Star Ratings.
The updated measure will be on the display page for the 2027 and 2028
Star Ratings and will be included in the 2029 Star Ratings if finalized
through rulemaking.
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\303\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/breast-cancer-screening#bcei-recommendation-title-area.
\304\ See Announcement of Calendar Year (CY) 2025 Medicare
Advantage (MA) Capitation Rates and Part C and Part D Payment
Policies (cms.gov) page 138.
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b. Plan Makes Timely Decisions About Appeals (Part C) and Reviewing
Appeals Decisions (Part C)
CMS is proposing substantive updates to the Plan Makes Timely
Decisions about Appeals (Part C) measure that evaluates the percent of
appeals timely processed by the plan (numerator) out of all the plan's
appeals decided by the Independent Review Entity (IRE) (includes
upheld, overturned, partially overturned, and appeals not evaluated by
the IRE because the plan agreed to cover) (denominator). Given the
extent to which cases are now submitted electronically (via the portal)
to the IRE, CMS has updated the Maximus Medicare Health Plan
Reconsideration Process Manual Medicare Managed Care Reconsideration
Project (that is, the IRE Manual) effective January 1, 2025 \305\ to
better align when submission of a case file to the IRE is considered
timely with the existing regulations. First, CMS is eliminating the
additional days the IRE allows for appeal files that are submitted
electronically. Currently, the IRE includes additional days to make
allowances for any mail delays. Because the IRE now receives over 99
percent of case files electronically via the portal, CMS has updated
the language in the IRE Manual to use a deadline for timely portal
(that is, electronic) submission that aligns with the timeliness
requirements in Sec. 422.590 for submission of standard, expedited,
and Part B drug cases. Section 422.590(a)(2) requires Medicare health
plans to submit an unfavorable standard service reconsideration to the
IRE as expeditiously as the enrollee's health condition requires, or
not later than 30 calendar days after the receipt of a valid
reconsideration request, subject to an additional 14-calendar day
extension if requested by the enrollee or otherwise justified and in
the enrollee's interest as set forth in Sec. 422.590(f). These
timeframes apply as well to Medicare cost plans under Sec. 417.600.
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\305\ https://www.medicareappeal.com/sites/default/files/New%20Manual%20with%20Timefram%20Updates%2010%207%2024.pdf.
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The regulations do not provide any additional time for mail delays
and Medicare health plans are not required to use overnight delivery
for non-expedited cases. For purposes of defining and calculating
timeliness, the IRE currently adds five calendar days to the timeframes
listed above for all appeal file submissions. For example, the IRE
currently considers a standard service case, without an extension, to
be submitted timely if it is received within 35 calendar days of the
valid request for reconsideration; this means that for electronic
submissions by the plan, the plan has an extra five days to submit the
file to the IRE beyond the deadline established in the applicable
regulation. Since CMS is eliminating this 5-day period for all cases
submitted electronically starting on January 1, 2025, we are proposing
to make this update to the Plan Makes Timely Decisions about Appeals
measure to align the measure with the timeframe used by the IRE in
processing appeal files submitted to it. CMS believes this change is
justified due to the overwhelming majority of cases being submitted
electronically; further, eliminating the 5-day grace period for
electronic submissions aligns this measure with the regulation text,
which does not provide for or require any grace period for submission
of files to the IRE. Per Sec. 422.590(a)(2), (b)(2), (c)(2) and
(e)(5), submission of the written explanation of an adverse
reconsideration decision and associated documentation to the IRE is
required within the same timeframe as notice to the enrollee (that is,
30, 60, or 7 days or 24 hours, depending on the specific item or
service under appeal). Please note these changes are only in effect for
electronic submissions. The timeliness of case files submitted by mail
would continue to be subject to the 5-day grace period.
The second update CMS is implementing starting January 1, 2025, is
to use the electronic system receipt date and time as the date the
appeal was received by the IRE, regardless of whether it is during the
IRE's business hours, for electronic submissions through the IRE's
secure web portal. Currently, the IRE uses the system receipt date as
the date the appeal was received if it is during the IRE's normal
business hours. If the system receipt time or date is outside of the
IRE's normal business hours, the following business day is currently
used as the receipt date. For example, if the appeal is received on a
Sunday when the IRE offices are closed, the appeal would be considered
received on Monday when the offices are open. With this change the
receipt date would be Sunday rather than Monday. CMS has updated the
IRE Manual and process to allow case files submitted via the electronic
portal to be considered received on the date and time of portal
submission, even if it is outside of normal business hours, starting
January 1, 2025. This means that cases received up to 11:59 p.m.
(Eastern Time) each day via the portal would be considered received on
that day. (However, the processing timeframe for the IRE-level review
would not commence until the following business day.) This update more
closely reflects the process of the submission of electronic files than
current practice; because the electronic submission is available to the
IRE at the time the electronic submission process is complete and the
portal system has the functionality to track the minute of submission
and record that as part of the submission record, using that date and
time will better reflect when the IRE has possession and the ability to
use the submitted materials to perform its work. These proposed
specification changes would only affect electronic submissions. If hard
copies are delivered outside of the IRE's normal business hours, the
following business day is used as the receipt date. We are proposing to
incorporate this change as part of the Plan Makes Timely Decisions
about Appeals measure. We are proposing to incorporate this change also
in the Reviewing Appeals Decisions measure since the appeals used in
this measure are based on the date in the
[[Page 99480]]
calendar year the appeals were received by the IRE, and this proposed
update could affect the received date.
We are proposing to adopt these measure updates as defined at Sec.
422.164(d)(2) for the Plan Makes Timely Decisions about Appeals and the
Reviewing Appeals Decisions measures for the 2026 measurement year. The
legacy appeals measures would remain in the Star Ratings until the
updated measures have been on the display page for at least 2 years.
Then, the legacy measures would be retired, and the respecified appeals
measures would move into the Star Ratings beginning with the 2029 Star
Ratings.
3. Summary of Measure Changes for the Part C and D Star Ratings
Table 14 summarizes the additional and updated measures addressed
in this proposed rule, beginning with the 2028 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. The annual Star Ratings are produced in the fall of
the prior year. For example, Star Ratings for the year 2028 are
produced in the fall of 2027. If a measurement period is listed as
``the calendar year 2 years prior to the Star Ratings year'' and the
Star Ratings year is 2028, the measurement period is referencing the
January 1, 2026 to December 31, 2026 period. As noted earlier in
section IV.B. of this proposed rule, CMS does not codify the specific
measures for the Part C and Part D Quality Rating System in regulation;
doing so would be unnecessarily lengthy and cumbersome due to the
relative regularity with which measure specifications are updated.
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C. Health Equity Index Reward (Sec. Sec. 422.166(f)(3) and
423.186(f)(3))
The Health Equity Index (HEI) reward will be implemented beginning
with the 2027 Star Ratings (measurement years 2024 and 2025) that will
be released in October 2026. The HEI reward is an upside only reward
for obtaining high measure-level scores for the subset of enrollees
with the specified social risk factors (SRFs). The current SRFs include
receipt of the low income subsidy or being dually eligible for Medicare
and Medicaid (LIS/DE), or having a disability as defined by the
original reason for Medicare entitlement. Additional SRFs may be added
over time through rulemaking. The goal of the HEI reward is to improve
health equity by incentivizing MA, 1876 cost, and PDP contracts to
perform well among enrollees with specified SRFs.
The methodology for the HEI reward is codified at Sec. Sec.
422.166(f)(3) and 423.186(f)(3). The calculation of the HEI reward
includes an assessment of contract enrollment against two enrollment
thresholds as described at Sec. Sec. 422.166(f)(3)(vii) and
423.186(f)(3)(vii). To qualify for the full HEI reward (which ranges
from 0.0 to 0.4 on a linear scale), contracts must have percentages of
enrollees with the specified SRFs combined greater than or equal to the
contract-level median in the most recent year of data used to calculate
the HEI. To qualify for one-half of the HEI reward (which ranges from
0.0 to 0.2 on a linear scale), contracts must have percentages of
enrollees with SRFs greater than or equal to one-half of the contract-
level median up to, but not including the contract-level median
percentage of enrollees with SRFs in the most recent year of data used
to calculate the HEI. Paragraph (f)(3)(viii) describes how the HEI
reward is calculated, with paragraphs (f)(3)(viii)(A) and (B)
addressing calculation of the HEI reward in cases of contract
consolidation.
We propose to revise Sec. Sec. 422.166(f)(3)(viii)(B) and
423.186(f)(3)(viii)(B) to clarify how the HEI reward enrollment
thresholds are assessed beginning with the 2027 Star Ratings in the
case of calculating the HEI reward for contract consolidations for the
second year following the consolidation. We also propose changes at
Sec. Sec. 422.166(f)(3)(viii)(C) and 423.186(f)(3)(viii)(C) to how the
HEI reward will be calculated beginning with the 2029 Star Ratings for
contracts that are required by a state Medicaid agency to move one or
more D-SNP plan benefit packages from an existing MA contract to an MA
contract that only includes one or more D-SNPs with a service area
limited to that state, consistent with Sec. 422.107(e). Finally, we
propose to revise Sec. Sec. 422.166(f)(3)(vi) and 423.186(f)(3)(vi) to
clarify that in order for I-SNP-only contracts to have the rating-
specific HEI calculated, these contracts must have data for at least
half the measures included in the rating-specific HEI for the subset of
measures that I-SNP-only contracts are required to report.
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 rewarding contracts that
serve relatively few enrollees with the specified SRFs as they
consolidate with contracts serving relatively more of these enrollees,
because we want to focus the HEI reward on contracts serving larger
percentages of enrollees with the specified SRFs where improvement is
most needed. Starting with the 2027 Star Ratings, for the second year
following a consolidation, we propose at Sec. Sec.
422.166(f)(3)(viii)(B) and 423.186(f)(3)(viii)(B) to clarify that the
combined enrollment from the consumed and surviving contracts from the
most recent year of data used in calculating the HEI will be used to
assess whether the surviving contract meets one of the enrollment
thresholds as described at Sec. Sec. 422.166(f)(3)(vii) and
423.186(f)(3)(vii). When two or more contracts consolidate, the
enrollment data used for the second year following the consolidation
are from prior to the consolidation since the HEI is measuring
performance prior to the contracts combining. For example, if two
contracts consolidate as of January 1, 2026, we would combine the
enrollment of the surviving and consumed contracts when calculating the
2027 Star Ratings based on enrollment in the surviving and consumed
contracts in 2025. This is similar to how enrollment is combined for
the calculation of enrollment for the second year following a
consolidation for the categorical adjustment index at Sec. Sec.
422.166(f)(2)(i)(B)(1) and 423.186(f)(2)(i)(B)(1).
In the final rule titled ``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 at Sec. 422.107(e) a provision allowing D-SNPs
with exclusively aligned enrollment to apply for and maintain MA
contracts that only include one or more D-SNPs with a service area
limited to a specific state. If states require such D-SNP-only
contracts along with integrated materials described at Sec.
422.107(e)(ii) through their state Medicaid agency contracts, CMS will
facilitate operationalization of additional opportunities for
integration. As we described in the May 2022 final rule (87 FR 27763),
D-SNP-only contracts established under Sec. 422.107(e) result in
several benefits for states and dually eligible individuals, including
greater transparency on the MA organizations' performance in serving
dually eligible enrollees by establishing Star Ratings specific to D-
SNPs. As of plan year 2025, five states have taken advantage of the
opportunity at Sec. 422.107(e) to require D-SNP-only contracts. We
anticipate the number of states with D-SNP-only contract requirements
to increase by another eight or nine states in 2026, with the majority
of these new states a result of the transition of those participating
in the capitated financial alignment model demonstrations. We expect a
limited number of additional states may move in this direction over
time.
As a result of these state requirements, some MA organizations have
had to, or will have to, move D-SNP plan benefit packages from existing
MA contracts (hereafter referred to as ``legacy MA contracts'') to D-
SNP-only contracts established under Sec. 422.107(e). These changes
may make it more difficult for a legacy MA contract to meet either of
the enrollment thresholds for the percentages of enrollees with the
specified SRFs for the HEI reward as defined at Sec. Sec.
422.166(f)(3)(vii) and 423.186(f)(3)(vii) while the specified SRFs
included in the HEI are LIS/DE or having a disability as currently
defined at Sec. Sec. 422.166(f)(3)(i)(A) and 423.186(f)(3)(i)(A). As
such, MA organizations operating in states that elected Sec.
422.107(e) may not be eligible for the HEI reward if fewer enrollees
with SRFs remain following the establishment of separate D-SNP-only
contracts, potentially creating an incentive for these organizations to
promote enrollment of individuals with the specified SRFs in the legacy
MA contracts as opposed to the D-SNPs. This incentive runs counter to
our goal of encouraging enrollment in high-quality integrated products
that better
[[Page 99483]]
suit the dually eligible population. To address this, we propose at
Sec. Sec. 422.166(f)(3)(viii)(C) and 423.186(f)(3)(viii)(C) to modify
the way eligibility for an HEI reward and the size of the HEI reward
are determined for legacy MA contracts that no longer meet either of
the percentage SRF enrollment thresholds due to state contracting
requirements under Sec. 422.107(e). As additional SRFs are added to
the HEI reward through rulemaking, we anticipate that the need for this
adjustment will no longer be necessary. Thus, we propose at Sec. Sec.
422.166(f)(3)(viii)(C) and 423.186(f)(3)(viii)(C) that this change
would be implemented every year after the D-SNP-only contract
established under Sec. 422.107(e) is required to be created until the
Star Ratings year when additional SRFs are added to the HEI reward,
after which time, legacy MA contracts will have the potential HEI
reward calculated based on their own enrollment and performance
following the methodology at Sec. Sec. 422.166(f)(3)(viii) and
423.186(f)(3)(viii). There are no changes to how eligibility for, or
the size of, the HEI reward are calculated for D-SNP-only contracts
established under Sec. 422.107(e).
We propose a series of rules that would be applied in order to
determine whether the legacy MA contract would qualify for an HEI
reward and the size of the reward if applicable. First, we propose at
Sec. Sec. 422.166(f)(3)(viii)(C)(1) and 423.186(f)(3)(viii)(C)(1) to
follow the methodology for calculating the HEI reward at paragraphs
Sec. Sec. 422.166(f)(3)(viii) and 423.186(f)(3)(viii) for legacy MA
contracts that continue to meet either of the percentage SRF enrollment
thresholds (i.e., the contract-level median threshold or one-half of
the contract-level median threshold) based on their own enrollment. For
legacy MA contracts that do not meet either of the percentage SRF
enrollment thresholds (i.e., the contract-level median threshold or
one-half of the contract-level median threshold) based on their own
enrollment, we propose at Sec. Sec. 422.166(f)(3)(viii)(C)(2) and
423.186(f)(3)(viii)(C)(2) to first determine whether the legacy MA
contract can reliably have the rating-specific HEI score calculated
based on its own enrollment as described at Sec. Sec.
422.166(f)(3)(iv) and (vi) and 423.186(f)(3)(iv) and (vi). If the
legacy MA contract cannot reliably have the rating-specific HEI score
calculated based on its own enrollment, then the legacy MA contract
would not qualify for an HEI reward for the given rating. We propose
this to ensure that legacy MA contracts are not rewarded unless they
are still providing relatively high quality care for their remaining
enrollees with SRFs, and we cannot ensure this if the rating-specific
HEI score cannot be reliably calculated.
Additionally, we propose at Sec. Sec. 422.166(f)(3)(viii)(C)(2)
and 423.186(f)(3)(viii)(C)(2) that if the D-SNP-only contract
established under Sec. 422.107(e) that received the D-SNP(s) from the
legacy MA contract cannot have the rating-specific HEI score reliably
calculated, then the legacy MA contract would not qualify for an HEI
reward for the given rating. We propose this because without the HEI
score from the D-SNP-only contract established under Sec. 422.107(e),
the potential HEI reward for the legacy contract would be based solely
on its own performance among a relatively small percentage of enrollees
with the specified SRFs. This would be inconsistent with our policy
goals for the HEI reward, one of which is to focus the HEI reward on
contracts serving larger percentages of enrollees with the specified
SRFs, as this is where improvement is most needed. For example, the D-
SNP-only contract established under Sec. 422.107(e) that received the
D-SNP(s) from the legacy MA contract would not be able to have a
rating-specific HEI score reliably calculated if the D-SNP contract is
too new or does not have enough data, and therefore the legacy MA
contract in this instance also would not qualify for an HEI reward. To
further illustrate this point using example measurement years, a D-SNP-
only contract established under Sec. 422.107(e) that begins operating
in 2027 would first be eligible for a Star Rating as of the 2029 Star
Ratings (measurement year 2027) and an HEI reward as of the 2030 Star
Ratings (measurement years 2027 and 2028). For the 2027 and 2028 Star
Ratings, the calculation of the enrollment thresholds and the HEI for
the legacy MA contract would be based on measurement periods that were
prior to the D-SNP-only contract transition. The 2029 Star Ratings are
based on a measurement period following the D-SNP-only contract
transition, and since the D-SNP-only contract cannot have an HEI reward
calculated that rating year, the legacy MA contract would not be
eligible for the HEI reward unless it qualifies solely based on its own
enrollment.
We propose at Sec. Sec. 422.166(f)(3)(viii)(C)(3) and
423.186(f)(3)(viii)(C)(3) that the legacy MA contract would not qualify
for a rating-specific HEI reward if the legacy MA contract's
performance on the rating-specific HEI based on its own enrollment does
not meet the minimum index score of greater than zero defined at
Sec. Sec. 422.166(f)(3)(vii) and 423.186(f)(3)(vii) or if the legacy
MA contract's performance on the rating-specific HEI based on its own
enrollment is less than the performance on the rating-specific HEI of
the D-SNP-only contract established under Sec. 422.107(e).
If both the legacy MA contract and the D-SNP-only contract
established under Sec. 422.107(e) can reliably have the rating-
specific HEI scores calculated as defined at Sec. Sec.
422.166(f)(3)(iv) and (vi) and Sec. Sec. 423.186(f)(3)(iv) and (vi)
based on their own enrollment, and the legacy MA contract does not meet
an enrollment threshold on its own, then we propose at Sec. Sec.
422.166(f)(3)(viii)(C)(4) and 423.186(f)(3)(viii)(C)(4) the methodology
to determine the potential HEI reward for the legacy MA contract for
the given rating. Specifically, we propose at Sec. Sec.
422.166(f)(3)(viii)(C)(4)(i) and 423.186(f)(3)(viii)(C)(4)(i) to base
the enrollment threshold at Sec. Sec. 422.166(f)(3)(vii) and
423.186(f)(3)(vii) on the combined enrollment from the legacy MA
contract and the D-SNP-only contract established under Sec. 422.107(e)
from the most recent measurement year used in calculating the HEI.
Additionally, we propose at Sec. Sec. 422.166(f)(3)(viii)(C)(4)(i) and
423.186(f)(3)(viii)(C)(4)(i) that if the legacy MA contract's rating-
specific HEI score based on its own enrollment meets the minimum index
score of greater than zero defined at Sec. Sec. 422.166(f)(3)(vii) and
423.186(f)(3)(vii), and the legacy MA contract's rating-specific HEI
score based on its own enrollment is greater than or equal to the
rating-specific HEI score for the D-SNP-only contract established under
Sec. 422.107(e), then the legacy MA contract would qualify for an HEI
reward for the given rating. This potential rating-specific HEI reward
would be calculated following Sec. Sec. 422.166(f)(3)(viii) and
423.186(f)(3)(viii) and would be based on the enrollment threshold
using the combined enrollment from the legacy MA contract and the D-
SNP-only contract established under Sec. 422.107(e) as defined at
Sec. Sec. 422.166(f)(3)(viii)(C)(4)(i) and
423.186(f)(3)(viii)(C)(4)(i), and using the HEI score for the D-SNP-
only contract established under Sec. 422.107(e). We propose this
because we want to avoid overly rewarding legacy MA contracts that are
serving a smaller percentage of enrollees with SRFs and therefore may
find it easier to perform well on the HEI.
We also propose at Sec. Sec. 422.166(f)(3)(viii)(C)(5) and
[[Page 99484]]
423.186(f)(3)(viii)(C)(5) that when multiple legacy MA contracts move
their D-SNP plan benefit packages to the same D-SNP-only contract
established under Sec. 422.107(e), the combined enrollment from the
multiple legacy MA contracts and the D-SNP-only contract would be used
to determine if a percentage SRF enrollment threshold is met for legacy
MA contracts that do not meet an enrollment threshold based on their
own enrollment.
Further, in calculating the rating-specific HEI, we require at
Sec. Sec. 422.166(f)(3)(vi) and 423.186(f)(3)(vi) that contracts must
have at least 500 enrollees and meet the criteria specified at
Sec. Sec. 422.166(f)(3)(iv) and 423.186(f)(3)(iv) for at least half of
the measures included in the rating- specific HEI. Since I-SNP-only
contracts are not required to report CAHPS, HOS, and certain HEDIS
measures, there may be situations depending on the set of measures
included in the HEI each year where I-SNP-only contracts cannot meet
this half of measures requirement based on not being required to report
some of the measures included in the HEI. To address this, we propose
to revise Sec. Sec. 422.166(f)(3)(vi) and 423.186(f)(3)(vi) to clarify
that starting with the 2027 Star Ratings, contracts that are I-SNP-only
contracts in the rating year must meet the criteria specified at
Sec. Sec. 422.166(f)(3)(iv) and 423.186(f)(3)(iv) for at least half of
the measures included in the rating-specific HEI for the subset of
measures that I-SNP-only contracts are required to report. For example
if there were 20 measures included in a rating-specific HEI but only 16
of the measures were required to be reported by I-SNP-only contracts,
then I-SNP-only contracts would need to meet the criteria specified at
Sec. Sec. 422.166(f)(3)(iv) and 423.186(f)(3)(iv) for at least half of
the 16 measures or for 8 measures. We propose this to avoid situations
where I-SNP-only contracts are not able to meet the half of measures
requirement at Sec. Sec. 422.166(f)(3)(vi) and 423.186(f)(3)(vi) based
solely on reporting requirements. We are not proposing changes for
other contract types, because we do not anticipate scenarios for other
contract types where it is not possible to meet the half of measures
requirement based solely on reporting requirements. We also propose at
Sec. Sec. 422.166(f)(3)(iv)(C) and 423.186(f)(3)(iv)(C) that for a
measure to be included in the calculation of the HEI for a contract
that is an I-SNP-only contract in the ratings year, the measure must be
required to be reported by I-SNP-only contracts. We propose this to
address situations where a contract may not have been an I-SNP-only
contract in one of the measurement years and therefore has data on
measures that are not required to be reported by I-SNP-only contracts
and are not reflective of the population served by I-SNP-only
contracts.
Finally, we propose changes at Sec. Sec. 422.166(f)(3)(v)(A) and
423.186(f)(3)(v)(A) to how the HEI score would be calculated for
contracts that have data discrepancies between their submitted patient-
level detail and summary-level data for HEDIS measures included in the
HEI beginning with the 2026 and 2027 measurement years used for the
2029 Star Ratings. For HEDIS measures included in the HEI we rely on
the patient-level detail data that contracts submit to CMS. It is
critical that these data are complete so we can accurately calculate
performance for the subset of enrollees with the specified SRFs. We
propose that for measures included in the HEI, if a contract's HEDIS
measure score across all enrollees for a measure that is calculated by
CMS using the contract's submitted patient-level detail HEDIS data does
not match the contract's summary-level HEDIS score submitted to NCQA
for either of the two measurement years used to construct the HEI as
defined at Sec. Sec. 422.166(f)(3)(i)(B) and 423.186(f)(3)(i)(B), the
contract would receive -1 points for that measure (the same number of
points assigned to the bottom third of the distribution of contract
performance) in the calculation of the HEI as described at Sec. Sec.
422.166(f)(3)(v) and 423.186(f)(3)(v). We also propose at Sec. Sec.
422.166(f)(3)(v)(A) and 423.186(f)(3)(v)(A) that a contract that does
not provide patient-level HEDIS data for a measure included in the HEI
for which it has provided summary-level HEDIS data to NCQA would
receive -1 points for that measure in the calculation of a contract's
HEI score at Sec. Sec. 422.166(f)(3)(v) and 423.186(f)(3)(v). For
example, if the HEI is based on the 2026 and 2027 measurement years and
a contract does not provide HEDIS patient-level data for a measure for
either the 2026 or 2027 measurement years, the contract would receive -
1 points for that measure in the calculation of its HEI score.
We solicit comments on these proposals, including whether these
rules for calculating the HEI reward when an MA organization is
required by a state, consistent with Sec. 422.107(e), to establish and
maintain a D-SNP-only contract that is limited to only D-SNPs offered
by the MA organization in that state should apply for one year,
multiple years, or every year after the D-SNP-only contract is required
to be established by the state or until additional SRFs are added to
the HEI.
D. Applying the Improvement Measure Scores (Sec. Sec. 422.166(g) and
423.186(g))
We propose to clarify at Sec. Sec. 422.166(g)(1)(i) and (ii) and
Sec. Sec. 423.186(g)(1)(i) and (ii) that the improvement measure hold
harmless for the highest rating is determined based on the rounded
rating before the addition of the HEI reward, if applicable. This is
consistent with how the improvement measure hold harmless rules have
historically been applied based on the rounded rating, and Sec. Sec.
422.166(f)(3)(ix) and 423.186(f)(3)(ix) require that the HEI reward be
added after the application of the improvement measures and before
rounding to the nearest half star.
To operationalize this, CMS would determine the application of the
improvement measures for the highest rating using the rating rounded to
the nearest half star before the addition of the HEI reward, if
applicable. Then when adding the HEI reward if applicable for the
highest rating, CMS would go back to the unrounded rating either with
or without the improvement measures as determined using the steps
described at Sec. Sec. 422.166(g) and 423.186(g), add the HEI reward,
and then round to the nearest half star. This is our current (and
historical) process and how the proposed regulatory clarification would
be applied.
E. Contract Consolidations (Sec. 422.162(b)(3) and Sec.
423.182(b)(3))
We are proposing a technical clarification of existing policy at
Sec. Sec. 422.162(b)(3)(iv)(A)(2) and (B)(2) and Sec. Sec.
423.182(b)(3)(ii)(A)(2) and (B)(2) to provide details about how the
enrollment-weighted measure score is calculated when a consumed or
surviving contract is missing data for a measure. In the first year of
the consolidation when a measure score for a consumed or surviving
contract is missing as a result of not having enough data to meet the
measure technical specification or for a CAHPS measure having
reliability less than 0.6, CMS proposes to treat this measure score as
missing in the calculation of the enrollment-weighted measure score.
Similarly, in the second year of the consolidation for all measures,
except HEDIS, HOS, CAHPS, and call center measures, when a measure
score for a consumed or surviving contract is missing as a result of
not having enough
[[Page 99485]]
data to meet the measure technical specification, CMS proposes to treat
this measure score as missing in the calculation of the enrollment-
weighted measure score. For Sec. 423.182(b)(3)(ii)(A)(2) and (B)(2) we
also removed reference to Sec. 423.184(g)(1)(ii) since it was reserved
in the 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 (pages 30639-30642).
F. Burden
As described in this section of this proposed rule, we are
proposing adding and updating certain measures. The proposed measure
additions and updates are calculated from administrative data or entail
moving existing measures from the display page to Star Ratings, which
would have no impact on plan burden. We are also proposing a series of
technical clarifications related to applying the improvement measure
scores and calculating the health equity index, as well as proposing
how the health equity index reward would be calculated for contracts
that are required by a state Medicaid agency to move one or more D-SNP
plan benefit packages from an existing MA contract to an MA contract
that only includes one or more D-SNPs with a service area limited to
that state, consistent with Sec. 422.107(e). The proposed provisions
would not change any respondent requirements or burden pertaining to
any of CMS's Star Ratings related PRA packages.
V. Improving Experiences for Dually Eligible Enrollees
A. Member ID Cards, Health Risk Assessments, and Individualized Care
Plans (Sec. Sec. 422.101, 422.107, 422.2267, 423.2267)
Dually eligible individuals face fragmentation in many parts of the
health care system, including their experiences as enrollees of
Medicare and Medicaid managed care plans. One way in which we seek to
address such fragmentation is through policies that integrate care for
dually eligible individuals. ``Integrated care'' refers to delivery
system and financing approaches that (1) maximize person-centered
coordination of Medicare and Medicaid services; (2) mitigate cost-
shifting incentives between the two programs; and (3) create a seamless
experience for dually eligible individuals.
In recent years, we have advanced integrated care by:
Incorporating features of the Medicare-Medicaid Financial
Alignment Initiative's (FAI) Medicare-Medicaid Plans (MMPs) into dual
eligible special needs plan (D-SNP) requirements, including enrollee
participation in plan governance, screening for social risk factors in
health risk assessments (HRAs) (which applies to all SNPs), integrated
enrollee materials, and mechanisms for joint Federal-State oversight;
Implementing provisions of the Bipartisan Budget Act of
2018 to unify appeals and grievance processes across Medicare and
Medicaid; and
Increasing opportunities for enrollment in D-SNPs with
aligned Medicaid managed care plans operated by the same parent
organization.
However, there remain aspects of care for dually eligible
individuals that can be misaligned, confusing, or duplicative even when
a dually eligible individual is enrolled in Medicare and Medicaid
managed care plans operated by the same parent organization.
In this section we describe proposals to establish new Federal
requirements for D-SNPs that are applicable integrated plans (AIPs) to:
(1) have integrated member identification (ID) cards that serve as the
ID cards for both the Medicare and Medicaid plans in which an enrollee
is enrolled; and (2) conduct an integrated health risk assessment for
Medicare and Medicaid, rather than separate HRAs for each program.
These proposals continue our work to advance integrated care by
applying MMP features into D-SNP requirements. More importantly, our
proposals would improve and simplify experiences for dually eligible
enrollees in AIP D-SNPs. We are also proposing to amend the
requirements related to HRAs and individualized care plans (ICPs) for
all SNPs (that is, D-SNPs, chronic condition SNPs, and institutional
SNPs). Under this third proposal, we would codify timeframes for SNPs
to conduct HRAs and develop ICPs and prioritize the involvement of the
enrollee or the enrollee's representative, as applicable, in the
development of the ICPs. Finally, we propose a related addition to
requirements for D-SNP enrollee advisory committees. We describe each
proposal in greater detail in the following sections.
a. Integrating Member ID Cards for Dually Eligible Enrollees in Certain
Integrated D-SNPs
Sections 422.2267(e)(30) and 423.2267(e)(32) require MA and Part D
plans, including D-SNPs, to provide member ID cards to enrollees.
Medicaid managed care plans, which include managed care organizations
(MCOs), prepaid inpatient health plans (PIHPs), and prepaid ambulatory
health plans (PAHPs) also send member ID cards to enrollees which they
use to access the items and services provided under that plan. However,
when a dually eligible individual is enrolled in both a Medicare
Advantage (MA) plan and a Medicaid managed care plan, the plans usually
issue the enrollee separate member ID cards--one for their MA plan and
one for their Medicaid managed care plan--to access services for each
program. This is administratively confusing, as providers may not
always know which insurance to charge for which services, and confusing
for enrollees, who may not always be aware of when to present which
card.\306\ Through studies and conversations with dually eligible
enrollees, we have learned that individuals dually eligible for
Medicare and Medicaid view having one insurance card instead of two as
a benefit of integrated care.\307\ As such, we are proposing to
continue our effort to integrate materials for dually eligible
enrollees by requiring that certain D-SNPs provide one integrated
member ID card to serve as the ID card for both the Medicare and
Medicaid plans in which the enrollee is enrolled.
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\306\ CMS commissioned studies on experiences and terms
pertaining to integrated care and solicited feedback from States and
plans on integrated member ID cards.
\307\ Rachelle Brill, Listening to Dually Eligible Individuals:
Person-Centered Enrollment Strategies for Integrated Care. Center
for Consumer Engagement in Health Innovation, June 2021. Online at
https://communitycatalyst.org/wp-content/uploads/2023/06/Person-Centered-Enrollment-Strategies-for-Integrated-Care.pdf.
