Medicare Program; Medicare Advantage and Prescription Drug Benefit Programs, 54600-54635 [2011-22126]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 76, Number 170 (Thursday, September 1, 2011)]
[Rules and Regulations]
[Pages 54600-54635]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22126]



[[Page 54599]]

Vol. 76

Thursday,

No. 170

September 1, 2011

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 417, 422, and 423





Medicare Program; Medicare Advantage and Prescription Drug Benefit 
Programs; Final Rule

Federal Register / Vol. 76 , No. 170 / Thursday, September 1, 2011 / 
Rules and Regulations

[[Page 54600]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 417, 422, and 423

[CMS-4131-F and CMS 4138-F]
RIN 0938-AP24 and 0938-AP52


Medicare Program; Medicare Advantage and Prescription Drug 
Benefit Programs

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule finalizes revisions to the regulations 
governing the Medicare Advantage (MA) program (Part C), prescription 
drug benefit program (Part D) and section 1876 cost plans including 
conforming changes to the MA regulations to implement statutory 
requirements regarding special needs plans (SNPs), private fee-for-
service plans (PFFS), regional preferred provider organizations (RPPO) 
plans, and Medicare medical savings accounts (MSA) plans, cost-sharing 
for dual-eligible enrollees in the MA program and prescription drug 
pricing, coverage, and payment processes in the Part D program, and 
requirements governing the marketing of Part C and Part D plans.

DATES: Effective Date: Except as otherwise specified these regulations 
are effective on October 31, 2011.

FOR FURTHER INFORMATION CONTACT:

Vanessa Duran, (410) 786-8697 and Heather Rudo, (410) 786-7627, General 
information.
Christopher McClintick, (410) 786-4682, Part C issues.
Lisa Thorpe, (410) 786-3048, Part D issues.
Frank Szeflinski, (303) 844-7119, Part C payment issues.
Camille Brown, (410) 786-0274, Marketing issues.

SUPPLEMENTARY INFORMATION:

I. Background

    The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) established 
a new ``Part C'' in the Medicare statute (sections 1851 through 1859 of 
the Social Security Act (the Act)) which established the current MA 
program. The Medicare Prescription Drug, Improvement, and Modernization 
Act of 2003 (MMA) (Pub. L. 108-173) established the Part D program and 
made significant revisions to Part C provisions governing the Medicare 
Advantage (MA) program. The MMA directed that important aspects of the 
Part D program be similar to, and coordinated with, regulations for the 
MA program. Generally, the provisions enacted in the MMA took effect 
January 1, 2006. The final rules implementing the MMA for the MA and 
Part D prescription drug programs appeared in the January 28, 2005 
Federal Register on (70 FR 4588 through 4741 and 70 FR 4194 through 
4585, respectively).
    As we gained more experience with the MA program and the 
prescription drug benefit program, we proposed to revise areas of both 
programs and issued a proposed rule on May 16, 2008 (73 FR 28556) that 
would have clarified existing policies or codified current guidance for 
both programs. The Medicare Improvements for Patients and Providers Act 
(MIPPA) (Pub. L. 110-275), enacted on July 15, 2008, called upon the 
Secretary to revise the marketing requirements for Part C and Part D 
plans in several areas. MIPPA also enacted changes with respect to 
Special Needs Plans (SNPs), Private Fee-For-Service plans (PFFS), 
Quality Improvement Programs, the prompt payment of Part D claims, and 
the use of Part D data. With the exceptions noted in this final rule, 
MIPPA required that these new rules take effect at a date specified by 
the Secretary, but no later than November 15, 2008.
    Because several of these proposed regulatory revisions in our May 
16, 2008 proposed rule were overtaken by statutory provisions in MIPPA, 
the MIPPA provisions superseded our proposed rulemaking in these areas. 
For example, some provisions in our May 16, 2008 proposed rule 
addressed issues in areas in which MIPPA required that we establish 
marketing limits no later than November 15, 2008. As a result, we 
implemented all provisions addressed in our May 16, 2008 proposed rule, 
and later overtaken by MIPPA provisions, in our September 18, 2008 and 
November 14, 2008 interim final rules with comment (IFCs). We finalized 
the non-MIPPA related provisions of our May 16, 2008 proposed rule in 
our January 16, 2009 final rule with comment period.
    This final rule finalizes the MIPPA-related provisions of our 
September 18, 2008 IFC (73 FR 54226), our November 14, 2008 IFC (73 FR 
67406), our November 21, 2008 correction notice (73 FR 70598), and one 
provision on two SNP-related statutory definitions that was finalized 
with a comment period in our January 16, 2009 final rule with comment 
period (74 FR 2881).

II. Provisions of This Final Rule

    Revisions made in this final rule govern section 1876 cost contract 
plans and the MA and prescription drug benefit programs. Several of the 
final provisions affect both the MA and Part D programs. In our 
discussion that follows, we note when a provision affects both the MA 
and prescription drug benefit, and we include in section II.C. of this 
final rule, a table comparing the final Part C and Part D program 
changes by specifying each issue and the sections of the Code of 
Federal Regulations that we are revising for both programs.

A. Changes to the Regulations in Part 422--Medicare Advantage Program

1. Special Needs Plans
    Congress authorized special needs plans (SNPs) as a type of 
Medicare Advantage (MA) plan designed to enroll individuals with 
special needs. The three types of special needs individuals eligible 
for enrollment in a SNP identified in the MMA include--(1) 
Institutionalized individuals (defined in Sec.  422.2 as an individual 
continuously residing, or expecting to continuously reside, for 90 days 
or longer in a long term care facility); (2) individuals entitled to 
medical assistance under a State Plan under title XIX of the Act; or 
(3) other individuals with severe or disabling chronic conditions that 
would benefit from enrollment in a SNP.
    As of January 2011, there are 455 SNP plan benefit packages (PBPs) 
in operation nationwide. These SNP PBPs include 298 dual-eligible SNP 
(D-SNP) PBPs, 92 chronic care SNP (C-SNP) PBPs, and 65 institutional 
SNP (I-SNP) PBPs.
a. Model of Care (Sec.  422.101(f))
    Section 164 of MIPPA added care management requirements for all 
SNPs effective January 1, 2010, as set forth in section 1859(f)(5) of 
the Act (42 U.S.C. 1395w-28(f)). The new mandate required dual-
eligible, institutional, and chronic condition SNPs to implement care 
management requirements which have two explicit components: an 
evidence-based model of care and a battery of care management services. 
While the revisions made in our September 18, 2008 IFC simply reflected 
the substance of the new MIPPA provisions, our May 16, 2008 proposed 
rule proposed other, related provisions which were finalized in our 
January 12, 2009 final rule.
    The first component of the new mandate enacted in section 164 of 
MIPPA is a requirement for an evidence-based model of care with an 
appropriate