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In the past several years, we have partnered with States to make
integrated materials more broadly available, with the goal of
streamlining the managed care enrollee experience and reducing burden
and confusion for dually eligible individuals. As of January 2024,
approximately 846,000 dual eligible individuals were enrolled in
integrated care plans that used integrated materials. That includes all
MMPs in the FAI, which use integrated Medicare and Medicaid materials
including the member ID card, annual notice of change, evidence of
coverage (Member Handbook), Formulary (List of Covered
[[Page 99486]]
Drugs), Summary of Benefits, and Provider and Pharmacy Directory.
In the final rule titled ``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 May 9, 2022, Federal Register
(hereinafter referred to as the May 2022 final rule), we finalized a
pathway at Sec. 422.107(e) by which States can require D-SNPs with
exclusively aligned enrollment (EAE) to use integrated Medicare and
Medicaid materials including the Summary of Benefits, Formulary, and
combined Provider and Pharmacy Directory--essential information for
dually eligible enrollees to be able to understand and utilize their
managed care benefits. Eleven States currently require D-SNPs that are
AIPs, as defined at Sec. 422.561, to use at least some integrated
materials for CY 2025, as shown in table 15.
[GRAPHIC] [TIFF OMITTED] TP10DE24.021
In addition, in some cases, dually eligible enrollees in D-SNPs and
an affiliated Medicaid managed care plan with EAE receive a single ID
card that serves as the ID card for both health plans. According to
State Medicaid agency contracts (SMACs) for contract year 2024, nine
States (California, Florida, Hawaii, Idaho, Massachusetts, Minnesota,
New Jersey, Tennessee, and Wisconsin) currently require D-SNPs to use a
single integrated member ID card for both Medicare and Medicaid
benefits.
Establishing a Federal requirement for integrated member ID cards
for AIP D-SNPs would improve experiences for dually eligible
individuals (in such plans not already deploying an integrated ID card)
and build on our past work to integrate Medicare and Medicaid.
Therefore, under our authority to interpret, implement and carry out
the Part C and D programs under sections 1851(h), 1852(c), 1860D-
1(b)(1)(B)(vi), 1860D-4(a), and 1860D-4(l) of the Social Security Act
(the Act), we are proposing to add a requirement at Sec. Sec.
422.2267(e)(30) and 423.2267(e)(32) that AIPs provide enrollees one
integrated member ID card that serves as the ID card for both the
Medicare and Medicaid plans in which they are enrolled.
We are not proposing substantive changes to the Medicare or
Medicaid requirements for the content of the ID cards. Therefore, the
integrated ID cards would need to comply with the applicable Medicare
requirements at Sec. Sec. 422.2267(e)(30) and 423.2267(e)(32) and as
further described in the Medicare Communications and Marketing
Guidelines as well as applicable Medicaid requirements.
For example, we finalized a provision at Sec. 438.3(s)(7) in the
final rule titled ``Medicaid Program; Misclassification of Drugs,
Program Administration and Program Integrity Updates Under the Medicaid
Drug Rebate Program,'' which appeared in the September 26, 2024,
Federal Register (hereinafter referred to as the September 2024
Medicaid final rule), requiring States that contract with MCOs, PIHPs,
or PAHPs that provide coverage of Medicaid outpatient drugs to require
those managed care plans to assign and exclusively use unique Medicaid-
specific Bank Identification Number (BIN) and Processor Control Number
(PCN) combination, and group number identifiers for all Medicaid
managed care enrollee identification cards for pharmacy benefits to
make the Medicaid drug program run more efficiently and improve the
level of pharmacy services provided to Medicaid enrollees. Although
Medicaid managed care plans are not Federally required to issue member
ID cards, it is a standard business practice for the MCOs, PIHPs, and
PAHPs to routinely issue identification cards for pharmacy benefits for
Medicaid enrollees. To the extent AIPs cover outpatient drugs for which
Medicaid (not Medicare) would be the primary payer, Sec. 438.3(s)(7)
would still apply to the AIP.
We note that the September 2024 Medicaid final rule states that
Sec. 438.3(s)(7) is effective for Medicaid managed care contracts
(which would require compliance by MCOs, PIHPs, and PAHPs) no later
than the first rating period for contracts with managed care plans
beginning on or after 1 year following the effective date of the
September 2024 Medicaid final rule, which is November 19, 2024. While
our proposed updates to Sec. Sec. 422.2267 and 423.2267 are applicable
for contract year 2027, beginning October 1, 2026, the requirements at
Sec. 438.3(s)(7) would be applicable as is described in the September
2024 Medicaid final rule.
Our proposal would not add new requirements in the nine States that
currently require integrated member ID cards in their SMACs. Similarly,
we expect--independent of this proposal--several additional States will
require integrated member ID cards when MMPs transition to D-SNPs in
2026 (because these States already require integrated member ID cards
for the MMPs). If finalized, this proposal would require current AIPs
in three additional States and Territories (District of Columbia, New
York, and Puerto Rico) to implement integrated member ID cards, and if
more plans become AIPs, this requirement would apply to any such plans
as well. However, we do not believe that this proposed requirement to
integrate member ID cards would create additional burden in these
States and Territories as the issuance of member ID cards is a normal
and customary practice throughout the insurance industry. Since we will
be working with several States to update an array of integrated
materials as we transition MMPs to become integrated D-SNPs in 2026,
and to give AIPs time needed to implement such updates as appropriate
during the annual material creation cycle, we propose to require the
use of the integrated member ID card for enrollments effective January
1, 2027. Thus, our proposed updates to marketing and communication
provisions at Sec. Sec. 422.2267(e)(30) and 423.2267(e)(32) would be
applicable for all contract year 2027 marketing and
[[Page 99487]]
communications beginning October 1, 2026.
We believe requiring that AIPs use integrated member ID cards is an
important step to further integration and make enrollees' experience
with Medicaid and Medicare less confusing, less burdensome, and more
accessible. To our knowledge, this proposal represents the first time
we have proposed a Federal requirement for any integrated materials for
any type of D-SNP. We chose to focus on ID cards because having one ID
card is important to dually eligible individuals \308\ and--relative to
integrating other materials--is operationally manageable for integrated
plans and requires the least of State Medicaid agencies. We solicit
comment on this proposal and feedback on successes, challenges, and
other experiences to date with integrated member ID cards.
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\308\ Rachelle Brill, Listening to Dually Eligible Individuals:
Person-Centered Enrollment Strategies for Integrated Care. Center
for Consumer Engagement in Health Innovation, June 2021. Online at
https://communitycatalyst.org/wp-content/uploads/2023/06/Person-Centered-Enrollment-Strategies-for-Integrated-Care.pdf.
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We are considering, and invite comment on, whether the final rule
should provide that any requirement for integrated ID cards should
apply to AIPs and all HIDE SNPs, including those that do not also
qualify as AIPs. However, in this proposed rule, we chose to limit our
proposal to AIPs because we assume that integrated member ID cards
would be more complex to administer in situations where some D-SNP
enrollees have aligned enrollment but others are enrolled in a Medicaid
plan operated by a different organization or fee-for-service Medicaid.
In contrast to an AIP, where all of the D-SNP's enrollees would receive
the integrated ID card, a non-AIP would need a reliable and timely
mechanism for differentiating among enrollees within the plan to
determine which ID card to send. We are unaware of any D-SNPs or other
MA plans that currently deploy the types of integrated ID cards
envisioned in our proposal for plans that do not have exclusively
aligned enrollment. We solicit comment on the accuracy of these
assumptions and, as noted above, whether in the final rule to apply the
proposed requirement to AIPs and all HIDE SNPs. We also welcome
comments on different situations in which commenters believe that
integrated member ID cards could be helpful to include in potential
future rulemaking.
Finally, we welcome comment on other considerations for future
rulemaking on ID cards, including ways to prevent stigma and ensure
their security and utility for dually eligible enrollees.
b. Integrating Health Risk Assessments for Dually Eligible Enrollees in
Certain Integrated D-SNPs
Medicare requirements at Sec. 422.101(f)(1) require D-SNPs to
conduct a comprehensive HRA for each enrollee, both at the time of
enrollment and annually thereafter. Separately, Medicaid managed care
regulations at Sec. 438.208(b)(3) require Medicaid managed care plans
to make a best effort to conduct an initial screening of enrollee needs
within 90 days of their effective enrollment date, and States may
require additional assessments such as long-term services and supports
(LTSS) and home and community-based services eligibility screenings.
In the FAI, MMP enrollees complete a single integrated HRA,
encompassing both Medicare and Medicaid requirements. In contrast,
dually eligible individuals enrolled in both a D-SNP and a Medicaid
managed care plan may end up completing multiple assessments during the
year, some of which may be duplicative, as managed care plans aim to
meet all applicable enrollee assessment requirements across both
programs, and to gather information about enrollee needs and
preferences and create individualized care plans. Completing two
separate, but potentially overlapping, assessments creates unnecessary
burden for enrollees, who may have to answer the same detailed personal
questions more than once.
In the final rule titled ``Medicare and Medicaid Programs; Contract
Year 2022 Policy and Technical Changes to the Medicare Advantage
Program, Medicare Prescription Drug Benefit Program, Medicaid Program,
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the
Elderly'' which appeared in the January 19, 2021, Federal Register
(hereinafter referred to as the January 2021 final rule), we clarified
that D-SNPs receiving capitation for Medicaid services may combine
their Medicare-required HRA with a State Medicaid-required assessment
to reduce burden for enrollees, as long as the assessment meets all
applicable requirements (86 FR 5879). We also noted that, to the extent
there is overlap and the HRA required by Sec. 422.101(f)(1)(i) can be
aligned with other assessments conducted by a SNP, the model of care
(MOC) should describe that alignment, consistent with the standards in
MOC 2, Element B in Chapter 5, section 20.2.2 of the Medicare Managed
Care Manual. We explained that the factors outlined in the MOC
guidelines allow SNPs the flexibility to align the HRA required by
Sec. 422.101(f)(1)(i) with other assessment tools. In addition, the
contract year (CY) 2024 Medicare Part C Reporting Requirements, in
which MA plans must report on HRA completion, allow D-SNPs to count a
Medicaid HRA that is performed within 90 days before or after the
effective date of Medicare enrollment as meeting the Part C obligation
to perform an HRA, so long as the requirements in Sec. 422.102(f)
regarding the HRA are met.\309\ As outlined in both the January 2021
rule and the most recent Part C Reporting Requirements, we have allowed
a certain degree of flexibility for SNPs to streamline their Medicare
and Medicaid assessments. However, we have not previously required that
D-SNPs integrate Medicare and Medicaid enrollee HRAs into a single HRA
for dually eligible individuals.
---------------------------------------------------------------------------
\309\ 2024 Part C Reporting Technical Specifications: https://www.cms.gov/files/document/cy2024-part-c-technical-specifications-02222024.pdf.
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States have implemented their own requirements, through SMACs, to
reduce burden and duplication. For example, Arizona requires D-SNPs to
perform an integrated HRA for both Medicare and Medicaid. California
requires D-SNPs with exclusively aligned enrollment to make their best
effort to create a single unified HRA for enrollees, and New Jersey's
SMAC includes requirements related to minimizing duplication of
assessments.\310\ Other States, while not explicitly requiring
integrated HRAs, have implemented requirements to improve integration
and coordination across Medicare and Medicaid HRAs and services. A 2019
Health Management Associates (HMA) report commissioned by the Medicaid
and CHIP Payment and Access Commission (MACPAC) noted one State
requires its D-SNPs to request a representative from an enrollee's
Medicaid plan to participate in all needs assessments, and that another
State requires integrating Medicaid LTSS assessments within the
HRA.\311\ We have also heard from a few D-SNP parent organizations that
are actively working to reduce duplication between their Medicare and
Medicaid HRAs.
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\310\ CMS review and analysis of State SMACs.
\311\ https://www.macpac.gov/wp-content/uploads/2019/03/Care-Coordination-in-Integrated-Care-Programs-Serving-Dually-Eligible-Beneficiaries.pdf.
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Under our authority at section 1856(b) of the Act to establish
standards for MA plans by regulation, we propose to adopt specific
standards to implement the requirement at section
[[Page 99488]]
1859(f)(5)(A)(ii)(I) of the Act that all MA SNPs conduct an initial
assessment and an annual reassessment of the individual's physical,
psychosocial, and functional needs. We propose to add a new paragraph
at Sec. 422.101(f)(1)(v) that would require D-SNPs that are AIPs (as
defined in Sec. 422.561) to conduct a comprehensive HRA that meets all
requirements at Sec. 422.101(f)(1)(i) through (v) as well as any
applicable Medicaid requirements, including those at Sec. 438.208,
such that enrollees in the AIP complete a single integrated HRA for
Medicare and Medicaid. If this proposal is finalized, we believe it
would meaningfully reduce assessment burden for dually eligible
individuals and improve their experience as managed care enrollees
(where States aren't already requiring something similar). It may also
improve integration of care within D-SNP AIPs and their affiliated
Medicaid managed care plans by collecting all enrollee assessment
information in one place, potentially facilitating better care
coordination across Medicare and Medicaid services. This proposal would
also continue our efforts to incorporate MMP features into D-SNP
requirements. Finally, we believe this proposal for a new Federal
requirement would not create a significant burden for health plans
because similar State requirements to integrate Medicare and Medicaid
HRAs are already in place in some States, and at least a few health
plans have taken on these efforts themselves.
We are proposing only to require D-SNPs that are AIPs to meet this
new requirement because we believe it is most feasible for D-SNPs whose
enrollees are exclusively aligned with an affiliated Medicaid MCO to
implement a fully integrated HRA. Because all FIDE SNPs are AIPs
beginning in 2025, the proposal encompasses all FIDE SNPs. Numerous
HIDE SNPs and some coordination-only D-SNPs with exclusively aligned
enrollment are also AIPs. We are considering whether we should apply
this new requirement to all HIDE SNPs or all D-SNPs, even those without
exclusively aligned enrollment. However, in a scenario where some D-SNP
enrollees receive their Medicaid benefits from a different organization
or through fee-for-service, it could be challenging for the D-SNP to
assess aligned enrollees with an integrated HRA and to assess non-
aligned enrollees with a different, Medicare-only assessment. We
welcome comment on whether, in the final rule, this requirement should
be applied to all HIDE SNPs or suggestions as to whether application to
a different subset of D-SNPs should be proposed in future rulemaking.
This proposal would not change any specific Medicare or Medicaid
requirements for the timing of or elements included in an HRA (although
we address an issue related to the timing of required HRAs elsewhere in
this proposed rule). Nor would this proposal preclude deployment of
assessments that are modular (such as a base level assessment that
meets all Medicare and Medicaid requirements with optional additional
sections that are specific to people for substance use or other
factors) or include additional elements for people with special needs.
For example, some States may require more expansive assessment
questions to develop a service plan for 1915(c) waiver services, or
plans may conduct additional assessment for people who screen positive
for substance use disorder or other conditions. Our proposal would not
require that all enrollees complete such an assessment, nor would it
preclude plans from conducting such additional assessments separately
from the HRA. Rather, our proposal simply requires that the base HRA
and screening applies across both programs, such that enrollees are not
asked to complete independent HRAs for Medicare and Medicaid. We
welcome comment on potential challenges that health plans and other
stakeholders foresee, or have already experienced, in implementing HRAs
that integrate LTSS assessments. We also welcome comment on any
potential conflicts with State Medicaid assessment requirements our
proposal may create.
In addition to separate Medicare and Medicaid managed care
assessment requirements, different Medicare and Medicaid enrollment
timeframes and effective dates can be a barrier to D-SNP AIPs
administering a single, integrated HRA. In the final rule titled
``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'' which appeared in the April 23, 2024, Federal Register
(hereinafter referred to as the April 2024 final rule), we noted at 89
FR 30704 that Medicare and Medicaid managed care enrollment start and
end dates can be misaligned. Sections 1851(f)(2) and 1860D-
1(b)(1)(B)(iv) of the Social Security Act, and regulations codified at
Sec. Sec. 422.68 and 423.40 respectively, generally require that
Medicare enrollments become effective on the first day of the first
calendar month following the date on which the election or change is
made, although section 1851(f)(4) of the Act and Sec. Sec. 422.68(d)
and 423.40(c) allow CMS flexibility to determine the effective dates
for enrollments that occur in the context of special enrollment
periods.
Medicaid managed care regulations at Sec. 438.54 do not specify
the timelines or deadlines by which any enrollment must be effective.
Some States have cut-off dates after which enrollment in a Medicaid
managed care plan is not effectuated until the first day of the next
month after the following month. In this scenario, a dually eligible
individual requesting to enroll in an AIP D-SNP with an aligned
Medicaid MCO on March 28 might be enrolled in the D-SNP effective April
1, but in the aligned Medicaid MCO effective May 1, leaving a month-
long gap. We believe it would still be feasible to assess an enrollee
using an integrated HRA in this scenario, given that the enrollee's
Medicaid eligibility would already be verified. However, we are
interested in hearing from stakeholders about whether this would
present operational challenges to implementing an integrated HRA for
AIP D-SNP enrollees.
We believe our proposal would reduce confusion, assessment burden,
and fragmentation for dually eligible individuals enrolled in AIP D-
SNPs and potentially lead to more effective coordination of care. We
also believe our proposal would not be overly burdensome for AIP D-SNPs
to implement, given there are existing requirements in eight States
\312\ either to use a single, integrated HRA or take action to reduce
duplication in HRAs. We welcome comment on our proposal.
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\312\ Based on CMS review of 2024 SMACs.
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c. Promoting Person-Centeredness in SNP ICPs and Timeliness of HRAs and
ICPs
(1) Medicare Context
Section 1859(f)(5)(A) of the Act requires SNPs to conduct an
initial assessment and an annual reassessment of each enrollee's
physical, psychosocial, and functional needs and ensure that the
results are addressed in each enrollee's ICP. We codified this
requirement at Sec. 422.101(f)(1)(i), using the term ``health risk
assessment,'' as a required component of the SNP MOC. Specifically,
Sec. 422.101(f)(1)(i) requires
[[Page 99489]]
that MA organizations offering SNPs conduct a comprehensive initial HRA
of the individual's physical, psychosocial, and functional needs as
well as annual HRA, using a comprehensive risk assessment tool that CMS
may review during oversight activities, and ensure that the results
from the initial assessment and annual reassessment conducted for each
individual enrolled in the plan are addressed in the individuals'
individualized care plan.
In addition, Sec. 422.112(b)(4)(i) requires that MA organizations
offering coordinated care plans make a ``best effort'' attempt to
conduct an initial assessment of each enrollee's health care needs,
including following up on unsuccessful attempts to contact an enrollee,
within 90 days of the effective date of enrollment. In the CY 2024
Medicare Part C Reporting Requirements, as further defined by the
Medicare Part C Technical Specifications Document Contract Year
2024,\313\ CMS specifies that SNPs must provide CMS with the number of
initial HRAs completed within 90 days of (before or after) the
effective date of enrollment and annual HRAs performed within 365 days
of the last HRA. As described in the Medicare Part C Technical
Specification Document Contract Year 2024, SNPs may report an enrollee
as unable to be reached if: the enrollee did not respond to at least
three ``non-automated'' phone calls and a follow-up letter from the SNP
where all the efforts were to solicit participation in the HRA, none of
the efforts to solicit participation were automated calls (``robo'' or
``blast'' calls), and documentation of the enrollee's refusal and/or
the SNP's inability to reach the enrollee is available at any time to
CMS. The technical specifications include additional details regarding
how to interpret the CY 2024 Medicare Part C Reporting Requirements.
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\313\ https://www.cms.gov/medicare/enrollment-renewal/health-plans/part-c.
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In addition, Sec. 422.101(f)(1)(ii) requires SNPs to develop and
implement a comprehensive ICP through an interdisciplinary team in
consultation with the beneficiary, as feasible, identifying goals and
objectives including measurable outcomes as well as specific services
and benefits to be provided. There are no timeframe requirements for
developing ICPs in Sec. 422.101(f). Chapter 5 of the Medicare Managed
Care Manual, section 20.2.2, MOC 2, Element C notes that SNPs must
describe the process for developing the ICP, including specifying how
often the ICP is modified as beneficiaries' health care needs change,
in the SNPs' MOC, which are subject to review and approval by NCQA and
subsequent CMS audits.
(2) Medicaid Context
Many D-SNPs have affiliated Medicaid managed care plans that
deliver Medicaid services to D-SNP enrollees through their parent
organization or another entity that is owned and controlled by the D-
SNP's parent organization. For Medicaid managed care, Sec.
438.208(b)(3) requires that MCOs, PIHPs, or PAHPs make a best effort to
conduct an initial screening of each enrollee's needs, within 90 days
of the effective date of enrollment for all new enrollees, including
subsequent attempts if the initial attempt to contact the enrollee is
unsuccessful.
For individuals enrolled in certain Medicaid home and community-
based services (HCBS) programs, we have adopted requirements for a
person-centered care planning process. For section 1915(c) Medicaid
HCBS waiver programs, these requirements are set forth at Sec.
441.301(c)(1) through (3); for section 1915(k) Medicaid HCBS State plan
amendments, these requirements are set forth at Sec. 441.540; and for
section 1915(i) Medicaid State plan HCBS benefits, these requirements
are set forth at Sec. 441.725. We refer readers to these regulations
for more details.
Generally, these regulations require the State administering these
Medicaid HCBS programs to ensure an individualized person-centered
services plan, meeting certain minimum requirements, is developed for
each individual beneficiary enrolled in a Medicaid HCBS program. This
plan must reflect the services and supports that are important for the
individual to meet their needs identified through an assessment of
functional need, as well as what is important to the individual with
regard to their preferences for the delivery of such services and
supports (Sec. Sec. 441.301(c)(2); 441.540(b); 441.725(b)). The
process by which the person-centered service plan is developed must be
led or driven by the individual. The individual's authorized
representative should play a participatory role, as needed and as
defined by the individual. If State law confers decision-making
authority to the legal representative, the individual should still lead
the person-centered service plan process to the extent possible. The
plan must also meet other person-centered requirements, including:
ensuring people chosen by the individual are included in the process;
providing necessary information and support to ensure that the
individual directs the process to the maximum extent possible;
reflecting cultural considerations of the individual; and offering
choices to the individual regarding the services and supports they
receive and from whom (Sec. Sec. 441.301(c)(1); 441.540(a);
441.725(a)). The resulting person-centered service plan must be
tailored and individualized, and the approach must consider personal
preferences and goals. Additionally, the State must ensure that the
person-centered service plan for every individual is reviewed, and
revised as appropriate, based upon reassessment of functional need at
least every 12 months, when the individual's circumstances change
significantly, or at the individual's request (Sec. Sec.
441.301(c)(3)(i); 441.540(c); 441.725(c)).
(3) Medicare-Medicaid Plan (MMP) Context
Like Medicaid managed care plans, MMPs are subject to more
requirements than SNPs on person-centeredness and timeliness of HRAs
and ICPs. The MMP care coordination requirements for HRAs and ICPs for
the FAI are included in the three-way contracts between CMS, State
Medicaid agencies, and MMPs. In several States, the three-way contracts
apply requirements on the person-centeredness of ICPs beyond what is
required for SNPs and specific requirements for the timing of HRAs and
ICPs. Most States participating in the FAI (Illinois, Massachusetts,
Michigan, Ohio, South Carolina, and Texas) require MMPs to develop HRAs
and ICPs within 90 days or less of enrollment and include enrollees in
the development of the ICPs.
d. Opportunities for Improvement
Over the years, we have identified opportunities to improve person-
centeredness in care planning and the need to codify the timeline for
development of HRAs and ICPs. For example, we have learned of instances
in which SNPs did not complete initial or annual HRAs timely, or it
took several months to develop an ICP for enrollees after an HRA. In
addition, we have reviewed ICPs that were only loosely related to the
needs and preferences of enrollees or did not contain measurable
outcomes. We have identified some similarities in our review of MMP
care plans, such as care plans that do not include goals that are
meaningful to enrollees. Through this proposed rule, we are seeking to
address these opportunities for improvement, better align requirements
across Medicare and Medicaid, and build on
[[Page 99490]]
our experiences in other programs and demonstrations.
We propose amendments to Sec. 422.101(f)(1) to codify timeliness
standards, improve the organization of the various HRA and ICP
requirements, and strengthen these requirements. First, in Sec.
422.101(f)(1)(i), we propose to specify that SNPs conduct the
comprehensive initial HRA within 90 days (before or after) of the
effective date of enrollment for all new enrollees. This would better
align with the Medicaid requirement at Sec. 438.208(b)(3) and, for
Medicare, conform to Sec. 422.112(b)(4)(i) and the standard currently
described for reporting HRA completion in the Part C Reporting
Requirements. We also note that, as described in the Medicare Part C
Technical Specifications, when a person enrolls, disenrolls, and re-
enrolls into any SNP under the same contract number, the previous HRA
is still considered valid and can continue to be used as long as it is
not more than 365 days old. CMS will continue to provide guidance on
these types of issues through the Medicare Part C Technical
Specifications.
Second, we propose to move the requirement for a comprehensive
annual HRA from Sec. 422.101(f)(1)(i) to Sec. 422.101(f)(1)(ii) based
on the updates and to improve the flow of the rule.
Third, we propose to relocate the requirement for SNPs to use a
comprehensive risk assessment tool that CMS may review during oversight
activities that assesses the enrollee's physical, psychosocial, and
functional needs and includes one or more questions from a list of
screening instruments specified by CMS in subregulatory guidance on
housing stability, food security, and access to transportation from
Sec. 422.101(f)(1)(i) to Sec. 422.101(f)(1)(iii). This is a technical
change to improve the organization of the rule.
Fourth, we propose a new Sec. 422.101(f)(1)(iv)(A) through (C) to
establish specific requirements for all SNPs related to outreach to
enrollees regarding completion of the HRA. Consistent with the Medicare
Part C Technical Specifications, we propose to require that the SNP
must make at least three non-automated phone call attempts, unless an
enrollee agrees or declines to participate in the HRA before three
attempts are made. We propose to newly require that these attempts be
made on different days at different times of day. Also consistent with
the Medicare Part C Technical Specifications, we propose to require
that, if the enrollee has not responded to these attempts, the SNP send
a follow-up letter to conduct the initial or annual risk assessments.
We also propose that, for any enrollees who are unable to be reached or
decline to participate in the HRA, the SNP must document the attempts
to contact the enrollee and, if applicable, the enrollee's choice not
to participate.
Fifth, in Sec. 422.101(f)(1)(v), as discussed earlier in this
proposed rulemaking in section III.E.b. of this proposed rule, we
propose to require D-SNPs that are AIPs conduct a comprehensive HRA
that meets all requirements at paragraphs (f)(1)(i) through (iv) of
this section as well as any applicable Medicaid requirements, including
those at Sec. 438.208, such that enrollees complete a single
integrated assessment for Medicare and Medicaid.
Sixth, we propose to relocate the requirement to ensure that the
results from the comprehensive initial and annual HRA conducted for
each individual enrolled in the plan are addressed in the enrollee's
ICP to Sec. 422.101(f)(1)(vi).
Seventh, we propose to add a new Sec. 422.101(f)(1)(vii) that
would require that SNPs within 30 days of conducting a comprehensive
initial HRA or 30 days after the effective date of enrollment,
whichever is later, develop and implement a comprehensive ICP that--
Is person-centered and based on the enrollee's
preferences, including for delivery of services and benefits, and needs
identified in the HRA;
Is developed through an interdisciplinary care team with
the active participation of the enrollee (or the enrollee's
representative, as applicable), as feasible;
Identifies person-centered goals and objectives (as
prioritized by the enrollee), including measurable outcomes as well as
specific services and benefits to be provided; and
Is updated as warranted by changes in the health status or
care transitions of enrollees.
While section 1859(f)(5)(A) of the Act uses the term individual
throughout, we have used the term enrollee to make it clear that the
proposed requirements are for individuals who are enrolled in the SNP,
consistent with how we have generally used the term enrollee in other
recent rulemaking.
The Resources for Integrated Care (RIC) Tip Sheet on Using Person-
Centered Language provides context for what we intend the proposed
requirements for a person-centered ICP to mean and include.\314\ It
notes that person-centered language acknowledges the person first and
foremost and places any diagnosis, condition, or disability in the
context of the whole person and describes person-centered language as
an essential component of a person-centered MOC (see The Medical Model
versus Person-Centered Model callout box). As also described in the RIC
tip sheet, the traditional medical model of health care focuses mainly
on diagnosis and treatment of disease, and individuals receiving
services under this model are typically expected to take a passive
role. In a person-centered model, people are empowered to participate
as active partners in discussions and decisions about their care. The
person-centered model considers diagnosis, condition, and disability in
the context of the whole person. This model focuses on supporting and
communicating with people by emphasizing their strengths, capabilities,
and opportunities to reach their chosen goals. We also note that an IT
system-generated ICP that simply suggests understanding the importance
of keeping appointments with providers or taking medications as
prescribed is not what we intend to meet the proposed requirement. We
believe that, for the ICP to be an effective tool in promoting health,
the ICP should be tailored to the specific needs of the enrollee based
on the enrollee's chosen goals.
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\314\ https://www.resourcesforintegratedcare.com/wp-content/uploads/2020/04/Using_Person_Centered_Language_Tip_Sheet.pdf.
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We intend for ICPs to engage and motivate enrollees by including
goals that are meaningful to each enrollee. These may include goals
that are not specific to a medical diagnosis, such as attending a
child's graduation, pursuing higher education, or being able to attend
religious services each week. The ICP should outline steps for managing
conditions, such as diabetes or high blood pressure, that may have been
identified in the HRA and impact the enrollee's ability to meet their
goals. The steps should also take account of the enrollee's preferences
for delivery of any needed services or benefits. For example, an
enrollee may have a goal of attending a child's graduation, but weight
and mobility limitations are current barriers identified in the HRA.
The care plan would include specific steps to help the enrollee lose
weight and improve mobility, which would support the enrollee's efforts
to attend the graduation. This personalized approach allows enrollees
to take control of their health and work toward achieving meaningful
life goals and aspirations.
As part of a person-centered care plan, we also remind SNPs that
Sec. 422.2267(a)(3) requires that ICPs be
[[Page 99491]]
provided to enrollees on a standing basis in any non-English language
identified in paragraphs (a)(2) and (a)(4) of Sec. 422.2267 or
accessible format upon receiving a request for any required materials
(including the ICP) or otherwise learning of the enrollee's primary
language or need for an accessible format. The HHS website Think
Cultural Health \315\ has a suite of resources that SNPs can use to
ensure their case managers/care coordinators are developing person-
centered plans that consider the language access and disability access
needs of enrollees. In particular, the Guide to Providing Effective
Communication and Language Assistance Services \316\ may be useful to
SNP front-line employees working with enrollees as well as D-SNP
management. Another resource that SNPs may find helpful to ensure the
development of culturally and linguistically appropriate care plans is
the CMS OMH Guide to Developing a Language Access Plan.\317\
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\315\ https://thinkculturalhealth.hhs.gov/.
\316\ https://thinkculturalhealth.hhs.gov/education/communication-guide.
\317\ https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Language-Access-Plan.pdf.
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Proposed Sec. 422.101(f)(1)(vii)(D) would codify that SNPs must
update ICPs as warranted when there are changes in an enrollee's health
status or the enrollee has a care transition. While not a complete
list, examples of the types of changes that would necessitate a review
of the ICP could include hospitalization, being diagnosed with a new
chronic condition such as diabetes, admission to a long-term care
facility when such admission is likely to result in long-term
institutionalization, or return home from a long-term care facility.
Finally, we propose to add Sec. 422.101(f)(1)(viii) to require
that, for any enrollees who are unable to be reached or decline to
participate in the development or updates to the comprehensive ICP, the
SNP must document the attempts to contact the enrollee or the
enrollee's refusal to participate. While our goal is for SNPs to
develop person-centered ICPs, if a SNP is unable to reach an enrollee
(after the SNP has fulfilled its obligations as previously described to
contact the enrollee for the HRA) or an enrollee declines to
participate, then at a minimum the SNP should base the ICP on enrollee
encounter data or other available data. We strongly encourage SNPs to
continue to try to reach the enrollee even after satisfying the
proposed regulatory requirement. We note that RIC has developed a brief
on Locating and Engaging Members: Key Considerations for Plans Serving
Members Dually Eligible for Medicare and Medicaid, which SNPs may find
helpful in bolstering their efforts to engage enrollees.\318\
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\318\ https://www.resourcesforintegratedcare.com/wp-content/uploads/2022/11/Locating-and-Engaging-Members-Key-Considerations-for-Plans-Serving-Members-Dually-Eligible-for-Medicare-and-Medicaid-Brief.pdf?csrt=17807429552740464906.
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In addition, as a result of these updates, we propose to
redesignate Sec. 422.101(f)(1)(iii) as Sec. 422.101(f)(1)(ix) and
redesignate Sec. 422.101(f)(1)(iv) as Sec. 422.101(f)(1)(x) and
change the term ``individual's'' to ``enrollee's''.
Collectively, our proposals would promote more timely and person-
centered HRAs and ICPs for SNP enrollees. Our proposals at Sec. Sec.
422.101(f)(1)(i) through (iv), 422.101(f)(1)(vi), and
422.101(f)(1)(viii) through (x) would codify elements of the CY 2024
Part C Reporting Requirements and Technical Specifications and
restructure the current section for better flow. Our proposal at Sec.
422.101(f)(1)(vii) would require that SNPs create and implement the ICP
within 30 days of conducting an initial HRA or 30 days after the
effective date of enrollment, whichever is later, although many SNPs
already complete ICPs within such timeframes. We believe that the
benefit gained by the ability for enrollees to quickly have an ICP in
place which will assist with coordinating their care in a person-
centered manner outweighs this burden. These enrollees often have
limited financial resources and health care needs that are more wide-
ranging and complex than the average Medicare enrollee.\319\ We are
considering whether to instead adopt alternative timelines for
development and implementation of the ICP. We note that the three-way
contracts for MMPs participating in several of the FAI States require
that HRAs and ICPs be conducted within 90 days of enrollment.
Alternatively, we are considering allowing additional time for the
development of the ICP, such as within 60 or 90 days of completion of
the HRA. We are also considering that the ICP not be required when the
enrollee is unable to be reached or declines to participate. Some
States participating in the FAI--including Illinois, Michigan, South
Carolina, and Texas--do not require the ICP in these circumstances. We
are considering whether text messaging could be useful for contacting
enrollees to conduct HRAs in addition to phone calls and how follow-up
to conduct the HRA would occur following the contact by text messages.
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\319\ https://www.kff.org/medicare/issue-brief/10-things-to-know-about-medicare-advantage-dual-eligible-special-needs-plans-d-snps/.
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Finally, for Sec. 422.101(f)(vii) where we use the term ``person-
centered,'' we are considering whether to cross-reference the elements
of the person-centered planning process at Sec. 441.540(a) as written,
a subset of those elements, or a different definition. Cross-
referencing the person-centered planning process at Sec. 441.540(a)
would promote consistency in the language across Medicare and Medicaid,
which is helpful for the purpose of integrated Medicare and Medicaid.
However, we are not sure that all the components of the description at
Sec. 441.540(a) fully apply to SNP enrollees.
We solicit comments on these alternatives. We also seek feedback on
potential challenges to our proposals and alternatives under
consideration.
e. Assuring Enrollee Advisory Committee Input on MOC Updates
In the May 2022 final rule, we codified the requirement at Sec.
422.107(f) that D-SNPs establish or maintain one or more enrollee
advisory committees (EACs) that serve the D-SNPs offered by the MA
organization in a State. We believe that it is important for enrollees
to have a voice in the development of the D-SNPs' MOC, which includes
details regarding how a D-SNP conducts HRAs and ICPs. Enrollee feedback
on the MOC should improve how D-SNPs and other SNPs engage enrollees in
conducting HRA and ICPs, the quality of information obtained from these
enrollees, and the usefulness of the HRAs and ICPs as tools in
supporting enrollees' health care. Therefore, we propose adding
language to D-SNP EAC requirements at Sec. 422.107(f) to include
updates to MOCs as described at Sec. 422.101(f) among the minimum
required EAC discussion topics. While MA organizations can already
include MOCs among their D-SNP EAC topics, adding these topics to the
D-SNP EAC conversations would ensure MA organizations solicit feedback
directly from enrollees to improve the care coordination process
including HRAs and ICPs as described in the MOC.
We are not proposing to require that D-SNP EACs review or approve
the MOC, per se, because they are often lengthy and technical
documents. However, we believe the D-SNP EAC's perspectives should
inform updates to the MOC over time. We do not anticipate additional
burden from this proposal. We welcome comments on our proposal and
underlying assumptions.
[[Page 99492]]
f. Comment Solicitation--Making State Medicaid Agency Contracts Public
Section 164 of the Medicare Improvements for Patients and Providers
Act of 2008 (MIPPA) (Pub. L. 110-275) amended section 1859(f) of the
Act to require that a D-SNP contract with the State Medicaid agency in
each State in which the D-SNP operates. We refer to such contracts as
SMACs. As we have emphasized in rulemaking over the last several years,
SMACs are important vehicles for integrating the delivery of Medicare
and Medicaid services and improving experiences for dually eligible
individuals. In many States, the provisions in the SMAC are of
significant public policy interest, affecting the ways that many people
experience the Medicare and Medicaid programs.
Some States, including Indiana, New Jersey, and Washington, have
posted SMACs and any SMAC amendments--usually as a single model
agreement, rather than the individual signed copies with each D-SNP--on
their websites. We encourage all States to post the content of the
SMACs online. However, we have never done so on a CMS website.
Posting SMACs would improve public transparency on the important
requirements included in these agreements. This, in turn, would promote
accountability in implementing the terms of the SMAC and make it easier
for States, advocates, researchers, and others to identify promising
practices or opportunities for improvement across States. However,
while we review all SMACs for compliance with the requirements of Sec.
422.107, CMS is not a signatory to the SMACs. And we have never
systematically analyzed the extent to which SMACs may include
confidential commercial or financial information that should not be
shared publicly.
We solicit comments on whether and how CMS should post SMACs
online.
B. Clarifying Highly Integrated Dual Eligible Special Needs Plan
Definition Relative to Oregon's Coordinated Care Organization Structure
(Sec. 422.2)
The definition of HIDE SNPs is codified at Sec. 422.2. According
to this definition, a HIDE SNP, in addition to meeting other
requirements, is a D-SNP offered by an MA organization that provides
coverage of Medicaid benefits under a capitated contract between the
State Medicaid agency and the MA organization itself, the MA
organization's parent organization, or another entity that is owned and
controlled by its parent organization. CMS defined this term 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'' which appeared in the April 16, 2019, Federal Register
(hereinafter referred to as the April 2019 final rule) (84 FR 15705),
and further refined it in the final rule titled ``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 May 9,
2022, Federal Register (hereinafter referred to as the May 2022 final
rule) (87 FR 27755).
The May 2022 final rule revised the HIDE SNP definition to outline
more clearly the services HIDE SNPs must cover in their contracts with
State Medicaid agencies to include LTSS or behavioral health services
to the extent Medicaid coverage of those benefits is available to
individuals eligible to enroll in a HIDE SNP, and required the
capitated contract with the State Medicaid agency to cover the entire
service area of the D-SNP beginning in 2025. The revisions facilitate
HIDE SNP enrollees having access to both Medicare and Medicaid benefits
from a single parent organization.
However, the definition of HIDE SNP at Sec. 422.2 does not
explicitly account for certain ownership arrangements of Medicaid
managed care organizations that operate Medicaid health plans
affiliated with D-SNPs that we believe should meet the definition of
and be treated as a HIDE SNP. In Oregon, the State Medicaid managed
care program utilizes community-governed organizations called
coordinated care organizations (CCOs) to provide comprehensive Medicaid
benefits, including physical, behavioral, and dental services.\320\
These nonprofit community-governed organizations are locally based
(rather than national organizations), and may be single corporate
structures or networks of providers with contractual relationships, per
Oregon law.\321\
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\320\ https://www.oregon.gov/oha/HPA/Pages/CCOs-Oregon.aspx.
\321\ https://oregon.public.law/statutes/ors_414.572.
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In the Portland metro area that includes Clackamas, Multnomah, and
Washington counties, one of the CCOs delivering Medicaid benefits to
eligible residents is Health Share, a nonprofit public benefit
corporation with 11 founding members that include providers, health
systems, and county governments. A subset of these founding members
includes organizations with which Health Share contracts to provide
covered Medicaid physical, behavioral, and dental health services to
beneficiaries assigned to them on a fully capitated basis through
agreements called Integrated Delivery System (IDS) Participation
Contracts. These founding members with IDS Participation Contracts
administer Medicaid benefits on Health Share's behalf and assume full
risk for their assigned beneficiaries' services.
Three of these Health Share founding members are organizations that
also operate a D-SNP with a service area that includes the three-county
Portland metro area. Dually eligible individuals in that three-county
service area who are enrolled in one of these D-SNPs can therefore
receive their Medicaid benefits from the same organization from which
they receive their Medicare benefits, through the organization's IDS
Participation Contract with Health Share to provide Medicaid benefits.
Oregon estimates that between 80 and 91 percent of the Health Share
enrollees who receive Medicare benefits through a D-SNP are assigned to
the same organization for their Medicaid benefits, depending on which
of the three organizations in which they are enrolled. We believe this
arrangement is functionally similar to and should be treated as meeting
the HIDE SNP definition because dually eligible individuals are
receiving their Medicare and Medicaid benefits from the same
organization or the parent organization of the entities that operate
the D-SNP and the Medicaid managed care plan. While that organization
does not directly hold a contract with the State Medicaid agency for
Medicaid managed care services, it is responsible for the full
obligations of the CCO contract with the State Medicaid agency through
its IDS Participation Contract with Health Share. Furthermore, the
current HIDE SNP definition requires the capitated contract to be
between the State Medicaid agency and either the MA organization
itself, the MA organization's parent organization, or another entity
that is owned and controlled by its parent organization. While the
founding members of Health Share do not meet the CMS definition
[[Page 99493]]
of a parent organization,\322\ founding members appoint representatives
to Health Share's board of directors, vote on key leadership decisions,
serve on standing committees of the board (including committees that
oversee Health Share's contractual obligations), and financially
support Health Share. We believe this is functionally an entity that is
owned and controlled by the MA organization's parent organization as
included in paragraph (1)(ii) of the HIDE SNP definition. For these
reasons, we categorized these D-SNPs in the three-county Portland area
as HIDE SNPs for CY 2025 as part of our review of Oregon's SMAC
agreements with D-SNPs operating in the State. Nonetheless, given the
foregoing ambiguity about the applicability of the existing HIDE SNP
definition, we are proposing to modify the HIDE definition at Sec.
422.2 to make clear that it applies to this type of arrangement,
whether in Oregon or elsewhere.
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\322\ CMS considers a parent organization to be the legal entity
that owns a controlling interest in a contracting organization.
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Under our authority at section 1859(f)(8)(D) of the Act to require
that all D-SNPs meet certain minimum criteria for Medicare and Medicaid
integration, and under section 1856(b) to establish requirements by
regulation, we are proposing to amend the definition of a HIDE SNP at
Sec. 422.2 to make minor edits to paragraph (1) and add a new
paragraph (1)(iii) to the definition to explicitly describe a scenario
in which there is a capitated contract between the State Medicaid
agency and a local nonprofit public benefit corporation of which the MA
organization is a founding member. The proposed change would clarify
that D-SNPs with this ownership arrangement meet the HIDE SNP
definition. (We are not proposing any changes to paragraphs (2) or (3)
of the HIDE SNP definition.)
In developing this proposal, we considered other scenarios that
have arisen related to the HIDE SNP definition. For example, in the
April 2019 final rule (84 FR 15705) we discussed a scenario in which an
entity with a managed care contract with the State Medicaid agency
subsequently subcontracts certain aspects of the managed care contract
to another entity under Sec. 438.230. We noted that in such situations
where that subcontractor also is a D-SNP, we recognized that there may
be a level of integration for enrollees that is greater than that of a
D-SNP that has no contract--directly or indirectly--with a State to
provide LTSS, behavioral health services, or both. However, we stated
we do not believe that the subcontractor in that situation should be
treated as a HIDE SNP.
We believe that the situation we addressed in the April 2019 final
rule is fundamentally different from the arrangement in Oregon, in
which the founding members with IDS Participation Contracts with Health
Share have an ownership and leadership role within Health Share, as
noted previously, participating financially and in key decision-making.
In other more common delegation scenarios, like the one described in
the April 2019 final rule, the delegated organization does not have
such a role in the organization that is delegating its
responsibilities. We believe this is an essential difference that sets
these two situations apart. With our proposal, we do not aim to allow
scenarios where the delegated organization does not have a meaningful
ownership role in the delegating organization to meet the HIDE SNP
definition. We therefore include the term ``local nonprofit benefit
corporation'' in our proposal to be specific to the structure of CCOs
and to clarify that such an arrangement does not include certain
delegation situations in which an MCO--including a for-profit MCO--
capitates an unrelated organization with no ownership stake in the MCO
to administer Medicaid benefits on the MCO's behalf, as is currently
common in California. We also include the term ``founding member''
because we have experience with this ownership arrangement in Oregon.
In contrast, we have not fully analyzed how the arrangement may differ
if an organization newly became a member through acquisition or
otherwise. We chose to include this language to keep this narrowly
applicable to a scenario we understand and limit any possible gaming
until we have more experience. However, we welcome comments on our
proposed use of the term ``founding member.''
We welcome comment on our proposed clarifications to the HIDE SNP
definition. We also welcome comment on whether the language we propose
here is sufficiently narrow such that it does not unintentionally
encompass additional delegation situations that are contrary to our
goals of increasing the level of integration between D-SNPs and
affiliated Medicaid managed care plans and facilitating D-SNP enrollees
having access to Medicare and Medicaid benefits provided by the same
parent organization. Additionally, we welcome comment on whether there
are existing scenarios like Health Share we may want to consider as we
revise the HIDE SNP definition.
We do not believe that this provision would add any additional
burden to the three D-SNPs in Oregon with affiliated Medicaid CCOs,
which we have already classified as HIDE SNPs in recent years. We do
not believe that any additional work from the three D-SNPs would amount
to burden above and beyond what is routine, and as such, this work has
already been accounted for in other burden estimates under OMB control
number 0938-1410 (CMS-10796).
C. Technical Changes
1. Technical Change to the Specific Rights to Which a PACE Participant
Is Entitled (Sec. 460.112)
In the Medicare Program: Changes to the Medicare Advantage and
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) (hereinafter referred to as the
April 2024 final rule), we finalized changes to the regulations
impacting the specific rights to which a participant is entitled (89 FR
30756). Specifically, we added a new paragraph (a) which was entitled
``right to treatment,'' and redesignated existing paragraphs Sec.
460.112 (a) through (c) as (b) through (d). In the new paragraph (a),
we finalized that each participant has the right to appropriate and
timely treatment for their health conditions.
On May 6, 2024, we issued the Nondiscrimination in Health Programs
and Activities final rule (hereinafter referred to as the
Nondiscrimination 2024 final rule), with the intention of adding
language to the respect and nondiscrimination paragraph regarding
sexual orientation and gender identity. Because the respect and
nondiscrimination paragraph had only been redesignated a few weeks
prior to the issuance of the Nondiscrimination 2024 final rule, the
updated language was added in error to paragraph (a) instead of the
redesignated paragraph (b); thereby replacing the right to treatment
language provision added to paragraph (a) through the April 2024 final
rule. As a result of this error, the current regulation text has two
identically titled subsections (Sec. Sec. 460.112(a) and 460.112(b)).
To avoid any further confusion and for the reasons explained in the
April 2024 final rule at 89 FR 30756, we propose to make a technical
change to reinstate
[[Page 99494]]
the language that each participant has the right to appropriate and
timely treatment for their health conditions in Sec. 460.112(b)
instead of in Sec. 460.112(a).
We also finalized two paragraphs under Sec. 460.112(a) in the
April 2024 final rule. Paragraph (a)(1) related to the right to receive
all care and services needed to improve or maintain the participant's
health condition and attain the highest practicable physical,
emotional, and social well-being. Paragraph (a)(2) related to the
participants' rights to access emergency health care services when and
where the need arises without prior authorization by the PACE
interdisciplinary team. Since the two paragraphs under Sec.
460.112(a), (a)(1) and (a)(2), more appropriately align with the
requirement in the ``right to treatment'' paragraph, we propose to
redesignate Sec. 460.112(a)(1) and (a)(2) as Sec. 460.112(b)(1) and
(b)(2). The subparagraphs under Sec. 460.112(b) more appropriately
align with the ``respect and nondiscrimination'' paragraph. Therefore,
we propose to redesignate the paragraphs under Sec. 460.112(b)(1)
through (b)(8) as Sec. 460.112(a)(1) through (a)(8).
Finally, we note that two courts, in Tennessee v. Becerra, No.
1:24-cv-161-LG-BWR (S.D. Miss.), and Texas v. Becerra, 6:24-cv-211-JDK
(E.D. Tex.), have issued orders that, in relevant part, stay nationwide
the effective date of, respectively, Sec. 460.112 to the extent it
``extend[s] discrimination on the basis of sex to include
discrimination on the basis of gender identity'' and Sec. 460.112(a).
Nothing in this technical change is intended to affect the scope of
those stay orders or CMS's compliance with those orders as long as they
remain in effect.\323\
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\323\ For updated information about court orders impacting the
Nondiscrimination in Health Programs and Activities 2024 Final Rule,
please see hhs.gov/1557.
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This provision is technical and is therefore not expected to have
economic impact beyond current operating expenses.
2. Technical Change to PACE Contracted Services (Sec. 460.70(e)(2))
In the April 2024 final rule, we finalized changes to the PACE
service delivery requirements at Sec. 460.98. Specifically, we removed
paragraph (b)(4), added a new paragraph at Sec. 460.98(c), and
redesignated paragraphs (b)(5) and (c) through (e) as paragraphs (b)(4)
and (d) through (f), respectively (89 FR 30845). As part of these
changes, the paragraph titled ``Minimum services furnished at each PACE
center'' was redesignated from Sec. 460.98(c) to Sec. 460.98(d).
However, the April 2024 final rule did not include a correction to the
cross-reference at Sec. 460.70(e)(2) to reflect the redesignation of
``Minimum services furnished at each PACE center'' requirements from
Sec. 460.98(c) to Sec. 460.98(d).
Therefore, we are proposing a technical change at Sec.
460.70(e)(2) to update the cross-reference from Sec. 460.98(c) to
Sec. 460.98(d), which would affirm the connection between Sec.
460.70(e)(2) and the ``Minimum services furnished at each PACE center''
requirements at the redesignated Sec. 460.98(d).
The proposed technical change would not impose any new requirements
or burden on PACE organizations. Additionally, we expect no cost impact
to the Medicare Trust Fund.
We solicit comment on the proposed technical change.
3. Technical Change to Notice of Availability of Language Assistance
Services and Auxiliary Aids and Services (Sec. 423.2267(e)(33))
In the April 2024 final rule, we finalized changes at Sec.
422.2267(e)(31) and (e)(33) to--(1) update multi-language insert (MLI)
references to notice of availability of language assistance services
and auxiliary aids and services (Notice of Availability); (2) allow
plans to utilize the updated MLI during contract year 2025; and (3)
require the Notice of Availability 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 be provided in alternate formats for
individuals with disabilities who require auxiliary aids and services
to ensure effective communication.
When amending the regulation at Sec. 423.2267(e)(33)(i), we
neglected to denote that the MLI is a notice for Part D sponsors.
Similarly, when we amended the regulation at Sec. 423.2267(e)(33)(ii),
we neglected to note the Notice of Availability is a notice for Part D
sponsors.
Therefore, we are proposing technical changes in Sec.
423.2267(e)(33)(i) and (ii) to denote the MLI and notice of
availability are notices for Part D sponsors.
The proposed technical changes would not impose any new
requirements or burden on Part D sponsors.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to provide 60-day notice in the Federal Register
and solicit public comment before a ``collection of information,'' as
defined under 5 CFR 1320.3(c) of the PRA's implementing regulations, is
submitted to the Office of Management and Budget (OMB) for review and
approval. To fairly evaluate whether an information collection
requirement should be approved by OMB, section 3506(c)(2)(A) of the PRA
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements. Comments, if received, will be responded to within the
subsequent final rule (CMS-4208-F, RIN 0938-AV40).
A. Wage Data
1. Private Sector
To derive average (mean) costs, we are using data from the most
current U.S. Bureau of Labor Statistics' (BLS's) National Occupational
Employment and Wage Estimates for all salary estimates (https://www.bls.gov/oes/2023/may/oes_nat.htm), which, at the time of
publication of this proposed rule, provides May 2023 wages. In this
regard, table 16 presents BLS's mean hourly wage, our estimated cost of
fringe benefits and other indirect costs (calculated at 100 percent of
salary), and our adjusted hourly wage.
[[Page 99495]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.022
Adjusting our employee hourly wage estimates by a factor of 100
percent is a rough adjustment that is being used since fringe benefits
and other indirect costs vary significantly from employer to employer
and because methods of estimating these costs vary widely from study to
study. In this regard, we believe that doubling the hourly wage to
estimate costs is a reasonably accurate estimation method.
2. Beneficiaries
We believe that the cost for beneficiaries undertaking
administrative and other tasks on their own time is a post-tax wage of
$20.71/hr. The Valuing Time in U.S. Department of Health and Human
Services Regulatory Impact Analyses: Conceptual Framework and Best
Practices identifies the approach for valuing time when individuals
undertake activities on their own time. To derive the costs for
beneficiaries, a measurement of the usual weekly earnings of wage and
salary workers of $998, divided by 40 hours to calculate an hourly pre-
tax wage rate of $24.95/hr. This rate is adjusted downwards by an
estimate of the effective tax rate for median income households of
about 17 percent, resulting in the post-tax hourly wage rate of $20.71/
hr. Unlike our private sector wage adjustments, we are not adjusting
beneficiary wages for fringe benefits and other indirect costs since
the individuals' activities, if any, would occur outside the scope of
their employment.
For valuing time spent outside of work, there is logic to this
approach but also to using a fully loaded wage. In the past we have
used occupational code 00-0000, the average of all occupational codes,
which currently is $29.76/hr. Thus, we propose a range for enrollees of
$20.71/hr to $29.76/hr. Nevertheless, the upper limit is based on an
average over all occupations while the lower limit reflects a detailed
analysis by ASPE targeted at enrollees many of whom are over 65 and
unemployed; consequently, in our primary estimates we will use the
lower limit as we consider it more accurate. The effect of this range
will be footnoted in table J5 and the summary table (table F11). Since
the impact to beneficiaries is approximately $54,000, increasing the
wage by 50 percent would result in a roughly $24,000 increase.
B. Proposed Information Collection Requirements (ICRs)
The following ICRs are listed in the order of appearance within the
preamble of this proposed rule.
1. ICRs Regarding Medicare Prescription Payment Plan Calculation of the
Maximum Monthly Cap on Cost-Sharing Payments (Sec. 423.137(c))
The following proposed changes will be submitted to OMB for review
under control number 0938-1475 (CMS-10882).
This rule proposes to implement the requirements in section 1860D-
2(b)(2)(E)(iv) of the Act related to the calculation of the monthly
caps on OOP cost sharing payments. The burden related to these new
requirements for Part D sponsors reflects the time and effort needed to
correctly calculate the monthly caps based on the statutory formulas,
determine the amount to be billed, and send monthly bills to program
participants.
We estimate a one-time burden for Part D sponsors to update their
payment systems to process data from their PBMs and contracted
pharmacies, calculate monthly caps, and determine the amount to be
billed. The average number of Part D contracts per year is 807 (based
on 2021, 2022, and 2023 data). This average number of Part D contracts
per year excludes contracts with Program of All-Inclusive Care for the
Elderly (PACE) organizations and D-SNPs and Medicare-Medicaid Plans
(MMP) that exclusively charge $0 cost sharing, which we do not expect
to offer enrollees the option to pay their OOP costs through monthly
payments over the course of the plan year or otherwise comply with the
Medicare Prescription Payment Plan requirements set forth in this
proposed rule and in the proposed new regulation at Sec. 423.137. On
average, we expect each Part D contract to have a team that consists of
one software developer at $132.80/hr, one web developer at $91.90/hr,
and one business operations specialist at $85.70/hr who will each spend
125 hours to implement these system changes. This team will also
include a software quality assurance analyst and tester who will spend
10 hours at $104.30/hr performing assurance and testing. Thus, a total
of 385 hours is spent per contract with a weighted average wage of
$103.49/hr (see table 17).
[[Page 99496]]
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In aggregate, we estimate a one-time burden of 310,695 hours (385
hr/contract * 807 Part D contracts) at a cost of $32,153,826 (310,695
hr * $103.49/hr).
After an enrollee elects to participate in the Medicare
Prescription Payment Plan, the Part D sponsor will pay the pharmacy for
any amounts that would have been due as OOP costs, calculate the
enrollee's monthly payment based on the statutory formula and any prior
prescription drug expenditures, and send a separate bill to the
enrollee for those amounts every month.
The burden associated with sending monthly bills to program
participants is a function of the number of enrollees likely to enroll
in the program. CMS conducted internal analyses of CY 2021 Prescription
Drug Event (PDE) data to identify the number of enrollees likely to be
identified as likely to benefit from the program and estimates that
between 435,000 and 3,200,000 individuals will elect to participate in
the Medicare Prescription Payment Plan. Because of the prior to plan
year and during the plan year targeted outreach required for
individuals identified as likely to benefit, we assume that the
majority of enrollees who participate will pick up a high-cost
prescription early in the year, for which they will be billed over all
12 months of the plan year. Assuming 3,200,000 enrollees participate,
and they all incur drug costs in January for which they are billed over
the course of 12 months, the projected number of bills sent per year is
38,400,000 (3,200,000 * 12). Billing statements may be provided via
mail or electronically; consistent with existing estimates for other
required Part D materials, we estimate that approximately one-third or
12,800,000 (\1/3\ * 38,400,000) will be sent electronically since we
estimate that one third of enrollees will opt to receive billing
statements electronically while the remaining two-thirds or 25,600,000
(\2/3\ * 38,400,000) will receive hard copy billing statements.
We assume the following costs include paper, toner, and postage
(envelope weight is normally considered negligible when citing these
rates and is not included), and envelope (supplies) for hard-copy
mailings:
Paper: $3.50 for a ream of 500 sheets. The cost for one
page is $0.007 ($3.50/500 sheets).
Toner: $70 for 10,000 pages. The toner cost per page is
$0.007 ($70/10,000 pages).
Postage: The cost of first-class metered mail is $0.73 per
letter up to 1 ounce. We estimate that a sheet of paper weighs 0.16
ounces, and do not anticipate additional postage for mailings in excess
of 1 ounce.
Envelope: Bulk envelope costs are $440 for 10,000
envelopes or $0.044 per envelope.
We estimate the aggregate cost per mailed billing statement is
$0.802 ([$0.007 for paper * 2 pages] + [$0.007 for toner * 2 pages] +
$0.73 for postage + $0.044 per envelope). We assume a maximum of 4
single sided pages will be needed for a billing statement, based on the
required content for billing statements. Billing statements are assumed
to be printed double-sided to save on printing costs, yielding 2 pages
of double-sided print, generally weighing less than 1 ounce. Because
preparing and generating a hard-copy billing statement is automated
once the systems have been developed, we do not estimate any labor
costs. Therefore, we estimate a total annual mailing cost by sponsors
to enrollees of $20,531,200 (25,600,000 mailings * $0.802/mailing).
Part D sponsors will also need to process payments received from
Medicare Prescription Payment Plan participants. This may require the
development of new systems since Part D premium payment often occurs
through automatic deduction from Social Security. On average, we expect
that for each Part D contract a two-person team consisting of one web
developer at $91.90/hr and one business operations specialist at
$85.70/hr will each spend 50 hours to these system changes. To make the
necessary systems changes, we estimate a total one-time burden of
80,700 hours (807 Part D contracts * 100 hr/contract) at a cost of
$7,166,160 (807 contracts x [($91.90/hr x 50 hr) + ($85.70/hr x 50
hr)]).
We also estimate annual burden associated with maintenance of
associated systems. On average, we expect that for each Part D
contract, a two-person team consisting of one database administrator at
$100.78/hr and one computer systems analyst at $106.54/hr will each
spend 50 hours per year performing system maintenance. In aggregate, we
estimate an annual burden of 80,700 hours (807 Part D contracts * 100
hr/contract) at a cost of $8,365,362 (807 contracts x [($100.78/hr x 50
hr) + ($106.54/hr x 50 hr)]).
Therefore, the total burden for all Part D contracts associated
with the aforementioned provisions is 472,095 hours at a first-year
cost of $68,216,548 and an annual subsequent year cost of $28,896,562
(see table 18).
[[Page 99497]]
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2. ICRs Regarding Medicare Prescription Payment Plan Eligibility and
Election Requirements (Sec. 423.137(d))
The following proposed changes will be submitted to OMB for review
under control number 0938-1475 (CMS-10882).
This rule's proposed amendments to Sec. 423.137(d) would require
that Part D sponsors offer the Medicare Prescription Payment Program to
all Part D enrollees. It also proposes requirements for how Part D
sponsors must process program election requests, including timing and
notice requirements and procedures for collecting missing information
on election requests.
The proposed amendments to Sec. 423.137(d) require Part D sponsors
to have a process to effectuate retroactive election into the Medicare
Prescription Payment Plan when an enrollee believes that a delay in
filling a prescription would seriously jeopardize their life, health,
or ability to regain maximum function and has paid the associated cost
sharing before their participation was effective. Sponsors are also
required to develop standardized procedures for determining and
processing reimbursements for excess program payments made by
participants who become LIS eligible. Finally, we propose to require
Part D sponsors to send a notice alerting the Part D enrollee that
their participation in the Medicare Prescription Payment Plan will
continue into the next year unless they indicate that they choose to
opt out. In developing these requirements, we referred to existing
requirements and procedures for Part D plan enrollment, to minimize the
updates and new systems necessary to implement and administer the
Medicare Prescription Payment Plan.
We estimate a one-time burden for Part D sponsors to set up systems
to process election requests and develop procedures to effectuate
retroactive election into the program and process reimbursements for
participants who become LIS eligible. We expect that for each Part D
contract, a four-member team will be used consisting of one software
developer at $132.80/hr, one web developer at $91.90/hr, and one
business operations specialist at $85.70/hr will each work 40 hours
while a software quality assurance analyst and tester will spend 10
hours at $104.30/hr to implement these system changes.
The total time spent per contract is 130 hours at a weighted
average wage of $103.54/hr (see table 19).
[GRAPHIC] [TIFF OMITTED] TP10DE24.025
In aggregate, we estimate a one-time burden of 104,910 hours (130
hr/plan * 807 Part D contracts) at a cost $10,862,381 (104,910 hr *
$103.54/hr).
We estimate a one-time burden for Part D sponsors to develop a
standard notice of request for additional information to provide to any
enrollees who provide an incomplete election request form. On average,
we expect that for each Part D contract, a team of one medical and
health services manager who will spend 2 hours at $129.28/hr and one
business operations specialist who will spend 10 hours at $85.70/hr
will be needed to implement this proposal. In aggregate, we estimate a
one-time burden of 9,684 hr (12 hr/contract * 807 Part D contracts) at
a cost of $900,257 (807 contracts x [($129.28/hr x 2 hr) + ($85.70/hr x
10 hr)]).
We also estimate annual burden for Part D sponsors providing these
requests for additional information to Part D enrollees. We estimate
that 3,200,000 individuals will elect to participate in the Medicare
Prescription Payment Plan, representing 3,200,000 election request
forms. We estimate that approximately 10 percent of election request
forms will be incomplete, requiring 320,000 requests for additional
information. We assume that one-third or 106,667 (320,000 * \1/3\)
enrollees will receive this request electronically or via telephone;
and the remaining two-thirds of enrollees or 213,333 (320,000 * \2/3\)
will receive hard copy notices.