[[Page 54601]]

network of providers and specialists that meet the specialized needs of 
the SNP target population. We received a few comments on our September 
18, 2008 IFC about whether we would issue evidence-based guidelines for 
the model of care, but we did not in our September 18, 2008 IFC 
implement this mandate to endorse any particular set of evidence-based 
guidelines or protocols; instead, we expected that SNPs would develop 
such guidelines and protocols based on the specific elements to be 
included in the model of care as found in the 2008 and 2009 Call 
Letters. We expected that SNPs would be able to use resources such as 
the Agency for Healthcare Research and Quality (AHRQ, https://www.ahrq.gov/). AHRQ does not endorse any particular set of evidence-
based guidelines or protocols; however, its Web site includes access to 
nationally-recognized evidence-based practices. The second component is 
a battery of care management services that includes: (1) A 
comprehensive initial assessment and annual reassessments of an 
individual's physical, psychosocial, and functional needs; (2) an 
individualized plan of care that includes goals and measurable 
outcomes, including specific services and benefits to be provided; and 
(3) an interdisciplinary team to manage care. In addition, MIPPA 
mandated a periodic audit of SNPs to ensure SNPs meet the model of care 
requirements.
    We also have issued guidance on the SNP model of care in our 2008 
and 2009 Call Letters. In addition, care coordination and the presence 
of a provider network comprised of clinical experts pertinent to a 
SNP's target population have long been the cornerstones of the SNP 
model of care.
    In this final rule, we are revising Sec.  422.101(f)(1), which was 
effective January 1, 2010, to correct a typo. The phrase that we are 
replacing is ``indentifying goals,'' and adding ``identifying goals'' 
in its place.
b. Definitions: Institutional-Equivalent and Severe or Disabling 
Chronic Condition (Sec.  422.2)
    Section 164 of MIPPA, inter alia, modified the requirements and 
definitions pertaining to an institutional special needs individual and 
a ``severe or disabling chronic condition'' special needs individual, 
without specifically defining the relevant terms. In response to our 
May 16, 2008 proposed rule regarding eligibility for institutional-
level individuals and severe or disabling chronic condition 
individuals, we received public comments that requested that we propose 
two additional SNP definitions. Accordingly, in our January 12, 2009 
final rule with comment period in which we added definitions based on 
comments from the May 16, 2008 proposed rule, we specified the 
following definitions for ``Institutional Equivalent'' and ``Disabling 
Chronic Condition.''
    ``Institutional-equivalent'' means, for the purpose of defining a 
special needs individual, an MA eligible individual who is living in 
the community, but requires an institutional level of care (LOC). The 
determination that the individual requires an institutional LOC must be 
made by--
     The use of a State assessment tool from the State in which 
the individual resides; and
     An assessment conducted by an impartial entity with the 
requisite knowledge and experience to accurately identify whether the 
beneficiary meets the institutional LOC criteria.
    In States and territories that do not have an existing 
institutional LOC tool, the individual must be assessed using the same 
methodology that specific State uses to determine institutional LOC for 
Medicaid nursing home eligibility.
    In our January 12, 2009 final rule with comment period, we 
specified that the determination of institutional LOC must be made 
using a State assessment tool because States have extensive experience 
in making LOC determinations. We also specified that this LOC 
determination also be made by an additional entity, other than the 
Medicare Advantage Organization (MAO), to ensure the impartially of the 
assessment.
    ``Severe or Disabling Chronic Condition'' means, for the purposes 
of defining a special needs individual, an MA eligible individual who 
has one or more co-morbid and medically complex chronic conditions that 
are substantially disabling or life-threatening; has a high risk of 
hospitalization or other significant adverse health outcomes; and 
requires specialized delivery systems across domains of care.
    We did not receive any comments on these definitions. As such, they 
are adopted without modification in this final rule.
c. Dual-Eligible SNPs and Contracts With States (Sec.  422.107)
    Section 164(c) of MIPPA modified section 1859(f)(3)(D) of the Act 
to require that, effective January 1, 2010, all MA organizations 
offering new dual-eligible SNPs (D-SNPs), or seeking to expand the 
service area of existing D-SNPs, have a contract with the State 
Medicaid agency(ies) in the State(s) in which the D-SNP operates to 
provide benefits, or to arrange for the provision of benefits to 
individuals entitled to receive medical assistance under title XIX of 
the Act. In order to implement this requirement, we specified in our 
(74 FR 54226) IFC published on September 18, 2008 that the contract 
with the State Medicaid agency(ies) must include, at minimum: (1) The 
MAO's responsibility to provide or arrange for Medicaid benefits; (2) 
the category(ies) of eligibility covered under the D-SNP; (3) the 
Medicaid benefits covered under the D-SNP; (4) the cost-sharing 
protections covered under the D-SNP; (5) the identification and sharing 
of information on Medicaid provider participation; (6) the verification 
of enrollee's eligibility for both Medicare and Medicaid; (7) the 
service area covered by the D-SNP; and (8) the contract period for the 
D-SNP. We further clarified that States are not required to enter into 
these contracts with a particular plan or any SNP in the state at all, 
and that we would not permit D-SNPs without State contracts to expand 
their service areas in 2010. We also specified that, for contract year 
2010, MAOs with existing D-SNPs may continue to operate in their 
existing service area without a State Medicaid Agency contract, 
provided they meet all other statutory requirements, including care 
management and quality improvement program requirements. We set forth 
these requirements at Sec.  422.107.
    Comment: Many commenters supported requiring the collaboration 
between MAOs offering D-SNPs and State Medicaid agencies. However, the 
majority of comments that offered qualified support raised questions 
and concerns about operational issues related to the submission of 
these State Medicaid Agency contracts to CMS. Several commenters 
contended that variation in State contracting and procurement processes 
make it difficult for D-SNPs to obtain State Medicaid Agency contracts 
by CMS' deadline, and requested that we give D-SNPs additional time and 
flexibility, on a case by case basis, to meet our contracting 
deadlines.
    Response: We appreciate the commenters' support for the requirement 
that D-SNPs contract with the State Medicaid agencies in the States 
within which the D-SNPs operate. Although we appreciate the information 
about how D-SNPs are impacted by our State Medicaid Agency contract 
submission deadlines, we are not modifying the provision to address the 
operational issues that the commenters raised because we do not