We estimate the aggregate cost per mailed request for additional
information to be $0.802 ([$0.007 for paper * 2 pages] + [$0.007 for
toner * 2 pages] + $0.73 for postage + $0.044/envelope). We assume a
maximum of 2
[[Page 99498]]
pages will be needed for this notice. Notices are assumed to be printed
double-sided to save on paper costs, yielding 2 pages of double-sided
print, generally weighing less than 1 ounce. Because preparing and
generating hard copy notices is automated once the systems have been
developed, we do not estimate associated labor costs. Therefore, we
estimate total annual mailing costs to sponsors of $171,093 (213,333
hard copy notices * $0.802/notice).
To estimate the information collection burden for beneficiaries, we
estimate that it would take approximately 15 minutes (0.25 hr) to
complete the requests for additional information. We estimate the cost
for beneficiaries undertaking administrative and other tasks on their
own time is a post-tax wage of $20.71/hr. We estimate a total one-time
burden of 80,000 hours (320,000 enrollees * 0.25 hr) at a cost of
$1,656,800 ($20.71/hr * 80,000 hr) across 320,000 enrollees.
Finally, we estimate a one-time burden for Part D sponsors to
develop a standard auto-renewal notice alerting the Part D enrollee
that their participation in the Medicare Prescription Payment Plan will
continue into the next year unless they indicate that they choose to
optout. On average, we expect that for each Part D contract, a team of
one medical and health services manager who will spend 2 hours at
$129.28/hr and one business operations specialist who will spend 10
hours at $85.70/hr will be needed to implement this proposal. In
aggregate, we estimate a one-time burden of 9,684 hours (12 hr/contract
* 807 Part D contracts) at a cost of $900,257 (807 contracts x
[($129.28/hr x 2 hr) + ($85.70/hr x 10 hr)]).
To estimate the information collection burden for beneficiaries, we
estimate that approximately 160,000 enrollees will voluntarily
terminate their participation in the program in CY2026. We estimate
that 99,200 will opt out of the program electronically, and the
remaining 60,800 will opt out via telephone. We estimate that it would
take approximately 5 minutes (0.083 hr) to voluntarily terminate
participation in the Medicare Prescription Payment Program. We estimate
the cost for beneficiaries undertaking administrative and other tasks
on their own time is a post-tax wage of $20.71/hr. We estimate a total
one-time burden of 13,280 hours (160,000 enrollees * 0.083 hr) at a
cost of $275,029 ($20.71/hr * 13,280 hr).
We estimate annual burden for Part D sponsors to provide these
auto-renewal notices to all enrollees participating in the Medicare
Prescription Payment Plan at the end of the plan year. Assuming
3,200,000 individuals participating in the Medicare Prescription
Payment Plan, we estimate a total of 3,200,000 auto-renewal notices
sent each year. We assume that one-third or 1,065,600 enrollees
(3,200,000 * \1/3\) will receive this notice electronically and the
remaining two-thirds or 2,133,333 enrollees (3,200,000 * \2/3\) will
receive hard copy notices.
We estimate the aggregate cost per mailed request for additional
information to be $0.802 ([$0.007 for paper * 2 pages] + [$0.007 for
toner * 2 pages] + $0.73 for postage + $0.044/envelope). We assume a
maximum of 2 pages will be needed for this notice. Notices are assumed
to be printed double-sided to save on paper costs, yielding 2 pages of
double-sided print, generally weighing less than 1 ounce. Because
preparing and generating hard copy notices is automated once the
systems have been developed, we do not estimate associated labor costs.
Therefore, we estimate total annual mailing costs to sponsors of
$1,710,933 (2,133,333 hard copy notices * $0.802/notice).
The total burden for all Part D contracts associated with the
aforementioned requirements is 124,278 hours with one-time first year
cost of $14,544,921 and subsequent year costs of $1,882,026 (see table
20). The total burden for Part D beneficiaries with the aforementioned
requirements is 93,280 hours with an on-going annual cost of $1,931,829
(see table 20).
[GRAPHIC] [TIFF OMITTED] TP10DE24.026
[[Page 99499]]
3. ICRs Regarding Medicare Prescription Payment Plan Part D Enrollee
Targeted Outreach (Sec. 423.137(e))
The following proposed changes will be submitted to OMB for review
under control number 0938-1475 (CMS-10882).
This rule proposes to require Part D sponsors to undertake targeted
outreach to enrollees who are likely to benefit from making an election
into the Medicare Prescription Payment Plan, including notifying a
pharmacy when a Part D enrollee incurs OOP costs with respect to
covered Part D drugs that make it likely the enrollee may benefit from
participating in the program, and directly outreaching to enrollees
likely to benefit prior to the plan year and on an ongoing basis during
the plan year.
We estimate one-time burden for Part D sponsors to develop systems
to identify ``likely to benefit'' enrollees prior to the plan year and
during the plan year. On average, we expect that for each Part D
contract, a three-person team consisting of one business operations
specialist at $85.70/hr, one web developer at $91.90/hr, and one
software developer at $132.80/hr who will each spend 20 hours to
develop and program these systems. In aggregate, we estimate a one-time
burden of 48,420 hours (807 Part D contracts * 60 hr/contract) at a
cost of $5,009,856 (807 contracts x [($85.70/hr x 20 hr) + ($91.90/hr x
20 hr) + ($132.80/hr x 20 hr)]).
We estimate annual burden for Part D sponsors to review annual
updates to the ``likely to benefit'' identification criteria and update
their systems accordingly. On average, we expect that for each Part D
contract, one business operations specialist will spend 2 hours at
$85.70/hr (see table 16) to review annual updates and make
corresponding systems changes. In aggregate, we estimate an annual
burden of 1,614 hours (807 Part D contracts * 2 hr/contract) at a cost
of $138,320 (1,614 hr * $85.70/hr).
The total burden for all Part D contracts associated with the
aforementioned requirements is 50,034 hours with a first-year cost of
$5,148,176 and a subsequent year cost of $138,320 (see table 21).
[GRAPHIC] [TIFF OMITTED] TP10DE24.027
4. ICRs Regarding Medicare Prescription Payment Plan Termination of
Election, Reinstatement, and Preclusion (Sec. 423.137(f))
The following proposed changes will be submitted to OMB for review
under control number 0938-1475 (CMS-10882).
This rule proposes to require Part D sponsors to have a process to
allow a participant who has opted into the Medicare Prescription
Payment Plan to opt out during the plan year. Part D sponsors are also
required to terminate an individual's Medicare Prescription Payment
Plan participation if that individual fails to pay their monthly billed
amount.
We estimate a one-time burden for Part D sponsors to develop an
opt-out process for enrollees who have elected into the program. On
average, we expect that each Part D contract will build a 3-person team
consisting of one business operations specialist at $85.70/hr, one web
developer at $91.90/hr, and one software developer at $132.80/hr who
will each spend 10 hours to develop and program these systems, for a
per contract burden of 30 hours for the team. In aggregate, we estimate
a one-time burden of 24,210 hours (807 Part D contracts * 30 hr) at a
cost of $2,504,928 (807 contracts x [($85.70/hr x 10 hr) + ($91.90/hr x
10 hr) + ($132.80/hr x 10 hr)]).
We also estimate a one-time burden for Part D sponsors to develop
processes to reinstate individual terminated for good cause. We note
that because this provision mirrors existing requirements for
reinstatements when an enrollee fails to pay their Part D premiums,
this should be a minor systems change. On average, we expect that for
each Part D contract a two-person team consisting of one business
operations specialist at $85.70/hr and one software developer at
$132.80/hr who will each spend 2 hours developing these processes and
updating plan systems. In aggregate, we estimate a one-time burden of
3,228 hours (807 Part D contracts * 4 hr) at a cost of $352,659 (807
contracts x [($85.70/hr x 2 hr) + ($132.80/hr x 2 hr)]).
Finally, we estimate a one-time burden for Part D sponsors to
develop systems to track individuals with outstanding balances who are
precluded from program participation in subsequent plan years. On
average, we expect that for each Part D contract a three-person team
consisting of one business operations specialist at $85.70/hr, one web
developer at $91.90/hr, and one software developer at $132.80/hr who
will each spend 10 hours developing these processes and updating plan
systems for a total of 30 hours per contract. In aggregate, we estimate
a one-time burden of 24,210 hours (807 Part D contracts * 30 hr) at a
cost of $2,504,928 (807 contracts x [($85.70/hr x 10 hr) + ($91.90/hr x
10 hr) + ($132.80/hr x 10 hr)]).
The total burden for all Part D contracts associated with the
aforementioned requirements is 51,648 hours with a one-time first year
cost of $5,362,515.
[[Page 99500]]
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5. ICRs Regarding Medicare Prescription Payment Plan Pharmacy POS
Notification Process (Sec. 423.137(i))
The following proposed changes will be submitted to OMB for review
under control number 0938-1475 (CMS-10882).
This rule proposes to require Part D sponsors to ensure that a
pharmacy, after receiving such a notification from the Part D sponsor,
informs the Part D enrollee that they are likely to benefit from the
Medicare Prescription Payment Plan. The provision also outlines the
required claims processing methodology for applicable Medicare
Prescription Payment Plan transactions.
The burden related to these new requirements for pharmacies
reflects the time and effort needed to process the notifications
provided by the Part D sponsor and include the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' with the enrollee's
prescription collateral. We estimate a one-time burden for pharmacies
to update their systems for this change, which will require 10 hours of
time for each member of a two-person team consisting of one software
developer at $132.80/hr and one web developer at $91.90/hr for a total
of 20 hours per contract. Assuming approximately 73,397 pharmacies bill
Part D based on monthly 2024 pharmacy network information, the total
burden estimate across all pharmacies is 1,467,940 hours (73,397
pharmacies x 20 hr) at a cost of $164,923,059 (73,397 pharmacies x
[($91.90/hr x 10 hr) + ($132.80/hr x 10 hr)]).
We do not estimate any additional burden for pharmacists to print
and provide the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' because we expect this to be integrated into the other
prescription collateral provided to the enrollee under existing
practices, such as those approved by OMB under control number 0938-0975
(CMS-10147).
6. ICRs Regarding Medicare Prescription Payment Plan Pharmacy Claims
Processing (Sec. 423.137(j))
The following proposed changes will be submitted to OMB for review
under control number 0938-1475 (CMS-10882).
The electronic claims processing methodology outlined in this
proposed rule is utilized today by Part D sponsors and pharmacies and
therefore the addition of the BIN/PCN that is unique to the Medicare
Prescription Payment Plan does not represent new burden that is not
approved by OMB. However, CMS is requiring that Part D sponsors report
their program-specific PCN starting with ``MPPP'' to CMS. We estimate
that this will require 1 hour at $85.70/hr for a business operations
specialist to report their identifier to CMS. In aggregate, we estimate
a one-time burden of 807 hours (807 Part D contracts * 1 hr/response)
at a cost of $69,160 (807 hr * $85.70/hr).
7. ICRs Regarding Part D Coverage of Anti-Obesity Medications (Sec.
423.100) and Application to the Medicaid Program
As indicated later in this section, we will submit proposed changes
to OMB under control number 0938-0659 (CMS-R-153) regarding the
modification of policies and criteria. We will also submit proposed
changes to OMB under control number 0938-0193 (CMS-179) regarding the
preparation and submission of State Plan Amendments.
We are proposing to reinterpret the phrase ``[a]gents when used for
. . . weight loss'' in section 1927(d)(2) of the Act such that AOMs
that are used for weight reduction or chronic weight management for the
treatment of obesity and otherwise meet the definition of Part D drug
at Sec. 423.100 would no longer be excluded from Part D coverage
pursuant to the exclusion in paragraph (2)(ii) of the definition, for
drugs that may be excluded from Medicaid coverage under section
1927(d)(2) of the Act. Our proposed reinterpretation would also apply
to Medicaid such that state Medicaid programs would no longer have the
discretion to exclude these drugs pursuant to section 1927(d)(2) of the
Act from Medicaid coverage when used for weight reduction or chronic
weight management for the treatment of obesity. States that are not
already covering AOMs for weight reduction or chronic weight management
would be required to do so to treat obesity in Medicaid enrollees.
Except as indicated later in this section, there is no new or
revised information collection burden for Part D plans associated with
this proposal to allow for Part D coverage of AOMs. The Part D plan's
activities related to the decision to include AOMs on their Part D
formularies would be the same as for any new drug that comes on the
market. This burden is currently approved by OMB under control number
0938-0964 (CMS-10141) under the requirement that the Pharmacy and
Therapeutics committee documents its decisions regarding formulary
development and revision.
The following proposed changes will be submitted to OMB for review
under control number 0938-0659 (CMS-R-153) using the standard non-rule
PRA process which includes the publication of 60- and 30-day Federal
Register notices.
As Medicaid is an operationally different program from Medicare
Part D, there will be a burden for the state Medicaid programs that do
not already cover AOMs when used for weight reduction or chronic weight
management for Medicaid enrollees with obesity to modify their existing
coverage and reimbursement policies and criteria to remove such
exclusion of AOMs. This burden may include the time and cost for
administrative processes and requirements, including changes to
utilization management criteria, claims processing to allow coverage of
these products for this indication, review of stakeholder input, change
to provider and beneficiary
[[Page 99501]]
documents to reflect this change in policy, and state internal
operational implementation procedures. We believe that it will take a
business operations specialist 40 hours at $85.70/hr to modify the
state's policies and criteria. In aggregate, we estimate a one-time
burden of 1,560 hours (39 states x 40 hr) at a cost of $133,692 (1,560
hr x $85.70/hr). Once the modifications are developed, there should be
no additional burden.
The following proposed changes will be submitted for OMB review and
approval under control number 0938-0193 (CMS-179) using the standard
non-rule PRA process which includes the publication of 60- and 30-day
Federal Register notices.
This new provision may also require the submission of a State Plan
Amendment (SPA) for formal review and approval. In such instances, we
estimate that it would take a Business Operations Specialist 20 hours
at $85.70/hr. In aggregate, we estimate a one-time burden of 780 hours
(39 states x 20 hr) at a cost of $66,846 (780 hr x $85.70/hr).
8. ICRs Regarding Part D Medication Therapy Management (MTM) Program
Eligibility Criteria (Sec. 423.153(d))
The following proposed changes will be submitted to OMB for review
under control number 0938-1154 (CMS-10396).
Based on comments we received from the December 2022 proposed rule
(87 FR 79452), CMS proposes to revise Sec. 423.153(d)(2)(iii)(A)
identifying ``Alzheimer's disease'' as a core chronic disease to
``Alzheimer's disease and dementia,'' to include all other dementias in
the core chronic diseases for targeting beneficiaries for MTM program
eligibility. We are also revising our burden estimates to reflect
updated data, including up-to-date postage rates and using 2023 data.
We estimate that the proposed change to add dementia to the core
chronic diseases will increase the number (and percentage) of Part D
enrollees eligible for MTM services by 71,210 beneficiaries, from
7,882,987 (14.5 percent x 54,503,892 Part D enrollees based on internal
data from 2023) to 7,954,197 (14.6 percent x 54,503,892 Part D
enrollees based on internal data from 2023) among 866 Part D contracts
with an approved MTM program in 2023.
Under Sec. 423.153(d)(1)(vii)(B) and (C), all MTM enrollees must
be offered a comprehensive medication review (CMR) at least annually
and targeted medication reviews (TMRs) no less than quarterly. A CMR is
an interactive consultation, performed by a pharmacist or other
qualified provider, that is either in person or performed via
synchronous telehealth, that includes a review of the individual's
medications and may result in the creation of a recommended medication
action plan as required in Sec. 423.153(d)(1)(vii)(B)(1). An
individualized, written summary in CMS's Standardized Format must be
provided following each CMR. For ongoing monitoring, sponsors are
required to perform TMRs for all beneficiaries enrolled in the MTM
program with follow-up interventions when necessary. The TMRs must
occur at least quarterly beginning immediately upon enrollment in the
MTM program and may address specific or potential medication-related
problems. TMRs may be performed to assess medication use, to monitor
whether any unresolved issues need attention, to determine if new drug
therapy problems have arisen, or assess if the beneficiary has
experienced a transition in care. Under Sec. 423.153(d)(1)(vii)(E),
plans are also required to provide all enrollees targeted for MTM
services with information about safe disposal of prescription
medications that are controlled substances. Plans may mail this
information as part of the CMR summary, a TMR, or other MTM
correspondence or service. The proposed changes do not impact the
requirements for MTM services.
In this section, we estimate the additional burden on plan sponsors
to conduct CMRs (labor cost) and mail the written CMR summaries (non-
labor cost) to the additional beneficiaries that will be targeted for
MTM enrollment based on our proposal to include dementia within the
required core chronic diseases for identifying beneficiaries who have
multiple chronic diseases. We also estimate the cost of sending safe
disposal information to the beneficiaries who will be newly targeted
under these revised criteria, but do not receive a CMR.
To obtain aggregate burden we separately estimate: (1) the burden
for pharmacists to complete the CMR; (2) the mailing costs of the CMRs;
and (3) the cost of mailing of safe disposal instructions to those
targeted beneficiaries who do not accept the offer of a CMR.
The burden for pharmacists to complete the additional
CMRs: Based on plan-reported data, we found that 70.9 percent of MTM
program enrollees accepted the offer of a CMR in 2023. To estimate the
cost of conducting the additional CMRs, we multiply the expected number
of additional MTM program enrollees (71,210) by 0.709 to obtain the
number of additional CMRs we estimate will actually be conducted
(50,488). We estimate a pharmacist would take 40 minutes (0.6667 hr) at
$129.62/hr (see table 16) to complete a CMR. Thus, the total burden is
33,660 hours (0.6667 hr/CMR * 50,488 enrollees who accept the CMR
offer) at a cost of $4,363,009 (33,660 hr * $129.62/hr).
Mailing Costs of CMRs: To estimate the cost of sending the
CMR summaries, we assume that the average length of a CMR is 7 pages
double-sided (including 1 page for information regarding safe
disposal). The cost of mailing one CMR summary is the cost of postage
plus the cost of printing one CMR summary. First-class postage costs
$0.64 per metered mailing. Paper costs are $0.007 per sheet ($3.50 per
ream/500 sheets per ream), and toner costs $70.00 per cartridge and
lasts for 10,000 sheets (at $0.007 per sheet = $70.00/10,000 sheets).
Bulk envelope costs are $440 for 10,000 envelopes or $0.044 per
envelope. Therefore, the cost of printing and mailing the average CMR
summary is $1.022 ([$0.64 postage for the first ounce + $0.24 for the
second ounce + $0.044/envelope] * [7 sheets * ($0.007 for paper +
$0.007 for toner)]). And taken as a whole, the annual cost of mailing
CMRs to the additional 50,488 beneficiaries expected to accept the CMR
offer is $51,599 (50,488 enrollees x $1.022/mailing).
Mailing costs for Safe Disposal Information: Out of the
71,210 additional beneficiaries expected to be targeted for MTM based
on the revised criteria, we expect that 29.1 percent or 20,722 (71,210
* 0.291) beneficiaries will decline a CMR. These beneficiaries will
still need to receive information regarding the safe disposal of
prescription drugs that are controlled substances. For purposes of
calculating the burden, we assume that any safe disposal information
that is not included in a CMR is either (1) being mailed in a TMR,
which may be as short as one page and may contain private health
information; or (2) is mailed as a standalone document which does not
contain any private health information. For purposes of impact, (1) if
one additional page is included in the TMR, then there is no additional
postage; and (2) if the safe disposal information is mailed separately,
there would be no private health information, and the burden would be
the cost of one page plus bulk postage. Due to a lack of data with
regard to what percentage of safe disposal information will be mailed
as part of a TMR or other MTM correspondence or service, we are
assuming that all safe disposal information not sent with a CMR will be
[[Page 99502]]
one page that is mailed separately using bulk postage in order to
project the maximum cost of such mailing. If the letter does not
contain private health information and thus bulk mailing (which include
the envelope, typically a fold over paper) is used, the cost to mail
one page of safe disposal information is $0.01495 per enrollee [(1 page
* $0.007/sheet) + (1 page * $0.007 toner) + ($0.19/200 items for bulk
postage).] Therefore, we estimate that the cost of mailing safe
disposal information to those beneficiaries targeted for MTM who do not
receive it in a CMR summary is $310 ($0.01495 * 20,722).
Therefore, the total burden associated with the proposed revisions
to the MTM targeting criteria is 33,660 hours and $4,414,918
($4,363,009 for a pharmacist to perform the CMRs for beneficiaries
newly targeted for MTM under the revised criteria + $51,599 to mail the
CMR written summary in the CMS Standardized Format with safe disposal
information + $310 for mailing information regarding safe disposal to
beneficiaries newly targeted for MTM who do not receive a CMR).
9. ICRs Regarding Eligibility for Supplemental Benefits for the
Chronically Ill (SSBCI) (Sec. 422.102(f)(4)(iii)(C))
The following proposed changes will be submitted to OMB for review
under control number 0938-TBD (CMS-10915). At this time the OMB control
number has yet to be determined (TBD) but will be issued by OMB upon
their clearance of this proposed collection of information request. CMS
will include that number in the subsequent CMS-4208-F final rule. OMB
will issue the control number's expiration date upon their approval of
the final rule's collection of information request. The issuance of
that date can be monitored at www.Reginfo.gov.
As explained in section III.H. of the proposed rule, for each
SSBCI, the plan must list all the written policies and objective
criteria on which the policies are based as noted in Sec.
422.102(f)(4)(iii)(C) on a public facing website. For web developers
and programmers to annually post the required information on the plan
website we estimate it would take 2 hours at $125.48/hr (see table 16).
We estimate 761 plans including local and regional CCPs, MSA, and PFFS
and reflects the publicly available CMS counts of these plans as of
July 2024 accessible at https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07. In aggregate we estimate an annual burden of
1,522 hours (761 plans * 2 hr/plan) at a cost of $190,981 (1,522 hr *
$125.48/hr). Medicare Cost plans are excluded from the count since they
are not permitted to offer SSBCI.
10. ICRs Regarding Ensuring Equitable Access to Behavioral Health
Benefits Through Section 1876 Cost Plan and MA Cost Sharing Limits
(Sec. Sec. 417.454 and 422.100)
As discussed in section III.M. of this proposed rule, we propose to
amend the existing requirements at Sec. Sec. 417.454 and 422.100(j)
(that cost sharing for certain benefits not exceed cost sharing for the
same benefits in Original Medicare) to add categories of mental health
and substance use disorder services (collectively called ``behavioral
health services''). The service categories include mental health
specialty services, psychiatric services, partial hospitalization,
intensive outpatient services, inpatient hospital psychiatric services
(all length of stay scenarios), outpatient substance use disorder
services, and opioid treatment program services. This proposal requires
Section 1876 Cost Plans (Cost Plans) and Medicare Advantage (MA) plans
(including employer group waiver plans (EGWPs)) in-network cost sharing
for these behavioral health services to be no greater than that in
Traditional Medicare, beginning in contract year 2026. Specifically,
this proposal: (1) modifies the way that in-network service category
cost-sharing limits for behavioral health services have been set by
adopting a new cost-sharing standard and (2) updates current guidance
governing organization bid requirements about how benefits must be
provided by plans, which are currently approved by OMB under control
number 0938-0763 (CMS-R-262).
Plans comply with our current practice because CMS annually reviews
bids and organizations have submitted supporting documentation (for
contract year 2024 and prior years) to demonstrate compliance with
Sec. 422.254(b)(5), (c)(5), and (c)(6), which require that MA
organization bid submissions \324\ must be prepared in accordance with
CMS actuarial guidelines. Following these guidelines requires use of
generally accepted actuarial principles, the actuarial bases of the
bid, a description of cost sharing applicable under the plan,\325\ and
the actuarial value of the cost sharing. CMS relies on our oversight
and monitoring authority and our longstanding bid review policy (and
the compliance program, recordkeeping, audit and access requirements at
Sec. Sec. 422.503 and 422.504) to request any additional information
and necessary documentation from organizations to investigate plan
compliance with the program and benefit requirements.
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\324\ Bid submissions from coordinated care plans, including
regional MA plans and specialized MA plans for special needs
beneficiaries (described at Sec. 422.4(a)(1)(iv)), and MA private
fee-for-service plans are subject to these actuarial guidelines.
\325\ Cost Plans are not required to report information for all
services in their plan benefit package.
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Consequently, CMS asserts that that this proposal does not impose
any new or revised collection of information requirements and/or burden
and is not subject to the requirements of the PRA because: (1) this
proposal does not change how CMS evaluates compliance with cost-sharing
limits as part of bid review; (2) plans comply with our current
practice; and (3) this proposal does not change any bid documentation
requirements in the CMS issued, annual bid instructions.
11. ICRs Regarding Improving Equitable Access--Enhancing the Health
Equity Analysis (Sec. 422.137(d))
The following proposed changes will be submitted to OMB for review
under control number 0938-0964 (CMS-10141) using the standard non-rule
PRA process which includes the publication of 60- and 30-day Federal
Register notices.
Currently, under Sec. 422.137(d), all MA organization utilization
management committees must conduct an annual health equity analysis of
the use of prior authorization at the plan-level, based on specified
metrics, aggregated for all items and services. The MA organizations
must make the results of the analysis publicly available on their
plan's website in a manner that is easily accessible and without
barriers. As explained in section III.N. of this proposed rule, CMS is
proposing to amend the regulation to require that the metrics for the
health equity analysis be reported for each covered item and service
(in other words, the data in the analysis must be presented in a
disaggregated form). The information relevant to this analysis and
corresponding report is routinely collected in plan systems for each
covered item and service, and therefore the data required for the
analysis should be readily available for plans. Therefore, we do not
believe there is a burden associated with this requirement. We estimate
an annual burden for the requirement that the data must be
[[Page 99503]]
compiled into a report and posted publicly. For web developers and
programmers of any plan to annually post the required information on
the plan website would require 8 hours at $125.48/hr) (see table 16).
We estimate 767 plans including local and regional CCP, MSA, PFFS plans
and Medicare Cost plans and is based on the publicly available CMS data
on plan type counts accessible at: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07. In aggregate we
estimate an annual burden of 6,136 hours (8 hr * 767 contracts) at a
cost of $769,945 (6,136 hr * $125.48/hr) to fulfil the requirement that
the plans publicly post the analysis to their website.
12. ICRs Regarding Formatting Medicare Advantage (MA) Organizations'
Provider Directories for Medicare Plan Finder (Sec. 422.120(c))
The following proposed changes will be submitted to OMB for review
under control number 0938-TBD (CMS-10906).
As indicated in section III.Q. of this proposed rule we propose
adding new requirements at Sec. 422.111(m) for MA organizations'
provider directory formats. Under this proposal, MA organizations would
be required to provide provider directory data that are formatted per
CMS/HHS specifications to CMS/HHS and attest to the accuracy and
consistency of their provider directory data. The purpose of this
proposal is to allow for MA organizations' provider directory data to
be populated into Medicare Plan Finder (MPF) so that current and
prospective MA enrollees would have the ability to search for a
provider or facility and determine whether the provider or facility has
a contractual relationship with the MA plans displayed in MPF. We
believe this would further CMS's objective to promote informed
beneficiary choice, efficiency, and transparency through online
resources while advancing health equity.
Since the production of provider directories are part of an
automated process, the burden associated with this provision is a one-
time burden for a computer programmer for each plan to create the
proposed functionality within their system. We estimate that for each
plan a computer programmer would spend 8 hours at $103.60/hr (see table
16). In aggregate, we estimate a one-time burden of 6,088 hours (761
plans * 8 hr/plan) at a cost of $630,717 (6,088 hr * $103.60/hr). The
761 plans include local and regional CCP, MSA, and PFFS plans and is
based on the publicly available CMS data on plan type counts accessible
at https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07. Medicare Cost plans have been excluded from the count since the
ultimate goal of the provision is a display in Medicare Plan Founder,
and Medicare Cost plans are not currently listed there.
13. ICRs Regarding Enhancing Review of Marketing and Communications
(Part 422, Subpart V, and Part 423, Subpart V)
The following proposed changes will be submitted to OMB for review
under control number 0938-1051 (CMS-10260).
As discussed in section III.R. of this proposed rule, in the April
2018 final rule, we narrowed the definition of ``marketing materials''
under Sec. Sec. 422.2260 and 423.2260 to only include materials and
activities that aim to influence enrollment decisions. As noted in
section III.R. of this proposed rule, these definitions were further
updated in the January 2021 final rule, with the net result of
narrowing the types of materials CMS required to be submitted, to those
materials that CMS considered, at the time of the January 2021 final
rule, to be the most likely to influence a beneficiary's decision to
enroll in a plan. However, as indicated in this proposed rule, since
the time these rules were finalized, CMS has observed a shifting
landscape of misleading marketing practices in MA and Part D, including
television and mail ads that, despite not meeting the definition of
marketing, seemingly draw a beneficiary's attention to a plan or
influence a beneficiary's enrollment decision. Moreover, CMS has seen a
steady increase in marketing misrepresentation complaints beginning
after the issuance of the April 2018 final rule. Therefore, we believe
many communications materials excluded from the current regulatory
definition of marketing and, consequently, from the submission and
review requirements for marketing materials in Sec. Sec. 422.2261(b)
and 423.2261(b), should in fact be collected, as they are likely
influencing a beneficiary's enrollment decision even when they do not
meet the content standards of the current regulatory definition of
marketing.
The burden of this provision is the time and money incurred by
plans and TPMOs submitting more materials. To estimate this burden, we
refer to table 16 of April 2018 final rule (83 FR 16696 and 16697).
This table is based on a year of marketing data, from July 2015--June
2016. We illustrate the effects of the current proposal by reviewing
what was then called (in the April 2018 final rule), category 4000
material, which dealt with advertisements. Table 16 indicates that in
2015-2016, we received roughly 44,000 advertisements of which 11,000
(44,000 * 25%) would no longer be submitted once the April 2018 final
rule was finalized as they did not meet the updated definition of
marketing, so that we would continue to receive 33,000 (44,000 * 75%)
advertisements that were still to be considered marketing. We assume
these proportions are stable. If so, in each year from 2019-2025, 25
percent of MA and Part D plan advertisements were no longer submitted
while 75% of advertisements are still considered marketing and continue
to be submitted to CMS. If the rule is finalized, then effective 2026,
besides the 75 percent of materials that would have been collected, we
will also collect the 25 percent of materials that were not required to
be submitted from 2019 through 2025. Thus, relative to what was
submitted in 2019 through 2025, that is, relative to 75 percent of the
advertisements that are potential marketing materials, we are adding 25
percent more advertisements that were not collected in 2019-2025. That
means we are increasing the current 75 percent by 33.3 percent
resulting in the 25 percent of the materials (33.3% * 75% = 25%) being
added. A similar analysis applies to all categories of marketing
affected by this proposal.
However, we now use a different classification system, rather than
the classification system based on the categories mentioned in the
April 2018 final rule. Since we currently only collect marketing
materials, unless directly specified in our regulations, we classify
most materials by material type and whether the material is marketing
or CMS required material. To illustrate this, we point out, that we
duplicated the sampling of data from July 2015 to June 2016 by
reviewing marketing materials collected from July 2023 to June 2024.
With this background we can illustrate some subtleties associated with
the comparison of the 2015 to 2016 and the 2023 to 2024 data.
To properly compare the two samples, we must identify the
categories of materials in each of them at the time, category 1100
(relevant to the 2015 and 2016 data) included the Annual Notice of
Change (ANOC) and Evidence of Coverage (EOC) documents. After the April
2018 final rule, the EOC was no longer considered a marketing material
and was no longer required to be submitted to CMS. However, as of
today, the EOC has been updated to be
[[Page 99504]]
required for submission to CMS, as per Sec. Sec. 422.2261(c)(1) and
423.2261(c)(1), even though it was defined as a communications
material. The ANOC is still a marketing material and continues to be
collected, and therefore neither category will be affected by the
update to the marketing definition, even though one material is
marketing and one material is communications. Due to the differing
classification system from the April 2018 final rule, and since there
will be no burden impacts associated with the submission of the ANOC or
EOC, the 1100 category is not relevant to the differences between the
2016 to 2017 data and the 2023 to 2024 data. Similarly, category 3000
(from the categories of the 2015-2016 data) refers to grievance forms,
but for the 2023 to 2024 data, we no longer collect grievances forms as
they are not considered marketing and therefore are not included in the
data. Additionally, under the current proposal, grievance forms would
not meet the definition of marketing and therefore does not have any
associated burden. Table 23 contains all categories from the 2015 to
2016 sample and indicates which ones are still relevant to the current
proposal.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10DE24.029
BILLING CODE 4120-01-C
The sample of marketing data from July 2023-June 2024 had 76,170
items. These 76,170 items include items corresponding to the 2015-2016
categories with category IDs listed in table 23 of 1000 (enrollment and
related documents), 4000 (advertisements), and 6000 (Presentations/
Scripts/Surveys). Table 16 of the April 2018 final rule (83 FR 16697)
indicates the total number of marketing items in these categories as
well as how many were not required to be submitted for 2019-2025. This
allows us to accurately calculate how much the 76,170 materials from
2023-2024 data should be increased. Table 24 summarizes the numerical
details.
We now make two observations. First, the 76,170 items in the 2023-
2024 collection correspond to categories 1000, 4000, and 6000. Based on
the April 2018 final rule, only 35,124 materials would have been
collected in 2015-2016 had the provisions of the April 2018 final rule
been in effect. Additionally, 28,172 items would not have been
collected. Thus, 80.21% of the 35,124 materials (28,172) were not
collected in 2019-2025; if the current proposal is finalized, we would
be increasing marketing materials by 80.21%.
Secondly, the 35,124 materials that would have been collected in
the 2015-2016 sample had the April 2018 final rule applied to them
correspond to the categories of item in the 2023-2024 data which had
76,170 items. This indicates an annual trend in growth of marketing
materials of 10.15% (that is, 35,124 * 1.1015 \8\ = 76,170). We expect
this trend to continue in the near future.
Based on these observations, we can calculate the burden of this
provision if finalized in 2026. The results are presented in table 25.
[[Page 99505]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.030
To clarify the meaning of table 25, we illustrate the calculation
for 2026. For 2023-2024, we had 76,170 marketing materials. That number
must be trended by a compound increase of 10.15 percent annually
resulting in 101,797.6 (76,170 * 1.1015\3\) marketing materials
expected in 2026 if the provision is not finalized. If the provision is
finalized, we must increase this by 81,652 materials (80.21% *
101,797.6) to a total of 183,449.5. The burden of processing the first
101,797.6 materials is included in the current burden, while the
proposed provision would add the burden of processing an additional
81,651.9 materials. We estimate 767 plans will be impacted by these
changes, including local and regional CCP, MSA, PFFS plans and Medicare
Cost plans and is based on the publicly available CMS data on plan type
counts accessible at: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07.we.
To calculate the burden, as in the April 2018 final rule, we assume
it would take an average of 30 minutes (0.5 hr) to process each
material resulting in a burden of 40,826 hours (81,651.9 additional
materials * 0.5 hr) in the first year. We also estimate a cost of
$3,498,788 (40,826 hr * $85.70/hr for a business operations specialist)
in the first year.
CMS received 76,170 materials in the base year of 2023, and that
the applied trend increase of 10.15 percent would have applied in each
year between 2023 and the proposed implementation date for this
provision in 2026.
[GRAPHIC] [TIFF OMITTED] TP10DE24.031
Given the annual increase, we have annualized our burden estimates
over 3 years. In this regard, we estimate an annual burden of 45,110
hours at a cost of $3,865,927. We are also soliciting specific comment
on the potential or alternative financial impacts of this proposal.
14. ICRs Related To Require Clinical or Quality Improvement Standards
for Provider Incentive and Bonus Arrangements To Be Included in the MA
MLR Numerator (Sec. 422.2420(b)(2))
The following proposed changes will be submitted to OMB for review
under control number 0938-1232 (CMS-10476).
We propose to amend Sec. 422.2420(b)(2) to clarify that only
provider incentives and bonuses tied to clearly defined, objectively
measurable, and well-documented clinical or quality improvement
standards may be included in incurred claims for MA MLR reporting and
remittance calculation purposes. We anticipate that implementing this
provision would require minor changes to the MLR Annual Reporting Form
Instructions and would not significantly increase the associated
reporting burden of 61.1 hours per response.
We estimate that approximately 700 MA organizations contracts must
comply with the updated reporting requirements based on 2021 reported
MLR data (the most recent data available). We further estimate that it
would take each MA organization a one-time effort of 1 hour at $85.70/
hr (see table 16) for a business operations specialist to update the
financial data needed for MLR calculations. In aggregate, we estimate a
one-time burden of 700 hours (700 MA organization contracts * 1 hr/
response) at a cost of $59,990 (700 hr * $85.70/hr).\326\
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[[Page 99506]]
15. ICRs Related to Proposal To Add Provider Payment Arrangement
Reporting in the Medicare MLR Report Regulations (Sec. Sec. 422.2460
and 422.2490)
The following proposed changes will be submitted to OMB for review
under control number 0938-1232 (CMS-10476).
We propose to amend Sec. Sec. 422.2460 and 422.2490 to require MA
organizations to submit data on provider payment arrangements through
the MLR Reporting Tool. This additional reporting will not be made
public unless the data is deidentified and reported as aggregate
totals. We anticipate that implementing this provision would require
minor changes to the MLR Annual Reporting Form and Instructions and
would not significantly increase the associated reporting burden of
61.1 hours per response.
We estimate that approximately 700 MA organizations contracts must
comply with the updated reporting requirements based on CY 2021
reported MLR data (the most recent data available). We further estimate
that it would take each MA organization an annual effort of 3 hours at
$85.70/hr (see table 16) for a business operations specialist to update
the financial data needed for MLR calculations given that CMS is
proposing to use a widely agreed upon HCPLAN APM framework. In
aggregate, we estimate an annual burden of 2,100 hours (700 MA
organizations contracts * 3 hr/response) at a cost of $179,970 (2,100
hr * $85.70/hr).\327\
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16. ICRs Related To Prohibit Administrative Costs From Being Included
in Quality Improving Activities in the MA and Part D MLR Numerator
(Sec. Sec. 422.2430(a) and 423.2430(a))
The following proposed changes will be submitted to OMB for review
under control number 0938-1232 (CMS-10476).
We propose to amend Sec. Sec. 422.2430(a) and 423.2430(a) to
specify that only expenditures directly related to activities that
improve health care quality may be included as quality improving
activity expenses for MLR reporting. We anticipate that implementing
these provisions would require minor changes to the MLR Annual
Reporting Form Instructions and would not significantly increase the
associated reporting burden of 61.1 hours per response. We estimate
that approximately 764 MA organizations and Part D sponsors contracts
must comply with the updated reporting requirements based on 2021
reported MLR data (the most recent data available). We further estimate
that it would take a business operations specialist at each MA
organization and Part D sponsor a one-time effort of 1 hour at $85.70/
hr (see table 16) to update the financial data needed for MLR
calculations. In aggregate, we estimate a one-time burden of 764 hours
(764 plans * 1 hr/response) at a cost of $65,475 (764 hr * $85.70/
hr).\328\
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17. ICRs Related to Establish Standards for MA and Part D MLR Audit
Examinations (Sec. Sec. 422.2480(d), 423.2480(d), 422.2401, 423.2401,
422.2450, 423.2450, 422.2452, 423.2452, 422.2454, and 423.2454)
The following proposed changes will be submitted to OMB for review
under control number 0938-1232 (CMS-10476).
Our proposed amendments would establish a process for MLR audit
examinations and a collection and appeals process for MLR audit
remittances based on MLR audit findings. We expect MA organizations and
Part D sponsors would have to retain detailed MLR information for
auditing purposes. We anticipate that implementing this provision would
require minor changes to the MLR Annual Reporting Form Instructions and
would not significantly increase the associated reporting burden of
61.1 hours per response.
MA organizations' and Part D sponsors' current record retention
practices should already support future audits, however, there may be
some burden associated with confirming compliance with record retention
requirements. We estimate that approximately 764 MA organizations and
Part D sponsors contracts must confirm compliance with the record
retention requirements. We further estimate that it would take 1 hour
at $85.70/hr (see table 16) for a business operations specialist to
confirm the data needed for potential MLR auditing has been retained on
an annual basis. Therefore, we expect approximately 764 hours (764
plans * 1 hr/year) at a cost of $65,475 ($764 hr * $85.70/hr).\329\
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In addition, CMS may conduct up to 9 MLR audit examinations
annually, and the compliance actions that result from the audits and
provisions in this rule would take effect in 2026. The annual burden
would be higher for audited contracts, although MA organizations and
Part D sponsors should have all of the materials requested by auditors
consistent with current record retention practices. We estimate the
burden to be 80 hours for the contracts selected for audit. Therefore,
if 9 audits are conducted in a given year we expect the burden to be
approximately 720 hours (9 contracts * 80 hr/year) at a cost of $61,704
(720 hr * $85.70/hr).\330\
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18. ICRs Regarding Improving Access--Enhancing Rules on Internal
Coverage Criteria (Sec. 422.101(b)(6))
The following proposed changes will be submitted to OMB for review
under control number (0938-0753) (CMS-R-267).
This rule proposes that by January 1, 2026, MA organizations must
publicly display on the organization's website a list of all Medicare
items and services where the MA organization uses internal coverage
criteria when making medical necessity decisions. The list of items and
services on the website must include the information in Sec.
422.101(b)(6)(ii)(A) through (C) (or connect directly to that
information through a hyperlink) and include the vendor's name when
using a third-party vendor's criteria.
The MA organization's internal coverage criteria web page must be
displayed in a prominent manner and clearly identified in the footer of
the website. The web page must be easily available to the 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,
in a machine-readable format with the data contained within that file
being digitally searchable and downloadable, and include a txt file in
the root directory of the website domain that includes a direct link to
the machine-readable file to establish and maintain automated access.
In Sec. 422.101(b)(6)(ii)(A), which requires posting the internal
coverage criteria in use, we are adding that any internal coverage
criterion used by the MA organization in making medical necessity
decisions on Part A and Part B benefits must be clearly identified and
marked as internal coverage criteria of the MA plan within their
coverage policies. In paragraph (B), we are proposing to add that the
evidence supporting the internal coverage criteria must be connected
with a corresponding footnote. In paragraph (C), we are
[[Page 99507]]
changing ``criteria'' to ``criterion'' to make it clear that we require
an explanation of the rationale that supports adoption of each
individual internal coverage criterion in use.
We believe that for a business operations specialist to make the
public posting of the new information described previously would
require on average 1.5 hours a month at $85.70/hr (see table 16). In
aggregate, we estimate an annual burden of 13,806 hr (767 plans * 1.5
hr/month * 12 months) at a cost of $1,183,174 (13,806 hr * $85.70/hr).
The 767 plans include local and regional CCP, MSA, PFFS plans and
Medicare Cost plans and is based on the publicly available CMS data on
plan type counts accessible at https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07.
19. ICRs Regarding Clarifying MA Organization Determinations To Enhance
Enrollee Protections in Inpatient Settings (Sec. Sec. 422.138,
422.562, 422.566, 422.568, and 422.616)
The following proposed changes will be submitted to OMB for review
under control number 0938-0753 (CMS-R-267).
The proposal to clarify the definition of an organization
determination is intended to enhance enrollee protections in inpatient
settings. This would be accomplished by proposing to clarify that an MA
organization's refusal, pre- or post-service or in connection with a
decision made concurrently with an enrollee's receipt of services, to
provide or pay for services, in whole or in part, including the type or
level of services, that the enrollee believes should be furnished or
arranged for by the MA organization is an organization determination
subject to part 422, subpart M.
When making an organization determination, the plan must issue a
coverage determination notice. The proposed clarification to the
definition of an organization determination would mean that when an MA
organization downgrades an enrollee from receiving inpatient to
outpatient services or when an MA organization denies payment for
services after such services were rendered but before a request for
payment is submitted, the MA organization would be required to provide
proper notice of the decision to the enrollee. The proposal also
includes strengthening requirements related to notifying providers. The
existing notice requirements for standard organization determinations
at Sec. 422.568 specify that MA organizations must provide the
enrollee with notice of its decisions. Under existing rules, MA
organizations are required to use an OMB-approved standardized denial
notice (CMS Form 10003-NDMCP/OMB 0938-0829) to notify enrollees of
adverse decisions. We propose to amend requirements related to notice
of a standard organization determination at Sec. 422.568(b)(1) to
notify an enrollee's physician or provider, as appropriate, as well. As
stated in section III.V.3. of this proposed rule, we do not believe the
proposal to strengthen notice requirements will have a substantial
impact on the practices of MA organizations as we are codifying
longstanding requirements and guidance that we believe the majority of
plans already implement based on the few complaints we receive on this
issue from providers and enrollees. In addition, we also understand
that due to the contractual relationship MA organizations have with
their providers, most contracted providers should already receive
notice of relevant organization determinations, including those that
the provider submitted on behalf of the enrollee.
However, while we acknowledge that some plans are complying with
the existing rules in a manner that is consistent with our proposed
clarification, we do not have the data on the number of plans that are
complying with this requirement. We estimate that annually 60,000
inpatient approvals are downgraded to observation status. We are
estimating that of those 60,000 cases, approximately 10 percent of
those cases are being handled appropriately (that is, plans are
complying with the existing regulations). We do not have definitive
data sources that indicate the number of plans that may not be in
compliance and, therefore, invite stakeholder comment on our
assumptions.
The burden associated with the proposed provisions are due to: (1)
additional notices to enrollees and providers not currently receiving
them; and (2) an increase in the number of appeals received. Due to
lack of data, we cannot fully quantify all burden; however, we can
quantify some and perform qualitative estimates. We discuss each burden
source separately.
a. Additional Notices
Under our proposal, there would be an increase in the number of
notices to providers and enrollees regarding downgrading inpatient
stays to observation status. The associated burden with this proposal
would be the increase in costs related to the issuance of these
notices. Because the issuance of these notices is typically automated,
there could be a one-time first year cost to update systems in addition
to a potential annual mailing cost. We estimate that, per plan, it may
take a programmer 4 to 8 hours to update systems. In aggregate we
estimate a one-time, first year burden of 5,816 hours (8 hr/plan * 727
plans) at a cost of $602,538 (5,816 hr * $103.60/hr).
We are basing our estimate for the cost of notices on the projected
cost of postage (the major cost) and the number of notices. By
examining risk-adjustment data for MA plan use of Condition Code 44,
the code used in Traditional Medicare for a downgrade of an inpatient
stay to observation, we estimate there are 60,000 downgrades annually.
This approach has some assumptions, for example, that MA plans are
using Condition Code 44 to indicate downgrades, and that most
downgrades are being captured. Since the information in the notice is
confidential, they must be mailed via first class at a postage rate of
$0.73/notice. In addition, we believe that the majority of plans are
currently not complying with our requirements and are estimating that
there will be a new burden for approximately 90% of plans. This
assumption is based on complaints, correspondence with plans, and other
anecdotal evidence, but we acknowledge that it is speculative since we
do not collect related data. Based on our assumptions, the cost of
mailing notices would be a non-labor cost of $39,420 annually (60,000
downgrades * 90 percent that are not currently complying * $0.73/
notice).
We note that besides the other assumptions detailed previously,
this estimate is an over-estimate since some enrollees will receive
their Integrated Denial Notice (IDN) in the hospital and hence incur no
mailing costs. Because it is an over-estimate, we focused on the main
drivers of cost and did not include the cost of paper, toner, and
envelopes. Had we included toner and paper costs, the estimate would
increase by a maximum of $756 (60,000 maximum notices * 90 percent *
(0.007 cost of paper + 0.007 cost of toner). The inclusion of bulk
envelopes could raise the cost by a maximum of $2,160 (60,000 maximum
notices * 90 percent * $0.04 bulk envelope cost).
b. Increased Appeals
While we expect an increase in the number of organization
determinations reported, as well as the number of appeals received, we
do not have data to confirm this assumption. Appeals data available to
CMS is not currently broken out by the type of service; therefore, we
do not know how many
[[Page 99508]]
MA organizations fail to provide proper notification and how many
inpatient approvals being downgraded to outpatient are appealed. There
are no current appeals going to the Independent Review Entity (IRE)
level. We are unable to estimate (1) how many cases of the 60,000 will
now receive notices (2) how many appeals would arise, (3) how many are
overturned, and (4) how many will go to the IRE. Thus, we cannot
quantify this, but we can qualitatively identify this as a cost.
We also note that our proposal to amend the reopening rules at
Sec. 422.616 will not add to existing plan processes or requirements,
so we believe any overall burden associated with processing a reopening
of an organization determination related to inpatient hospital
admissions will remain unchanged or will possibly be reduced (given
that we are proposing to eliminate the discretion of an MA organization
to reopen an approved authorization for an inpatient hospital admission
based on new and material evidence). The decision to reopen an
organization determination is at the discretion of an MA organization.
Our proposal to curtail an MA organization's authority to reopen and
modify an approved authorization for an inpatient hospital admission on
the basis of good cause for new and material evidence does not impose
any new burden in the decision-making process related to prior
authorization for inpatient hospital admissions. Consequently, this
provision will not have added impact. We do not believe the proposed
changes will adversely impact enrollees or MA organizations. Similarly,
we do not believe the proposed changes would have any impact to the
Medicare Trust Funds.
Likewise, our proposed clarification to Sec. 422.562(c)(2) will
not add to existing plan processes or requirements, so we believe the
overall estimated burden on MA organizations associated with processing
organization determinations and appeals will be unchanged and this
provision will not have added impact. We do not believe the proposed
change will adversely impact enrollees or MA organizations and,
further, believe that most MA organizations are properly excluding
provider payment appeals from the subpart M administrative appeals
process when a dispute no longer involves enrollee financial liability
for furnished services. Similarly, we do not believe the proposed
changes would have any impact to the Medicare Trust Funds.
We invite stakeholder comment on our approaches to determine the
potential burden and our estimates.
20. ICRs Regarding Promoting Person-Centeredness in SNP ICPs and
Timeliness of HRAs and ICPs (Sec. Sec. 422.101(f) and 422.107(e))
In section V.A. of this proposed rule, we propose amendments to
Sec. 422.101(f)(1) to codify timeliness standards, improve the
organization of the various HRA and ICP requirements, and strengthen
these requirements. These proposals would require that--
SNPs conduct the comprehensive initial HRA within 90 days
(before or after) of the effective date of enrollment for all new
enrollees. This would better align with the Medicaid requirement at
Sec. 438.208(b)(3) and conform to the standard currently described for
reporting HRA completion in the Part C reporting requirements.
SNPs make at least three non-automated phone call
attempts, unless an enrollee agrees or declines to participate in the
HRA before three attempts are made, on different days at different
times of day. We also propose that for any enrollees that are unable to
be reached or decline to participate in the HRA, the SNP must document
the attempts to contact the enrollee or the enrollee's choice not to
participate. These updates would better conform to the standard
currently described for reporting HRA completion in the Part C
reporting requirements.
Within 30 days of conducting a comprehensive initial HRA
or 30 days after the effective date of enrollment, whichever is later,
SNPs to develop and implement a comprehensive ICP that--
++ Is person-centered and based on the enrollee's preferences,
including for delivery of services and benefits, and needs identified
in the HRA;
++ Is developed through an interdisciplinary care team with the
active participation of the enrollee (or the enrollee's representative,
as applicable) as feasible;
++ Identifies person-centered goals and objectives (as prioritized
by the enrollee), including measurable outcomes as well as specific
services and benefits to be provided; and
++ Is updated as warranted by changes in the health status or care
transitions of enrollees.
Since SNPs are already required to conduct HRAs and ICPs, we do not
anticipate that the proposed changes to Sec. 422.101(f) would impose
any new burden on MA organizations offering SNPs. However, we would
need to revise language on timeframes and related narrative in the
Model of Care Matrix that is currently approved by OMB under control
number 0938-1296 (CMS-10565).
In section V.A. of this proposed rule, we also propose to add
language to the D-SNP EAC requirements at Sec. 422.107(f) to include
updates to MOCs as described at Sec. 422.101(f) among required EAC
discussion topics. While MA organizations can already include MOCs
among their D-SNP EAC topics, adding these topics to the D-SNP EAC
conversations would ensure MA organizations solicit feedback directly
from enrollees to improve the care coordination process including HRAs
and ICPs as described in the MOC.
We do not anticipate new or additional burden from this proposal
since MA organizations are already convening EACs per the existing
requirements at Sec. 422.107(f) and can solicit feedback on MOCs as
part of their existing convenings. Thus, we would not need to revise
any of the currently approved requirements and/or burden under OMB
control number 0938-1422 (CMS-10799).
We welcome comments on our assumptions.
21. ICRs Regarding Integrating Member ID Cards for Dually Eligible
Enrollees in Certain Integrated D-SNPs (Sec. Sec. 422.2267(e)(30) and
423.2267(e)(32))
Our May 2022 final rule noted that the Member Identification Card
burden is exempt from the requirements of the PRA since the issuance of
Medicare Identification Cards is a normal and customary practice
throughout the insurance industry, citing the fact that health plans,
whether commercial, through Medicare or Medicaid, or Original Fee-for-
Service issue cards that inform providers of the enrollee's insurance.
The MA requirements were previously described in the May 2022 final
rule, and we are simply combining these requirements with Medicaid
requirements for one ID card. Sections 422.2267(e)(30) and
423.2267(e)(32) require D-SNPs to provide member ID cards to enrollees.
Medicaid managed care plans also send member ID cards to enrollees.
However, when a dually eligible individual is enrolled in both an MA
plan and a Medicaid managed care plan, the plans may issue the enrollee
separate member ID cards--one for their MA plan and one for their
Medicaid managed care plan--to access services for each program. Our
proposal would require that applicable integrated plans (AIPs), as
defined in Sec. 422.561, provide one integrated member ID card to
serve as the ID card for both the Medicare and Medicaid plans in which
the enrollee is enrolled. Given that issuance of member
[[Page 99509]]
ID cards is a normal and customary practice throughout the insurance
industry and most States with AIPs currently require integrated member
ID cards in their SMACs, we do not estimate any PRA-related burden for
the proposed requirement. We welcome comments on our assumptions.
22. ICRs Regarding Integrating Health Risk Assessments for Dually
Eligible Enrollees in Certain Integrated D-SNPs (Sec.
422.101(f)(1)(v))
The following proposed changes will be submitted to OMB for review
under control number 0938-1446 (CMS-10825).
Medicare requirements at Sec. 422.101(f)(1) require D-SNPs to
conduct a comprehensive HRA for each enrollee, both at the time of
enrollment and annually thereafter. Separately, Medicaid managed care
regulations at Sec. 438.208(b)(3) require Medicaid managed care plans
to make a best effort to conduct an initial screening of enrollee needs
within 90 days of their effective enrollment date, and State
requirements may include additional assessments such as long-term
services and supports (LTSS) and home and community-based services
eligibility screenings. While some States have implemented their own
requirements, through SMACs, to reduce burden and duplication, not all
States have done so. In this rule, we propose to require D-SNPs that
are AIPs to conduct a comprehensive HRA that meets all Medicare and
Medicaid requirements, rather than two separate HRAs.
If this provision is finalized, AIPs in seven states (DC, FL, ID,
NJ, PR, VA, and WI) that do not currently combine their HRAs would be
required to adhere to this new provision. We believe that in plan year
2026, a business operation specialist associated with each contract
that has an AIP in these seven states would spend an average of 2 hours
to determine whether the HRA tool currently in use meets State
requirements and make any necessary system updates in preparation for
implementation in plan year 2027. With 26 unique contracts in the seven
States that would be required to meet this provision, we estimate that
half of the contracts or 13 contracts (26 contracts * \1/2\) will only
need to make minor administrative changes to comply with this
provision. This would be a one-time burden of 26 hours (13 contracts *
2 hr) at a cost of $2,228 (26 hr * $85.70/hr (see table 26). We
estimate that the other half of the contracts (13 contracts) would
require more extensive updating and merging of two separate HRAs (at 40
hr/response) to comply with this provision. We estimate such MA
organizations would need to merge two separate HRAs and implement
systems updates to operationalize the integrated HRA. We estimate that
these activities would take 40 hours per contract. This would be a one-
time burden of 520 hours (13 contracts * 40 hr) at a cost of $44,564
(520 hr * $85.70/hr).
After initial implementation, this proposed requirement would
reduce burden for AIPs in the seven states listed earlier with HRAs
that are not already integrated, as plans would be conducting one
integrated HRA instead of two. As discussed in the prior paragraph, we
estimate that half of the contracts that would be affected by our
proposal currently administer some form of a consolidated HRA.
Conversely, we estimate that the other half of the contracts are
currently conducting two HRAs. Based on this assumption, we are
estimating that half of the contracts that would be required to adhere
to this provision if it is finalized would see a reduction of burden by
half. We expect some long-term burden reduction from the 13 contracts
that currently administer two HRAs for their enrollees but would only
administer one HRA under this proposal. We welcome comments on our
assumptions.
C. Summary of Proposed Information Collection Requirements and
Associated Burden
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP10DE24.032
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[GRAPHIC] [TIFF OMITTED] TP10DE24.033
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[GRAPHIC] [TIFF OMITTED] TP10DE24.034
BILLING CODE 4120-01-C
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D. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection requirements. The
requirements are not effective until they have been approved by OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed previously, please visit the CMS
website at https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing, or call the Reports Clearance
Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you wish to comment, please submit your comments
electronically as specified in the DATES and ADDRESSES sections of this
proposed rule and identify the rule (CMS-4208-P), the ICR's CFR
citation, and the OMB control number.
VII. Regulatory Impact Analysis
A. Statement of Need
The primary purpose of this proposed rule is to amend the
regulations for the Medicare Advantage (Part C) and Medicare
Prescription Drug Benefit (Part D) programs, and Programs of All-
Inclusive Care for the Elderly (PACE). It is necessary to codify our
implementation of policies laid out in acts of Congress and to improve
access, transparency, and equity for beneficiaries enrolled in MA and
Part D plans. The rule includes a number of new policies from the
Bipartisan Budget Act of 2018 (BBA) and the IRA, as well as policies
instituted by those acts that have operated under program instruction
to this point. Further explanation of the purpose, methods, and
expected outcomes of those provisions believed to have an economic
impact on beneficiaries, plans, providers, or other entities is
provided in the Anticipated Effects section of this RIA.
Rulemaking is required for CMS to amend its longstanding
interpretation of the reference in section 1927(d)(2) of the Act to
``[a]gents when used for . . . weight loss'' under which coverage for
anti-obesity medications (AOMs) has been excluded from Part D, and is
subject to state discretion under Medicaid, even for treating
individuals with obesity.
We believe it would be more consistent with current medical views
of obesity as a disease to propose to reinterpret the phrase ``[a]gents
when used for . . . weight loss'' to exclude AOMs when used for weight
loss or chronic weight management for the treatment of obesity.
B. Overall Impact Analysis
We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), Executive Order 14094, entitled
``Modernizing Regulatory Review'' (April 6, 2023), the Regulatory
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section
1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 14094 amends section 3(f) of Executive Order 12866 (Regulatory
Planning and Review). The amended section 3(f) of Executive Order 12866
defines a ``significant regulatory action'' as an action that is likely
to result in a rule: (1) having an annual effect on the economy of $200
million or more in any 1 year, or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, territorial,
or Tribal governments or communities; (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising legal or policy
issues for which centralized review would meaningfully further the
President's priorities.
A regulatory impact analysis (RIA) must be prepared for a
regulatory action that is significant under section 3(f)(1). Based on
our estimates of the combined impact of the provisions in this proposed
rule, OIRA has determined this rulemaking is significant under section
3(f)(1) of E.O. 12866. Accordingly, we have prepared a Regulatory
Impact Analysis that presents the costs and benefits of the rulemaking
to the best of our ability. Pursuant to Subtitle E of the Small
Business Regulatory Enforcement Fairness Act of 1996 (also known as the
Congressional Review Act), OIRA has determined that this rule meets the
criteria set forth in 5 U.S.C. 804(2). Therefore, OMB has reviewed this
proposed regulation, and the Department has provided the following
assessment of its impact.
Section 202 of UMRA also requires that agencies assess anticipated
costs and benefits before issuing any rule whose mandates require
spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. In 2024, that threshold is approximately $183
million. This proposed rule is not anticipated to have an unfunded
effect on State, local, or Tribal governments, in the aggregate, or on
the private sector of $183 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has federalism
implications. Since this proposed rule does not impose any substantial
costs on State or local governments, preempt State law or have
federalism implications, the requirements of Executive Order 13132 are
not applicable.
If regulations impose administrative costs on reviewers, such as
the time needed to read and interpret this proposed rule, then we
should estimate the cost associated with regulatory review. There are
currently fewer than 1,000 contracts (which includes MA, MA-PD, and PDP
contracts) and 500 Medicaid MCOs, prepaid inpatient health plans
(PIHP), and prepaid ambulatory health plans (PAHPs), as well as 55
State Medicaid Agencies. We also expect a variety of other
organizations to review (for example, consumer advocacy groups, major
PBMs). We expect that each organization will designate one person to
review the rule. A reasonable maximal number is 2,000 total reviewers.
We note that other assumptions are possible.
Using the BLS wage information for medical and health service
managers (code 11-9111), we estimate that the cost of reviewing this
proposed rule is $106.42 per hour, including fringe benefits, overhead,
and other indirect costs (http://www.bls.gov/oes/current/oes_nat.htm).
Assuming an average reading speed, we estimate that it will take
approximately 19 hours for each person to review this proposed rule.
For each entity that reviews the rule, the
[[Page 99514]]
estimated cost is therefore $2,022 (19 hours x $106.42). Therefore, we
estimate that the maximum total cost of reviewing this proposed rule is
$4.04 million ($2,022 x 2,000 reviewers). However, we expect that many
reviewers, for example pharmaceutical companies and PBMs, will not
review the entire rule but just the sections that are relevant to them.
We expect that on average (with fluctuations) 10 percent of the rule
will be reviewed by an individual reviewer; we therefore estimate the
total cost of reviewing to be $0.4 million.
Note that this analysis assumes one reader per contract. Some
alternatives include assuming one reader per parent organization. Using
parent organizations instead of contracts would reduce the number of
reviewers. However, we believe it is likely that review will be
performed by contract. The argument for this is that a parent
organization might have local reviewers assessing potential region-
specific effects from this proposed rule.
C. Impact on Small Businesses--Regulatory Flexibility Analysis (RFA)
The RFA, as amended, requires agencies to analyze options for
regulatory relief of small businesses if a rule has a significant
impact on a substantial number of small entities. For purposes of the
RFA, small entities include small businesses, nonprofit organizations,
and small governmental jurisdictions.
We proposed a wide range of policies in the proposed rule. These
policies would codify, modify, and update current guidance governing MA
organization bid requirements.
This rule has several affected stakeholders. They include: (1) MA
organizations such as HMOs, local and regional PPOs, MSAs, PFFS and
Part D sponsors, PACE plans, and Stand-Alone Part D plans (PDP) (2)
providers, including institutional providers, outpatient providers,
clinical laboratories, and pharmacies; and (3) enrollees. Some
descriptive data on these stakeholders are as follows:
Pharmacies and Drug Stores, NAICS 456110, have a $37.5
million threshold for ``small size'' with 88 percent of pharmacies,
those with under 20 employees, considered small.
Direct Health and Medical Insurance Carriers, NAICS
524114, have a $47 million threshold for ``small size,'' with 75
percent of insurers having under 500 employees meeting the definition
of small business. Several Medicare Advantage plans (about 30 to -40
percent) are not-for-profit resulting in a ``small entity'' status.
Ambulatory Health Care Services, NAICS 621, including
about 2 dozen subspecialties, including Physician Offices, Dentists,
Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic
Imaging Centers, have a threshold ranging from $8 to $35 million
(Dialysis Centers, NAICS 621492, have a $47 million threshold). Almost
all firms are big, and this also applies to sub-specialties. For
example, for Physician Offices, NAICS 621111, receipts for offices with
under 9 employees typically exceed $34 million.