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believe that rulemaking is the appropriate vehicle for addressing such 
issues. However, we note, that while we are not addressing these 
specific operational concerns in this final rule, we provided 
operational guidance to MAOs well in advance of the 2012 contract 
submission deadline. Additional guidance for the 2013 contract 
submission deadline will be included in the 2013 SNP Application, the 
Call Letter for CY 2013, and in any additional HPMS memoranda about the 
D-SNP-State Medicaid agency contract requirement.
    Comment: A number of commenters that submitted comments sought 
clarification on the States' obligations to contract with D-SNPs, 
including whether a State Medicaid agency is required to enter into 
contracts with all D-SNPs that seek to operate in its State. One 
commenter expressed concern about being able to contract with all of 
the D-SNPs that operate in its State because of budgetary concerns and 
contended that this MIPPA requirement to contract with D-SNPs conflicts 
with its established Medicaid managed care models. A few commenters 
suggested that CMS hold D-SNPs harmless if the D-SNP made a good faith 
effort to contract and the State Medicaid agencies either refused to 
contract with the D-SNP at all or refused to include the required 
provisions of Sec.  422.107(c) in the contract between the DSNP and the 
State Medicaid agency. Several of these commenters requested that CMS 
provide incentives and assistance to States to contract with D-SNPs and 
facilitate the contracting process between D-SNPs and the State 
Medicaid agencies. By contrast, one commenter recommended that CMS 
communicate with State Medicaid agencies about D-SNPs that seek to 
operate in its State so the State can let CMS know what SNPs it will 
not contract with, thereby alleviating CMS' burden of reviewing SNPs 
with which a State will not contract.
    Response: As explicitly provided in section 164(c)(4) of MIPPA, 
States are not under any obligations to contract with D-SNPs and can 
decline a D-SNP's request to enter into a contract for any reason. D-
SNPs must still comply with the State contract requirements as 
established in section 164(c) and our regulations at Sec.  422.107. 
However, as required by MIPPA and modified by the Affordable Care Act 
of 2010, to operate during contract year 2013 and beyond, all D-SNPs 
must secure a State Medicaid Agency contract containing, at minimum, 
all provisions listed in Sec.  422.107(c); existing D-SNPs that do not 
obtain a required contract with their State Medicaid agency(ies) will 
not be permitted to continue. We do not believe that Congress intended 
that we hold D-SNPs harmless if the D-SNP made a good faith effort to 
contract and the State Medicaid agencies either refused to contract 
with the D-SNP at all or refused to include the required provisions. As 
required by section 164(c) of MIPPA, and in an effort to facilitate the 
contracting process between State Medicaid agencies and D-SNPs, we have 
established a State Resource Center to provide States with helpful 
information as they engage in contract negotiations with D-SNPs. This 
State Resource Center is designed to facilitate integration and 
coordination of benefits, policies, and day-to-day business processes 
between State Medicaid agencies and D-SNPs, and was also developed to 
provide a forum for States to make inquiries and share information with 
CMS and each other about the coordination of State and Federal policies 
pertaining to SNPs. States and D-SNPs seeking assistance with these 
requirements may e-mail at State_Resource_Center@cms.hhs.gov, or 
visit the State Resource Center Web site at https://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asp. We are, therefore, 
finalizing this provision without further modification.
    Comment: Several commenters requested clarification on the meaning 
of ``providing benefits, or arranging for benefits to be provided'' 
under Sec.  422.107(b), which states that ``[t]he MA organization 
retains responsibility under the contract for providing benefits, or 
arranging for benefits to be provided, for individuals entitled to 
receive medical assistance under title XIX * * *''. A few commenters 
sought confirmation that, with this language, CMS is not requiring D-
SNPs to provide the Medicaid benefits directly to the dual-eligible 
beneficiary; rather, these commenters suggested that they should be 
able to subcontract with another entity for the provision of the 
benefits. Additionally, one commenter questioned whether States may 
enter into a State Medicaid Agency contract with a D-SNP under which 
the SNP does not have a contractual obligation to provide any Medicaid 
benefits. As noted by this commenter, such an option would enable 
States to facilitate the continued operation of D-SNPs without creating 
a conflict with the State's existing managed care models.
    Response: D-SNPs may provide Medicaid benefits directly, or under 
contract with another entity, but must retain responsibility for the 
Medicaid benefits. States and D-SNPs identify the package of Medicaid 
benefits included under the D-SNP in their contract negotiations. The 
requirement that the D-SNP retain responsibility for the Medicaid 
benefits does not allow for a MIPPA compliant State Medicaid Agency 
contract under which the SNP does not have a contractual obligation to 
provide any Medicaid benefits. We are, therefore, finalizing this 
provision without further modification.
    Comment: Many commenters questioned and sought clarification on the 
minimum contract requirements specified in Sec.  422.107(c) and 
questioned whether various existing contracting arrangements between 
MAOs and States (that is, HIPAA business associate agreements or 
existing contracts between States and Medicaid managed care 
organizations) would satisfy the requirements of Sec.  422.107(c). 
Commenters also requested we clarify: (1) The meaning of ``provide or 
arrange for Medicaid benefits'' under Sec.  422.107(c)(1); (2) whether 
under Sec.  422.107(c)(2), the State Plan governs the categories of 
dual eligible beneficiaries to be specified under the State contract, 
and whether the D-SNP must serve all duals in a State as opposed to 
smaller subsets of the State's dual-eligible population; (3) the scope 
of Medicaid benefits to be covered under the SNP; (4) the meaning 
``cost sharing provisions under the SNP''; (5) the meaning of 
``identification and sharing of information on Medicaid provider 
participation''; (6) the meaning of ``verification of enrollee's 
eligibility for both Medicare and Medicaid''; (7) whether the Medicaid 
managed care contract service area must match up with the D-SNP service 
area; and (8) whether CMS will accept contracts with evergreen clauses.
    Response: In order to comply with the State Medicaid Agency 
contract requirements under section 164 of MIPPA, all contracts must, 
at minimum, contain the provisions outlined in Sec.  422.107(c). We are 
unable to make a blanket determination that certain agreements between 
SNPs and State Medicaid agencies do or do not contain all of the 
required provisions; rather, we will review each contract individually 
for each required element to determine compliance. To provide D-SNPs 
more information on these requirements, we released and will continue 
to update additional guidance through the Medicare Managed Care Manual 
and other guidance vehicles (that is, HPMS memos) on the minimum 
contract requirements specified in Sec.  422.107. Additionally, the 
following explanations provide some further

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clarification on the required contract provisions:
     The MA organization's responsibility, including financial 
obligations, to provide or arrange for Medicaid benefits: This 
requirement under Sec.  422.107(c) simply requires that the contract 
between the D-SNP and the State Medicaid agency clearly outline the 
process by which the D-SNP will provide or arrange for Medicaid 
benefits and specify how the Medicare and Medicaid benefits will be 
integrated and/or coordinated. The meaning of ``provide or arrange for 
Medicaid benefits'' is previously discussed in response to the previous 
comment regarding the meaning of these terms under Sec.  422.107(b).
     The category(ies) of eligibility for dual-eligible 
beneficiaries to be enrolled under the SNP, including the targeting of 
specific subsets: This contract provision must specify the population 
of dual-eligible beneficiaries eligible to enroll in the D-SNP, and any 
enrollment limitations for Medicare beneficiaries under this D-SNP must 
parallel any enrollment limitations under the Medicaid program and 
Medicaid State Plan. A D-SNP contract with a State Medicaid agency may 
be for the State's entire population of dual-eligible beneficiaries or 
may cover certain categories of dual-eligible individuals. To the 
extent a State Medicaid agency excludes specific groups of dual 
eligibles from their Medicaid contracts or agreements, those same 
groups must be excluded from enrollment in the SNP, provided that the 
enrollment limitations parallel the structure and care delivery of the 
State Medicaid program. For organizations that contract with the State 
as a Medicaid managed care plan, enrollment in the D-SNP must be 
limited to the dual-eligible beneficiaries permitted to enroll in that 
organization's Medicaid managed care contract.
     The Medicaid benefits covered under the SNP: This State 
contract provision must specify information on benefit design and 
administration, and delineate plan responsibility to provide or arrange 
for benefits. The contract should specify the Medicaid benefits offered 
under the State Plan as well as those benefits the D-SNP will offer 
that go beyond what is required under Original Medicare.
     The cost-sharing protections covered under the SNP: The 
State Medicaid Agency contract should include the limitation on out of 
pocket costs for the applicable categories of dual eligible 
beneficiaries (for example, full benefit dual-eligible individuals). D-
SNPs must enforce limits on out-of-pocket costs for dual-eligibles, and 
contracts between D-SNPs and State Medicaid agencies must specify that 
the D-SNP will not impose cost-sharing requirements on specified dual-
eligible individuals that would exceed the amounts permitted under the 
State Medicaid Plan if the individual were not enrolled in the D-SNP.
     The identification and sharing of information on Medicaid 
provider participation: Meeting this contracting element requires that 
the information provided include a process for the State to identify 
and share information on providers contracted with the State Medicaid 
agency for inclusion in the SNP provider directory. Although CMS does 
not require all providers to accept both Medicare and Medicaid, the D-
SNP's Medicare and Medicaid networks should meet the needs of the dual-
eligible population served.
     The verification of enrollee's eligibility for both 
Medicare and Medicaid: The contract must describe in detail how the 
State Medicaid agency will provide D-SNPs with access to real time 
information to verify eligibility of enrolled dual eligible members.
     The service area covered by the SNP: The State contract 
provision must clearly identify the covered service area in which the 
State has agreed the D-SNP may operate. The D-SNPs service area cannot 
exceed the service area specified in the State Medicaid Agency 
contract. By contrast, the Medicaid managed care service area can 
exceed or include more counties than the D-SNP service area.
     The contract period for the SNP: The State Medicaid Agency 
contract requires a contract term covering at least January 1 through 
December 31 of the relevant MA contract year. If the State is unable to 
meet this required contract term provision, the D-SNP may include an 
evergreen clause within the contract and provide information about when 
the State issues updates to its existing contracts with evergreen 
clauses. Therefore, we are finalizing this provision without 
modification.
    Comment: One commenter sought clarification about whether a D-SNP 
with authority to operate without a State Medicaid Agency contract can 
increase enrollment in the existing counties in its service area.
    Response: D-SNPs that are permitted to operate in contract year 
2012 without a State Medicaid Agency contract are also permitted to 
increase enrollment in the counties in their existing service area. 
Section 164(c) of MIPPA provided that all new D-SNPs must have 
contracts with the State Medicaid agencies in the States in which the 
D-SNPs operate. This provision allowed existing D-SNPs that were not 
seeking to expand their service areas the authority to continue 
operating without a State contract through the 2010 contract year. In 
2010, section 3205 of the Affordable Care Act extended this provision 
for existing, non-expanding D-SNPs through the end of the 2012 contract 
year. As such, for contract year 2012, D-SNPs are only required to have 
a signed State Medicaid Agency contract to operate if they: (1) Are 
offering a new D-SNP-type in CY 2012; (2) are expanding the service 
area of an existing D-SNP type in CY 2012; (3) offered a new D-SNP type 
in CY 2010 or CY 2011; or (4) expanded the service area of an existing 
D-SNP during either of these 2 contract years. Since our April 2011 
final rule (76 FR 21563) entitled, Medicare Program: Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit Programs 
for Contract Year 2012 and Other Changes, finalized changes to Sec.  
422.107(d)(1)(ii) such that existing D-SNPs can operate without State 
Medicaid contracts through CY 2012, provided they do not expand their 
service areas, the regulatory text changes we made to Sec.  
422.107(d)(1)(ii) in our September 18, 2008 IFC have been superseded. 
Therefore, in this final rule, we are not finalizing the regulatory 
text changes to Sec.  422.107(d)(1)(ii) that we described in our 
September 18, 2008 IFC.
    Comment: Two commenters sought clarification on whether MIPPA's 
State Medicaid Agency contract requirement applies only to D-SNPs or to 
all SNPs types that serve and enroll dual-eligible beneficiaries. One 
commenter suggested this provision broadly apply to all SNP types.
    Response: Section 164(c) of MIPPA requires that D-SNPs contract 
with the State Medicaid agencies in the States in which the D-SNP 
operates to provide benefits, or arrange for benefits to be provided, 
for individuals entitled to receive medical assistance under title XIX. 
This requirement is found in section 164(c) of MIPPA under a subsection 
starting with the statutory text ``ADDITIONAL REQUIREMENTS FOR DUAL 
SNPS.'' Further, this provision specifically refers to a specialized MA 
plan for special needs individuals described in subsection 
(b)(6)(B)(ii), which we have interpreted in past guidance to mean D-
SNPs. As such, it is clear that Congress only intended that this State 
contract requirement apply to D-SNPs, and not C-SNPs and I-SNPs that 
enroll dual-eligible beneficiaries. Therefore, we are finalizing this 
provision without modification.

[[Page 54604]]