Hospitals, NAICS 622, including General Medical and
Surgical Hospitals (NAICS 622110), Psychiatric and Substance Abuse
Hospitals (NAICS 622210), and Specialty Hospitals (NAICS 622310) have a
$47 million threshold for small size, with half of the hospitals (those
with between 20-500 employees) considered small.
Skilled Nursing Facilities (SNFs), NAICS 623110, have a
$34 million threshold for small size, with half of the SNFs (those with
under 100 employees) considered small.
We are certifying that this rule will not have a significant
economic impact on a substantial number of small entities. The RFA does
not define the terms ``significant economic impact'' or ``substantial
number.'' The Small Business Administration (SBA) advises that this
absence of statutory specificity allows what is ``significant'' or
``substantial'' to vary, depending on the problem that is to be
addressed in the rulemaking, the rule's requirements, and the
preliminary assessment of the rule's impact. Nevertheless, HHS
typically considers a ``significant'' impact to be 3 to 5 percent or
more of the affected entities' costs or revenues. To explain our
position, we explain certain operational aspects of the Medicare
program.
Each year, MA organizations, submit a bid for each plan for
furnishing Part A and B (and sometimes D) benefits and the entire bid
amount is paid by the government through the Medicare Trust Fund to the
plan if the plan's bid is below an administratively set benchmark. If
the plan's bid exceeds that benchmark, the beneficiary pays the
difference in the form of a basic premium (note that a small percentage
of plans bid above the benchmark, whereby enrollees pay a basic
premium, thus this percentage of plans is not ``significant'' as
defined by the RFA and as justified in this section of this rule). Part
D sponsors also submit a bid for each plan, and the payments made to
stand-alone Part D plans (PDPs) are covered by the Supplementary
Medical Insurance Medicare Trust Fund. PACE organizations are paid a
capitation amount that is funded by both the Medicare Trust Funds (the
Hospital Insurance and Supplementary Medical Insurance trust funds) as
well as the State Medicaid programs they negotiate with.
MA plans can also offer enhanced benefits, that is, benefits not
covered under Traditional Medicare. These enhanced benefits are paid
for through enrollee premiums, rebates or a combination. Under the
statutory payment formula, if the plan bid submitted by an MA
organization for furnishing Part A and B benefits is lower than the
administratively set benchmark, the government pays a portion of the
difference to the plan in the form of a rebate. The rebate must be used
to provide supplemental benefits (that is, benefits not covered under
Traditional Medicare) and/or to lower beneficiary Part B or Part D
premiums. Some examples of these supplemental benefits include vision,
dental, and hearing, fitness and worldwide coverage of emergency and
urgently needed services.
Part D sponsors submit bids and plans are paid through a
combination of Medicare funds and beneficiary premiums. In addition,
for enrolled low-income beneficiaries, Part D plans receive special
government payments to cover most of premium and cost sharing amounts
those beneficiaries would otherwise pay.
Thus, the cost of providing services by these insurers is funded by
a variety of government funding and in some cases by enrollee premiums.
As a result, MA plans, Part D plans, Prescription Drug Plans, and PACE
plans are not expected to incur burden or losses since the private
companies' costs are being supported by the government and enrolled
beneficiaries. This lack of expected burden applies to both large and
small health plans.
Small entities that must comply with MA regulations, such as those
in this proposed rule, are expected to include the costs of compliance
in their bids, thus avoiding additional burden, since the cost of
complying with any proposed rule is funded by payments from the
government and, if applicable, enrollee premiums.
For Direct Health and Medical Insurance Carriers, NAICS 524114,
plans estimate their costs for the upcoming year and submit bids and
proposed plan benefit packages. Upon approval, the plan commits to
providing the proposed benefits, and CMS commits to paying the plan
either (1) the full amount of the bid, if the bid is below the
benchmark, which is a ceiling
[[Page 99515]]
on bid payments annually calculated from Traditional Medicare data; or
(2) the benchmark, if the bid amount is greater than the benchmark.
Theoretically, there is additional burden if plans bid above the
benchmark. However, consistent with the RFA, the number of these plans
is not substantial. Historically, only 2 percent of plans bid above the
benchmark, and they contain roughly 1 percent of all plan enrollees.
Since the HHS criterion for a ``substantial'' number of small entities
is 3 to 5 percent, the number of plans bidding above the benchmark is
not substantial.
The preceding analysis shows that meeting the direct cost of this
proposed rule does not have a significant economic impact on a
substantial number of small entities, as required by the RFA. Besides
the direct costs, discussed above, are certain indirect consequences of
these provisions which also create impact. We have already explained
that 98 percent of MA plans (including MA-PD plans) bid below the
benchmark. Thus, their estimated costs for the coming year are fully
paid by the Federal Government, given that as previously noted, under
the statutory payment formula, if a bid submitted by a Medicare
Advantage plan for furnishing Part A and B benefits is lower than the
administratively set benchmark, the government pays a portion of the
difference to the plan in the form of a beneficiary rebate, which must
be used to provide supplemental and/or lower beneficiary Part B or Part
D premiums. If the plan's bid exceeds the administratively set
benchmark, the beneficiary pays the difference in the form of a basic
premium. However, as also noted previously, the number of MA plans
bidding above the benchmark to whom this burden applies does not meet
the RFA criteria of a significant number of plans. If the provisions of
this proposed rule were to cause bids to increase and if the benchmark
remains unchanged or increases by less than the bid does, the result
could be a reduced rebate. Plans have different ways to address this in
the short-term, such as reducing administrative costs, modifying
benefit structures, and/or adjusting profit margins. These decisions
may be driven by market forces. Part of the challenge in pinpointing
the indirect effects is that there are many other factors combining
with the effects of this proposed rule, making it effectively
impossible to determine whether a particular policy had a long-term
effect on bids, administrative costs, margins, or supplemental
benefits. Notwithstanding the foregoing, we have requested comment on
the assessment of this outcome in association with this proposed rule.
We next examine in detail each of the other stakeholders and
explain how they can bear cost. Each of the following are providers
(inpatient, outpatient, or pharmacy) that furnish plan-covered services
to plan enrollees for: (1) Pharmacies and Drug Stores, NAICS 446110;
(2) Ambulatory Health Care Services, NAICS 621, including about 2 dozen
sub-specialties, including Physician Offices, Dentists, Optometrists,
Dialysis Centers, Medical Laboratories, Diagnostic Imaging Centers, and
Dialysis Centers, NAICD 621492; (3) Hospitals, NAICS 622, including
General Medical and Surgical Hospitals, Psychiatric and Substance Abuse
Hospitals, and Specialty Hospitals; and (4) SNFs, NAICS 623110.
If these providers are contracted with the plan, their aggregate
payment for services is the sum of the enrollee cost sharing and plan
payments.
The rules for non-contracted providers servicing plan enrollees
depends on the plan type involved. Non-contracted providers in both MA
and MA PD plans are not expected to incur burden from a final rule
because the regulations (42 CFR 422.214 and sections 1852(k)(1) and
1866(a)(1)(O) of the Act) require they be paid at least the FFS Rate.
PACE must provide only contracted providers to its participants (42 CFR
460.70(a)). Similarly non-contracted pharmacies are a sporadic issue in
stand-alone drug plans which are encouraged to limit out of network
access to those situations when it is required (42 CFR 423.124). PACE
plan participants must obtain services from the PACE organization or
its contracted providers (42 CFR 460.70(a)). Consequently, non-
contracted providers have no additional cost burden above the already
existing burden in Traditional Medicare.
D. Anticipated Effects
Many provisions of this proposed rule have negligible impact either
because they are technical provisions, clarifications, or provisions
that codify existing guidance. Other provisions have an impact that
cannot be quantified.\331\ Throughout the preamble we have noted when
we estimated that provisions have no impact. Additionally, this
Regulatory Impact Analysis discusses several provisions with either
zero impact or impact that cannot be quantified. The remaining
provisions' effects are estimated in section VI. of this proposed rule
and in this RIA. Where appropriate, when a group of provisions have
both paperwork and non-paperwork impact, this RIA cross-references
impacts from section VI. of this proposed rule in order to arrive at
the total impact. The following table 27 provides a summary of the
estimated transfers and costs associated with the various provisions in
this proposed rule over a 10-year period. Further detail is provided in
later in this RIA.
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\331\ We request comment--especially data or other quantitative
evidence--on costs, benefits and transfers attributable to the
provisions of this proposed rule.
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BILLING CODE 4120-01-P
[[Page 99516]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.035
BILLING CODE 4120-01-C
[[Page 99517]]
1. Effects of Coverage of Adult Vaccines Recommended by the Advisory
Committee on Immunization Practices under Medicare Part D (Sec. Sec.
423.100 and 423.120)
This proposal would implement section 11401 of the IRA which amends
section 1860D-2 of the Act to require that, effective for plan years
beginning on or after January 1, 2023, the Medicare Part D deductible
shall not apply to, and there is no cost-sharing for, an adult vaccine
recommended by the Advisory Committee on Immunization Practices (ACIP)
covered under Part D.
The cost-sharing limits for ACIP-recommended adult vaccines
outlined in this proposed rule have been in place since CMS implemented
the limits in 2023 through program instruction authority. We have
annually reviewed cost-sharing in plan benefit package submissions and
believe our proposed codification of these requirements should have
minimal impact on Part D sponsors and beneficiaries. All Part D
enrollees have had zero cost sharing for ACIP-recommended adult
vaccines since 2023.
Shortly after the IRA was enacted, CBO scored the $0 cost-sharing
requirement for ACIP-recommended adult vaccines as a Federal cost of
$4.4 billion from FY 2022 to FY 2031 and, therefore, the estimates are
not a result of this rule.\332\
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\332\ https://www.cbo.gov/system/files/2022-09/PL117-169_9-7-22.pdf
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2. Effects of Appropriate Cost-Sharing for Covered Insulin Products
under Medicare Part D (Sec. Sec. 423.100 and 423.120)
This proposal would implement section 11406 of the IRA, which
amends section 1860D-2 of the Act to require that, effective for plan
years beginning on or after January 1, 2023, the Medicare Part D
deductible shall not apply to covered insulin products, and the Part D
cost-sharing amount for a 1-month supply of each covered insulin
product must not exceed the statutorily defined ``applicable copayment
amount'' for all enrollees. The applicable copayment amount for 2023,
2024, and 2025 was $35. For 2026 and each subsequent year, in
accordance with the statute, we are proposing that, with respect to a
covered insulin product covered under a PDP or an MA-PD plan prior to
an enrollee reaching the annual out-of-pocket threshold, the ``covered
insulin product applicable cost-sharing amount'' is the lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of subchapter XI; or
An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
The requirement to provide enrollees with an applicable copayment
amount equal to the lesser of $35, 25 percent of the MFP, or 25 percent
of the negotiated price, has not yet been implemented. As described in
Part E of subchapter XI of the Act, the Secretary must establish a Drug
Price Negotiation Program and negotiate MFPs for selected drugs that
will go into effect beginning in initial price applicability year
(IPAY) 2026. The selected drug list for IPAY 2026 includes insulin
products that will be subject to the cost-sharing requirements outlined
in this proposal.\333\ The selected drug list under the Drug Price
Negotiation Program in future years may also include additional insulin
products. As defined in Sec. 423.100, the negotiated price is the
price for a covered Part D drug that the Part D sponsor (or other
intermediary contracting organization) and the network dispensing
pharmacy or other network dispensing provider have negotiated as the
lowest possible reimbursement such network entity will receive, in
total, for a particular drug. A negotiated price must meet all of the
following: (1) includes all price concessions from network pharmacies
or other network providers; (2) includes any dispensing fees; and (3)
excludes additional contingent amounts, such as incentive fees, if
these amounts increase prices. Finally, a negotiated price is reduced
by non-pharmacy price concessions and other direct or indirect
remuneration that the Part D sponsor passes through to Part D enrollees
at the point of sale.
---------------------------------------------------------------------------
\333\ https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation.
---------------------------------------------------------------------------
Beginning in 2026, the applicable copayment amount for a 1-month
supply of a covered insulin product will depend on which of the
following is the lowest amount: $35, an amount equal to 25 percent of
the insulin product's MFP (if the insulin product is a selected drug),
or an amount equal to 25 percent of the negotiated price of the insulin
product. If 25 percent of the MFP or 25 percent of the negotiated price
is not less than $35, the impact on Part D sponsors will be minimal as
this $35 applicable copayment amount has been in place since 2023.
However, if either 25 percent of the MFP or 25 percent of the
negotiated price is less than $35, the impact on Part D sponsors will
depend on (1) the magnitude of difference between 25 percent of the MFP
or 25 percent of the negotiated price and $35 and (2) the number of
beneficiaries affected. In other words, the greater the difference in
25 percent of the MFP or 25 percent of the negotiated price and $35,
the greater the impact on Part D sponsors.
We estimated the impact of the change in Part D insulin coverage
for years 2026 through 2035 using a claim-level simulation model under
the defined standard benefit before and after the application of the
change. As the beneficiary cost-sharing is reduced, the net effect is
an increase in benefit costs. Additionally, because of the premium
stabilization provisions of the IRA, beneficiary premiums are not
impacted until 2031. In 2031 and subsequent years, we expect
beneficiaries will see small increase in premiums to account for the
richer benefit structure. Overall, we expect Federal costs to increase
by approximately $1.2 billion from 2026 to 2035.
[[Page 99518]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.036
3. Effects of Part D Coverage of Anti-Obesity Medications (AOMs) (Sec.
423.100) and Application to the Medicaid Program
We are proposing to reinterpret the reference to ``[a]gents when
used for . . . weight loss'' in section 1927(d)(2)(A) of the Act to not
include drugs used for weight loss or chronic weight management for the
treatment of obesity to reflect changes in the prevailing medical
consensus towards recognizing obesity as a disease. As a result of this
proposed reinterpretation, AOMs used for weight loss or chronic weight
management for the treatment of obesity would not be excluded from the
definition of Part D drug at Sec. 423.100, and state Medicaid programs
would likewise not be permitted to exclude AOMs used for weight loss or
chronic weight management for the treatment of obesity from Medicaid
coverage pursuant to section 1927(d)(2)(A) of the Act.
As we stated in section III.A.1. of this proposed rule, while we
refer to AOMs generally throughout our proposal and have included
discussion on specific classes of AOMs, this proposal is not limited to
particular drugs or drug classes. Older AOMs are significantly less
costly than newer AOMs in the glucagon-like peptide-1 (GLP-1) and
glucose-dependent insulinotropic polypeptide (GIP)/GLP-1 receptor
agonist classes. AOMs in the GLP-1 and GIP/GLP-1 receptor agonist
classes have emerged as preferred therapies over older AOMs and are
therefore likely to be the driver of overall costs related to this
proposal.
The impact of our proposed reinterpretation must be considered in
the context of newly approved indications for AOMs that are medically
accepted indications (MAIs) that are coverable under current policy,
which will increase their coverage under Part D regardless of our
proposal. Additionally, there is a robust pipeline for these drugs,
which may impact pricing and utilization in the future.
It is also possible that the changes in Part D and Medicaid
coverage of AOMs as a result of our proposal could prompt changes in
private health plan coverage outside of Medicare and Medicaid. This
could impact premiums for those plans, including Affordable Care Act
marketplace plans, but these impacts are not quantifiable without data
on changes for the private health insurance market in response to this
proposal. We request comment on the potential impact of our proposal on
the private employer insurance market and the ACA marketplace.
Furthermore, for the purposes of this impact analysis, when we
refer to AOMs and their respective FDA-approved indications, we are
generally referring to a drug's active ingredient(s) and not particular
formulations or brands. Therefore, for the purposes of our estimates,
if a beneficiary with obesity has type 2 diabetes, we assume that under
current policy the beneficiary could obtain coverage for an AOM that is
FDA-approved for glycemic control in type 2 diabetes, but not an AOM
that is FDA-approved only for weight loss or chronic weight management.
If the two drugs have the same active ingredient, then the beneficiary
with obesity and type 2 diabetes is able to obtain coverage for the AOM
because under current policy they can obtain coverage for the drug that
is approved for glycemic control in type 2 diabetes.
a. Medicare Impacts
Currently, Part D enrollees can obtain coverage for AOMs only when
prescribed for an FDA-approved indication or for a use that is
supported by CMS-approved compendia for a condition other than weight
loss. For example, some AOMs are FDA-approved for use in type 2
diabetes and cardiovascular risk reduction in individuals with
established cardiovascular disease and either obesity or overweight.
Existing AOMs may potentially receive FDA approval for new indications
in the future. At least one manufacturer has conducted a study on sleep
apnea that was published and met its primary endpoint of reducing the
severity of sleep apnea for the treatment of obesity and is seeking
regulatory approval.\334\ Therefore, for the purposes of these
estimates, we consider AOMs to be already coverable under current Part
D policy for individuals with obesity and type 2 diabetes, established
cardiovascular disease, or sleep apnea. Our proposal would extend AOM
coverage to Medicare beneficiaries with obesity who do not have a
condition that is coverable by Part D under the current policy.
---------------------------------------------------------------------------
\334\ Lilly. Lilly's tirzepatide reduced obstructive sleep apnea
(OSA) severity, with up to 51.5% of participants meeting the
criteria for disease resolution. June 21, 2024. Available from:
https://investor.lilly.com/news-releases/news-release-details/lillys-tirzepatide-reduced-obstructive-sleep-apnea-osa-severity.
---------------------------------------------------------------------------
We used Medicare claims data from 2022 to identify Part D enrollees
with obesity. This was narrowed from those with obesity to those with
obesity but without other conditions (specifically, type 2 diabetes,
cardiovascular disease, or sleep apnea) for which we considered AOMs to
be coverable under current Part D policy for the purposes of these
estimates. We estimate that approximately 7 percent of the Part D
population would become newly able to obtain coverage for these drugs
if this proposal is finalized. We assumed a 1 percent annual growth
rate. As shown in table 29, the majority of Medicare beneficiaries with
obesity have a comorbid condition that we consider coverable under
current Part D policy for the purposes of our estimates.
[[Page 99519]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.037
Next, we estimated the proportion of this population expected to
utilize AOMs annually. This included the effect of treatment
discontinuation to refine the estimated duration of treatment per year.
Taking into account published discontinuation rates of AOMs in the GLP-
1 agonist class,\335\ our estimates assume that 52.5 percent of those
who start treatment with an AOM will discontinue treatment after 2
months. This was combined with an assumption that 10 percent of the
population newly able to obtain AOM coverage would initiate treatment
with an AOM, growing by 0.3 percent each year, to determine the total
amount of Part D utilization per year. We assumed a 10 percent rate of
initiation of therapy in the population newly able to obtain AOM
coverage since this was an approximate mean of the range used in a
published modeling study.\336\
---------------------------------------------------------------------------
\335\ Rodriguez PJ, Goodwin Cartwright BM, Gratzl S, et al.
Semaglutide vs Tirzepatide for Weight Loss in Adults With Overweight
or Obesity. JAMA Intern Med. 2024;184(9):1056-1064. doi:10.1001/
jamainternmed.2024.2525.
\336\ Ippolito B, Levy JF. Expanding Medicare Coverage Of Anti-
Obesity Medicines Could Increase Annual Spending By $3.1 Billion To
$6.1 Billion. Health Aff (Millwood). 2024 Sep;43(9):1254-1262. doi:
10.1377/hlthaff.2024.00356.
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The cost per utilization was based on 2024 prescription drug event
(PDE) data for the drugs in question. These costs were trended forward
to each projection year and adjusted for estimated manufacturer
rebates. To account for changes in the AOM drug development pipeline,
the estimates assumed that there would be a gradual shift from older to
newer products.
The resulting estimated utilization cost was used to modify the
model for projecting Part D benefit costs to determine net Federal
costs per year. As shown in table 30., we estimate an increase of $24.8
billion in trust fund expenditures over a 10-year period. As discussed
in section III.A.4. of this proposed rule we are soliciting comment on
an appropriate applicability date of the new interpretation should our
proposal be finalized. Therefore, for the purposes of this analysis, we
report annual costs with a placeholder for each year starting with the
first year the reinterpretation is applicable in Medicare Part D. This
analysis would be updated in any final rule for this policy to reflect
the determined effective date of a final rule and the applicability
date for Part D plans. There is no expected premium impact until 2031
due to the premium stabilization provisions in section 11201 of the
IRA, so the premium offsets shown in table 30. reflect the earliest
such offsets would be factored into the analysis (assuming 2026
notionally as year 1 of implementation). The estimates do not include
medical cost savings for this proposal, as the magnitude and timing of
any potential savings is highly uncertain. While we expect that there
could be offsetting medical savings due to treatment of obesity, those
savings will be much slower to emerge, such that in the near-term, the
costs will have a larger impact on the overall picture of the estimated
financial impact of this proposal. These estimates also assume that
beneficiaries for whom these drugs are prescribed for a coverable
indication under current Part D policy will continue to have access
regardless of whether this provision is finalized as proposed;
therefore, the costs associated with such use are not included in our
estimates for this proposal. Our financial estimates include the
population dually eligible for Medicare and Medicaid. As discussed in
section III.A.3. of this proposed rule, should the proposal be
finalized, AOM costs for these individuals would be borne by Medicare
when the reinterpretation of section 1927(d)(2) to no longer exclude
AOMs from the definition of Part D drug when used for weight loss or
chronic weight management for the treatment of obesity becomes
applicable under Part D. For dually eligible individuals, Medicaid
provides drug coverage for covered outpatient drugs that are Part D
excluded drugs. As such, state Medicaid programs would bear the costs
of AOMs for dually eligible individuals if the applicable date of
coverage under the Medicaid program is earlier than the applicable date
of coverage under the Medicare program.
[GRAPHIC] [TIFF OMITTED] TP10DE24.038
It is possible that our estimates significantly underestimate the
impact of our proposal. These estimates are sensitive to the
utilization rate, which has a high degree of uncertainty. We factored
in an estimated discontinuation
[[Page 99520]]
rate based on published literature, but discontinuation rates and
duration of therapy before treatment is discontinued vary in the
literature.\337\ Our assumption may not fully reflect patients who
discontinue but subsequently resume treatment with AOMs.
Discontinuation rates vary across studies and are influenced by a
variety of factors including cost, adverse effects, or successful
weight loss.338 339 Some factors contributing to
discontinuation may be mitigated, for example, if AOMs approved in the
future have more favorable tolerability profiles. Our estimates rely on
available claims data and therefore a limitation in our estimates is
whether a diagnosis of obesity was reliably reported. Available
National Health and Nutrition Examination Survey (NHANES) data from
2017 to March 2020 indicates that the prevalence of obesity in the U.S.
population age 60 and older was 41.5 percent,\340\ which is much higher
than the 25 percent prevalence observed in Medicare claims data.
Additionally, the definition of cardiovascular disease that we applied
to perform the analysis was based on CMS's pre-determined chronic
condition algorithms for Ischemic Heart Disease, Stroke/Transient
Ischemic Attack, and Peripheral Vascular Disease (PVD).\341\ This
definition is broader than the definition of cardiovascular disease in
a recent clinical trial investigating major adverse cardiovascular
events in adults with established cardiovascular disease and either
obesity or overweight, in which established cardiovascular disease was
defined as prior myocardial infarction, prior stroke, or peripheral
arterial disease.\342\ Therefore, our calculation may overestimate the
proportion of beneficiaries with cardiovascular disease for whom AOMs
are already coverable under current policy and, correspondingly,
underestimates the number of beneficiaries who will be newly able to
obtain AOM coverage under the proposed policy. Finally, for the
purposes of our financial estimates, we included sleep apnea as a
coverable indication under current policy since this new indication for
an approved AOM has been submitted to FDA for approval. This assumption
increases the number of Part D enrollees who we considered to already
have a coverable indication under current policy. Part D enrollees with
obesity and sleep apnea only (that is, enrollees with sleep apnea who
do not have type 2 diabetes or cardiovascular disease as a coverable
indication) would be considered part of the population newly able to
obtain AOM coverage until sleep apnea meets the definition of an MAI
coverable under current Part D policy.
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\337\ Gleason PP, Urick BY, Marshall LZ, Friedlander N, Qiu Y,
Leslie RS. Real-world persistence and adherence to glucagon-like
peptide-1 receptor agonists among obese commercially insured adults
without diabetes. J Manag Care Spec Pharm. 2024 Aug;30(8):860-867.
doi: 10.18553/jmcp.2024.23332.
\338\ Cohen, JP. Study Shows 85% Of Patients Discontinue GLP-1s
For Weight loss After 2 Years. Forbes. July 11, 2024. Available
from: https://www.forbes.com/sites/joshuacohen/2024/07/11/study-shows-85-of-patients-discontinue-glp-1s-for-weight-loss-after-2-years/.
\339\ Do D, Lee T, Peasah SK, Good CB, Inneh A, Patel U. GLP-1
Receptor Agonist Discontinuation Among Patients With Obesity and/or
Type 2 Diabetes. JAMA Netw Open. 2024 May 1;7(5):e2413172. doi:
10.1001/jamanetworkopen.2024.13172.
\340\ Stierman, B., et al. National Health and Nutrition
Examination Survey 2017--March 2020 Prepandemic Data Files--
Development of Files and Prevalence Estimates for Selected Health
Outcomes. 2021. Available from https://stacks.cdc.gov/view/cdc/106273.
\341\ https://www2.ccwdata.org/web/guest/condition-categories-chronic and https://www2.ccwdata.org/web/guest/condition-categories-other.
\342\ Lincoff AM, Brown-Frandsen K, Colhoun HM, et al.
Semaglutide and Cardiovascular Outcomes in Obesity without Diabetes.
N Engl J Med. 2023 Dec 14;389(24):2221-2232. doi: 10.1056/
NEJMoa2307563.
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We analyzed the population of Part D enrollees with obesity to
determine if there were disparities between the population with
comorbid conditions that are coverable MAIs under the current Part D
policy and the population without such comorbid conditions for whom
AOMs would become coverable under Part D if our proposal is finalized.
We examined beneficiary characteristics to determine if our proposal
would disproportionately affect underserved racial and ethnic minority
groups, rural communities, individuals with lower incomes, or other
disadvantaged groups. The population of Medicare beneficiaries with
obesity but without type 2 diabetes, cardiovascular disease, or sleep
apnea was more likely to be female (68 percent vs. 57 percent,
respectively) or have a disability (22 percent vs. 18 percent,
respectively) than the population of Medicare beneficiaries with
obesity who had one or more of those conditions.
b. Medicaid Impacts
Currently, state Medicaid programs have discretion to cover the
drugs or classes of drugs listed in section 1927(d)(2) of the Act,
including ``agents used for . . . weight loss . . .'' As discussed in
section III.A.3. of this proposed rule, should our proposal be
finalized as proposed, state Medicaid programs providing coverage of
drugs \343\ would be required to provide coverage of AOMs under
Medicaid when used for weight loss or chronic weight management for
treatment of obesity. That is, state Medicaid programs would no longer
be permitted to consider AOMs to be excludable agents under section
1927(d)(2)(A) of the Act when they are used for weight loss or chronic
weight management for treatment of obesity. States do have the
discretion to utilize preferred drug lists and implement prior
authorization processes to establish certain limitations on the
coverage of these drugs as long as such practices are consistent with
the requirements of section 1927(d) of the Act to ensure appropriate
utilization. We estimate financial impact to the Federal Government and
state Medicaid programs if this proposal is finalized.
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\343\ Under the Medicaid program, section 1902(a)(54) of the Act
provides states with the option of providing coverage of prescribed
drugs as described in section 1902(a)(12) of the Act. All states
have elected to do so.
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For Medicaid, estimates were developed first by determining the
current amount of spending and claims on AOMs, including GLP-1 and GIP/
GLP-1 agonists used for the treatment of other indications (for
example, type 2 diabetes or cardiovascular disease). Gross spending on
these drugs in Medicaid was $7.5 billion in 2023 based on analysis of
Transformed Medicaid Statistical Information System (T-MSIS) data.
According to Medicaid Drug Rebate Program data, net spending was
significantly less, $2.5 billion in 2023, due to the significant
rebates Medicaid collects on these drugs.\344\
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\344\ Section 1927 of the Act governs the Medicaid Drug Rebate
Program and payment for covered outpatient drugs. In general, for
payment to be made available for covered outpatient drugs,
manufacturers must enter into a national drug rebate agreement as
set forth in Section 1927(a) of the Act. Pursuant to that agreement,
manufacturers must pay rebates to states which are determined
according to a formula set forth in section 1927(c) of the Act. In
addition, states may have authority to enter into supplemental
rebate agreements with the manufacturers through which states may
obtain additional rebates.
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There is limited data on the number of Medicaid enrollees with
obesity. One study found that 44 percent of adult Medicaid enrollees in
Rhode Island, for example, had obesity in 2017 to 2018.\345\ According
to data from the NHANES, 42.4 percent of all adults in the United
States had obesity in 2017 to 2018.\346\ For the purposes of our
financial
[[Page 99521]]
estimates, we assumed that 45 percent of adult Medicaid enrollees have
obesity. We also assumed the Medicaid population with obesity had the
same proportion of other conditions which, for the purposes of our
estimates, we considered AOMs to be already coverable (type 2 diabetes,
cardiovascular disease, or sleep apnea), as the Medicare population.
Therefore, should our proposal be finalized, approximately 12 percent
of the adult Medicaid population would be newly able to obtain coverage
for AOMs. Twelve percent was derived by taking 26 percent (Medicaid
enrollees with obesity and at least one coverable condition) of 45
percent (proportion of Medicaid enrollees with obesity).
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\345\ Mylona EK, Benitez G, Shehadeh F, Fleury E, Mylonakis SC,
Kalligeros M, Mylonakis E. The association of obesity with health
insurance coverage and demographic characteristics: a statewide
cross-sectional study. Medicine (Baltimore). 2020 Jul
2;99(27):e21016. doi: 10.1097/MD.0000000000021016.
\346\ https://www.niddk.nih.gov/health-information/health-statistics/overweight-obesity.
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To estimate the financial impact of our proposal, we developed
assumptions on how much expanding coverage of these drugs would
increase usage and spending. Fifteen states already cover AOMs for
weight loss (in addition to other indications). We compared the number
of AOM claims per enrollee in states covering AOMs for weight loss to
the number in states that do not and found that the number of AOM
claims per enrollee was 18 percent higher in states that cover AOMs for
weight loss. Since some AOMs are FDA-approved for use in pediatric
populations, these claims include current pediatric use. We also
assumed that expanding AOM coverage to the 12 percent of Medicaid
enrollees with obesity and no other conditions would also expand
coverage to the 33 percent of Medicaid enrollees with obesity and at
least one other condition (45 percent of Medicaid enrollees with
obesity minus 12 percent of Medicaid enrollees with obesity and no
coverable conditions) due to general increased awareness of AOM
coverage in the Medicaid program. That is, we anticipated that there
could be an increase in prescribing of these drugs for weight loss in
Medicaid enrollees with obesity and other coverable conditions when a
prescriber may not have otherwise prescribed the drugs for these
individuals, despite coverage already being available. We assumed that
use of these drugs would increase 30 percent because of the proposal--
this could also include expanded access among Medicaid enrollees in
states already covering these drugs for weight loss.
Medicaid costs are typically split between the Federal Government
and the states. The Federal Medical Assistance Percentage (FMAP) can
vary by state, by enrollment group, and by service. We arrived at an
estimated the Federal share of 72 percent based on the average Federal
share for prescription drugs and rebates. This Federal share is higher
than the regular average FMAP in large part because this includes
adults enrolled in Medicaid due to the Medicaid expansion under the
Affordable Care Act, for whom the Federal share is 90 percent. As shown
in table 31, we estimate that spending net of rebates on these drugs
would increase by $14.8 billion over 10 years, with the Federal
Government paying $11.0 billion and states paying $3.8 billion. As
discussed in section III.A.4. of this proposed rule we are soliciting
comment on an appropriate applicability date of the new interpretation
should our proposal be finalized. Therefore, for the purposes of this
analysis, we report annual costs with a placeholder for each year
starting with the first year the new interpretation is applicable in
Medicaid. This analysis would be updated in any final rule for this
policy to reflect the determined effective date of a final rule and the
applicability date for state Medicaid programs.