d. SNPs and Quality Improvement Program (Sec.  422.152)
    Section 164 of MIPPA amended section 1852(e)(3)(A) of the Act to 
add clause (ii) and added a new paragraph (6) to section 1857(d) of the 
Act. Section 1852(e)(3)(A)(ii) of the Act requires that data collected, 
analyzed, and reported as part of the plan's quality improvement (QI) 
program must measure health outcomes and other indices of quality at 
the plan level with respect to the model of care (MOC) as required in 
section 1859(f)(2) through (5) of the Act. As a Medicare Advantage (MA) 
plan, each SNP must implement a documented QI program for which all 
information is available for submission to CMS or for review during 
monitoring visits. The focus of the SNP QI program should be the 
monitoring and evaluation of the performance of its MOC (see Sec.  
422.101(f)). In the September 18, 2008 IFC, we stated that, no later 
than January 1, 2010, the program should be executed as a three-tier 
system of performance improvement.
    The first tier of this program consisted of collection and analysis 
of data on quality and outcome to enable beneficiaries to compare and 
select among health coverage options. As part of the first tier 
implementation and to pilot the development of comparative measures to 
facilitate beneficiary choice, SNPs were required to collect, analyze, 
and submit 13 Healthcare Effectiveness Data and Information Set 
(HEDIS[supreg]) measures and three National Committee on Quality 
Assurance (NCQA) structure and process measures in CY 2008. Since CY 
2008, we have required SNPs to submit eight HEDIS[supreg] and six NCQA 
structure and process measures.
    The second tier of the QI program for SNPs was effective on January 
1, 2010 and was implemented consistent with the requirements Sec.  
422.152(g). As we articulated in our September 18, 2008 IFC, Sec.  
422.152(g) reflects the requirement under section 1852(e)(3)(A)(ii) of 
the Act, added by MIPPA, that SNPs collect, analyze, and report data 
that measures the performance of their plan-specific MOC. SNPs may 
measure the effectiveness of their MOCs, as required under Sec.  
422.152(g), using a variety of plan-determined methodologies, such as 
claims data, record reviews, administrative data, clinical outcomes, 
and other existing valid and reliable measures (for example, Assessing 
Care of Vulnerable Elders (ACOVE) measures, Minimum Data Set (MDS), 
HEDIS[supreg], Health Outcomes Survey (HOS), and the Outcome and 
Assessment Information Set (OASIS)) at the plan level to evaluate the 
effectiveness of the process of care and clinical outcomes. 
Specifically, each SNP must measure the effectiveness of its MOC 
through the collection, aggregation, analysis, and reporting of data 
that demonstrate: Access to care; improvement in beneficiary health 
status; staff implementation of the MOC as evidenced by measures of 
care structure and process from the continuity of care domain; 
comprehensive health risk assessment; care management through an 
individualized plan of care; provision of specialized clinical 
expertise targeting its special needs population through a provider 
network; coordination and delivery of services and benefits through 
transitions across settings and providers; coordination and delivery of 
extra services and benefits that meet the needs of the most vulnerable 
beneficiaries; use of evidence-based practices and/or nationally 
recognized clinical protocols; and the application of integrated 
systems of communication. As we specified in our September 18, 2008 
IFC, each SNP must coordinate the systematic collection of data using 
indicators that are objective, clearly defined, and based on measures 
having established validity and reliability. We further clarified that 
the indicators should be selected from a variety of quality and outcome 
measurement domains such as functional status, care transitioning, 
disease management, behavioral health, medication management, personal 
and environmental safety, beneficiary involvement and satisfaction, and 
family and caregiver support. We also stated that SNPs must document 
all aspects of their QI program, including data collection and 
analysis, actions taken to improve the performance of the MOC, and the 
participation of the interdisciplinary team members and network 
providers in QI activities.
    We are currently implementing the third tier of the QI program, 
which is the required reporting of monitoring data, that consists of a 
prescribed sample of data that SNPs collect under the second tier of 
the QI program to measure their performance under their MOCs. MA 
organizations must currently collect and report ``data that permits the 
measurement of health outcomes and other indices of quality.'' 
Accordingly, MA organizations must collect and report data from the 
HEDIS[supreg], HOS, and CAHPS[supreg] instruments, as well as the SNP 
structure and process measures. We make these performance data 
available to the public (on a summary basis and at the plan level).
    The Affordable Care Act (ACA) requires that, starting in 2012, all 
SNPs be approved by the National Committee on Quality Assurance (NCQA) 
based on standards developed by the Secretary. In our April 2011 final 
rule (76 FR 21466-21448), we specified that the SNP MOC would be the 
basis of NCQA's approval of SNPs. We developed the standards and 
scoring criteria for each of the 11 elements of the MOC for the NCQA to 
use for the SNP approval process.
    Section 1857(d)(6) of the Act stipulates that we will conduct 
reviews of the SNP MOC in conjunction with the periodic audits of the 
MA organizations. During 2010 and 2011, we conducted a pilot study to 
assist us in determining the best methods for assessing the MOCs once 
they were implemented by the SNPs. We will expand this effort in 2012, 
by assessing a sample of the SNPs that attained a 3-year approval as a 
result of the NCQA SNP approval process that was mandated under the 
Affordable Care Act. This assessment will help us ensure that SNPs are 
providing care consistent with their approved MOC and to identify MAOs' 
strengths and weaknesses in implementing their MOCs. We also hope to 
use this information to identify best practices to share with plans and 
the public.
    After considering comments we received, we are finalizing these 
provisions without modification.
    Comment: One commenter viewed this provision as a positive addition 
to demonstrating the value and effectiveness of the SNP model. To 
ensure successful implementation and to improve clarity the commenter 
offered the following suggestions:
     Section 422.152(g)(2)--To ensure that CMS, contracting 
plans, and other interested parties are referring to the same standard, 
the commenter suggested that the regulation specify the source of the 
domains referenced (for example, CMS, NCQA, NIH).
     Section 422.152(g)(2)(viii)--The commenter was concerned 
that the delivery of extra services and benefits to meet the 
specialized needs of the most vulnerable beneficiaries may conflict 
with current CMS guidance on MA bids and benefits. The commenter 
requests that CMS clarify how a SNP would provide a different benefit 
set or set of services to those populations as the term ``extra 
services and benefits'' seems to imply.
     Section 422.152(g)(2)(x)--The commenter believes that the 
use of the term ``plans demonstrating use of integrated systems of 
communication''

[[Page 54605]]