[GRAPHIC] [TIFF OMITTED] TP10DE24.039
Costs may be significantly higher or lower than projected. Our
estimates relied on assumptions about rates of obesity and other
conditions in the Medicaid population since T-MSIS does not contain
complete diagnosis-level data. It is possible that a larger proportion
of the Medicaid population has obesity without other conditions since
the Medicaid population is younger than the Medicare population and
therefore may not yet have developed other conditions that are
coverable under the current policy. The AOM utilization in states
already covering AOMs for weight loss may include some utilization by
Medicaid enrollees with overweight with weight-related comorbidities,
if states permit such coverage. We were unable to determine if a claim
was used for weight loss for treatment of obesity or in individuals
with overweight with weight-related comorbidities. Using AOM
utilization data from states that have not expanded AOM coverage
approximates the baseline level of AOM coverage for conditions other
than obesity. There is some additional uncertainty in the baseline
costs under current policy given the limited data on the current state-
by-state coverage rules and utilization of AOMs for other conditions.
Spending on AOMs is already increasing significantly due to use for
treatment of other conditions, and it is difficult to predict how many
people may use these drugs in the future. States may take steps to
limit use of these drugs even if they are covered by imposing
utilization management restrictions or seek to lower the net price of
these drugs by negotiating supplemental rebates by using preferred drug
lists. We have not considered the impact of the use of AOMs on other
medical costs.
4. Part D Medication Therapy Management (MTM) Program Targeting
Requirements (Sec. 423.153)
We propose modifying the regulatory text at Sec.
423.153(d)(2)(iii)(A) identifying ``Alzheimer's disease'' as a core
chronic disease to ``Alzheimer's disease and dementia,'' which would
expand the targeting criteria to include Alzheimer's disease and all
other causes of dementias. We anticipate that this change would allow
beneficiaries with other causes of dementia who could potentially
benefit from MTM services to be targeted for MTM enrollment.
We estimate that this proposal would increase the number and
percentage of Part D enrollees eligible for MTM services from 7.9
million (14.5 percent) to 8 million (14.6 percent). Although the
increase in MTM program enrollment is
[[Page 99522]]
estimated to cost $4,414,918 for the provision of required MTM services
to beneficiaries with dementia who become eligible for MTM enrollment
under this proposal, there is uncertainty in the estimates of effects
of this proposal because there may be other administrative costs
attributable to MTM, and MTM program costs are not a specific line item
that can be easily extracted from the bid. Additionally, published
studies have found that MTM services may generate overall medical
savings, for example, through reduced adverse outcomes including
reduced hospitalizations and readmissions, outpatient encounters, or
nursing home admissions. CMS is unable to generate reliable savings
estimates from the published studies due to limitations in potential
study design, including the lack of a control group and numerous
intervening variables. The burden associated with these proposed
changes is addressed in section VI. of this proposed rule (in the ICR
section for MTM targeting criteria.
5. Effects of Ensuring Equitable Access to Behavioral Health Benefits
Through Section 1876 Cost Plan and MA Cost-Sharing Limits (Sec. Sec.
417.454 and 422.100)
Traditional Medicare benefits under Parts A and B include a wide
range of mental health and substance use disorder services
(collectively called ``behavioral health services'').\347\ Per section
1876(c)(2)(A) of the Act and Sec. Sec. 422.100 and 422.101,
respectively, section 1876 Cost Plans (Cost Plans) and Medicare
Advantage (MA) plans must cover the same set of services, subject to
limited exclusions.\348\ As discussed in section III.M. of this
proposed rule, CMS believes the affordability of behavioral health
services is especially crucial for MA enrollees as they (1) represent a
significant proportion of Medicare-eligible beneficiaries and (2) pay
between $7 and $47 more on average in in-network cost sharing per visit
for one or more professional behavioral health service categories in
comparison to beneficiaries in Traditional Medicare (as shown in table
32). In addition, while enrollment in Cost Plans represents a small
proportion of all Medicare-eligible beneficiaries (approximately
169,000 as of July 2024) \349\ we believe extending this proposal to
Cost Plan enrollees is appropriate because: (1) CMS wants to improve
equitable access to behavioral health services across all Medicare
program choices and (2) enrollees in these plans pay between $5 and $13
more on average in in-network cost sharing per visit for one or more
professional behavioral health service categories in comparison to
beneficiaries in Traditional Medicare (as shown in table 32).\350\ To
this end, CMS is proposing behavioral health cost-sharing standards in
MA and Cost Plans that strike a balance between: (1) improving the
affordability of behavioral health services for enrollees in a timely
manner and (2) minimizing disruption to enrollees' access to care and
coverage options.
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\347\ McGinty, Beth. ``Medicare's Mental Health Coverage: What's
Included, What's Changed, and What Gaps Remain,'' Commonwealth Fund,
Mar. 2, 2023. Retrieved from: https://www.commonwealthfund.org/publications/explainer/2023/mar/medicare-mental-health-coverage-included-changed-gaps-remain.
\348\ For example, MA plans are not required to provide hospice
services--a service covered in Traditional Medicare.
\349\ CMS. Contract Summary 2024. Data as of July 2024.
Retrieved from: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07.
\350\ We note that enrollees in Cost Plans can access basic
benefits out-of-network at cost sharing in Traditional Medicare.
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As part of CMS's behavioral health strategy and to improve the
affordability of behavioral health services, we propose to require--
beginning in contract year 2026--that in-network cost sharing for
behavioral health service categories be no greater than that in
Traditional Medicare for Cost Plans and MA plans (including employer
group waiver plans (EGWPs)). The behavioral health service categories
subject to this proposal include mental health specialty services,
psychiatric services, partial hospitalization, intensive outpatient
program services, inpatient hospital psychiatric services (all length
of stay scenarios), outpatient substance use disorder services, and
opioid treatment program services. We also propose some clarifying
amendments at Sec. Sec. 417.454 and 422.100, including the
applicability of the 50% coinsurance (or actuarially equivalent
copayment) standard for Cost Plans. These proposed amendments primarily
continue current policy with minor updates (such as, to annually update
copayment limits CMS sets for Cost Plans based on the most recent
Medicare FFS data projections).
If this proposal is finalized, CMS would not experience additional
burden as we could, as needs arise, adjust the plan benefit package as
part of normal business operations. In addition, CMS expects this
proposal would prompt some--
Organizations to adjust their plan benefit designs,\351\
primarily to come into compliance with this proposal, if: (1) any of
their contract year 2025 plan benefits are not compliant with the
proposed behavioral health cost-sharing standard for contract year 2026
and (2) they submit a bid to continue that plan offering for contract
year 2026; and
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\351\ Cost Plans may not have to adjust their benefit designs
for all behavioral health service categories as these plans are not
required to report information for all services in the plan benefit
package, including for inpatient hospital psychiatric services.
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Enrollees who remain in those continuing plans to
experience changes in cost that will change over time based on their
health status and service utilization (such as, behavioral health
services or other service categories).
These potential impacts to organizations and enrollees are
discussed in greater detail in the following section. In brief, CMS
expects that this proposal to make in-network cost sharing for
behavioral health services no greater than that in Traditional Medicare
will increase utilization of these services and thus reduce: (1)
enrollee disparities in health outcomes and health care costs formerly
arising because of affordability issues related to behavioral health
care; and (2) program costs due to better behavioral health disease
management, health outcomes, and fewer high-cost services (such as,
emergency room visits for life-threatening behavioral health condition
complications).
a. Potential Impacts From Behavioral Health Cost-Sharing Limits No
Greater Than Traditional Medicare to Organizations and Enrollees
From an aggregate perspective, CMS assumes that this proposal will
not result in: (1) additional out of pocket costs for MA enrollees
compared to beneficiaries in Traditional Medicare; or (2) significant
losses for MA organizations. This is because there is a statutory
requirement for MA organizations to submit bids that are at least
actuarially equivalent to coverage in Traditional Medicare. This
statutory requirement is operationalized through an actuarial
equivalence test based on a projection of MA cost sharing under each
plan. At the time that the actuarially equivalent cost sharing amounts
are calculated, the expectation is that there will be no costs or
savings for the policy year in question. As a result, the plan will
cover--and MA enrollees would receive--the same level of total benefits
on average in each contract year prior to and after implementation.
However, CMS also expects lower behavioral health cost-sharing limits
will pose varying
[[Page 99523]]
individual impacts to MA organizations and enrollees that change over
time.
Cost Plans are not required to submit a bid that is at least
actuarially equivalent to coverage in traditional Medicare. As a
result, if this proposal is finalized enrollees in these plans could
receive a different level of total benefits on average after its
implementation. However, CMS expects this proposal will not result in
significant additional out of pocket costs for Cost Plan enrollees
because our analysis of cost sharing for the applicable professional
behavioral health service categories demonstrates that: (1) most of
these plans already established cost sharing for these services that is
equal to or less than cost sharing in Traditional Medicare (as shown in
table 32; and (2) plans with cost sharing greater than cost sharing in
Traditional Medicare should not have to vastly change their cost
sharing designs to come into compliance (as shown in table 33). For
example, as shown in table 33, only 5 percent of Cost Plans have cost
sharing greater than Traditional Medicare for the ``outpatient
substance abuse services'' service category. Of those plans, as shown
in table 34, the average in-network cost sharing is $40, or $10 more
than cost sharing in Traditional Medicare. Finally, we also note that
Cost Plan enrollees may continue to receive basic benefits at cost
sharing in Traditional Medicare by going out-of-network. As such,
beneficiary choice will continue to act as an incentive for Cost Plan
organizations to offer favorable benefit designs. As a result, we
believe Cost Plans should not be incentivized to either drastically
increase overall costs for their enrollees or leave the market as a
direct result of this proposal.
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP10DE24.041
[[Page 99524]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.042
BILLING CODE 4120-01-C
CMS expects in the first applicable contract year when lower
behavioral health cost-sharing limits would apply (contract year 2026),
MA and Cost Plan organizations may or may not have increased costs to
provide behavioral health services. This is because, as discussed in
section III.M. of this proposed rule, plans incorporate varying cost
sharing arrangements for behavioral health services--with amounts less
than, greater than, or equal to cost sharing in Traditional Medicare
for these services. As a result, continuing plans that previously
established cost sharing for behavioral health services at amounts that
are equal to or less than Traditional Medicare may not have any cost
impacts as a direct result of this proposal. In contrast, for
organizations that do reduce plan cost sharing for one or more
behavioral health service categories in response to this proposal, CMS
expects they will initially have increased costs to provide those
behavioral health services. However, plan bids must: (1) remain at
least actuarially equivalent to Traditional Medicare if it is an MA
plan; and (2) satisfy Traditional Medicare coverage requirements for
both MA and Cost Plans. As a result, CMS expects that the reduction in
cost sharing for behavioral health services in contract year 2026 will
lead organizations to--
Predict the impacts that lower cost sharing will have on
their cost to provide behavioral health benefits and profit margins
(primarily based on plan-level total financial liability to provide
behavioral health services and actuarial expectations of changes in
enrollee utilization of behavioral health services based on the
population served) and;
Potentially adjust aspects of their bid design and
allocation of rebate dollars (such as changes to cost sharing amounts
for other service categories, premiums, deductibles, or supplemental
benefits).
In contract year 2027 and subsequent years, organizations may
become better aware of the cost impact of this proposal as potential
cost savings from improved enrollee behavioral health outcomes become
more apparent. As a result, as part of normal business operations,
organizations may make additional adjustments based on their initial
experience of actual changes to their cost of providing behavioral
health benefits and profit margins. For example, each year
organizations may adjust case management strategies and behavioral
health provider contracting (and thus their total plan financial
liability for behavioral health services). MA plans have significant
plan design flexibility and multiple levers they can use to inform how
they make these adjustments and develop bids that continue to remain
actuarially equivalent to Traditional Medicare in contract year 2026
and subsequent years. CMS expects these types of adjustments and
implementation timeframe would vary between organizations and influence
how an organization chooses to design their plan bid(s) in subsequent
contract years.
The specific adjustments organizations make in response to this
proposal would in turn determine the varying short- and long-term
individual financial impacts enrollees would experience. Specifically,
CMS expects enrollees would experience different out-of-pocket impacts
that change annually based on: (1) how organizations evolve their plan
benefit designs; (2) their health conditions and utilization of
services; and (3) enrollment switching patterns, if applicable. As an
illustrative example, in response to this proposal, a continuing MA
plan for contract year 2026 may have: (1) reduced cost sharing for
behavioral health services; and (2) increased cost sharing for a few
non-behavioral health benefits. In this scenario, enrollees that
continue enrollment in this plan and utilize (to the same extent) the
following:
Behavioral health services--may experience cost savings.
[[Page 99525]]
Non-behavioral health services that have increased cost
sharing--may experience an increase in costs.
Behavioral and non-behavioral health services with and
without changes in cost sharing--may experience cost savings,
increases, or neutral effects depending on how they allocate their
utilization of these services.
However, the extent to which organizations may shift costs to
services utilized by certain groups of enrollees is limited to ensure
that beneficiaries--regardless of their health condition--can access
needed health services. Consistent with statutory requirements, CMS
would do the following:
Not approve a plan bid if its proposed benefit design
substantially discourages enrollment in that plan for certain Medicare-
eligible individuals.
Continue evaluations and enforcement of its current
authority prohibiting plans from misleading beneficiaries in their
marketing and communication materials and continue efforts to improve
plan offerings and plan comparison tools and resources (for example,
Medicare & You and 1-800-MEDICARE).
Over time, as plans continue to evolve their plan benefit designs
and the long-term effects of lower behavioral health cost sharing begin
to show, the out-of-pocket impacts individual enrollees experience may
change. For example, potential long-term impacts for enrollees with
behavioral health conditions may include the following:
Improved aggregate health outcomes and health care costs
from increased utilization of high-value behavioral health services
(such as, regular check-ins with a behavioral health provider).
Decreased utilization of high-cost services related to
poor behavioral health management (such as, emergency psychiatric
admissions).
Given the breadth of potential impacts to enrollees from changes
organizations may make to their plan benefit designs in response to
this proposal, changing the behavioral health cost-sharing standards
could create savings or losses for certain organizations or groups of
enrollees at different times after its implementation. For this reason,
there is a possibility that this proposal may be of substantial
magnitude. A discussion of possible quantification of these potential
effects follows.
b. Impact Analysis: Behavioral Health Cost-Sharing Limits No Greater
Than Traditional Medicare
Ideally, we would justify this proposal quantitatively but lack
sufficient data. To accurately quantify this proposal's potential
impacts to similarly situated organizations (such as those that lower
behavioral health service category cost sharing amounts by a
substantive or nominal amount as a direct result of this proposal) or
by certain groups of enrollees (such as those with or without
behavioral health conditions) the Office of the Actuary (OACT) would
need sufficient data for the following:
Contract year 2026--MA and Cost Plan organization and
enrollee cost impacts based on: (1) expected decrease in behavioral
health service category cost sharing amounts; (2) estimates of
potential cost impacts to other non-behavioral health benefits to meet
actuarial equivalence requirements for MA plans; (3) estimates of
plans' total financial liability to provide services with a change in
cost directly related to this proposal; and (4) the expected change in
frequency of enrollee utilization of the impacted benefits (behavioral
health services and non-behavioral health service categories or
benefits).
Contract year 2027 and subsequent years--annual MA and
Cost Plan organization and enrollee cost impacts based on: (1) estimate
of changes to plans' total financial liabilities to provide impacted
behavioral health and non-behavioral health benefits; (2) revised
estimates of potential cost impacts to other non-behavioral health
benefits to continue meeting actuarial equivalence requirements for MA
plans; (3) expected change in frequency of enrollee utilization of
impacted benefits; (4) estimate of cost savings per enrollee from
better behavioral health outcomes; and (5) enrollee migration patterns
between plans.
OACT lacks sufficient data on these topics and as a result, cannot
quantitatively project the financial impacts for certain organizations
or groups of enrollees if this proposal is finalized. As noted
previously, the aggregate, short term impact to MA organizations should
be minimal due to the statutory requirement that plans remain
actuarially equivalent to Traditional Medicare. While there are
possible impacts due to the redistribution of cost sharing to
compensate for the proposed limits on behavioral health cost sharing,
these impacts would depend on which other services had corresponding
changes in cost sharing. The affected service categories are unknown
until bid submission, so the impacts are not currently quantifiable.
While there is uncertainty in the impact analysis of this proposal
to lower behavioral health cost-sharing standards is not currently
possible, existing studies clarify potential implications from this
proposal for organizations and enrollees with and without a need for
behavioral health services. For example, a study \352\ comparing the
rate of beneficiary follow-up within 30 days after a psychiatric
hospitalization between plans with equivalent mental and physical
health cost sharing amounts and plans with mental health cost sharing
amounts that were greater than their primary and specialty care cost
sharing found that beneficiaries in plans with equivalent cost
sharing--
---------------------------------------------------------------------------
\352\ Trivedi AN, Swaminathan S, Mor V. Insurance parity and the
use of outpatient mental health care following a psychiatric
hospitalization. JAMA. 2008 Dec 24;300(24):2879-85. doi: 10.1001/
jama.2008.888. PMID: 19109116; PMCID: PMC4757896.
---------------------------------------------------------------------------
Were significantly more likely to have follow-up visits
after a psychiatric hospitalization; and
This important service primarily benefited affected
enrollees with lower education and in rural areas.
Another study \353\ assessed the impact of the Medicare
Improvements for Patients and Providers Act (MIPPA) of 2008 (which
lowered beneficiaries' coinsurance from 50 percent to 20 percent for
mental health visits) on changes to specialty and primary care
outpatient mental care visits and psychotropic medication fills. They
found that Medicare beneficiaries' use of psychotropic medication
increased after the implementation of cost-sharing parity, without a
detected change in visits. The greater use of psychotropic medications
was primarily among people with probable serious mental illness and
among Medicare beneficiaries who did not report having supplemental
coverage. The article concluded that--
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\353\ Cook, Benjamin & Flores, Michael & Zuvekas, Samuel &
Newhouse, Joseph & Hsu, John & Sonik, Rajan & Lee, Esther & Fung,
Vicki. (2020). The Impact Of Medicare's Mental Health Cost-Sharing
Parity On Use Of Mental Health Care Services: An assessment of
whether Medicare cost-sharing reductions for outpatient mental
health services was associated with changes in mental care visits to
physicians and psychotropic medication fills. Health Affairs. 39.
819-827. 10.1377/hlthaff.2019.01008.
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Increased psychotropic medication fills could signal
improvements in mental health care access among Medicare beneficiaries,
especially among the subgroups most likely to benefit from the policy
change; and
A lack of changes to mental care visits may suggest other,
nonfinancial barriers are impacting beneficiaries from receiving mental
health treatment (for example, barriers related to transportation, the
availability of
[[Page 99526]]
providers, or community- or person-level stigma).
As a result, CMS believes this proposal (which would also reduce
the coinsurance limit for several professional behavioral health
standards from 50 to 20 percent coinsurance) in conjunction with other
provisions focused on addressing nonfinancial barriers for enrollees to
receive behavioral health services described in section III.M. of this
proposed rule would work together to improve access to, and utilization
of, behavioral health services in MA and Cost Plans.
Another intended consequence of this proposal is a higher level of
integration for medical and behavioral health services. Integrating
medical and behavioral healthcare is one method some payers use to
improve enrollee health outcomes while reducing the growth rate of
healthcare claim expenditures. As lower behavioral health cost sharing
limits may increase utilization of these services, we expect this
proposal may provide additional financial incentive for MA plans to
integrate these services. Specifically, there should be incentive
through capitated payments to the MA organization to ensure
beneficiaries receive efficient and effective care despite changes in
cost sharing and utilization patterns. Medical and behavioral
healthcare integration has been studied both qualitatively and
quantitatively in several contexts. One such study \354\ reviewed
relevant literature, conducted interviews, and held a workshop to
develop a human-centered vision for the mental health ecosystem,
reinforced by the experiences of those with mental illness, behavioral
health providers, and efforts already underway by state, local, and
Federal health leaders. This vision hinges upon five major shifts for
better mental health care access, with one major shift being reform of
payment systems. This study cites numerous attempts to improve mental
health both in the U.S. and in the United Kingdom. Several of the
attempts cited had significant reductions in hospitalizations,
emergency room visits, and overall costs. Milliman,\355\ in a 2018
update to a report originally made to the American Psychiatric
Association in 2014 on the efficiencies of integrating behavioral and
medical health, estimated savings to Medicare of $6 to $12 billion, for
calendar year 2017, if behavioral health services were integrated into
lower cost medical services.
---------------------------------------------------------------------------
\354\ Egizi, Alison Muckle; Blasco, Gwen; Collins, Helen. A
human-centered vision for improving the mental health care
ecosystem. July 2022. Retrieved from: https://www2.deloitte.com/us/en/insights/industry/public-sector/mental-health-equity-and-creating-an-accessible-system.html.
\355\ Milliman. Potential economic impact of integrated medical-
behavioral healthcare: Updated projections for 2017. February 2018.
Retrieved from: https://www.milliman.com/en/insight/potential-economic-impact-of-integrated-medical-behavioral-healthcare-updated-projections.
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Based on these existing studies we believe that lowering cost
sharing for behavioral health services could lead to significant
savings for MA and Cost Plan organizations, enrollees, and Medicare
over time.
c. Comment Solicitation: Behavioral Health Cost-Sharing Limits No
Greater Than Traditional Medicare
CMS also considered how the proposed cost-sharing standard may
impact the flexibility MA organizations have in preparing a plan bid
that meets the existing actuarial equivalence requirements at Sec.
422.100(j)(1) and (2).\356\ To assess this, the Office of the Actuary
(OACT) first estimated what percentage of total 2023 Medicare FFS cost
sharing is represented by the MA service categories currently subject
to cost sharing no greater than Traditional Medicare (2023 was the most
recently available data at the time of developing this proposal). The
OACT then estimated the percentage representing the additional
behavioral health MA service categories subject to this proposal. We
note that this approach is from the perspective of an MA plan having to
meet the Traditional Medicare cost-sharing standards for all the
service categories listed in paragraph (j)(1) even though only a subset
MA plans with certain MOOP types are subject to that standard for
certain service categories. This approach is intended to assess the
minimum level of flexibility MA organizations would have to structure
cost sharing differently from Traditional Medicare, regardless of their
MOOP type (that is, most plans would have more flexibility). The OACT's
analysis found that--
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\356\ These actuarial requirements do not apply to Cost Plans.
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Existing MA cost-sharing standards with limits above cost
sharing in Traditional Medicare represent about 51 percent of total
2023 Medicare FFS cost sharing; and
The proposed addition of behavioral health service
categories to the list of services for which cost sharing must be no
greater than Traditional Medicare would nominally increase the
percentage of total 2023 Medicare FFS cost sharing that MA cost-sharing
standards represent from 49 to 51 percent.
In assessing the results of this analysis, there are several
limitations. First, these percentages are only estimates based on how
Traditional Medicare pays by service and not differently by provider.
Second, the OACT does not have a statistical method to determine how
high a percent threshold would result in insufficient flexibility for
MA organizations to design cost sharing that is different from
Traditional Medicare while fulfilling the actuarial equivalence
requirements in Sec. 422.100(j)(1) and (2). However, the OACT
generally expects an approximate 2 percent decrease to the proportion
of total cost sharing that can be raised above what Traditional
Medicare requires (from 51 to 49 percent) is not likely to result in
insufficient flexibility for MA organizations when designing their plan
benefits. As a result, we believe that this proposal, if finalized,
will not require MA organizations to make disruptive changes to their
plan benefit designs so their plans meet the existing actuarial
equivalence requirements to Traditional Medicare while complying with
the proposed behavioral health cost-sharing limits. Nevertheless, we
solicit comment on this supposition.
In summary, we expect this proposal to make in-network behavioral
health service category cost-sharing limits no greater than Traditional
Medicare will result in both increased savings and higher quality of
health care in the MA and Cost Plan program over time. A detailed
analysis of these effects would require additional data that are not
available at this time. We solicit public comment on the economic cost
and benefits of this proposal, which may include comments on data
sources and available analyses of behavioral health service utilization
impacts on health care savings and costs that could offer additional
insight into the likely impacts of this proposal.
6. Proposal To Enhance Review of Marketing and Communications
(Sec. Sec. 422.2260 and 423.2260)
CMS is proposing to expand the definition of marketing under
Sec. Sec. 422.2260 and 423.2260 to broaden CMS oversight of certain
categories of MA and Part D communications materials and activities in
order to strengthen beneficiary protections. The updated definition
would ensure all communications materials and activities that intend to
draw a beneficiary's attention to an MA plan, Part D Plan or other
plan, influence a beneficiary's decision-making process when making a
MA or Part D plan selection or influence
[[Page 99527]]
a beneficiary's decision to stay enrolled in a plan (as described in
the current intent standard of the marketing definition in Sec. Sec.
422.2260(1) and 423.2260(1)) are submitted to CMS and subject to review
under the more comprehensive marketing material review requirements.
While CMS does expect this proposed change will result in an increase
in the volume of materials submitted to CMS, most of those materials
are, and will continue to be, designated as File & Use per Sec. Sec.
422.2261(b) and 423.2261(b) and therefore, only those materials which
are prospectively reviewed will directly impact CMS time and cost
burden.
Under this provision, CMS estimates that if this provision is
finalized based on the trend estimates in the COI, CMS will receive
80.21 percent more marketing materials. Of those submitted marketing
materials, CMS estimates that 10 percent of those materials will be
prospectively reviewed by health insurance specialists. Therefore, we
take the hour burden of a single review (0.5 hour) and multiply that by
the number of materials that we expect to be reviewed (10 percent of
submitted materials as estimated in table F10) and the hourly wage of a
health insurance specialist ($64.06). For CY 2026, the estimated cost
burden for CMS would be $261,531.36 (0.5*8165.20*64.06). For CY 2027,
the estimated cost burden for CMS would be $288,077.82
(0.5*8994*64.06). For CY 2028, the estimated cost burden for CMS would
be $317,314.80 (0.5*9906.80*64.06).
CMS notes that it has not collected the materials currently
categorized as communications since prior to the April 2018 final rule,
and therefore these estimates could vary depending on how the
advertising landscape has changed and how frequently plans and TPMOs
have been utilizing communications materials which are not currently
required to be submitted for CMS review. In addition, it is possible
that, based on concerns brought to CMS' attention through data such as
complaints, surveillance activities, or retrospective reviews, CMS
could increase the percentage of materials that are prospectively
reviewed.
7. Proposal To Require Clinical or Quality Improvement Standards for
Provider Incentive and Bonus Arrangements To Be Included in the MA MLR
Numerator (Sec. 422.2420(b)(2))
We propose to amend Sec. 422.2420(b)(2) to clarify that only
provider incentives and bonuses tied to clearly defined, objectively
measurable, and well-documented clinical or quality improvement
standards may be included in incurred claims for MA MLR reporting. Due
to the proposed change, if MA organizations report fewer provider
incentives and bonuses in the MLR numerator and their MLR percent
decreases, remittances paid could increase. While we do not know
exactly how many incentives and bonuses would be impacted by this
change, using information from prior Marketplace and Medicaid
Regulatory Impact Analyses,357 358 we estimate that with a 1
percent decrease in incurred medical incentive pools and bonuses in the
Medicare MLR numerator based on the Medicare MLR data for contract year
2017 (when detailed incentive and bonus data were last reported), the
proposed clarification would have almost no impact on remittances paid
by MA organizations, an estimated approximately $4 million per year. To
arrive at this estimate, we calculated updated Medicare MLR remittances
based on the assumptions outlined previously, subtracted those amounts
from the actual Medicare MLR remittances and estimate a 1.8 percent
increase per year in remittances paid by MA organizations.
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\357\ https://www.govinfo.gov/content/pkg/FR-2022-01-05/pdf/2021-28317.pdf, page 133.
\358\ https://www.govinfo.gov/content/pkg/FR-2023-05-03/pdf/2023-08961.pdf, page 139.
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8. Proposal To Prohibit Administrative Costs From Being Included in
Quality Improving Activities in the MA and Part D MLR Numerator
(Sec. Sec. 422.2430(a) and 423.2430(a))
We also propose to amend Sec. Sec. 422.2430(a) and 423.2430(a) to
specify that only expenses directly related to activities that improve
health care quality may be included in quality improving activity
expenses for MA and Part D MLR reporting. We expect this proposed
change could result in an increase in remittances from MA organizations
and Part D sponsors that currently include indirect expenses in quality
improving activities. Although we do not know how many MA organizations
and Part D sponsors include indirect expenses in quality improving
activities, we estimate the impact of the proposed change by assuming
that indirect expenses inflate quality improving activities by 41.5
percent (the midpoint of the 33 percent to 50 percent range we have
observed during commercial and Medicaid MLR audit examinations) for
half of the organizations that report quality improving activity
expenses (sorted based on lowest to highest and highest to lowest MA
organization and Part D sponsor revenue). To determine the amount in
remittances that we expect based on the proposed change, we reviewed
the MLR data for contract year 2017 (when detailed health care quality
improvement expenses were last reported). Using the assumption that
indirect expenses improve the quality improving activities by 41.5
percent, we multiplied the quality improving activity expenses for each
plan contract by 41.5 percent and subtracted these expenses from the
numerator. Next, we updated the MLR for each contract and determined
the change in remittances for contracts that fell below the 85 percent
threshold. Using these calculations and steps, we determined the
proposed clarification would increase remittances paid by MA
organizations and Part D sponsors by a range of approximately $13
million to $189 million per year (sorted lowest to highest).
Extrapolating the estimated transfers to the Treasury General Fund over
10 years, we expect the policy change to transfer an average of
approximately $101 million per year, and $1.01 billion between 2026 and
2035.
9. Proposal To Establish Standards for MA and Part D MLR Audit
Examinations (Sec. Sec. 422.2480(d), 423.2480(d), 422.2401, 423.2401,
422.2450, 423.2450, 422.2452, 423.2452, 422.2454, and 423.2454)
Our proposed amendments to the MA and Part D MLR regulations,
including the addition of or modification to Sec. Sec. 422.2401,
423.2401, 422.2450, 423.2450, 422.2452, 423.2452, 422.2454, and
423.2454, would increase the MLR reporting burden by requiring that MA
organizations and Part D sponsors to provide auditors with detailed MLR
data and any underlying records that can be used to substantiate
amounts included in the calculation of each contract's MLR and any
remittance determined to be owed. We anticipate the level of effort
related to record retention, responding to record requests, and
preparing and mailing MLR audit remittances would vary by MA
organization and Part D sponsor and their potential audit findings and
is therefore difficult to quantify.
The proposed update would primarily impose additional costs on the
Federal government. To conduct MLR audit examinations in Medicare we
would pay a contractor to perform the audits to identify suspected
inaccuracies and communicate findings to the MA organizations and Part
D sponsors. We anticipate that we would pay a contractor to perform
audits approximately equal to the number we are currently paying them
to perform
[[Page 99528]]
pilot MLR audit examinations, which is consistent with commercial MLR
audits previously conducted (approximately $1 million to $1.5 million
per year).
MA organizations and Part D sponsor MLR audits are expected to lead
to more MLR remittances to the Treasury General Fund. These additional
payments are transfers since no goods or services are being created.
The impact to the Medicare Trust Funds is $0. To estimate the potential
total increase in MLR remittances because of MA and Part D MLR audit
examinations, first we accessed the total remittances paid for the most
recent contract years available. Based on Medicare Part C and D MLR
data, the average of total remittances paid for CYs 2017-2021,
excluding 2020, which was significantly impacted by the COVID-19
pandemic with unusually large remittances collected, was
$194,032,540.30.\359\
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\359\ https://www.cms.gov/medicare/health-drug-plans/medical-loss-ratio.