is unclear and requests that CMS provide additional clarification as to 
the intent of the measure CMS references.
    Response: We appreciate the commenter's interest in this issue. 
With respect to Sec.  422.152(g)(2), we are using the definitions of 
domains as described by the Care Continuum Alliance, formerly the 
Disease Management Association of America. An integrated system of 
communication is the system the plan employs to communicate with all of 
its stakeholders--providers, beneficiaries, the public and regulatory 
agencies. This definition is included in Chapter 5 of the Medicare 
Managed Care Manual (``Quality Improvement Program''). The chapter, 
which is part of the Publication 100-16, may be accessed online at 
https://www.cms.hhs.gov/Manuals/IOM.
    We expect MA organizations offering SNPs to incorporate some or all 
of the following benefits that exceed the basic required Medicare A and 
B benefits offered by other MA products available in the same service 
area--(1) No or lower beneficiary cost-sharing; (2) longer benefit 
coverage periods for inpatient services; (3) longer benefit coverage 
periods for specialty medical services; (4) parity (equity) between 
medical and mental health benefits and services; (5) additional 
preventive health benefits (for example, dental screening, vision 
screening, hearing screening, age-appropriate cancer screening, risk-
based cardiac screening); (6) social services (for example, connection 
to community resources for economic assistance); (7) transportation 
services; and (8) wellness programs to prevent the progression of 
chronic conditions.
    Finally, in Sec.  422.152(g)(2)(x), we state that, as part of its 
quality program, a SNP must incorporate use of integrated systems of 
communication as evidenced by measures from the care coordination 
domain. An integrated system of communication is the system the plan 
employs to communicate with all of its stakeholders--providers, 
beneficiaries, the public and regulatory agencies. An example of an 
integrated communication system is a call center that might, as a 
reminder, reach out to clients in advance of their scheduled 
appointments.
    Comment: One commenter expressed the view that current CMS policy 
in the area of allowed extra services and benefits to meet the needs of 
vulnerable beneficiaries is unclear, resulting in instability of 
benefit packages (for example, an extra benefit of independent living 
skills was approved one year and disapproved the next year). The 
commenter also contends that CMS' policy is not applied consistently 
across organizations, resulting in an unlevel playing field for some 
MAOs. Another commenter advised that the plan's care management 
approach may be more a matter of ``how'' and ``when'' benefits are 
provided and reimbursed than what extra benefits and services are 
provided.
    Response: We have provided guidance to MA organizations offering 
SNPs that they should incorporate some or all of the following benefits 
that exceed the basic required Medicare A and B benefits offered by 
other MA products available in the same service area--(1) No or lower 
beneficiary cost-sharing; (2) longer benefit coverage periods for 
inpatient services; (3) longer benefit coverage periods for specialty 
medical services; (4) parity (equity) between medical and mental health 
benefits and services; (5) additional preventive health benefits (for 
example, dental screening, vision screening, hearing screening, age-
appropriate cancer screening, risk-based cardiac screening); (6) social 
services (for example, connection to community resources for economic 
assistance); (7) transportation services; and (8) wellness programs to 
prevent the progression of chronic conditions. As the commenter 
asserts, as important as the provision of ``extra'' services is plans' 
appropriate management of all benefits--both those covered by Parts A 
and B and those that extend or enrich Parts A and B services or provide 
supplemental benefits--for their particular populations is equally as 
important to us. With respect to the commenters' assertion that our 
policy is not applied consistently across organizations, we note that 
our bid review process very carefully scrutinizes permissible 
supplemental benefits across all MA plan.
    Comment: A commenter stated that the term ``health status,'' in 
reference to the second-tier language in the September 18, 2008 IFC, 
can be interpreted in a variety of ways. In an effort to promote 
consistent compliance by SNPs, the commenter recommends that CMS 
provide an explanation of the meaning of the term. The commenter also 
stated that depending upon the beneficiary's disease state, the course 
of the beneficiary's medical condition may be expected to result in 
declining health status. The commenter recommends that CMS revise the 
regulation to accommodate this circumstance.
    Response: We have not provided a specific definition of health 
status, as it is more appropriate for SNPs to apply a definition that 
is appropriate for its population. We understand that for beneficiaries 
with certain medical conditions, the natural course of the disease will 
result in a decline in health status and death. However, our intent is 
to improve health status for the overall Medicare population.
    Comment: Several commenters contended that health outcomes cannot 
be achieved without consideration of other quality of life indicators, 
such as adequate housing, engagement in meaningful activities, 
employment/community activities, and self-determination. These 
commenters suggested that meaningful measures of outcomes and quality 
should include personal experience outcomes. One of the commenters 
urged CMS to consider how ``improvement in health status'' will apply 
to persons whose care plan is focused on maintaining current 
functioning, delaying decline, or approaching the end of life.
    Response: We agree that health outcomes are linked to many other 
factors in a patient's life. We intend to continue to explore best 
practices for measuring health outcomes in the Medicare population. We 
will also consider how ``improvement in health status'' will apply to 
persons whose care plan is focused on maintaining current functioning, 
delaying decline, or approaching the end of life.
    Comment: One commenter noted that the regulation identifies data 
collection, analysis, and reporting as well as audit requirements in 
its QI system but that it does not provide in-depth specifications. The 
commenter suggests that such measures and specifications need further 
development and should be integrated with State's quality measures and 
data requirements.
    Response: Since the publication of the September 18, 2008 IFC, we 
have issued guidance to plans regarding in-depth data specifications in 
various guidance vehicles, including HPMS memoranda. Much of this 
guidance is also consolidated in Chapter 5 of the Medicare Managed Care 
Manual, ``Quality Improvement Program.''
    We are currently revising the process that MA organizations will 
use to submit their 2012 Chronic Care Improvement Programs (CCIPs) and 
Quality Improvement Projects (QIPs) and automating collection within a 
new module in the Health Plan Management System (HPMS). We are also 
revising and streamlining the templates that MA organizations will use 
for CCIP and QIP submission through the Paperwork Reduction Act 
process. The new format will allow MA organizations to demonstrate how 
the CCIP and/or QIP is developed, implemented and analyzed on a 
continuous cycle and to show where improvements in care occur. We

[[Page 54606]]

will provide more detailed guidance and timelines, as well as in-depth 
training on the new CCIP and QIP tools in the fall of 2011. We are also 
developing an MA quality Web page, which we intend to use to provide 
important information to external stakeholders, including MA 
organizations.
    With respect to the commenter's specific concern about integration 
of quality data specifications with those of individual States, we note 
that is it not currently possible to integrate Medicare and Medicaid 
quality reporting requirements at this time. However, this is an issue 
we are currently exploring in coordination with the Federal Coordinated 
Health Care Office (FCHO).
    Comment: Several commenters advised that States have many quality 
assurance requirement processes in place for Medicaid as such the new 
requirements must not conflict/override/interfere with current Medicaid 
contract requirements. According to the commenters, SNPs are concerned 
that they will be forced to try and reconcile conflicting Medicare and 
Medicaid requirements with States without clear guidance from CMS. 
Areas of potential overlap include care plans, initial/annual health 
risk assessments, performance measures, and appeals and grievances.
    Response: We understand the potential for conflicting requirements 
and are currently working with the FCHO to consider ways of more 
closely aligning Medicare and Medicaid requirements.
    The FCHO published the Alignment Initiative on May 16, 2011. This 
Initiative is focused on the new Office's efforts to address 
misalignments between Medicare and Medicaid, including extensive 
treatment and discussion of differing Medicare and Medicaid 
requirements for integrated managed care plans, including SNPs. CMS is 
reviewing the extensive comments that it has received and is working on 
addressing issues identified by this Office and commenters. Further 
guidance will be forthcoming.
    Comment: One commenter questioned how continuum of care is defined. 
The commenter urged that CMS be careful not to encroach on the right of 
State Medicaid agencies to define what benefits to include in its 
contracts with SNPs.
    Response: We have no intention of encroaching on State Medicaid 
agencies' rights to define the Medicaid benefits that are available for 
the dual eligible population. Continuum of care refers to patients 
receiving the care that is appropriate for managing their specific 
health conditions. We recommend using the Care Continuum Alliance's 
definition as a resource. Additional information on continuum of care 
can be found at https://www.carecontinuum.org.
    Comment: One commenter believed there was a lack of evidence based 
guidelines for some populations, such as specific disability groups; 
the commenter suggests that CMS should include language allowing 
locally recognized protocols to permit maximum flexibility. Another 
commenter stated that an evidence base does not exist for the co-morbid 
populations most likely to receive care via SNPs.
    Response: We understand that evidence-based practice in medicine is 
a growing field and, as such, acknowledge that there may not be 
evidence-based protocols for all clinical conditions and co-
morbidities. We do, however, expect plans to institute evidence-based 
protocols and practices that are available and appropriate for their 
patient population. Where there is no evidence-based guidance, then we 
expect that the plan will seek guidance from their account manager at 
the regional office and, in conjunction with CMS, determine the best 
approach to implement.
    Comment: One commenter expressed concern that SNPs which have high 
cost, high need dual populations will be compared with other SNPs 
serving other subsets of the population without an appropriate risk 
adjustment and stratification system. The commenter questions whether 
CMS has a plan for making fair comparisons of data across such 
differences in populations among D-SNPs, as well as between C-SNPs, I-
SNPs, and D-SNPs.
    Another commenter questioned how there can be comparisons across 
different types of SNPs when the populations are so different. The 
commenter recommends that CMS exclude integrated, full benefit D-SNPs 
from the requirements.
    Response: We understand that there are differences in SNP 
populations. The MOC is the vehicle for SNPs to identify, implement, 
provide, and coordinate appropriate health care for their specific 
target populations. Effecting the type of data comparisons recommended 
by the commenter would require us to develop data measures specific to 
each SNP type. At this time, we do not anticipate developing such 
measures. We are aware, however, of the measurement issues that SNPs 
with small enrollments face. We are currently focusing our attention on 
these issues in order to refine our measures for SNPs, including those 
with low enrollments. One way we are addressing this concern is through 
a contract to develop outcome measures for MA organizations, as well as 
for SNPs more specifically. Through this contract we are reviewing all 
current SNP measures and developing measures where there are gaps, 
including for SNPs with low enrollment. We expect this work on outcome 
measures to be completed in late 2014.
    We do not agree with the commenter that fully integrated dual 
eligible SNPs should be exempt from data reporting requirements. All 
SNP types must comply with our requirements.
    Comment: One commenter contended that reporting quality data by 
PBP/plan would result in many low enrollment SNPs not having any 
members in the denominator, or so few that the data/rates would not be 
meaningful. The commenter recommends that quality data instead be 
reported by SNP type (for example, D-SNP) to ensure CMS and 
beneficiaries have meaningful data for plan comparison purposes.
    Response: We understand that there are potentially SNPs with very 
low enrollment (small denominators). Because of this, we currently have 
data reported at the contract level. We understand that plans with 
small enrollments, especially SNPs, may not have the data resources 
available to them to track and monitor quality on an ongoing basis. 
However, SNPs are required to collect HEDIS[reg] data using selected 
measures that have been developed just for plans with smaller 
enrollments. These data, as well as the NCQA structure and process 
measures, should be used to track and monitor areas that could benefit 
from ongoing quality improvement. Also, small plans may have encounter 
data or other data specific to the operations of their organization 
that could be useful for quality improvement.
    As part of our continued effort to explore measures that are more 
sensitive for plans with low enrollment, we are developing outcome 
measures for the MA program, including SNPs. We will also conduct a 
pilot study to test the measures (for example, measures that address 
health outcomes related to coordination of care and transitions of 
care), as well as a larger study to validate the measures. One of our 
goals is to incorporate some of these measures into the MA plan rating 
system. This work will also assist us in developing measures to address 
the concerns of plans with low enrollment that cannot report using some 
of the current measures in the CAHPS[reg]; HEDIS[reg],

[[Page 54607]]

and/or HOS instruments. We expect to complete our work in late 2014.
    Comment: One commenter advised that they have heard concerns from 
both States and plans regarding the stringency of the QI requirements 
and their potential impact on plans' stability.
    Response: We appreciate the commenter's interest in this issue. We 
believe that improving quality and having the data to demonstrate these 
improvements will help support the stability and viability of the 
program.
    Comment: One commenter recommended that CMS promptly issue guidance 
with operational instructions implementing the 2008 SNP Chronic 
Condition Panel Final Report. MIPPA restricted enrollment in C-SNPs to 
special needs individuals that ``have one or more co-morbid and 
medically complex chronic conditions that are substantially disabling 
or life-threatening, have a high risk of hospitalization or other 
significant adverse health outcomes, and require specialized delivery 
systems across domains of care.''
    Response: Fifteen SNP-specific chronic conditions were recommended 
by the panel and adopted beginning with the CY 2009 plan year. The 
Special Needs Plan Chronic Condition Panel Final Report was made public 
on November 12, 2008. The final report is available on the CMS Web site 
at: https://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.zip.
    Comment: In questioning how the new requirements to collect, 
analyze, and report data as well as new requirements for MOC, care 
management, etc., relate to existing CCI, HEDIS, and structure and 
process measures, one commenter urged CMS to work closely with SNPs and 
NCQA to minimize any new data reporting burdens, to prevent duplication 
of data collection and reporting efforts and to maximize use of 
existing structure and process measures to the extent possible in 
meeting new reporting requirements. The commenter also requested that 
CMS take into consideration the development time required to ensure 
accurate and complete data as well as provide technical specifications 
well in advance (for example, plans should have the technical 
specifications 6 months in advance). In addition, the commenter 
requested, that since SNPs have to meet both standard MA reporting as 
well as SNP-specific reporting, CMS take into account the total data 
and reporting burden on SNPs and consider staggering reporting of any 
new SNP requirements, similar to the process for Part C reporting.
    Response: We are sensitive to the potential overlap of QI data 
reporting requirements. As part of our overall QI strategy, are 
carefully and systematically evaluating the impact of data collection 
requirements related to QI in an attempt to decrease burden and prevent 
duplication, while achieving our programmatic goals. Where possible, we 
will attempt to stagger reporting requirements.
    Many of the measures that we have received comments on are included 
in the 5-star plan rating system. We are looking systematically at all 
of our QI reporting tools and measures and making a number of changes. 
For example, we are in the process of improving and implementing new 
reporting tools for the CCIPs and the QIPs for the CY 2012 reporting 
cycle. We expect that these new reporting tools will decrease the data 
collection and reporting burden for all MA organizations. We are also 
developing a module in HPMS that will allow for this reporting process 
to be automated. CMS is committed to continuing to review and to assess 
the measures to address these concerns.
    We acknowledge that the NCQA structure and process measures overlap 
heavily with the MOC and QI reporting requirements. The structure and 
process measures were developed in an effort to identify SNP-specific 
measures that are not affected by a plan's enrollment size. Another 
goal of these measures is to evaluate some of the specific features of 
SNPs that make them unique among MA plans. These measures cannot 
replace the QIPs, since QIPs are a tool for evaluating weaknesses in 
the overall QI program for and MA organization, as well as monitoring 
the impact of any intervention that was implemented to mitigate a 
specific problem.
    Similarly, the MOC serves a unique purpose by ensuring that SNPs 
design a clinical care program to address the health care needs of the 
specific vulnerable populations they serve. The MOC is not a data 
collection system but, rather, a framework for coordinating the key 
evidence based elements critical to providing integrated, high quality 
care to vulnerable patients.
    We are looking systematically at all of our QI reporting tools and 
measures, and are in the process of making changes to eliminate some of 
the burden on plans. For example, we are in the process of streamlining 
and improving the CCIP and QIP reporting tools. By improving the 
reporting tools we expect to use in the 2012 reporting cycle we expect 
to decrease the burden for completing the data collection and 
reporting. We are also developing automating the submission process 
through an HPMS module.
    Comment: One commenter recommended that CMS require the data to be 
reported uniformly. The commenter pointed out that the first tier 
purpose of the QI program to provide data on quality and outcomes to 
enable beneficiaries to compare and select from among health coverage 
options and the second tier purpose for measuring essential components 
of the MOC using a variety of plan-determined methodologies discussed 
in the rule do not appear to require uniform data reporting that would 
promote comparisons among plans.
    Response: We appreciate the commenter's interest in this issue. We 
understand the need for uniformity in reporting and will strive to 
incorporate this principle in the QI program.
d. Special Needs Plans and Other MA Plans With Dual-Eligibles: 
Responsibility for Cost-Sharing (Sec.  422.504(g)(1)) and Written 
Disclosure of Cost-Sharing Requirements (Sec.  422.111(b)(2)(iii))
(1) Comprehensive Written Disclosure Requirement for Dual Eligible SNPs 
(Sec.  422.111(b)(2)(iii))
    Section 164(c)(1) of MIPPA requires that plan sponsors offering D-
SNPs must provide each prospective enrollee, prior to enrollment, with 
a comprehensive written statement that describes the benefits and cost-
sharing protections that the individual would be entitled to under the 
D-SNP and the relevant State Medicaid plan. The comprehensive written 
statement must include the benefits that the individual is entitled to 
under Medicaid (Title XIX), the cost-sharing protections that the 
individual is entitled to under Medicaid (Title XIX), and a description 
of which of these benefits and cost-sharing protections are covered 
under the D-SNP. This provision is effective January 1, 2010. In the 
September 18, 2008 IFC (73 FR 54226), we introduced the regulations at 
Sec.  422.111(b)(2)(iii) to reflect these statutory requirements, and 
are finalizing it without modification in this final rule.
    Comment: One commenter mentioned that it believed that CMS's 
current marketing materials for duals were confusing and inaccurate. 
The commenter expressed support for the comprehensive written statement 
requirement, which it believed would provide dual eligible enrollees 
with crucial information on a plan's cost-sharing benefits.

[[Page 54608]]

    Response: We agree that the comprehensive written statement will 
help dual-eligible beneficiaries make more informed enrollment choices.
    Comment: One commenter stated that the comprehensive written 
statement provision, as written in the interim final rule, was narrower 
than the corresponding section of MIPPA, which requires that CMS 
establish a standard content and format for the notice concerning cost 
sharing protections and Medicare and Medicaid benefits. The commenter 
also recommended adding language to the rule to specify that the 
comprehensive written statement must include a statement of the 
benefits that the SNP provides.
    Response: We disagree with the commenter's assertion that we should 
modify the rule to specifically reference CMS's responsibility to 
establish a standard content and format for the comprehensive written 
notice. Section 164(c)(1) of MIPPA (section 1859(f)(3)(c) of the Act) 
directly mandates that CMS determine the form and content of the 
comprehensive written statement. Regulatory language is neither a 
necessary nor appropriate means of effectuating this statutory 
directive to the agency. Therefore, we are not adding this language to 
the final rule.
    In addition, the language in the regulatory text for this provision 
includes the requirement that the comprehensive written statement must 
include a description of the benefits and cost-sharing protections that 
the D-SNP provides. We do not believe this provision requires further 
clarification.
    Comment: Two commenters requested clarification on the format and 
administration of the requirements established in this provision. One 
commenter suggested that CMS develop a simple template that States 
could use to describe their Medicaid benefits, and requested that CMS 
clarify how the written statement could be modified to reflect States' 
mid-year benefit changes. The commenter additionally asked CMS to 
define the role of the CMS Central Office and CMS Regional offices in 
coordinating the flow of information between States and SNPs. Another 
commenter asked CMS to clarify whether a plan that included this 
information on its Evidence of Coverage (EOC) document would be 
compliant with the comprehensive written statement requirement.
    Response: We are not modifying the provision to address the 
operational issues that the commenters raised. We do not believe that 
rulemaking is the appropriate vehicle for addressing comments on the 
operational issues related to the comprehensive written statement 
requirement. We will address operational issues related to the 
comprehensive written statement requirement for D-SNPs through 
operational guidance vehicles (for example, call letters, manual 
chapters, and HPMS memoranda). We anticipate that this future guidance 
will address the commenters' concerns regarding the operational aspects 
of the comprehensive written disclosure requirement.
(2) Limitation on Cost-Sharing for Certain Dual Eligible Special Needs 
Individuals (Sec.  422.504(g)(1))
    Section 165 of MIPPA, which revised section 1852(a) of the Act, 
prohibits D-SNPs from imposing cost-sharing requirements on full 
benefit dual-eligible individuals and Qualified Medicare Beneficiaries 
(QMBs), as described in sections 1935(c)(6) and 1905(p)(1) of the Act, 
that would exceed the cost-sharing amounts permitted under the State 
Medicaid plan if the individual were not enrolled in the D-SNP. The 
effective date of this provision is January 1, 2010.
    Comment: One commenter asked CMS to clarify the difference between 
this provision's requirement that limits cost-sharing for full benefit 
dual-eligible beneficiaries and the prohibition on balance billing 
Qualified Medicare Beneficiaries (QMBs) that is established in 1903(n) 
of the Act. The commenter also requested that CMS explain the 
difference between this provision and provisions that hold 
beneficiaries harmless in instances of non-payment by a health plan or 
a State Medicaid Agency. Another commenter asked CMS to clarify how a 
plan should construct its benefits and its bid for full benefit duals 
when the liability of the State varies by the reimbursement level in 
its State Medicaid plan.
    Response: We will continue to provide all MA plans, including D-
SNPs, with guidance on the bid submission process. We do not believe 
that it is appropriate t