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Then we reviewed the results of eight commercial MLR audit
examination reports, which approximates the annual number of MA and
Part D MLR examinations CMS expects to conduct. The commercial MLR
audit examination reports from CYs 2015 to 2019, the most recent
publicly available reports, reported $11,691,450 in rebates were
distributed back to policyholders.\360\ To compare MLR remittance
amounts we determined that the MA and Part D programs are 2.7 times
larger than the enrollment size of the commercial Marketplace. As of
January 2024, 21.3 million consumers signed up for coverage through the
commercial Marketplaces.\361\ As of August 2024, 57.2 million people
were enrolled in Medicare Part C and D, excluding PACE organizations,
which do not report MLR.\362\ Therefore, we multiplied the $11,691,450
in commercial MLR audit rebates by 2.7 to estimate MA and Part D MLR
audit remittances, which would total approximately $31,566,915.
Extrapolating the estimated transfers to the Treasury General Fund over
10 years, we expect the MLR audit examinations to transfer an average
of approximately $32 million per year, and $320 million between 2026
and 2035.
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\360\ https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/MLR_examinations_reports.
\361\ https://www.cms.gov/data-research/statistics-trends-reports/marketplace-products/2024-marketplace-open-enrollment-period-public-use-files.
\362\ https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-advantagepart-d-contract-and-enrollment-data/monthly-contract-and-enrollment-summary-report.
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10. Proposal To Add Provider Payment Arrangement Reporting in the
Medicare MLR Reporting Regulations (Sec. Sec. 422.2460 and 422.2490)
Our proposal to require separate reporting amounts for provider
payment arrangements would increase the Medicare MLR reporting burden
by requiring MA organizations to compile additional information in the
MLR Reporting Tool. We anticipate the level of effort to compile this
information would vary based on the size of the MA organization, how
they submit the existing Medicare Part C reporting requirements to
report payments to providers, and whether they have ever responded to
the HCPLAN APM measurement survey. The 2023 APM Measurement Methodology
and Results report stated a total of 64 health plans, four FFS Medicaid
states, and Traditional Medicare participated in the 2023 LAN
Measurement Effort representing almost 264 million or 86.7% of people
covered by an insurance plan in the Commercial, Medicare Advantage,
Medicaid, or Traditional Medicare markets.\363\ While the level of
effort is difficult to quantify, in the COI we estimate an annual
burden of 2,100 hours (700 MA organizations * 3 hr/response) at a cost
of $179,970 (2,100 hours * $85.70/hr).
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\363\ https://hcp-lan.org/workproducts/apm-methodology-2023.pdf.
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The proposed update would also impose additional costs on the
Federal government related to analyzing the additional data. However,
given that the additional reporting will not change the Medicare MLR
calculation we do not expect the proposal to increase MLR remittances
or create significant additional costs for the Federal government.
11. Clarifying MA Organization Determinations To Enhance Enrollee
Protections in Inpatient Settings (Sec. Sec. 422.138, 422.562,
422.566, 422.568, and 422.616)
We are proposing modifications to existing regulations at 42 CFR
part 422, subpart M, to clarify and strengthen existing rules related
to organization determinations. The intent of this proposal is to
clarify the definition of an organization determination to enhance
enrollee protection in inpatient settings. We want to ensure enrollees
and providers acting on their behalf receive notice of an inpatient/
outpatient downgrade and are aware of their appeal rights. The intent
of this provision is also to increase awareness when inpatient stays
are downgraded with the expectation that there would be more appeals
and some overturns. Thus, qualitatively, we expect this proposal to
generate increased costs to the MA organizations and ultimately to the
Medicare Trust Fund since inpatient stays are more expensive than
observations.
In section VI.B.18. of this proposed rule, we estimated that there
are annually 60,000 downgrades of inpatient to observation. Although we
can estimate 60,000 affected enrollees, we do not have any way to
estimate the following: (1) what percent of the enrollees are already
receiving required written notification and what percent of them will
receive a notice due to change in the provision; (2) of those receiving
the notice, what percent will appeal; (3) of those appealing the
downgrade, what percent will be overturned by the plan; (4) of those
appeals upheld by the plan what percent will be overturned by the
Independent Review Entity (IRE) (given that 100 percent of upheld plan
decisions are forwarded to IRE). If this data was available, we could
obtain average costs of inpatient stays and observation days and
estimate the cost to the trust fund. In the absence of this data, we
are estimating this as a non-quantified cost to the plans that is
passed on to the Trust Fund.
E. Alternatives Considered
In this section, CMS includes discussions of alternatives
considered. Several provisions of this proposed rule reflect a
codification of existing policy where we have evidence, as discussed in
the appropriate preamble sections, that the codification of this
existing policy would not affect compliance. In such cases, the
preamble typically discusses the effectiveness metrics of these
provisions for public health.
1. Proposal for Medicare Prescription Payment Plan (Sec. Sec.
423.137(e), 423.137 (d), 423.137(f), 423.137(i), and 423.137(j))
a. Auto Renewal
As Medicare Prescription Payment Plan participation is tied to drug
expenditures in a given plan year, CMS considered how to address year-
over-year program participation.
Option #1: Implement an automatic election renewal process
that requires a Part D sponsor to automatically renew a Part D
enrollee's participation in the Medicare Prescription Payment Plan,
provided the participant remains in the same Plan Benefit Package (PBP)
in the upcoming year, unless the program participant indicates
otherwise. This option would minimize burden for Part D enrollees, who
would not need to
[[Page 99529]]
complete additional paperwork to remain in the program, and Part D
sponsors, which would not be required to process new election forms for
active program participants or conduct ``likely to benefit'' analyses
for the upcoming plan year for those participants. The primary impact
of this approach is the burden and cost on Part D sponsors associated
with annual notifications alerting participants that their
participation in the program is continuing into the next year.
Option #2: Require Part D enrollees to re-elect into the
program each plan year. This option would allow Part D enrollees to
actively choose to participate in the program each year but would place
additional burden on both enrollees and Part D sponsors. In addition to
requiring Part D sponsors to send annual notifications alerting
participants that their participation in the program is ending and that
participation renewal is required, this option would also require
enrollees to complete a new election request form annually and require
plan sponsors to review election requests from the same enrollee each
year and send new notices of election approval following the renewal
request.
As noted in the earlier in this rule, CMS proposed an automatic
election renewal process requiring Part D sponsors to alert program
participants no later than December 7 that their participation in the
program will continue into the next year unless they indicate they
would like to opt out. We believe this approach minimizes burden for
both enrollees and plan sponsors.
b. Point-of-Sale Enrollment
Timely effectuation of election requests is important to prevent
dispensing delays and potential prescription abandonment. For enrollees
who trigger the likely to benefit threshold with a new high-cost
prescription and receive the ``Medicare Prescription Payment Plan
Likely to Benefit Notice'' informing them about the Medicare
Prescription Payment Plan at the point of sale, a real-time or point of
sale election mechanism could allow them to pay $0 at the point of sale
and still leave the pharmacy with their medication. We considered the
following three options for point-of-sale enrollment:
Option #1: Permit point of sale enrollment by establishing
a new value in an existing NCPDP data field for the Medicare
Prescription Payment Plan. If a Part D enrollee indicates to the
pharmacist that they would like to opt into the program, the pharmacist
would reverse the claim and resubmit it with a specific clarification
code indicating that the individual has agreed to opt into the program.
The PBM would then accept the clarification code value, add the
individual to the relevant eligibility file, and return a message to
the pharmacy providing the plan-specific BIN/PCN. The pharmacist would
process the claim like a COB claim, bill any other applicable OHI, and
bill the plan-specific BIN/PCN for the Medicare Prescription Payment
Plan. The new program participant would be able to collect their
prescription without paying any OOP cost sharing at the POS. The PBM
would then communicate to the Part D sponsor that the individual has
opted into the program.
Option #2: Permit real-time enrollment by telephone or
mobile or web-based application. If a Part D enrollee wanted to elect
into the Medicare Prescription Payment Plan, they could call their
plan's telephone number or submit a web-based application. The Part D
sponsor would manually effectuate the individual's election into the
program and communicate the election to the PBM in real time. The PBM
would then add the individual to the relevant eligibility file. Once
the individual's election is effectuated, the pharmacist would either
reverse and resubmit the claim to receive the plan-specific Medicare
Prescription Payment Plan BIN/PCN, or the new program participant would
receive a verbal confirmation via the phone call with the Part D
sponsor providing the plan-specific BIN/PCN.
Option #3: Require Part D sponsors to process election
requests within 24 hours. If a Part D enrollee wishes to elect into the
Medicare Prescription Payment Plan, they may use any of the plan's
election mechanisms. During the plan year, Part D sponsors must process
the election request within 24 hours. The Part D sponsor would then
communicate the effectuation to the enrollee and to the PBM.
As noted earlier in this rule, CMS proposed to codify the 24-hour
timeframe for election requests made during the plan year, as required
in 2025, and requested comment on real-time election. We believe that
the 24-hour timeframe, paired with the required process to
retroactively apply the program to those meeting criteria for a
retroactive election, reduces the likelihood of dispensing delays and
prescription abandonment while avoiding the operational burden that
would be required for Part D sponsors, PBMs, and pharmacies to develop
and implement mechanisms to support real-time or POS election. We are
continuing to explore the operational feasibility of a real-time
election mechanism for 2026 and subsequent years.
b. Pharmacy Processes
Section 1860D-2(b)(2)(E)(v)(III)(ff) of the Act states that an
individual's participation in the Medicare Prescription Payment Plan
does not affect the amount paid (or the timing of such payments) to
pharmacies. Accordingly, we proposed that the Part D sponsor must pay
the pharmacy for the final amount the individual would have otherwise
paid at the POS. Because an individual's OOP costs are net of any
contributions made by supplemental payers to Part D to which the
individual may be entitled and that reduce the OOP amount due, this
requires the Medicare Prescription Payment Plan to be integrated into
current COB transactions for program participants.
We proposed to require pharmacies and Part D sponsors to utilize an
additional BIN/PCN that is unique to the Medicare Prescription Payment
Plan to facilitate electronic processing of supplemental COB
transactions for program participants.
We also considered the use of a pre-funded card, which would keep
the pharmacy whole and could allow for COB with other payers
supplemental to Part D; however, we are concerned this approach does
not provide the same level of Part D sponsor oversight to ensure that
payments are only made for covered Part D drugs for the participant
cardholder. Additionally, there are other concerns surrounding
timeliness of issuing payment cards and participants needing to present
a physical card at the POS, which could be forgotten, lost, or stolen,
potentially causing delays in obtaining prescription drugs, elevated
risk of fraud, additional costs to the Part D program, and potential
card processing fees for pharmacies. We are also aware that not all
organizations have the financial capabilities established to enable a
prefunded payment card system. Moreover, interested parties have also
expressed a desire to have a single, uniform method of adjudicating and
managing the patient liability for the Medicare Prescription Payment
Plan at the POS; we determined the use of unique BIN/PCNs for the final
transaction to the Medicare Prescription Payment Plan best accomplishes
that objective.
2. Part D Coverage of Anti-Obesity Medications (AOMs) (Sec. 423.100)
and Application to the Medicaid Program
In this section, we discuss the alternative considered when
developing our proposal to reinterpret section 1927(d)(2)(A) of the Act
such that drugs
[[Page 99530]]
used for weight loss or chronic weight management for treatment of
obesity would no longer be excluded from the definition of Part D drug
to reflect changes in the prevailing medical consensus towards
recognizing obesity as a disease. FDA-approved indications for
available AOMs generally include weight loss or chronic weight
management in both individuals with obesity and individuals with
overweight and at least one weight-related comorbid condition. We
considered an alternative proposal to extend our reinterpretation of
the statutory exclusion to no longer consider drugs used for weight
loss or chronic weight management for individuals with overweight and
at least one weight-related comorbidity as excluded from the definition
of Part D drug. This alternative proposal would expand Part D coverage
of AOMs to Medicare beneficiaries with overweight and a weight-related
comorbidity other than type 2 diabetes or cardiovascular disease, since
those conditions are already coverable MAIs under current policy. See
section III.A.2. of this proposed rule for further discussion regarding
our rationale not to extend our reinterpretation of the statutory
exclusion such that individuals with overweight and at least one
weight-related comorbidity could receive coverage of AOMs under Part D.
These estimates follow a similar methodology to the estimates of
our proposal to permit AOM coverage for weight loss or chronic weight
management for treatment of obesity as described in section VII.D.6. of
this proposed rule. For Medicare, the estimates expanded the population
newly able to obtain AOM coverage from 7 percent to approximately 9
percent of total Part D enrollees based on 2022 data, which includes
the number of Part D enrollees with obesity (7 percent) and with
overweight and weight-related comorbidities (2 percent). As shown in
table 35, the alternative proposal would result in expenditures of $35
billion over a 10-year period for the Part D trust fund (increased from
$24.8 billion for the proposal discussed in section VII.D.1.a. to
provide coverage for obesity only). For the purposes of this
alternative analysis, we report annual costs with a placeholder for
each year starting with the first year the reinterpretation would be
applicable in Medicare Part D. Premium offsets reflect the earliest
such offsets would be factored into the analysis due to premium
stabilization provisions in section 11201 of the IRA (assuming 2026
notionally as year 1 of implementation).
[GRAPHIC] [TIFF OMITTED] TP10DE24.043
It is possible that our estimates significantly underestimate the
impact of our alternative proposal. Our estimates rely on available
claims data and therefore a major limitation in our estimates is
whether a diagnosis of overweight was reliably reported. Available
NHANES data from 2017 to 2018 indicates that the prevalence of
overweight in the U.S. adult population was 30.7 percent \364\ which is
more than triple the prevalence observed in Medicare claims data (8.1
percent). NHANES data did not report the proportion of overweight in
adults age 60 and older, but the prevalence of obesity in the overall
U.S. adult population is similar to the prevalence in adults age 60 and
older; therefore, we think it is reasonable to assume that the
proportion of overweight in the Medicare population should be similar
to the proportion of overweight in the overall U.S. adult population.
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\364\ https://www.niddk.nih.gov/health-information/health-statistics/overweight-obesity.
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We were unable to estimate the financial impact of the alternative
proposal on the Medicaid program due to lack of available data on the
proportion of Medicaid enrollees with overweight and weight-related
comorbidities.
3. Ensuring Equitable Access to Behavioral Health Benefits Through
Section 1876 Cost Plan and MA Cost-Sharing Limits (Sec. Sec. 417.454
and 422.100)
In this section, CMS discusses alternatives we considered when
developing our proposal to add behavioral health service categories to
the list of services for which MA and Section 1876 Cost Plan (Cost
Plan) in-network cost sharing must be no greater than that in
Traditional Medicare, beginning in contract year 2026. We do not
include alternatives for the proposal to clarify the applicability of
the 50 percent coinsurance (or actuarially equivalent copayment)
standard for Cost Plans and other proposals that primarily continue
current policy with minor updates. For example, this includes our
proposed revision to Sec. 417.454(a)(1) which would allow for CMS to
annually update copayment limits for basic benefits that apply to Cost
Plans based on the most recent Medicare FFS data projections.
a. Cost Estimation
As noted in section VII.D.4. of this proposed rule, because of
multiple factors affecting bids and our longstanding actuarially
equivalent MA plan bid requirements, we have not estimated a cost for
this proposal and acknowledge a possible combination of savings and
costs for individual organizations and enrollees. Similarly, we would
not be able to quantify potential impacts from these alternative
behavioral health cost-sharing standards considered for MA and Cost
Plans. However, potential impacts from the alternatives on average MA
and Cost Plan cost-sharing amounts for these services are noted in
section VII.E.3.d. of this proposed rule. In addition, as the actuarial
equivalence tests are applied to MA plans for each alternative
presented in this section, the implication is that--in aggregate--the
expected enrollee cost-sharing expenses will remain the same for those
enrollees in MA and for beneficiaries in Traditional Medicare. This
actuarial requirement does not apply to Cost Plans; however, we do not
expect major effects from this proposal on these plans, primarily
because: (1) only a
[[Page 99531]]
small proportion of these plans (20% or fewer) have established cost
sharing greater than the alternatives considered; (2) in most cases
plans with cost sharing greater than the alternatives considered should
not have to vastly change their cost sharing designs to come into
compliance (less than $20.00 per service category in most cases); and
(3) Cost Plans represent a small proportion of all Medicare-eligible
beneficiaries (approximately 169,000 as of July 2024 \365\). In
addition, we expect beneficiary choice will continue to act as an
incentive for Cost Plan organizations to offer favorable benefit
designs. Consequently, we expect no material changes to the Medicare
Trust Fund expenditures since aggregate enrollee cost sharing remains
unchanged or minimally affected under the proposed or alternative
scenarios discussed in section VII.E.3.d. of this proposed rule.
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\365\ CMS. Contract Summary 2024. Data as of July 2024.
Retrieved from: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-07.
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b. Applicability Date
All alternatives in section VII.E.3.d. of this proposed rule
consider specific behavioral health cost-sharing standards that would
apply beginning in contract year 2026. If this proposal is finalized
and issued within an expected timeframe, we believe changes to the
behavioral health cost-sharing standards should be applicable beginning
no earlier than contract year 2026 to provide sufficient time between
the publication of the final rule and the behavioral health cost-
sharing compliance date (operationally this would be the bid deadline
for the first contract year in which the cost-sharing limits would
apply). Specifically, sufficient time between these dates is necessary
for: (1) CMS to implement the finalized policy (which may include
creating validations in the PBP functionality and issuing subregulatory
operational guidance for MA organizations); and (2) organizations to
ensure their benefit designs align with the finalized behavioral health
cost-sharing policies and any operational guidance issued by CMS.
However, as discussed in section III.M. of this proposed rule, we
solicit comments on aspects of our proposal including whether a
transition period from the existing contract year 2026 behavioral
health cost-sharing standards in current regulations to the proposed
cost-sharing standard (alternative 3) is necessary and if so, how long
the transition should be.
c. Evaluation Approach of Alternatives Considered
In section VII.E.3.d. of this proposed rule, we evaluate which
alternative may best strike a balance between: (1) improving the
affordability of behavioral health services for enrollees in a timely
manner; and (2) minimizing disruption to enrollees' access to care and
coverage options. This evaluation is supported by narratives and tables
that indicate how each alternative may impact future contract year: (1)
behavioral health service category cost-sharing (copayment and
coinsurance) limits set by CMS; and (2) behavioral health cost sharing
amounts established by MA and Cost Plans. Specifically, we evaluate
these potential consequences for the following behavioral health
service categories that are subject to this proposal:
Inpatient hospital psychiatric services \366\
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\366\ Cost Plans are not required to report information for all
services, including Part A inpatient hospital psychiatric services.
Due to this lack of data, from a Cost Plan perspective we are only
able to evaluate potential impacts to inpatient hospital psychiatric
services cost-sharing limits (for all length of stay scenarios) and
not to plan cost sharing amounts. In contrast, for MA plans we are
able to evaluate potential impacts to both cost-sharing limits and
plan amounts for this service category.
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Mental health specialty services \367\
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\367\ Beginning January 1, 2024, Medicare started allowing
marriage, family, and mental health counselors to bill independently
for their professional services and made changes to payment for
certain mental health specialty services including services
involving community health workers and outpatient psychotherapy for
crisis services. At the time of drafting this proposed rule, the
OACT did not have sufficient utilization data available for these
services to incorporate their costs into the projected weighted
average allowed amount that we use to calculate illustrative
``mental health specialty services'' service category copayment
limits that could result from the alternatives discussed in this
section. As a result, the illustrative ``mental health specialty
services'' service category copayment limits in this section are
based on a projected weighted average allowed amount calculated
using the same provider specialties that were used to calculate the
copayment limits for this service category for contract year 2025,
including: clinical psychologist, licensed clinical social worker,
and psychiatry. Regardless of whether this proposal is finalized or
not, CMS plans to update the Medicare FFS data used to inform the
calculation of copayment limits for the ``mental health specialty
services'' service category for contract year 2026 and future years
to include covered services from marriage, family, and mental health
counselors and new payment rates for certain mental health specialty
services. As a result, CMS expects actual ``mental health specialty
services'' service category copayment limits that would result from
each alternative discussed in this section would be different from
the illustrative copayment limits provided in this section.
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Psychiatric services
Partial hospitalization \368\
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\368\ Beginning January 1, 2024, Medicare started covering
Intensive Outpatient Program services. This benefit provides the
same services as the partial hospitalization program benefit but
requires fewer hours of therapy per week (a minimum of 9 hours
versus over 20 hours). At the time of drafting this proposed rule,
the OACT did not have sufficient utilization data available for this
service type to project an allowed amount for these Intensive
Outpatient Program services that is separate from partial
hospitalization program services. As a result, in evaluating the
alternatives discussed in this section, CMS considered that the
illustrative partial hospitalization copayment limits in this
section would also apply to the Intensive Outpatient Program
services. Regardless of whether this proposal is finalized or not,
CMS plans to set cost-sharing limits specific to Intensive
Outpatient Program services for contract year 2026 and future years
that are separate from the cost-sharing limits applicable to partial
hospitalization program services and establish separate data entry
for this benefit in the PBP bid tool. As a result, CMS expects
actual copayment limits that would result from each alternative
discussed in this section for Intensive Outpatient Program services
would be different from the illustrative partial hospitalization
program services copayment limits provided in this section.
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Outpatient substance use disorder services
Opioid treatment program services
Tables indicating potential consequences to the cost-sharing limits
and plan cost-sharing amounts for these service categories are included
in section VII.E.3.e. of this proposed rule. To develop the
illustrative dollar values in these tables, we used: (1) analyses of
the most recent and relevant data sources CMS had at the time of
developing this proposal: contract year 2025 Medicare FFS data
projections (based on 2019-2023 Medicare FFS data, respectively) and
contract year 2024 MA and Cost Plan data \369\ and (2) application of
the existing rounding rules in current regulation (Sec.
422.100(f)(6)(ii)) that apply to MA copayment limits and are proposed
to apply to Cost Plan copayment limits per Sec. 417.454(e). Additional
detail about the specific Traditional Medicare FFS data projections
used in the calculations to develop these amounts are available in the
footnotes of tables 3 and 4 in section III.L. of this proposed rule.
For example, this includes the provider specialties that informed the
projected total weighted average allowed amount per visit for mental
health specialty services.
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\369\ Excludes employer, D-SNPs, and MSAs.
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The consequences discussed and shown in the tables in
sections VII.E.3.d. and e. of this proposed rule are uncertain because:
Final behavioral health copayment and dollar limits set in
future contract years (under the existing cost-sharing standards in
current regulations, the proposed cost-sharing standard, or the other
alternative cost-sharing standards considered) would likely be
different than the illustrative behavioral health copayment and dollar
limits in this
[[Page 99532]]
proposed rule based on using updated Traditional Medicare FFS data
projections and coverage rules to calculate the limits.
Plan behavioral health cost-sharing amounts established by
organizations in future contract years cannot be precisely predicted
because: (1) organizations may establish plan cost sharing amounts up
to the applicable final limit set by CMS, regardless of any prior trend
in establishing cost sharing for that service category; (2)
organizations establish plan cost sharing amounts based on many
variables that may change annually (including provider contracting
arrangements, managed care practices, and scope of supplemental benefit
offerings); (3) if CMS does not set a copayment limit for a behavioral
health service category, the plan's copayment amount may be actuarially
equivalent to, or less than, the applicable cost-sharing standard based
on data specified in the regulation which may include their total
financial liability for that benefit (which may be greater or less than
the illustrative copayment limits in this section); and (4) Cost Plans
are not required to report information for all services.
However, the consequences each alternative poses to the behavioral
health coinsurance limits and percent of estimated Traditional Medicare
FFS cost sharing (which determine dollar cost- sharing limits for
inpatient hospital psychiatric services) are characterized by a
relatively high degree of certainty because these values are not
subject to the influencing factors discussed previously.
CMS considered both the consequences discussed in this section to
guide our decision making among the alternative behavioral health cost-
sharing standards considered. We believe the data used to develop the
potential consequences to future year behavioral health copayment
limits and plan cost sharing amounts is sufficiently accurate for this
purpose. Tables 32 to 34 and 36 to 55 indicate these consequences of
each alternative. Next, we provide an overview of tables 32 to 34 and
36 to 55 to avoid repetitive text in the discussion of specific
alternatives.
Tables 36 to 40 specify contract year 2026 and future year MA
behavioral health cost-sharing standards that would apply to specific
service categories based on: (1) the current (or baseline) cost-sharing
standard from Sec. 422.100(f)(6) and (j)(1); (2) the cost-sharing
standard posed by each alternative (percent coinsurance or percent of
estimated Medicare FFS cost sharing); and (3) illustrative dollar
limits that reflect actuarially equivalent values to the baseline and
alternative cost-sharing standards, based on contract year 2025
Traditional Medicare FFS data projections and application of the
regulatory rounding rules. These comparisons are completed for
categories from each group of behavioral health services that have
different cost-sharing standards in current regulations. Specifically,
tables 36 to 40 present information for the following MA behavioral
health service categories:
Mental health specialty services (table 36) and partial
hospitalization program services (table 37) currently subject to a
range of cost-sharing limits for professional services in paragraph
(f)(6)(iii)).
Inpatient hospital psychiatric services for the 15-day
length of stay scenario (table 38) currently subject to dollar limits
based on specific percentages of Medicare FFS cost sharing in paragraph
(f)(6)(iv).
Opioid treatment program services (table 39) and
outpatient substance use disorder services (table 40) currently subject
to the 50 percent coinsurance (or actuarially equivalent copayment) cap
on cost sharing in paragraph (f)(6)(i).
CMS uses the information in tables 36 to 40 to assess each
alternative's potential impact to MA behavioral health cost-sharing
limits on an overall and service category specific basis. Tables 41 to
45 use similar data for Cost Plans for this same purpose. Substantive
differences in table 41 to 45 from tables 36 to 40 include the
following:
A lack of a range of cost-sharing limits considered under
Alternative 1 for Cost Plans (as they are not subject to setting one of
three MOOP types as MA plans are) instead, the lowest cost-sharing
limit under Alternative 1 is considered for all Cost Plans (as shown in
tables 41 and 42).
The illustrative dollar limits only reflect actuarially
equivalent values to the alternative cost-sharing standards, not the
baseline standards. This is because the current (baseline) standards
derive from Sec. 417.454 and longstanding dollar limits applied to
Cost Plans for behavioral health services (as shown in tables 41 to
45).
Tables 46 and 47 specify--by service category--the number and
percent of contract year 2023 and 2024 MA plans that: (1) established
cost sharing amount(s) exceeding the cost-sharing limit applied to
plans with a mandatory MOOP type for that contract year and service
category; and (2) switched to a lower or intermediate MOOP type from a
mandatory MOOP type in the prior contract year. CMS developed these
tables to assess how each alternative may impact the number of MA plans
that offer lower MOOP amounts in future contract years. We make this
assessment for each alternative based on our evaluation in the
narratives of how and to what extent tables 41 and 42 suggest that
differentiated behavioral health cost-sharing limits (beginning in
contract year 2023 \370\) may have incentivized MA plans to adopt lower
MOOP amounts for contract year 2023 and 2024. Corresponding tables for
Cost Plans are not applicable under this proposal.
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\370\ As discussed in the April 2022 final rule, most
professional cost-sharing standards were the same for all MOOP types
before contract year 2023. The cost-sharing standards established by
the April 2022 final rule created differentiated professional and
inpatient hospital cost-sharing limits (including for some
behavioral health service categories) by MOOP type beginning in
contract year 2023 to encourage plans to adopt lower MOOP amounts.
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Tables 33, 48, 49, 52 A through C, and 53 (MA plans and enrollees)
and tables 34, 50, 51, 54, and 55 (Cost Plans and enrollees) evaluate
contract year 2024 plan and enrollee data \371\ by behavioral health
service category. Specifically--
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\371\ Contract year 2024 plan weighted average cost sharing
values reflect maximum cost sharing for each behavioral health
service category (including plans with copayment and coinsurance
percentages). Specifically, plan coinsurance values were converted
into equivalent copayment dollar amounts and vice versa to calculate
a weighted average coinsurance and copayment value for each category
that reflects all cost sharing designs. These plan cost sharing
conversions were based on the OACT's contract year 2025 projected
total Medicare FFS allowed amount for each professional service
category. This approach allows for a consistent comparison between
plan cost sharing amounts and the potential cost-sharing standard
that could apply if a particular alternative was finalized. As a
result, contract year 2024 plan weighted average cost sharing values
consistently reflect dollar values that are normalized based on the
same and most recent data available, contract year 2025 Medicare FFS
projections. The OACT developed the contract year 2025 projected
total Medicare FFS allowed amounts using 2022 Medicare FFS cost and
utilization data and their projections of cost changes between 2022
to 2025. The OACT employed generally accepted actuarial principles
and practices in calculating these projected amounts (per Sec.
422.100(f)(7)).
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Tables 48 and 49 (MA) and tables 50 and 51 (Cost Plans)
identify the percent of plans and enrollees with cost sharing amounts
that are greater than the cost-sharing limits considered by each
alternative.
Tables 33, 52A through C, and 53 (MA) and tables 34, 54,
and 55 (Cost Plans) specify: (1) the weighted average plan cost sharing
amount for the plans identified with cost-sharing amounts that are
greater than the cost-sharing limits considered by each alternative;
and (2) the difference between those weighted average plan cost sharing
amounts and the cost-sharing standards posed by each alternative.
In essence, tables 33, 47,48, 52A through C, and 53 (MA plans and
[[Page 99533]]
enrollees) and tables 34, 50, 51, 54, and 55 (Cost Plans and enrollees)
approximate the: (1) proportion of plans that may lower cost sharing;
(2) proportion of enrollees that may be in those plans and experience
that lower cost sharing; and (3) weighted average reduction in plan
cost sharing that may occur for each behavioral health service category
(as possible) and alternative. As a result, in the narratives in
section VII.E.3.d. of this proposed rule, we consider the information
in these tables to reflect an estimate of each alternative's potential
impact on MA and Cost Plans and enrollees based on the most recent
Medicare FFS and plan data available.
d. Alternatives Considered for Behavioral Health Service Category Cost-
Sharing Limits
In this section CMS summarizes the MA and Cost Plan cost-sharing
standards considered by each alternative, evaluates the potential and
definitive consequences of each alternative in comparison to the other
alternatives, and provides rationale for our decision to propose the
behavioral health cost-sharing standards considered under Alternative
3.
(1) Alternative 1
In this alternative, CMS considered MA behavioral health service
category cost-sharing standards for contract year 2026 and future years
that would: (1) maintain or increase the amount of cost-sharing
incentive MA plans have to offer lower MOOP types; and (2) result in
lower behavioral health cost-sharing limits for all MOOP types in
comparison to the limits that would apply based on the existing cost-
sharing standards in current regulations. As discussed in the April
2022 final rule, CMS set a transition to a range of cost-sharing limits
for professional services proportionate to each MOOP type by contract
year 2026 to incentivize MA organizations to offer plans with lower
MOOP amounts. This alternative takes a similar approach by applying
behavioral health service category cost-sharing standards that are
unique to each MOOP type, with the lower MOOP types retaining the most
cost-sharing flexibilities. To apply this alternative to Cost Plans
(which lack MOOP types), we considered applying the lowest cost-sharing
standard that was considered for MA plans (those with a mandatory MOOP
type).
(a) Specific Cost-Sharing Standards Considered
This alternative considers the following MA cost-sharing standards
for the professional behavioral health service categories (mental
health specialty services, psychiatric services, partial
hospitalization, outpatient substance use disorder services, and opioid
treatment program services):
Lower MOOP Type: Cost sharing no greater than Traditional
Medicare (which is 20 percent coinsurance or an actuarially equivalent
copayment, except for the ``opioid treatment program services'' service
category which has no cost sharing in Traditional Medicare).
Intermediate MOOP Type: 15 percent coinsurance (or an
actuarially equivalent copayment).
Mandatory MOOP Type: 10 percent coinsurance (or an
actuarially equivalent copayment).
The 10 percent coinsurance (or an actuarially equivalent copayment)
would apply to all Cost Plans for the same professional behavioral
health service categories under this alternative. In addition, this
alternative considers setting the ``inpatient hospital psychiatric
services'' service category dollar limits (all length of stay
scenarios) for MA plans based on the following: