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, 56336-56527 [2017-25068]
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56336
Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 405, 417, 422, 423, and
498
[CMS–4182–P]
RIN 0938–AT08
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
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
revise the Medicare Advantage program
(Part C) regulations and Prescription
Drug Benefit program (Part D)
regulations to implement certain
provisions of the Comprehensive
Addiction and Recovery Act (CARA)
and the 21st Century Cures Act;
improve program quality, accessibility,
and affordability; improve the CMS
customer experience; address program
integrity policies related to payments
based on prescriber, provider and
supplier status in Medicare Advantage,
Medicare cost plan, Medicare Part D and
the PACE programs; provide a proposed
update to the official Medicare Part D
electronic prescribing standards; and
clarify program requirements and
certain technical changes regarding
treatment of Medicare Part A and Part
B appeal rights related to premiums
adjustments.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on January 16, 2018.
ADDRESSES: In commenting, please refer
to file code CMS–4182–P. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to https://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–4182–P, P.O. Box 8013, Baltimore,
MD 21244–8013.
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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–4182–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. Alternatively,
you may deliver (by hand or courier)
your written comments ONLY to the
following addresses prior to the close of
the comment period:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address, call
telephone number (410) 786–7195 in
advance to schedule your arrival with
one of our staff members.
Comments erroneously mailed to the
addresses indicated as appropriate for
hand or courier delivery may be delayed
and received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Theresa Wachter, (410) 786–1157,
Part C Issues.
Marie Manteuffel, (410) 786–3447,
Part D Issues.
Kristy Nishimoto, (206) 615–2367,
Beneficiary Enrollment and Appeals
Issues.
Raghav Aggarwal, (410) 786–0097,
Part C and D Payment Issues.
Vernisha Robinson-Savoy, (267) 970–
2395, Part C and D Compliance Issues.
Frank Whelan, (410) 786–1302,
Preclusion List Issues.
Shelly Winston, (410) 786–3694, Part
D E-Prescribing Program.
SUPPLEMENTARY INFORMATION:
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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 Web
site as soon as possible after they have
been received: https://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
1. Implementation of the Comprehensive
Addiction and Recovery Act of 2016
(CARA) Provisions
2. Updating the Part D E-Prescribing
Standards (§ 423.160)
3. Revisions to Timing and Method of
Disclosure Requirements
4. Preclusion List
a. Part D
b. Part C
C. Summary of Costs and Benefits
II. Provisions of the Proposed Regulations
A. Supporting Innovative Approaches to
Improving Quality, Accessibility, and
Affordability
1. Implementation of the Comprehensive
Addiction and Recovery Act of 2016
(CARA) Provisions
a. Medicare Part D Drug Management
Programs
b. Stakeholder Input Informing This Notice
of Proposed Rulemaking
c. Integration of CARA and the Current Part
D Opioid DUR Policy and OMS
(1) Current Part D Opioid DUR Policy and
OMS
(2) Proposed Requirements for Part D Drug
Management Programs (§§ 423.100,
423.153)
(i) Definitions (§ 423.100)
(A) Definition of ‘‘Potential At-Risk
Beneficiary’’ and ‘‘At-Risk Beneficiary’’
(§ 423.100)
(B) Definition of ‘‘Frequently Abused
Drug’’, ‘‘Clinical Guidelines’’, ‘‘Program
Size’’, and ‘‘Exempted Beneficiary’’
(§ 423.100)
(ii) Requirements of Drug Management
Programs (§§ 423.153, 423.153(f)))
(iii) Written Policies and Procedures
(§ 423.153(f)(1))
(iv) Case Management/Clinical Contact/
Prescriber Verification (§ 423.153(f)(2))
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(v) Limitations on Access to Coverage for
Frequently Abused Drugs
(§ 423.153(f)(3))
(vi) Requirements for Limiting Access to
Coverage for Frequently Abused Drugs
(§ 423.153(f)(4))
(vii) Beneficiary Notices and Limitation of
the Special Enrollment Period
(§§ 423.153(f)(5), 423.153(f)(6), 423.38)
(A) Initial Notice to Beneficiary and
Sponsor Intent To Implement Limitation
on Access to Coverage for Frequently
Abused Drugs (§ 423.153(f)(5))
(B) Limitation on the Special Enrollment
Period for LIS Beneficiaries With an AtRisk Status (§ 423.38)
(C) Second Notice to Beneficiary and
Sponsor Implementation of Limitation
on Access to Coverage for Frequently
Abused Drugs by Sponsor
(§ 423.153(f)(6))
(D) Alternate Second Notice When Limit
To Access to Coverage for Frequently
Abused Drugs by Sponsor Will Not
Occur (§ 423.153(f)(7))
(E) Timing of Notices (§ 423.153(f)(8))
(F) Exceptions to Timing of the Notices
(§ 423.153(f)(8))
(viii) Provisions Specific to Limitation on
Access to Coverage of Frequently Abused
Drugs to Selected Pharmacies and
Prescribers (§ 423.153(f)(4) and (f)(9)
Through (13))
(A) Special Requirement To Limit Access
to Coverage of Frequently Abused Drugs
to Selected Prescriber(s) (§ 423.153(f)(4))
(B) Selection of Pharmacies and Prescribers
(§ 423.153(f)(9) Through (13))
(1) Beneficiary Preferences (§ 423.153(f)(9))
(2) Exception to Beneficiary Preferences
(§ 423.153(f)(10))
(3) Reasonable Access (§§ 423.100,
423.153(f)(11), 423.153(f)(12))
(4) Confirmation of Pharmacy and
Prescriber Selection (§ 423.153(f)(13))
(ix) Drug Management Program Appeals
(§§ 423.558, 423.560, 423.562, 423.564,
423.580, 423.582, 423.584, 423.590,
423.602, 423.636, 423.638, 423.1970,
423.2018, 423.2020, 423.2022, 423.2032,
423.2036, 423.2038, 423.2046, 423.2056,
423.2062, 423.2122, and 423.2126)
(x) Termination of a Beneficiary’s Potential
At-Risk or At-Risk Status
(§ 423.153(f)(14))
(xi) Data Disclosure and Sharing of
Information for Subsequent Sponsor
Enrollments (§ 423.153(f)(15))
(xii) Summary
2. Flexibility in the Medicare Advantage
Uniformity Requirements
3. Segment Benefits Flexibility
4. Maximum Out-of-Pocket Limit for
Medicare Parts A and B Services
(§§ 422.100 and 422.101)
5. Cost Sharing Limits for Medicare Parts
A and B Services (§§ 417.454 and
422.100)
6. Meaningful Differences in Medicare
Advantage Bid Submissions and Bid
Review (§§ 422.254 and 422.256)
7. Coordination of Enrollment and
Disenrollment Through MA
Organizations and Effective Dates of
Coverage and Change of Coverage
(§§ 422.66 and 422.68)
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8. Passive Enrollment Flexibilities To
Protect Continuity of Integrated Care for
Dually Eligible Beneficiaries (§ 422.60(g))
9. Part D Tiering Exceptions (§§ 423.560,
423.578(a) and (c))
a. Background
b. General Rules
c. Limitations on Tiering Exceptions
d. Alternative Drugs for Treatment of the
Enrollee’s Condition
e. Approval of Tiering Exception Requests
f. Additional Technical Changes and
Corrections
10. Establishing Limitations for the Part D
Special Election Period (SEP) for Dually
Eligible Beneficiaries (§ 423.38)
11. Medicare Advantage and Part D
Prescription Drug Plan Quality Rating
System
a. Introduction
b. Background
c. Basis, Purpose and Applicability of the
Quality Star Ratings System
d. Definitions
e. Contract Ratings
f. Contract Consolidations
g. Data Sources
h. Adding, Updating, and Removing
Measures
i. Measure Set for Performance Periods
Beginning on or After January 1, 2019
j. Improvement Measures
k. Data Integrity
l. Measure-Level Star Ratings
m. Hierarchical Structure of the Ratings
n. Domain Star Ratings
o. Part C and D Summary Ratings
p. Overall Rating
q. Measure Weights
r. Application of the Improvement Measure
Scores
s. Reward Factor (Formerly Referred to as
Integration Factor)
t. Categorical Adjustment Index
u. High and Low Performing Icons
v. Plan Preview of Star Ratings
w. Technical Changes
12. Any Willing Pharmacy Standards
Terms and Conditions and Better Define
Pharmacy Types (§§ 423.100, 423.505)
a. Any Willing Pharmacy Required for All
Pharmacy Business Models
b. Revise the Definition of Retail Pharmacy
and To Add a Definition of Mail-Order
Pharmacy
c. Treatment of Accreditation and Other
Similar Any Willing Pharmacy
Requirements in Standard Terms and
Conditions
d. Timing of Contracting Requirements
13. Changes to the Days’ Supply Required
by the Part D Transition Process
14. Expedited Substitutions of Certain
Generics and Other Midyear Formulary
Changes (§§ 423.100, 423.120, and
423.128)
15. Treatment of Follow-On Biological
Products as Generics for Non-LIS
Catastrophic and LIS Cost Sharing
16. Eliminating the Requirement To
Provide PDP Enhanced Alternative (EA)
to EA Plan Offerings With Meaningful
Differences (§ 423.265)
17. Request for Information Regarding the
Application of Manufacturer Rebates and
Pharmacy Price Concessions to Drug
Prices at the Point of Sale
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B. Improving the CMS Customer
Experience
1. Restoration of the Medicare Advantage
Open Enrollment Period (§§ 422.60,
422.62, 422.68, 423.38, and 423.40)
2. Reducing the Burden of the Compliance
Program Training Requirements
(§§ 422.503 and 423.504)
3. Medicare Advantage Plan Minimum
Enrollment Waiver (§ 422.514(b))
4. Revisions to Timing and Method of
Disclosure Requirements (§§ 422.111 and
423.128)
5. Revisions to Parts 422 and 423, Subpart
V, Communication/Marketing Materials
and Activities
a. Revising the Scope of Subpart V To
Include Communications and
Communications Materials
b. Amending the Regulatory Definition of
Marketing and Marketing Materials
c. Prohibition of Marketing During the
Open Enrollment Period
d. Technical Changes to Other Regulatory
Provisions as a Result of the Changes to
Subpart V
6. Lengthening Adjudication Timeframes
for Part D Payment Redeterminations
and IRE Reconsiderations (§§ 423.590
and 423.636)
7. Elimination of Medicare Advantage Plan
Notice for Cases Sent to the IRE
(§ 422.590)
8. E-Prescribing and the Part D Prescription
Drug Program; Updating Part D EPrescribing Standards
a. Legislative Background
b. Regulatory History
c. Proposed Adoption of NCPDP SCRIPT
Version 2017071 as the Official Part D EPrescribing Standard, Retirement of
NCPDP SCRIPT 10.6, Implementing
Related Conforming Changes Elsewhere
in § 423.160 and Correction of a
Typographical Error Which Occurred
When NCPDP SCRIPT 10.6 Was Initially
Adopted
9. Reduction of Past Performance Review
Period for Applications Submitted by
Current Medicare Contracting
Organizations (§§ 422.502 and 423.503)
10. Part D Prescriber Preclusion List
a. Background
(1) 2014 Final Rule
(2) 2015 Interim Final Rule
(3) Preparations for Enforcement of
Prescriber Enrollment Requirement
b. Proposed Provisions
(1) Prescriber NPI Validation on Part D
Claims
(a) Provisions of § 423.120(c)(5)
(b) Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA)
(i) Preclusion List
(b) Replacement of Enrollment
Requirement With Preclusion List
Requirement
(ii) Updates to Preclusion List
(3) Provisional Coverage
(4) Appeals
c. Specific Regulatory Changes
11. Part C/Medicare Advantage Cost Plan
and PACE Preclusion List (§ 422.224)
12. Removal of Quality Improvement
Project for Medicare Advantage
Organizations (§ 422.152)
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13. Reducing Provider Burden—Comment
Solicitation
C. Implementing Other Changes
1. Reducing the Burden of the Medicare
Part C and Part D Medical Loss Ratio
Requirements (§§ 422.2420 and
423.2430)
a. Background
b. Proposed Regulatory Changes to the
Calculation of the Medical Loss Ratio
(§§ 422.2420, 422.2430, 423.2420, and
423.2430)
(1) Fraud Reduction Activities
(§§ 422.2420, 422.2430, 423.2420, and
423.2430)
(2) Medication Therapy Management
(MTM) (§§ 422.2430 and 423.2430)
(3) Additional Technical Changes to
Calculation of the Medical Loss Ratio
(§§ 422.2420 and 423.2420)
c. Proposed Regulatory Changes to
Medicare MLR Reporting Requirements
(§§ 422.2460 and 423.2460)
d. Proposed Technical Changes to
Medicare MLR Review and NonCompliance and the Release of MLR Data
(§§ 422.2410, 422.2480, 422.2490,
423.2410, 423.2480, and 423.2490)
2. Medicare Advantage Contract Provisions
(§ 422.504)
3. Late Contract Non-Renewal Notifications
(§§ 422.506, 422.508, and 423.508)
4. Contract Request for a Hearing
(§§ 422.664(b) and 423.652(b))
5. Physician Incentive Plans—Update StopLoss Protection Requirements (§ 422.208)
6. Changes to the Agent/Broker
Compensation Requirements
(§§ 422.2274 and 423.2274)
7. Changes to the Agent/Broker
Requirements (§§ 422.2272(e) and
423.2272(e))
8. Codification of Certain Medicare
Premium Adjustments as Initial
Determinations (§ 405.924)
9. Eliminate Use of the Term ‘‘NonRenewal’’ To Refer to a CMS-Initiated
Termination (§§ 422.506, 422.510,
423.507, and 423.509)
III. Collection of Information Requirements
A. Wages
B. Proposed Information Collection
Requirements (ICRs)
1. ICRs Regarding Passive Enrollment
Flexibilities To Protect Continuity of
Integrated Care for Dually Eligible
Beneficiaries (§ 422.60(g))
2. ICRs Regarding Restoration of the
Medicare Advantage Open Enrollment
Period (§§ 422.60, 422.62, 422.68,
423.38, and 423.40)
3. ICRs Regarding Coordination of
Enrollment and Disenrollment Through
MA Organizations and Effective Dates of
Coverage and Change of Coverage
(§§ 422.66 and 422.68)
4. ICRs Regarding Revisions to Timing and
Method of Disclosure Requirements
(§§ 422.111 and 423.128)
5. ICRs Regarding the Removal of Quality
Improvement Project for Medicare
Advantage Organizations (§ 422.152)
6. ICRs Regarding Medicare Advantage
Quality Rating System (§§ 422.162,
422.164, 422.166, 422.182, 422.184, and
422.186)
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7. ICRs Regarding the Medicare Advantage
Plan Minimum Enrollment Waiver
(§ 422.514(b))
8. ICRs Regarding Revisions to Parts 422
and 423, Subpart V, Communication/
Marketing Materials and Activities
9. ICRs Regarding Medical Loss Ratio
Reporting Requirements (§§ 422.2460
and 423.2460)
10. ICRs Regarding Establishing
Limitations for the Part D Special
Enrollment Period for Dual Eligible
Beneficiaries (§ 423.38(c)(4))
11. ICRs Regarding Expedited Substitutions
of Certain Generics and Other Midyear
Formulary Changes (§§ 423.100, 423.120,
and 423.128)
12. ICRs Related to Preclusion List
Requirements for Prescribers in Part D
and Individuals and Entities in Medicare
Advantage, Cost Plans and PACE
13. ICRs Regarding the Part D Tiering
Exceptions (§§ 423.560, 423.578(a), and
(c))
14. ICRs Regarding the Implementation of
the Comprehensive Addiction and
Recovery Act of 2016 (CARA) Provisions
(§§ 423.38 and 423.153(f))
IV. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. CARA Provisions
2. Reducing the Burden of the Compliance
Program Training Requirements
(§§ 422.503 and 423.504)
3. Meaningful Differences in Medicare
Advantage Bid Submissions and Bid
Review (§§ 422.254 and 422.256)
4. Physician Incentive Plans—Update StopLoss Protection Requirements (§ 422.208)
5. Changes to the Agent/Broker
Requirements (§§ 422.2272(e) and
423.2272(e))
6. Coordination of Enrollment and
Disenrollment Through MA
Organizations and Effective Dates of
Coverage and Change of Coverage
7. Lengthening Adjudication Timeframes
for Part D Payment Redeterminations
and IRE Reconsiderations
8. Elimination of Medicare Advantage Plan
Notice for Cases Sent to the IRE
9. Medicare Advantage and Prescription
Drug Plan Quality Rating System
10. Changes to the Days’ Supply Required
by the Part D Transition Process
11. Treatment of Follow-On Biological
Products as Generics for Non-LIS
Catastrophic and LIS Catastrophic Cost
Sharing
12. Eliminating the Requirement To
Provide PDP Enhanced Alternative (EA)
to EA Plan Offerings With Meaningful
Differences (§ 423.265)
13. Removal of Quality Improvement
Project for Medicare Advantage
Organizations (§ 422.152)
14. Preclusion List Requirements for
Prescribers in Part D and Providers and
Suppliers in Medicare Advantage, Cost
Plans and PACE
15. Any Willing Pharmacy Standard Terms
and Conditions and Better Define
Pharmacy Types
16. Expedited Substitutions of Certain
Generics and Other Midyear Formulary
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Changes (§§ 423.100, 423.120, and
423.128)
D. Expected Benefits
E. Alternatives Considered
F. Accounting Statement and Table
G. Conclusion
Acronyms
ACA Affordable Care Act
ACS American Community Survey
AEP Annual Election Period
ANDA Abbreviated New Drug Application
ANOC Annual Notice of Change
AMA American Medical Association
AO Accrediting Organization
ASPE Office of the Assistant Secretary for
Planning and Evaluation
AWP Any Willing Pharmacy
CAI Categorical Adjustment Index
CARA Comprehensive Addiction and
Recovery Act
CCIP Chronic Care Improvement Program
CMS Centers for Medicare & Medicaid
Services
CPT Current Procedural Terminology
DAB Departmental Appeals Board
DE Dual Eligible
DIR Direct or Indirect Remuneration
DME Durable Medical Equipment
DSMO Designated Standards Maintenance
Organization
D–SNP Dual-Eligible Special Needs Plan
EDM Enhanced Disease Management
EHR Electronic Health Record
EOC Evidence of Coverage
EP Eligible Professionals
FFS Fee-for-Service
ePA Electronic Prior Authorization
eRx Electronic Prescription (e-prescribing)
FDA Food and Drug Administration
FIDE Fully Integrated Dual Eligible
FMV Fair Market Value
FPL Federal Poverty Level
HPMS Health Plan Management System
ICD–10 ICD–10–CM
IRE Independent Review Entity
LIS Low Income Subsidy
LPPO Local Preferred Provider
Organization
LTC Long Term Care
MA Medicare Advantage
MADP Medicare Advantage Disenrollment
Period
MA–PD Medicare Advantage Prescription
Drug
MAO Medicare Advantage Organizations
MIPPA Medicare Improvements for Patients
and Providers Act
MLR Medical Loss Ratio
MOOP Maximum Out-of-Pocket
NCPDP National Council of Prescription
Drug Programs
NCQA National Committee for Quality
Assurance
NDC National Drug Code
NSO National Standard Organization
OIG Office of Inspector General
OEP Open Enrollment Period
OMHA Office of Medicare Hearings and
Appeals
OOPC Out-of-Pocket Cost
PA Prior Authorization
PBM Pharmacy Benefit Manager
PBP Plan Benefit Package
PDP Prescription Drug Plan
PHSA Public Health Service Act
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PIP Physician Incentive Plan
PQA Pharmacy Quality Alliance
PSO Provider Sponsored Organization
PSP Provider Specific Plan
QBP Quality Bonus Payment
QI Quality Improvement
QIA Quality Improvement Activities
QIP Quality Improvement Project
REMS Risk Evaluation and Mitigation
Strategies
RFI Request for Information
RHC Rural Health Center
RI Rewards and Incentives
RPPO Regional Preferred Provider
Organization
RRB Railroad Retirement Board
SE Standard Error
SEP Special Enrollment/Election Period
SES Socio-Economic Status
SNP Special Needs Plan
SSA Social Security Administration
TMP Timeliness Monitoring Project
I. Executive Summary
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A. Purpose
The primary purpose of this proposed
rule is to make revisions to the Medicare
Advantage (MA) program (Part C) and
Prescription Drug Benefit Program (Part
D) regulations based on our continued
experience in the administration of the
Part C and Part D programs and to
implement certain provisions of the
Comprehensive Addiction and Recovery
Act and the 21st Century Cures Act. The
proposed changes are necessary to—(1)
Support Innovative Approaches to
Improving Quality, Accessibility, and
Affordability; (2) Improve the CMS
Customer Experience; and (3)
Implement Other Changes. In addition,
this rule proposes technical changes
related to treatment of Part A and Part
B premium adjustments and updates the
Script standard used for Part D
electronic prescribing. While the Part D
program has high satisfaction among
users, we continually evaluate program
policies and regulations to remain
responsive to current trends and newer
technologies. Specifically, this
regulation meets the Administration’s
priorities to reduce burden and provide
the regulatory framework to develop
MA and Part D products that better meet
the individual beneficiary’s healthcare
needs. Additionally, this regulation
includes a number of provisions that
will help address the opioid epidemic
and mitigate the impact of increasing
drug prices in the Part D program.
B. Summary of the Major Provisions
1. Implementation of the
Comprehensive Addiction and Recovery
Act of 2016 (CARA) Provisions
This proposed regulatory provision
would implement statutory provisions
of the Comprehensive Addiction and
Recovery Act of 2016 (CARA), enacted
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into law on July 22, 2016, which
amended the Social Security Act and
includes new authority for Medicare
Part D drug management programs,
effective on or after January 1, 2019.
Through this provision, CMS proposes a
framework under which Part D plan
sponsors may establish a drug
management program for beneficiaries
at risk for prescription drug abuse or
misuse, or ‘‘at-risk beneficiaries.’’ CMS
proposes that, under such programs,
sponsors may limit at-risk beneficiaries’
access to coverage of controlled
substances that CMS determines are
‘‘frequently abused drugs’’ to a selected
prescriber(s) and/or network
pharmacy(ies). CMS also proposes to
limit the use of the special enrollment
period (SEP) for dually- or other low
income subsidy (LIS)-eligible
beneficiaries who are identified as atrisk or potentially at-risk for
prescription drug abuse under such a
drug management program. Finally, this
provision proposes to codify the current
Part D Opioid Drug Utilization Review
(DUR) Policy and Overutilization
Monitoring System (OMS) by integrating
this current policy with our proposals
for implementing the drug management
program provisions. The current policy
involves Part D prescription drug
benefit plans engaging in case
management with prescribers when an
enrollee is found to be taking a very
high dose of opioids and obtaining them
from multiple prescribers and multiple
pharmacies who may not know about
each other. Through the adoption of this
policy, from 2011 through 2016, there
was a 61 percent decrease (over 17,800
beneficiaries) in the number of Part D
beneficiaries identified as potential very
high risk opioid overutilizers.1 Thus,
this proposal expands upon an existing,
innovative, successful approach to
reduce opioid overutilization in the Part
D program by improving quality of care
through coordination while maintaining
access to necessary pain medications.
2. Updating the Part D E-Prescribing
Standards (§ 423.160)
This provision proposes an update to
the electronic standards to be used by
Medicare Part D prescription drug
plans. This includes the proposed
adoption of the NDPDP SCRIPT
Standard Version 2017071, and
retirement of the current NCPDP
SCRIPT Version 10.6, as the official
electronic prescribing standard for
transmitting prescriptions and
prescription-related information using
electronic media for covered Part D
1 CY 2018 Final Parts C&D Call Letter, April 3,
2017.
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drugs for Part D eligible individuals.
These changes would become effective
January 1, 2019. The NCPDP SCRIPT
standards are used to exchange
information between prescribers,
dispensers, intermediaries and Medicare
prescription drug plans.
Although e-prescribing is optional for
physicians and pharmacies, the
Medicare Part D statute and regulations
require drug plans participating in the
prescription benefit to support
electronic prescribing, and physicians
and pharmacies who elect to transmit eprescriptions and related
communications electronically must
utilize the adopted standards. The
proposed updated NCPDP SCRIPT
standards have been requested by the
industry and could provide a number of
efficiencies which the industry and
CMS supports.
In order to facilitate this change, we
propose to update § 423.160, and also
make a number of conforming technical
changes to other sections of part 423. In
addition, we are proposing to correct a
typographical error that occurred in the
regulatory text listing the applicability
dates of the standards by changing the
reference in § 423.160(b)(1)(iv) to
reference (b)(2)(iii) instead of (b)(2)(ii) to
correctly cite to the present use of the
currently adopted NCPDP SCRIPT
Standard Version 10.
3. Revisions to Timing and Method of
Disclosure Requirements
We are proposing to allow the
electronic delivery of certain
information normally provided in hard
copy documents such as the Evidence of
Coverage (EOC). Additionally, we are
proposing to change the timeframe for
delivery of the EOC in particular to the
first day of the Annual Election Period
(AEP) rather than fifteen days prior to
that date. Allowing plans to provide the
EOC electronically would alleviate plan
burden related to printing and mailing,
and simultaneously would reduce the
number of paper documents that
beneficiaries receive from plans. This
would allow beneficiaries to focus on
materials, like the Annual Notice of
Change (ANOC), that drive decision
making. Changing the date by which
plans must provide the EOC to members
would allow plans more time to finalize
the formatting and ensure the accuracy
of the information, as well as further
distance it from the ANOC, which must
still be delivered 15 days prior to the
AEP. We see this proposed change as an
overall reduction of impact that our
regulations have on plans and
beneficiaries. In aggregate, we estimate
a savings (to plans for not producing
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and mailing hard-copy EOCs) of
approximately $51 million.
4. Preclusion List
a. Part D
This proposed rule would rescind the
current provisions in § 423.120(c)(6)
that require physicians and eligible
professionals (as defined in section
1848(k)(3)(B) of the Act) to enroll in or
validly opt-out of Medicare in order for
a Part D drug prescribed by the
physician or eligible professional to be
covered. As a replacement, we propose
that a Part D plan sponsor must reject,
or must require its pharmacy benefit
manager to reject, a pharmacy claim for
a Part D drug if the individual who
prescribed the drug is included on the
‘‘preclusion list,’’ which would be
defined in § 423.100 and would consist
of certain prescribers who are currently
revoked from the Medicare program
under § 424.535 and are under an active
reenrollment bar, or have engaged in
behavior for which CMS could have
revoked the prescriber to the extent
applicable if he or she had been
enrolled in Medicare, and CMS
determines that the underlying conduct
that led, or would have led, to the
revocation is detrimental to the best
interests of the Medicare program. We
recognize, however, the need to
minimize interruptions to Part D
beneficiaries’ access to needed
medications. Therefore, we also propose
to prohibit plan sponsors from rejecting
claims or denying beneficiary requests
for reimbursement for a drug on the
basis of the prescriber’s inclusion on the
preclusion list, unless the sponsor has
first covered a 90-day provisional
supply of the drug and provide
individualized written notice to the
beneficiary that the drug is being
covered on a provisional basis.
b. Part C
This proposed rule would rescind the
current provisions in § 422.222 stating
that providers or suppliers that are types
of individuals or entities that can enroll
in Medicare in accordance with section
1861 of the Act must be enrolled in
Medicare in order to provide health care
items or services to a Medicare enrollee
who receives his or her Medicare benefit
through an MA organization. As a
replacement, we propose that an MA
organization shall not make payment for
an item or service furnished by an
individual or entity that is on the
‘‘preclusion list.’’ The preclusion list,
which would be defined in § 422.2,
would consist of certain individuals and
entities that are currently revoked from
the Medicare program under § 424.535
and are under an active reenrollment
bar, or have engaged in behavior for
which CMS could have revoked the
individual or entity to the extent
applicable if he or she had been
enrolled in Medicare, and CMS
determines that the underlying conduct
that led, or would have led, to the
revocation is detrimental to the best
interests of the Medicare program.
C. Summary of Costs and Benefits
Provision
Savings
Implementation of the Comprehensive Addiction
and Recovery Act of 2016.
Besides the benefits of preventing opioid dependency in beneficiaries we estimate a net savings in 2019 of $13 million to the Trust Fund because of reduced scripts, modestly increasing to a savings of $14 million in 2023. The cost to industry is estimated at about $2.8 million per year.
We estimate 67% of the current 47.8 million beneficiaries will prefer use of the internet vs.
hard copies. This will result in savings of $55 million in 2019 and growing due to inflation to
$67 million in 2023.
Revisions to Timing and Method of Disclosure
Requirements.
II. Provisions of the Proposed
Regulations
A. Supporting Innovative Approaches to
Improving Quality, Accessibility, and
Affordability
1. Implementation of the
Comprehensive Addiction and Recovery
Act of 2016 (CARA) Provisions
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a. Medicare Part D Drug Management
Programs
The Comprehensive Addiction and
Recovery Act of 2016 (CARA), enacted
into law on July 22, 2016, amended the
Social Security Act and includes new
authority for the establishment of drug
management programs in Medicare Part
D, effective on or after January 1, 2019.
In accordance with section 704(g)(3) of
CARA and revised section 1860D–4(c)
of the Act, CMS must establish through
notice and comment rulemaking a
framework under which Part D plan
sponsors may establish a drug
management program for beneficiaries
at-risk for prescription drug abuse, or
‘‘at-risk beneficiaries.’’ Under such a
Part D drug management program,
sponsors may limit at-risk beneficiaries’
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access to coverage of controlled
substances that CMS determines are
‘‘frequently abused drugs’’ to a selected
prescriber(s) and/or network
pharmacy(ies). While such programs,
commonly referred to as ‘‘lock-in
programs,’’ have been a feature of many
state Medicaid programs for some time,
prior to the enactment of CARA, there
was no statutory authority to allow Part
D plan sponsors to require beneficiaries
to obtain controlled substances from a
certain pharmacy or prescriber in the
Medicare Part D program.
In summary, this proposed rule would
implement the CARA Part D drug
management program provisions by
integrating them with the current Part D
Opioid Drug Utilization Review (DUR)
Policy and Overutilization Monitoring
System (OMS) (‘‘current policy’’). As
explained in more detail later in this
section, this integration would mean
that Part D sponsors implementing a
drug management program could limit
an at-risk beneficiary’s access to
coverage of opioids beginning 2019
through a point-of-sale (POS) claim edit
and/or by requiring the beneficiary to
obtain opioids from a selected
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pharmacy(ies) and/or prescriber(s) after
case management and notice to the
beneficiary. To do so, the beneficiary
would have to meet clinical guidelines
that factor in that the beneficiary is
taking a high-risk dose of opioids over
a sustained time period and that the
beneficiary is obtaining them from
multiple prescribers and multiple
pharmacies. This proposed rule would
also implement a limitation on the use
of the special enrollment period (SEP)
for low income subsidy (LIS)-eligible
beneficiaries who are identified as
potential at-risk beneficiaries.
b. Stakeholder Input Informing This
Notice of Proposed Rulemaking
Section 704(g)(2) of CARA required us
to convene stakeholders to provide
input on specific topics so that we could
take such input into account in
promulgating regulations governing Part
D drug management programs.
Stakeholders include Medicare
beneficiaries with Part A or Part B,
advocacy groups representing Medicare
beneficiaries, physicians, pharmacists,
and other clinicians (particularly other
lawful prescribers of controlled
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substances), retail pharmacies, Part D
plan sponsors and their delegated
entities (such as pharmacy benefit
managers), and biopharmaceutical
manufacturers.
We hosted a Listening Session on the
CARA drug management program
provisions via a public conference call
on November 14, 2016 that was
announced in the October 26, 2016
Federal Register (81 FR 74388). We
sought stakeholder input on specific
topics enumerated in sections 704(a)(1)
and 704(g)(2)(B) of the CARA and other
related topics of concern to the
stakeholders.
In developing this proposed rule, we
considered the stakeholders’ comments
provided during the Listening Session,
as well as written comments submitted
afterward, including those submitted in
response to the Request for Information
associated with the publication of the
Plan Year 2018 Medicare Parts C&D
Final Call Letter. We refer to this input
in this preamble using the terms
‘‘stakeholders,’’ ‘‘commenters’’ and
‘‘comments.’’
c. Integration of CARA and the Current
Part D Opioid DUR Policy and OMS
As noted in section II.A.1. of this
proposed rule previously, we are
proposing to implement the CARA Part
D drug management program provisions
by integrating them with our current
policy that is not currently codified, but
would be under this proposal. In using
the term ‘‘current policy’’, we refer to
the aspect of our current Part D opioid
overutilization policy that is based on
retrospective DUR.2 Specifically, we are
proposing a regulatory framework for
Part D plan sponsors to voluntarily
adopt drug management programs
through which they address potential
overutilization of frequently abused
drugs identified retrospectively through
the application of clinical guidelines/
criteria that identify potential at-risk
beneficiaries and conduct case
management which incorporates
clinical contact and prescriber
verification that a beneficiary is an atrisk beneficiary. If deemed necessary, a
sponsor could limit at-risk beneficiaries’
access to coverage for such drugs
through pharmacy lock-in, prescriber
lock-in, and/or a beneficiary-specific
point-of-sale (POS) claim edit. Finally,
sponsors would report to CMS the status
and results of their case management to
OMS and any beneficiary coverage
2 Please refer to the CMS Web site, ‘‘Improving
Drug Utilization Review Controls in Part D’’ at
https://www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/
RxUtilization.html which contains CMS
communications regarding the current policy.
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limitations they have implemented to
MARx, CMS’ system for payment and
enrollment transactions. While plan
sponsors would have the option to
implement a drug management program,
our proposal codifies a framework that
would place requirements upon such
programs. We foresee that all plan
sponsors will implement such drug
management programs based on our
experience that all plan sponsors’ are
complying with the current policy as
laid out in guidance, the fact that our
proposal largely incorporates the CARA
drug management provisions into
existing CMS and sponsor operations,
and especially, in light of the national
opioid epidemic and the declaration
that the opioid crisis is a nationwide
Public Health Emergency.
Because we propose to integrate the
CARA Part D drug management program
provisions with the current policy and
codify them both, we describe the
current policy in section II.A.1.c.(1) of
this proposed rule, noting where our
proposal incorporates changes to the
current policy in order to comply with
CARA and achieve operational
consistency. Where we do not note a
change, our intent is to codify the
current policy, and we seek specific
comment as to whether we have
overlooked any feature of the current
policy that should be codified. CMS
communications regarding the current
policy can be found at the CMS Web
site, ‘‘Improving Drug Utilization
Review Controls in Part D’’ at https://
www.cms.gov/Medicare/PrescriptionDrug-Coverage/
PrescriptionDrugCovContra/
RxUtilization.html.
Then we set forth our proposal for
codification of the regulatory framework
for drug management programs in
section II.A.1.c.(2) of this proposed rule,
which includes provisions specific to
lock-in, which is not a feature of the
current policy.
(1) Current Part D Opioid DUR Policy
and OMS
CMS is actively engaged in addressing
the opioid epidemic and committed to
implementing effective tools in
Medicare Part D. We will work across
all stakeholder, beneficiary and
advocacy groups, health plans, and
other federal partners to help address
this devastating epidemic. CMS has
worked with plan sponsors and other
stakeholders to implement Medicare
Part D opioid overutilization policies
with multiple initiatives to address
opioid overutilization in Medicare Part
D through a medication safety approach.
These initiatives include better
formulary and utilization management;
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real-time safety alerts at the pharmacy
aimed at coordinated care; retrospective
identification of high risk opioid
overutilizers who may need case
management; and regular actionable
patient safety reports based on quality
metrics to sponsors.
The goal of the current policy and
OMS is to reduce opioid overutilization
in Part D. In conjunction with related
Part D opioid overutilization policies
that address prospective opioid use, the
current policy has played a key role in
reducing high risk opioid
overutilization in the Part D program by
61 percent (representing over 17,800
beneficiaries) from 2011 (pre-policy
pilot) through 2016, even as the number
of beneficiaries enrolled in Part D
increased overall during this period
from 31.5 million to 43.6 million
enrollees, or a 38 percent increase.3
The purpose of the current policy is
to provide Part D plan sponsors with
specific guidance about compliance
with § 423.153(b)(2) as to opioid
overutilization, which requires a Part D
plan sponsor to have a reasonable and
appropriate drug utilization
management program that maintains
policies and systems to assist in
preventing overutilization of prescribed
medications. We adopted the current
policy on January 1, 2013, and it has
evolved over time in scope in several
ways with stakeholder feedback and
support, including through the addition
of the OMS in July 2013, primarily via
the annual Parts C&D Call Letter
process.
The current policy has two aspects.
First, in the CY 2013 final Call Letter
and subsequent supplemental guidance,
we provided guidance about our
expectations for Part D plan sponsors to
retrospectively identify beneficiaries
who are at high risk for potential opioid
overutilization and provide appropriate
case management aimed at coordinated
care.4 More specifically, we currently
expect Part D plan sponsors’ Pharmacy
and Therapeutics (P&T) committees to
establish criteria consistent with CMS
guidance to retrospectively identify
potential opioid overutilizers at high
risk for an adverse event enrolled in
their plans who may warrant case
management because they are receiving
opioid prescriptions from multiple
prescribers and pharmacies. Enrollees
3 Final CY 2018 Parts C&D Call Letter, April 3,
2017.
4 An excerpt from the Final 2013 Call Letter, the
supplemental guidance, and additional information
about the policy and OMS are available on the CMS
Web page, ‘‘Improving Drug Utilization Controls in
Part D’’ at https://www.cms.gov/Medicare/
Prescription-Drug/PrescriptionDrugCovContra/
RxUtilization.html.
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with cancer or in hospice are excluded
from the current policy, because the
benefit of their high opioid use may
outweigh the risk associated with such
use. This exclusion was supported by
stakeholder feedback on the current
policy.
Once such enrollees are identified
through retrospective prescription drug
claims review, we expect the Part D
plan sponsors to diligently assess each
case, and if warranted, have their
clinical staff conduct case management
with the beneficiary’s opioid prescribers
until the case is resolved. According to
the supplemental guidance,5 case
management entails:
• The personnel communicating with
prescribers have appropriate
credentials.
• Written inquiries to the prescribers
of the opioid medications about the
appropriateness, medical necessity and
safety of the apparent high dosage for
their patient.
• Attempts to schedule telephone
conversations with the prescribers
(separately or together) within a
reasonable period from the issuance of
the written inquiry notification, if
necessary.
• The clinician-to-clinician
communication includes information
about the existence of multiple
prescribers and the beneficiary’s total
opioid utilization, and the plan’s
clinician elicits the information
necessary to identify any complicating
factors in the beneficiary’s treatment
that are relevant to the case management
effort.
• After discussion or communication
about the appropriate level of opioid
use, the consensus reached by the
prescribers is implemented by the
sponsor, with a beneficiary-specific
opioid POS claim edit, as deemed
appropriate by the prescribers, to
prevent further Part D coverage of an
unsafe level of drug.
• In cases of non-responsive
prescribers, the sponsor may also
implement a beneficiary-specific opioid
POS claim edit to prevent further
coverage of an unsafe level of drug and
to encourage the prescribers to
participate in case management.
Thus, we expect case management to
confirm that the beneficiary’s opioid use
is medically necessary or resolve an
overutilization issue.
As part of the current policy, and
because the Food and Drug
Administration (FDA)-approved
labeling for opioids generally does not
5 September
6, 2012 HPMS memo, ‘‘Supplemental
Guidance Related to Improving Drug Utilization
Review Controls in Part D.’’
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include maximum daily doses, CMS
developed specific criteria to identify
beneficiaries at high risk through
retrospective review of their opioid use
in order to assist Part D sponsors in
identifying such beneficiaries. These
criteria incorporate a morphine
milligram equivalent (MME) 6 approach,
which is a method to uniformly
calculate the total daily dosage of
opioids across all of a patient’s opioid
prescription drug claims. Beginning
with plan year 2018, we adjusted these
criteria to align with the Centers for
Disease Control (CDC) Guideline for
Prescribing Opioids for Chronic Pain
(CDC Guideline) 7 issued in March 2016
in terms of using 90 MME as a threshold
to identify beneficiaries who appear to
be at high risk due to their opioid use.
In its guideline, after considering
information from relevant studies and
experts, the CDC identifies 50 MME
daily dose as a threshold for increased
risk of opioid overdose, and to generally
avoid increasing the daily dosage to 90
MME. Our criteria, which we will
discuss more fully later in the preamble,
also incorporate a multiple prescriber
and pharmacy count to focus on
beneficiaries who appear to be not only
overutilizing opioids but who also are at
increased risk due to potential
coordination of care issues, such that
the providers who are prescribing or
dispensing opioids to these beneficiaries
may not know that other providers are
also doing so.
The second aspect of the current
policy came into place in July 2013,
when CMS launched the OMS as a tool
to monitor Part D plan sponsors’
effectiveness in complying with
§ 423.153(b)(2) to address opioid
overutilization. Through the OMS, CMS
sends sponsors quarterly reports about
their Part D enrollees who meet the
criteria for being at high risk of opioid
overutilization. Then, we expect
sponsors to address each case through
the case management process previously
described and respond to CMS through
the OMS using standardized responses.
In addition, we expect sponsors to
provide information to their regional
CMS representatives and the MARx
system about beneficiary-specific opioid
POS claim edits that they intend to or
have implemented.8
6 Please note that CMS will use the term ‘‘MME’’
going forward instead of morphine equivalent dose
(MED), which CMS has used to date. CMS used the
term MED in a manner that was equivalent to MME.
We will update CMS documents that currently refer
to MED as soon as practicable.
7 Please see https://www.cdc.gov/drugoverdose/
prescribing/guideline.html.
8 Please refer to the CMS Web site, ‘‘Improving
Drug Utilization Review Controls in Part D’’ at
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Because case management is very
resource intensive for sponsors and
PBMs, we have limited the scope of the
current policy in terms of the number of
beneficiaries identified by OMS, and
when expanding that number, we have
made changes incrementally through
annual Parts C&D Call Letter process.
(2) Proposed Requirements for Part D
Drug Management Programs (§§ 423.100
and 423.153)
We first propose several definitions
for terms we propose to use in
establishing requirements for Part D
drug management programs.
(i) Definitions (§ 423.100)
(A) Definition of ‘‘Potential At-Risk
Beneficiary’’ and ‘‘At-Risk Beneficiary’’
(§ 423.100)
Section 1860D–4(c)(5)(C) of the Act
contains a definition for ‘‘at-risk
beneficiary’’ that we propose to codify
at § 423.100. In addition, although the
section 1860D–4(c)(5) of the Act does
not explicitly define a ‘‘potential at-risk
beneficiary,’’ it contemplates a
beneficiary who is potentially at-risk.
Accordingly, we propose to define these
two terms at § 423.100 as follows:
Potential at-risk beneficiary means a
Part D eligible individual—(1) Who is
identified using clinical guidelines (as
defined in § 423.100); or (2) With
respect to whom a Part D plan sponsor
receives a notice upon the beneficiary’s
enrollment in such sponsor’s plan that
the beneficiary was identified as a
potential at-risk beneficiary (as defined
in paragraph (1) of this definition) under
the prescription drug plan in which the
beneficiary was most recently enrolled,
such identification had not been
terminated upon disenrollment, and the
new plan has adopted the identification.
At-risk beneficiary means a Part D
eligible individual—(1) who is—(i)
Identified using clinical guidelines (as
defined in § 423.100); (ii) Not an
exempted beneficiary; and (iii)
Determined to be at-risk for misuse or
abuse of such frequently abused drugs
under a Part D plan sponsor’s drug
management program in accordance
with the requirements of § 423.153(f); or
(2) With respect to whom a Part D plan
sponsor receives a notice upon the
beneficiary’s enrollment in such
sponsor’s plan that the beneficiary was
identified as an at-risk beneficiary (as
defined in paragraph (1) of this
definition) under the prescription drug
plan in which the beneficiary was most
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recently enrolled, such identification
had not been terminated upon
disenrollment, and the new plan has
adopted the identification. The
distinction between a ‘‘potential at-risk
beneficiary’’ and an ‘‘at-risk
beneficiary’’ is important for a few
reasons that we will explain later in this
preamble. Also, we added the phrase,
‘‘and the new plan has adopted the
identification’’ to both definitions for
cases where a beneficiary has been
identified as a potential at-risk or at-risk
beneficiary by the immediately prior
plan to indicate that the beneficiary’s
status in the subsequent plan is not
automatic.
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(B) Definition of ‘‘Frequently Abused
Drug’’, ‘‘Clinical Guidelines’’, ‘‘Program
Size’’, and ‘‘Exempted Beneficiary’’
(§ 423.100)
Because we use these terms in the
proposed definitions of ‘‘potential atrisk beneficiary’’ and ‘‘at-risk
beneficiary,’’ we propose to define
‘‘frequently abused drug,’’ ‘‘clinical
guidelines’’, ‘‘program size’’, and
‘‘exempted beneficiary’’ at § 423.100 as
follows:
• Frequently Abused Drug
Section 1860D–4(c)(5)(G) of the Act
defines ‘‘frequently abused drug’’ as a
drug that is a controlled substance that
the Secretary determines to be
frequently abused or diverted.
Consistent with the statutory definition,
we propose to define ‘‘Frequently
abused drug’’ at § 423.100 to mean a
controlled substance under the federal
Controlled Substances Act that the
Secretary determines is frequently
abused or diverted, taking into account
the following factors: (1) The drug’s
schedule designation by the Drug
Enforcement Administration; (2)
Government or professional guidelines
that address that a drug is frequently
abused or misused; and (3) An analysis
of Medicare or other drug utilization or
scientific data. This definition is
intended to provide enough specificity
for stakeholders to know how the
Secretary will determine a frequently
abused drug, while preserving flexibility
to update which drugs CMS considers to
be frequently abused drugs based on
relevant factors, such as actions by the
Drug Enforcement Administration and/
or trends observed in Medicare or
scientific data.
We plan to publish and update a list
of frequently abused drugs for purposes
of Part D drug management programs.
We propose that future designations of
frequently abused drugs by the
Secretary primarily be included in the
annual Parts C&D Call Letter or in
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similar guidance, which would be
subject to public comment, if necessary
to address midyear entries to the drug
market or evolving government or
professional guidelines. This approach
would be consistent with our approach
under the current policy and necessary
for Part D drug management programs to
be responsive to changing public health
issues over time.
While this is the approach we propose
for future designations of frequently
abused drugs, we are including a
discussion of the designation for plan
year 2019 in this preamble. For plan
year 2019, consistent with current
policy, we propose that opioids are
frequently abused drugs. Our proposal
to designate opioids as frequently
abused drugs illustrates how the
proposed definition could work in
practice:
First, the Secretary determines
opioids are frequently abused or
diverted, because they are controlled
substances, and drugs and other
substances that are considered
controlled substances under the
Controlled Substances Act (CSA) are so
considered precisely because they have
abuse potential. The Drug Enforcement
Administration (DEA) divides
controlled substances into five
schedules based on whether they have
a currently accepted medical use in
treatment in the United States, their
relative abuse potential, and their
likelihood of causing dependence when
abused. Most prescription opioids are
Schedule II, where the DEA places
substances with a high potential for
abuse with use potentially leading to
severe psychological or physical
dependence.9 A few opioids are
Schedule III or IV, where the DEA
places substances that have a potential
for abuse.
Second, on October 26, 2017, the
President directed that executive
agencies use all appropriate emergency
authorities and other relevant
authorities to address drug addiction
and opioid abuse, and the Acting
Secretary of Health and Human Services
declared a nationwide Public Health
Emergency to address the opioid
crisis.10 In addition, the CDC has
9 The abuse rate is a determinate factor in the
DEA’s scheduling of the drug; for example,
Schedule I drugs have a high potential for abuse
and the potential to create severe psychological
and/or physical dependence. As the drug schedule
changes— Schedule II, Schedule III, etc., so does
the abuse potential— Schedule V drugs represents
the least potential for abuse. See DEA Web site
about Drug Scheduling: https://www.dea.gov/
druginfo/ds.shtml.
10 See White House Web site https://
www.whitehouse.gov/the-press-office/2017/10/26/
presidential-memorandum-heads-executive-
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declared opioid overuse a national
epidemic, both of which are relevant
factors.11 More than 33,000 people died
from opioid overuse in 2015, which is
the highest number per year on record.
From 2000 to 2015, more than half a
million people died from drug
overdoses, and 91 Americans die every
day from an opioid overdose. Nearly
half of all opioid overdose deaths
involve a prescription opioid. Given
that opioids, including prescription
opioids, are the main driver of drug
overdose deaths in the U.S., it is
reasonable for the Secretary to conclude
that opioids are frequently abused and
misused.
Third, government or professional
guidelines support determining that
opioids are frequently abused or
misused. Consistent with current policy,
we propose to designate all opioids as
frequently abused drugs except
buprenorphine for medication-assisted
treatment (MAT) and injectables. The
CDC MME Conversion Factor file 12
does not include all formulations of
buprenorphine for MAT so that access
is not limited, and injectables are not
included due to low claim volume.
Therefore, CMS cannot determine the
MME. CMS will consider revisions to
the CDC MME Conversion Factor file
when updating the list of opioids
designated as frequently abused drugs
in future guidance.
Fourth, an analysis of Medicare data
supports designating opioids as
‘‘frequently abused drugs,’’ at least
initially. Over 727,000 Part D
beneficiaries had an average MME of at
least 90 mg during the 6-month period
from July 1, 2015 to December 31, 2015
(‘‘90 mg MME + users’’), a number
which excludes beneficiaries with
cancer or in hospice, whom we propose
to exempt from drug management
programs, as we discuss later. As noted
earlier, the CDC recommends
prescribers generally avoid increasing
the daily opioid dosage to 90 MME.
Given that so many beneficiaries have
an average MME above this threshold, it
is reasonable that the Secretary consider
this data to be a relevant factor in
determining that opioids are frequently
abused or diverted.
Most stakeholders recommended
designating opioids as frequently
abused drugs. In this regard, we note
departments-and-agencies, and the HHS Web site
https://www.hhs.gov/about/news/2017/10/26/hhsacting-secretary-declares-public-health-emergencyaddress-national-opioid-crisis.html.
11 See CDC Web site https://www.cdc.gov/
drugoverdose/ for all statistics in this
paragraph.
12 See https://www.cdc.gov/drugoverdose/
resources/data.html.
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that our current policy applies only to
opioids and that we are integrating the
drug management provisions of CARA
with our current policy. Therefore,
designating opioids as frequently
abused drugs, at least in the initial
implementation of drug management
programs, would have the added benefit
of allowing CMS and stakeholders to
gain experience with the use of lock-in
in the Part D program, before potentially
designating other controlled substances
as frequently abused drugs.
Some commenters expressed support
for including other or all controlled
substances, such as benzodiazepines,
sedatives, and certain muscle relaxants
as frequently abused drugs; however, we
are not persuaded. Opioids are unique
in that there is generally no maximum
dose for them in the FDA labeling. Also,
in the proposed Contract Year 2016
Parts C&D Call Letter, we solicited
feedback on expanding the current
policy to other drugs, and the comments
were mixed. A few commenters
suggested that we expand the current
policy to benzodiazepines and muscle
relaxants when used with opioids. In
respond to the feedback, we did not
expand the current policy beyond the
opioid class but indicated that we
would investigate. Subsequently, the
CDC Guideline was published and it
specifically recommends that clinicians
avoid prescribing opioid pain
medication and benzodiazepines
concurrently whenever possible due to
increased risk for overdose. Therefore,
we added a concurrent benzodiazepineopioid flag to OMS in October 2016 to
alert Part D sponsors that concurrent use
may be an issue that should be
addressed during case management, and
we will continue to do so.13
Other than conveying the concurrent
benzodiazepine use information to
sponsors, we have not expanded the
current policy to address non-opioid
medications. However, we have stated
that if a sponsor chooses to implement
the current policy for non-opioid
medications, we would expect the
sponsor to employ the same level of
diligence and documentation with
respect to non-opioid medications that
we expect for opioid medications.14 We
have taken this approach to the current
policy so that we could focus on the
opioid epidemic and also due to the
difficulty in establishing overuse
guidelines for non-opioid controlled
13 Please refer to the memo, ‘‘Medicare Part D
Overutilization Monitoring System (OMS) Update:
Addition of the Concurrent Opioid-Benzodiazepine
Use Flag’’ dated October 21, 2016.
14 See ‘‘Supplemental Guidance Related to
Improving Drug Utilization Review Controls in Part
D,’’ dated September 6, 2012.
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substances. For this reason our proposal
would not identify benzodiazepines as
frequently abused drugs. However, we
solicit additional comment on our
proposed approach to frequently abused
drugs. Also, we propose that, if
finalized, this rule would supersede our
current policy, and sponsors would no
longer be allowed to implement the
current policy for non-opioid
medications. We seek feedback on
allowing sponsors to continue to
implement the current policy for nonopioid medications with respect to
beneficiary-specific claim edits.
• Clinical Guidelines and Program Size
Section 1860D–4(c)(5)(C)(i)(I) of the
Act requires at-risk beneficiaries to be
identified using clinical guidelines that
indicate misuse or abuse of frequently
abused drugs and that are developed in
consultation with stakeholders. We
propose to include a definition of
‘‘clinical guidelines’’ that cross
references standards that we are
proposing at § 423.153(f) for how the
guidelines would be established and
updated. Specifically, we propose to
define clinical guidelines for purposes
of a Part D drug management program
as criteria to identify potential at-risk
beneficiaries who may be determined to
be at-risk beneficiaries under such
programs, and that are developed in
accordance with the proposed standards
in § 423.153(f)(16) and published in
guidance annually.
We also propose to add
§ 423.153(f)(16) to state that potential atrisk beneficiaries and at-risk
beneficiaries are identified by CMS or
the Part D sponsor using clinical
guidelines that: (1) Are developed with
stakeholder consultation; (2) Are based
on the acquisition of frequently abused
drugs from multiple prescribers,
multiple pharmacies, the level of
frequently abused drugs, or any
combination of these factors; (3) Are
derived from expert opinion and an
analysis of Medicare data; and (4)
Include a program size estimate. This
proposed approach to developing and
updating the clinical guidelines is
intended to provide enough specificity
for stakeholders to know how CMS
would determine the guidelines by
identifying the standards we would
apply in determining them.
This proposed approach indicates that
the program size would be determined
as part of the process to develop the
clinical guidelines—a process into
which stakeholders would provide
input. Section 1860D–4(c)(5)(C)(iii) of
the Act states that the Secretary shall
establish policies, including the
guidelines and exemptions, to ensure
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that the population of enrollees in drug
management programs could be
effectively managed by plans. We
propose to define ‘‘program size’’ in
§ 423.100 to mean the estimated
population of potential at-risk
beneficiaries in drug management
programs (described in § 423.153(f))
operated by Part D plan sponsors that
the Secretary determines can be
effectively managed by such sponsors as
part of the process to develop clinical
guidelines.
This proposed approach to
developing and updating the clinical
guidelines would also be flexible
enough to allow for updates to the
guidelines outside of the regulatory
process to address trends in Medicare
with respect to the misuse and/or
diversion of frequently abused drugs.
We have determined this approach is
appropriate to enable CMS to assist Part
D drug management programs in being
responsive to public health issues over
time. This approach would also be
consistent with how the OMS criteria
have been established over time through
the annual Medicare Parts C&D Call
Letter process, which we plan to
continue except for 2019.
For plan year 2019, we propose the
clinical guidelines in this preamble to
be the OMS criteria established for plan
year 2018, which meet the proposed
standards for the clinical guidelines for
the following reasons: First, as
described earlier, the OMS criteria
incorporate a 90 MME threshold cited in
a CDC Guideline, which was developed
by experts as the level that prescribers
should avoid reaching with their
patients. This threshold does not
function as a prescribing limit for the
Part D program; rather, it identifies
potentially risky and dangerous levels of
opioid prescribing in terms of misuse or
abuse. Second, the OMS criteria also
incorporate a multiple prescriber and
pharmacy count. A high MED level
combined with multiple prescribers
and/or pharmacies may also indicate the
abuse or misuse of opioids due to the
possible lack of care coordination
among the providers for the patient.
Third, the OMS criteria have been
revised over time based on analysis of
Medicare data and with stakeholder
input via the annual Parts C&D Call
Letter process. Indeed, many
stakeholders recommended the use of
the CDC Guideline as part of the clinical
guidelines the Secretary must develop,
with some noting that they would need
to be used in a way that accounts for use
of multiple providers, which the OMS
criteria do. Fourth, these criteria are
familiar to Part D sponsors—they will
already have experience with them by
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2019, and they were established with an
estimate of program size.
Several stakeholders in their
comments referred to various criteria
used in state Medicaid lock-in programs
to identify beneficiaries appropriate for
lock-in, without suggesting that any
particular ones be adopted. Other
commenters suggested CMS consider
other guidelines, such as the American
Society of Addiction Medicine (ASAM)
National Practice Guideline for the Use
of Medications in the Treatment of
Addiction Involving Opioid Use and the
Veterans Affairs/Department of Defense
(VA/DoD) Clinical Practice Guideline on
Opioid Therapy for Chronic Pain.
However, these guidelines are similar to
or moving toward an MME methodology
which we currently use or address a
more narrow population than persons
who may be abusing or misusing
frequently abused drugs, and they do
not directly address situations involving
multiple opioid providers. The VA/DoD
Clinical Practice Guideline for Opioid
Therapy for Chronic Pain is similar to
the scope of the CDC Guideline. The
ASAM Guideline for the Use of
Medications in the Treatment of
Addiction Involving Opioid Use was
developed specifically for the
evaluation and treatment of opioid use
disorder and for the management of
opioid overdose, which would not be
applicable here because it serves a
different purpose. Therefore, we do not
see a reason to adopt these guidelines
instead of the 2018 OMS criteria.
The clinical guidelines for use in drug
management programs we are proposing
for 2019 are: Use of opioids with an
average daily MME greater than or equal
to 90 mg for any duration during the
most recent 6 months and either: 4 or
more opioid prescribers and 4 or more
opioid dispensing pharmacies OR 6 or
more opioid prescribers, regardless of
the number of opioid dispensing
pharmacies. We note that we have
described alternative clinical guidelines
that we considered in the Regulatory
Impact Analysis section of this rule.
Stakeholders are invited to comment on
those alternatives and any others which
would involve identifying more or fewer
potential at-risk beneficiaries.
We propose that under the proposed
clinical guidelines, prescribers
associated with the same single Tax
Identification Number (TIN) be counted
as a single prescriber. This is consistent
with the current policy under which we
have found that such prescribers are
typically in the same group practice that
is coordinating the care of the patients
served by it. Thus, it is appropriate to
count such prescribers as one, so as not
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to identify beneficiaries who are not atrisk.
In this regard, in applying the OMS
criteria, CMS counts prescribers with
the same TIN as one prescriber, unless
any of the prescribers are associated
with multiple TINs. For example, under
the criteria we have proposed, a
beneficiary who meets the 90 MME
criterion and received opioid
prescriptions from 4 prescribers in the
same group practice and 3 independent
opioid prescribers (1 group practice + 3
prescribers = 4 prescribers) and filled
the prescriptions at 4 opioid dispensing
pharmacies, would still meet the
criteria, which is appropriate. However,
a beneficiary who meets that 90 MME
criterion and received opioid
prescriptions from 4 prescribers in the
same group practice and 1 independent
opioid prescriber (1 group practice + 1
prescriber = 2 prescribers) and filled the
prescriptions at 4 opioid dispensing
pharmacies would not meet the criteria,
which is also appropriate at this time
given program size concerns.
Section 1860D–4(c)(5)(D) of the Act
specifies that for purposes of limiting
access to coverage of frequently abused
drugs to those obtained from a selected
pharmacy, if the pharmacy has multiple
locations that share real-time electronic
data, all such locations of the pharmacy
collectively are treated as one
pharmacy. Given this provision, as well
as our proposal to treat multiple
prescribers from the same group
practice as one prescriber under the
clinical guidelines, we propose that
where a pharmacy has multiple
locations that share real-time electronic
data, all locations of the pharmacy
collectively be treated as one pharmacy
under the clinical guidelines.
Because not all Part D plans’ data
systems may be able to account for
group practice prescribers as we
described above, or chain pharmacies
through data analysis alone, or may not
be able to fully account for them, we
request information on sponsors’
systems capabilities in this regard. Also,
if a plan sponsor does not have the
systems capability to automatically
determine when a prescriber is part of
a group or a pharmacy is part of a chain,
the plan sponsor would have to make
these determinations during case
management, as they do with respect to
group practices under the current
policy. If through such case
management, the Part D plan finds that
the multiple prescribers who prescribed
frequently abused drugs for the
beneficiary are members of the same
group practice, the Part D plan would
treat those prescribers as one prescriber
for purposes of identification of the
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beneficiary as a potential at-risk
beneficiary. Similarly, if through such
case management, the Part D plan finds
that multiple locations of a pharmacy
used by the beneficiary share real-time
electronic data, the Part D plan would
treat those locations as one pharmacy
for purposes of identification of the
beneficiary as a potential at-risk
beneficiary. Both of these scenarios may
result in a Part D sponsor no longer
conducting case management for a
beneficiary because the beneficiary does
not meet the clinical guidelines. We also
note that group practices and chain
pharmacies are important to consider
for purposes of the selection of a
prescriber(s) and pharmacy(ies) in cases
when a Part D plan limits a beneficiary’s
access to coverage of frequently abused
drugs to selected pharmacy(ies) and/or
prescriber(s), which we discuss in more
detail later in this preamble.
Under the current policy, sponsors
must use 90 MME as a ‘‘floor’’ for their
own criteria to identify beneficiaries
who may be overutilizing opioids, but
they may vary the prescriber and
pharmacy count. This means sponsors
may review beneficiaries who do not
meet the OMS criteria but meet the
sponsors’ internal criteria for review, or
they may not review beneficiaries who
meet the OMS criteria but do not meet
the sponsors’ internal criteria for
review. However, under our proposal to
adopt the 2018 OMS criteria as the 2019
clinical guidelines for Part D drug
management programs, we also propose
to mostly eliminate this feature of the
current policy. Under our proposal, Part
D plan sponsors would not be able to
vary the criteria of the guidelines to
include more or fewer beneficiaries in
their drug management programs,
except that we propose to continue to
permit plan sponsors to apply the
criteria more frequently than CMS
would apply them through OMS in
2018, which can result in sponsors
identifying beneficiaries earlier. This is
because CMS evaluates enrollees
quarterly using a 6-month look back
period, whereas sponsors may evaluate
enrollees more frequently (for example,
monthly).
While several commenters stated that
Part D plan sponsors should have
flexibility in developing their own
criteria for identifying at-risk
beneficiaries in their plans, a more
conservative and uniform approach is
warranted for the initial implementation
of Part D drug management programs.
While we already have experience with
how frequently Part D plan sponsors use
beneficiary-specific opioid POS claim
edits to prevent opioid overutilization,
we wish to learn how sponsors will use
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lock-in as a tool to address this issue
before adopting clinical guidelines that
might include parameters for
permissible variations of the criteria. We
plan to monitor compliance of drug
management programs as we monitor
compliance with the current policy
through various CMS data sources, such
as OMS, MARx, beneficiary complaints
and appeals.
Also, we note that despite sponsors’
additional identification of some
beneficiaries currently, in practice, we
have found that CMS identifies the vast
majority of beneficiaries who are
reviewed by Part D sponsors through
OMS. CMS identifies over 80 percent of
the cases reviewed through OMS, and
about 20 percent are identified by
sponsors based on their internal criteria.
We understand that most of the
beneficiaries representing the 20 percent
were reported to OMS due to the
sponsors averaging the MME
calculations across all opioid
prescriptions, which has subsequently
been changed in the 2018 OMS criteria.
The 2018 OMS criteria also have a lower
MME threshold and account for
additional beneficiaries who receive
their opioids from many prescribers
regardless of the number of pharmacies,
which will result in the identification of
more beneficiaries through OMS. Thus,
our proposal would not substantially
change the current practice.
Furthermore, in approximately 39
percent of current OMS cases, sponsors
respond that the case does not meet the
sponsor’s internal criteria for review.15
We found that the original OMS criteria
generated false positives that some
sponsors’ internal criteria did not
because these sponsors used a shorter
look back period or were able to group
prescribers within the same practice or
chain pharmacies. These best practices
have also been incorporated into the
revised 2018 OMS criteria, which are
the basis of the proposed 2019 clinical
guidelines. Thus, while our proposal
will prevent sponsors from voluntarily
reviewing more potential at-risk
beneficiaries than CMS identifies
through OMS, it will likely require
sponsors to review more beneficiaries
than they currently do.
Table 1 shows that in 2015
approximately 33,000 beneficiaries
would have met the proposed 2019
clinical guidelines, which is
approximately 0.08 percent of the 42
million beneficiaries enrolled in Part D
in 2015. We think this population
would constitute a manageable program
size because this is the estimated OMS
population we finalized during the Plan
Year 2018 Parts C&D Call Letter process.
Moreover, we have no evidence to
suggest that this program size will be
problematic for sponsors.
In addition, current Medicaid lock-in
programs support the notion that this
program size would be manageable by
Part D plan sponsors. In 2015, an
average 0.37 percent of Medicaid
recipients were locked-in and the
percentage of recipient’s locked-in by
state programs ranged from 0.01 percent
to 1.8 percent.16
To derive this estimated population of
potential at-risk beneficiaries, we
analyzed prescription drug event data
(PDE) from 2015,17 using the CDC
opioid drug list and MME conversion
factors, and applying the criteria we
proposed earlier as the clinical
guidelines. This estimate is overinclusive because we did not exclude
beneficiaries in long-term care (LTC)
facilities who would be exempted from
drug management programs, as we
discuss later in this section. However,
based on similar analyses we have
conducted, this exclusion would not
result in a noteworthy reduction to our
estimate. Also, we were unable to count
all locations of a pharmacy that has
multiple locations that share real-time
electronic data as one, which is a topic
we discussed earlier and will return to
later. Thus, there likely are beneficiaries
counted in our estimate who would not
be identified as potential at-risk
beneficiaries because they are in an LTC
facility or only use multiple locations of
a retail chain pharmacy that share realtime electronic data.
TABLE 1—CLINICAL GUIDELINES OR IDENTIFYING POTENTIAL AT-RISK BENEFICIARIES
Impact to Part D program
≥90 mg MED and either:
4+ opioid prescribers AND 4+ opioid dispensing pharmacies ..........
OR
6+ opioid prescribers (regardless of the number of opioid dispensing pharmacies).
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Criteria applied
33,053 beneficiaries in 2015 (76.3% were LIS).
Represents 0.08% of 41,835,016 Part D beneficiaries in 2015.
LTC beneficiaries included in estimate but are exempt.
Prescribers associated with the same single Tax Identification Numbers
(TIN) are counted as a single prescriber.
We note that the alternatives for
clinical guidelines that we considered,
which are described in the Regulatory
Impact Analysis (RIA) section of this
rule, also include estimated population
of potential at-risk beneficiaries for each
alternative. Most of the options include
a 90 MME threshold with varying
prescriber and pharmacy counts and
range from identifying 33,053 to 319,133
beneficiaries. Again, stakeholders are
invited to comment on these
alternatives. We are particularly
interested in receiving comments on
whether CMS should adjust the clinical
guidelines so that more or fewer
potential at-risk beneficiaries are
identified, and if more are identified,
whether the additional number would
result in a manageable program size for
plan sponsors (or too few beneficiaries
to be meaningful).
Section 1860D–4(c)(5)(C)(ii) of the Act
defines an exempted individual as one
who receives hospice care, who is a
resident of a long-term care facility for
which frequently abused drugs are
dispensed for residents through a
contract with a single pharmacy, or who
the Secretary elects to treat as an
exempted individual. Consistent with
this, we propose that an exempted
beneficiary, with respect to a drug
management program, would mean an
enrollee who: (1) Has elected to receive
hospice care; (2) Is a resident of a longterm care facility, of a facility described
in section 1905(d) of the Act, or of
another facility for which frequently
abused drugs are dispensed for residents
15 We noted in the final CY Parts C&D Call Letter,
for the January 2014 OMS reports, 67 percent of the
potential opioid overutilization responses were that
the beneficiary did not meet the sponsor’s internal
criteria. We explained the reasons for this figure
and the actions we took to reduce it.
16 Medicaid Drug Utilization Review State
Comparison/Summary Report FFY 2015 Annual
Report: Prescription Drug-Fee-For-Service Programs
(December 2016), pg. 26.
17 Unique count of beneficiaries who met the
criteria in any 6 month measurement period
(January 2015–June 2015; April 2015–September
2015; or July 2015–December 2015).
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• Exempted Beneficiary
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through a contract with a single
pharmacy; or (3) Has a cancer diagnosis.
While the first two exceptions are
required under CARA, we propose to
exercise the authority in section 1860D–
4(c)(5)(C)(ii)(III) of the Act to treat a
beneficiary who has a cancer diagnosis
as an exempted individual for two
reasons. First, many commenters
recommended that the Secretary exempt
beneficiaries who have a cancer
diagnosis, because a Part D drug
management program should not be able
to interfere administratively with their
pain control regimen in the form of
additional notices from their
prescription drug benefit plans and
limitations on their access to coverage
for frequently abused drugs. We agree
with these commenters. Second,
exempting beneficiaries with a cancer
diagnosis would be consistent with
current policy. Under the current
policy, which has been developed
through stakeholder feedback,
beneficiaries with cancer are excluded
because the benefit of their opioid use
may outweigh the risk associated with
their opioid use. Also, as noted
previously, some commenters requested
that implementation of the drug
management program provisions of
CARA be as consistent as possible with
the current policy for operational ease.
We also agree with these commenters.
Some commenters recommended
against exempting beneficiaries with
cancer diagnoses, stating that there is no
standard clinical reason why a
beneficiary with cancer should be
receiving opioids from multiple
prescribers and/or multiple pharmacies,
and that such situations warrant further
review. While we understand the
concern of these commenters, we
maintain that beneficiaries who have a
cancer diagnosis should be exempted
for the reasons stated just above.
Moreover, our experience with this
exemption under the current policy
suggests that the exemption is workable
and appropriate. We understand
beneficiaries with cancer diagnoses are
identifiable by Part D plan sponsors
either through recorded diagnoses, their
drug regimens or case management, and
no major concerns have been expressed
about this exemption under our current
policy, including from standalone Part
D plan sponsors who may not have
access to their enrollees’ medical
records.
A few commenters suggested
exempting beneficiaries who are
receiving palliative and end-of-life care,
since not all patients receiving this type
of care are necessarily enrolled in
hospice or reside in an LTC facility.
Two commenters suggested exempting
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beneficiaries in assisted living. Other
commenters suggested exempting
beneficiaries in various other health
care facilities, such as group homes and
adult day care centers, where
medication is supervised. Other
commenters suggested exempting
beneficiaries with debilitating disorders
or receiving medication-assisted
treatment for substance abuse disorders.
We have not proposed to exempt
these additional categories of
beneficiaries but we seek specific
comment on whether to do so and our
rationale. First, we have not exempted
these other beneficiaries under the
current policy, and we thus do not think
it is necessary to exempt them from
drug management programs. Second,
unlike with cancer diagnoses, we are
not able to determine administratively
through CMS data who these
beneficiaries are to exempt them from
OMS reporting. Consequently, it could
be burdensome for Part D sponsors to
attempt to exempt these beneficiaries,
by definition, from their drug
management programs. Third, it is
important to remember that the
proposed clinical guidelines would only
identify potential at-risk beneficiaries in
the Part D program who are receiving
potentially unsafe doses of opioids from
multiple prescribers and/or multiple
pharmacies who typically do not know
about each other in terms of providing
services to the beneficiary. Thus, it is
likely that a plan would discover during
case management that a potential at-risk
beneficiary is receiving palliative and
end-of-life care during case
management. Absent a compelling
reason, we would expect the plan not to
seek to implement a limit on such
beneficiary’s access to coverage of
opioids under the current policy nor a
drug management program, as it would
seem to outweigh the medication risk in
such circumstances. Moreover, in cases
where a prescriber is cooperating with
case management, we would not expect
the prescriber to agree to such a
limitation, again, absent a compelling
reason. With respect to beneficiaries
receiving medication-assisted treatment
for substance abuse for opioid use
disorder, we decline to propose to treat
these individuals as exempted
individuals. It is these beneficiaries who
are among the most likely to benefit
from a drug management program.
(ii) Requirements of Drug Management
Programs (§§ 423.153, 423.153(f))
As noted previously, we are
proposing to codify a regulatory
framework under which Part D plan
sponsors may adopt drug management
programs to address overutilization of
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frequently abused drugs. Therefore, we
propose to amend § 423.153(a) by
adding this sentence at the end: ‘‘A Part
D plan sponsor may establish a drug
management program for at-risk
beneficiaries enrolled in their
prescription drug benefit plans to
address overutilization of frequently
abused drugs, as described in paragraph
(f) of this section,’’ in accordance with
our authority under revised section
1860D–4(c)(5)(A) of the Act.
We also propose to revise § 423.153
by adding a new paragraph (f) about
drug management programs for which
the introductory sentence would read:
‘‘(f) Drug Management Programs. A drug
management program must meet all the
following requirements.’’ Thus, the
requirements that a Part D plan sponsor
must meet to operate a drug
management program would be codified
in various provisions under subsection
§ 423.153(f).
(iii) Written Policies and Procedures
(§ 423.153(f)(1))
We propose to require Part D sponsors
document their programs in written
policies and procedures that are
approved by the applicable P&T
committee and reviewed and updated as
appropriate, which is consistent with
the current policy. Also consistent with
the current policy, we would require
these policies and procedures to address
the appropriate credentials of the
personnel conducting case management
and the necessary and appropriate
contents of files for case management.
We additionally propose to require
sponsors to monitor information about
incoming enrollees who would meet the
definition of a potential at-risk and an
at-risk beneficiary in proposed § 423.100
and respond to requests from other
sponsors for information about potential
at-risk and at-risk beneficiaries who
recently disenrolled from the sponsor’s
prescription drug benefit plans. We
discuss potential at-risk and at-risk
beneficiaries who are identified as such
in their most recent Part D plan later in
this preamble.
To codify these requirements, we
propose that section § 423.153(f)(1) read
as follows: (1) Written policies and
procedures. A sponsor must document
its drug management program in written
policies and procedures that are
approved by the applicable P&T
committee and reviewed and updated as
appropriate. The policies and
procedures must address all aspects of
the sponsor’s drug management
program, including but not limited to
the following: (i) The appropriate
credentials of the personnel conducting
case management required under
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paragraph (f)(2); (ii) The necessary and
appropriate contents of files for case
management required under paragraph
(f)(2); and (iii) Monitoring reports and
notifications about incoming enrollees
who meet the definition of an at-risk
beneficiary and a potential at-risk
beneficiary in § 423.100 and responding
to requests from other sponsors for
information about at-risk beneficiaries
and potential at-risk beneficiaries who
recently disenrolled from the sponsor’s
prescription drug benefit plans. Thus,
Part D sponsors would have flexibility—
as they do today under the current
policy—to adopt specific policies and
procedures for their drug management
programs, as long as they are consistent
with the requirements of § 423.153, as
finalized.
(iv) Case Management/Clinical Contact/
Prescriber Verification (§ 423.153(f)(2))
As discussed earlier, case
management is a key feature of the
current policy, under which we
currently expect Part D plan sponsors’
clinical staff to diligently engage in case
management with the relevant opioid
prescribers to coordinate care with
respect to each beneficiary reported by
OMS until the case is resolved (unless
the beneficiary does not meet the
sponsor’s internal criteria). We propose
that the second requirement for drug
management programs in a new
§ 423.153(f)(2) reflect the current policy
with some adjustment to the current
policy to require all beneficiaries
reported by OMS to be reviewed by
sponsors.
Our proposal for a new § 423.153(f)(2)
also meets the requirements of section
1860D–4I(5)(C) of the Act. This section
of the Act requires that, with respect to
each at-risk beneficiary, the sponsor
shall contact the beneficiary’s providers
who have prescribed frequently abused
drugs regarding whether prescribed
medications are appropriate for such
beneficiary’s medical conditions.
Further, our proposal meets the
requirements of Section 1860D–
4(c)(5)(B)(i)(II) of the Act, which
requires that a Part D sponsor first verify
with the beneficiary’s providers that the
beneficiary is an at-risk beneficiary, if
the sponsor intends to limit the
beneficiary’s access to coverage for
frequently abused drugs.
Specifically, we propose that a new
§ 423.153(f)(2) read as follows: Case
Management/Clinical Contact/Prescriber
Verification. (i) General Rule. The
sponsor’s clinical staff must conduct
case management for each potential atrisk beneficiary for the purpose of
engaging in clinical contact with the
prescribers of frequently abused drugs
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and verifying whether a potential at-risk
beneficiary is an at-risk beneficiary.
Proposed § 423.153(f)(2)(i) would
further state that, except as provided in
paragraph (f)(2)(ii) of this section, the
sponsor must do all of the following: (A)
Send written information to the
beneficiary’s prescribers that the
beneficiary meets the clinical guidelines
and is a potential at-risk beneficiary; (B)
Elicit information from the prescribers
about any factors in the beneficiary’s
treatment that are relevant to a
determination that the beneficiary is an
at-risk beneficiary, including whether
prescribed medications are appropriate
for the beneficiary’s medical conditions
or the beneficiary is an exempted
beneficiary; and (C) In cases where the
prescribers have not responded to the
inquiry described in (i)(B), make
reasonable attempts to communicate
telephonically with the prescribers
within a reasonable period after sending
the written information.
Given the ‘‘Except as provided in
paragraph (f)(2)(ii) of this section’’, we
propose to add paragraph (ii) to
§ 423.153(f)(2) that would read: (ii)
Exception for identification by prior
plan. If a beneficiary was identified as
a potential at-risk or an at-risk
beneficiary by his or her most recent
prior plan, and such identification has
not been terminated in accordance with
paragraph (f)(14) of this section, the
sponsor meets the requirements in
paragraph (f)(2)(i) of this section, so long
as the sponsor obtains case management
information from the previous sponsor
and such information is still clinically
adequate and up to date. This proposal
is to avoid unnecessary burden on
health care providers when additional
case management outreach is not
necessary. This is consistent with the
current policy under which sponsors are
expected to enter information into
MARx about pending, implemented and
terminated beneficiary-specific POS
claim edits, which is transferred to the
next sponsor, if applicable. Pending and
implemented POS claim edits are
actions that sponsors enter into MARx
after case management. We discuss
potential at-risk and at-risk beneficiaries
who change plans again later in this
preamble.
The information that the plan sends to
the prescribers and elicits from them is
intended to assist a Part D sponsor to
understand why the beneficiary meets
the clinical guidelines and if a plan
intervention is warranted for the safety
of the beneficiary. Also, sponsors use
this information to choose standardized
responses in OMS and provide
information to MARx about plan
interventions that were referenced
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earlier. We will address required
reporting to OMS and MARx by
sponsors again later.
We note that, currently, OMS
standardized responses generally fall
into four categories: First, in
approximately 18 percent of cases, the
enrollee’s opioid use is medically
necessary. Second, approximately 38
percent of cases are resolved without a
beneficiary-specific POS opioid claim
edit, for example, when the sponsor
takes a ‘‘wait and see’’ approach to
observe if the prescribers adjust their
management of, and the opioid
prescriptions they are writing for, their
patient due to the written information
they received from the sponsor about
their patient. Third, a small subset of
cases—on average 1.3 percent—need a
beneficiary-specific opioid POS claim
edit to resolve the beneficiary’s opioid
overutilization issue. From 2013
through of July 4, 2017, CMS received
4,617 contract-beneficiary-level opioid
POS claim edit notifications through
MARx for 3,961 unique beneficiaries.
Fourth, as previously mentioned,
approximately 39 percent of cases do
not meet the sponsor’s internal criteria
for review. We expect adjustment to
these percentages under our proposal,
particularly since we anticipate that
plans will no longer be able to respond
that a case does not meet its internal
criteria for review. In addition, the
revised 2018 OMS criteria which are the
basis of the proposed 2019 clinical
guidelines should reduce ‘‘false
positives’’ which may have been
reported through OMS but not
identified through sponsors’ internal
criteria due to a shorter look back period
and ability to group prescribers within
the same practice.
We also note that under the current
policy, sponsors are expected to make
‘‘at least three (3) attempts to schedule
telephone conversations with the
prescribers (separately or together)
within a reasonable period (for example,
a 10 business day period) from the
issuance of the written inquiry
notification.’’ If the prescribers are
unresponsive to case management,
under our current policy, a sponsor may
also implement a beneficiary-specific
POS claim edit for opioids as a last
resort to encourage prescriber
engagement with case management.
By contrast, our proposed
§ 423.153(f)(2) uses the terms
‘‘reasonable attempts’’ and ‘‘reasonable
period’’ rather than a specific number of
attempts or a specific timeframe for plan
to call prescribers. The reason for this
proposed adjustment to our policy is
because our current policy also states
that ‘‘[s]ponsors are not required to
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automatically contact prescribers
telephonically,’’ but those that ‘‘employ
a wait-and-see approach’’ should
understand that ‘‘we expect sponsors to
address the most egregious cases of
opioid overutilization without
unreasonable delay, and that we do not
believe that all such cases can be
addressed through a prescriber letter
campaign.’’ Our guidance further states
that, ‘‘to the extent that some cases can
be addressed through written
communication to prescribers only, we
would acknowledge the benefit of not
aggravating prescribers with
unnecessary telephonic
communications.’’ Finally, our guidance
states that, ‘‘[s]ponsors must determine
for themselves the usefulness of
attempting to call or contact all opioid
prescribers when there are many,
particularly when they are emergency
room physicians.’’ 18
Given the competing priorities of
sponsors’ diligently addressing opioid
overutilization in the Part D program
through case management, which may
necessitate telephone calls to the
prescribers, while being cognizant of the
need to be judicious in contacting
prescribers telephonically in order to
not unnecessarily disrupt their
practices, we wish to leave flexibility in
the regulation text for sponsors to
balance these priorities on a case-bycase basis in their drug management
programs, particularly since this
flexibility exists under the current
policy. We note however, that we
propose a 3 attempts/10 business days
requirement for sponsors to conclude
that a prescriber is unresponsive to case
management in § 423.153(f)(4) discussed
later in this section.
(v) Limitations on Access to Coverage
for Frequently Abused Drugs
(§ 423.153(f)(3))
As described earlier, under the
current policy, Part D sponsors may
implement a beneficiary-specific opioid
POS claim edit to prevent continued
overutilization of opioids, with
prescriber agreement or in the case of an
unresponsive prescriber during case
management. If a sponsor implements a
POS claim edit, the sponsor thereafter
does not cover opioids for the
beneficiary in excess of the edit, absent
a subsequent determination, including a
successful appeal.
As noted earlier, revised section
1860D–4(c)(5)(A) of the Act provides
18 See ‘‘Supplemental Guidance Relating to
Improving Drug Utilization Review Controls in Part
D’’, September 6, 2012 (pp. 5, 19–20) at https://
www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/
RxUtilization.html.
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additional tools commonly known as
‘‘lock-in’’, for Part D plans to limit an atrisk beneficiary’s access to coverage for
frequently abused drugs. Prescriber
lock-in would limit an at-risk
beneficiary’s access to coverage for
frequently abused drugs to those that are
prescribed for the beneficiary by one or
more prescribers, and pharmacy lock-in
would restrict an at-risk beneficiary’s
access to coverage for frequently abused
drugs to those that are dispensed to the
beneficiary by one or more network
pharmacies.
If the sponsor uses a lock-in tool(s),
the sponsor must generally cover
frequently abused drugs for the
beneficiary only when they are obtained
from the selected pharmacy(ies) and/or
prescriber(s), as applicable, absent a
subsequent determination, including a
successful appeal. Pursuant to section
1860D–4(c)(5)(D)(i)(II) of the Act, a
sponsor would also have to cover
frequently abused drugs from a nonselected pharmacy or prescriber, if such
coverage were necessary in order to
provide reasonable access. We discuss
selection of pharmacies and prescribers
and reasonable access later.
We propose to describe all the tools
that would be available to sponsors to
limit an at-risk beneficiary’s access to
coverage for frequently abused drugs
through a drug management program in
§ 423.153(f)(3) as follows: Limitation on
Access to Coverage for Frequently
Abused Drugs. Subject to the
requirements of paragraph (f)(4) of this
section, a Part D plan sponsor may do
all of the following: (i) Implement a
point-of-sale claim edit for frequently
abused drugs that is specific to an atrisk beneficiary; or (ii) In accordance
with paragraphs (f)(10) and (f)(11) of
this section, limit an at-risk
beneficiary’s access to coverage for
frequently abused drugs to those that are
(A) Prescribed for the beneficiary by one
or more prescribers; (B) Dispensed to
the beneficiary by one or more network
pharmacies; or (C) Specified in both
paragraphs (3)(ii)(B)(1) and (2) of this
paragraph. Paragraph (iii)(A) would
state that if the sponsor implements an
edit as specified in paragraph (f)(3)(i) of
this section, the sponsor must not cover
frequently abused drugs for the
beneficiary in excess of the edit, unless
the edit is terminated or revised based
on a subsequent determination,
including a successful appeal.
Paragraph (iii)(B) would state that if the
sponsor limits the at-risk beneficiary’s
access to coverage as specified in
paragraph (f)(3)(ii) of this section, the
sponsor must cover frequently abused
drugs for the beneficiary only when they
are obtained from the selected
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56349
pharmacy(ies) and/or prescriber(s), or
both, as applicable, (1) in accordance
with all other coverage requirements of
the beneficiary’s prescription drug
benefit plan, unless the limit is
terminated or revised based on a
subsequent determination, including a
successful appeal, and (2) except as
necessary to provide reasonable access
in accordance with paragraph (f)(12) of
this section.
(vi) Requirements for Limiting Access to
Coverage for Frequently Abused Drugs
(§ 423.153(f)(4))
We propose that before a Part D plan
sponsor could limit the access of at-risk
beneficiary to coverage for frequently
abused drugs, the sponsor must first
take certain actions, consistent with
current policy. We propose that a
sponsor must first conduct the case
management discussed earlier, which
includes clinical contact to determine
whether prescribed medications are
appropriate for the potential at-risk
beneficiary’s medical conditions and
prescriber verification that the
beneficiary is an at-risk beneficiary. We
also propose that the sponsor must first
obtain the agreement of the prescribers
of frequently abused drugs with the
limitation, unless the prescribers were
not responsive to the required case
management, in light of the risk to the
beneficiary’s health. We further propose
that the sponsor must first provide
notice to the beneficiary in accordance
with section 1860D–4(c)(5)(B)(i)(I) of the
Act.
We propose to require the additional
step of prescriber agreement, which is
consistent with the current policy as
discussed earlier, because a prescriber
may verify that the beneficiary is an atrisk beneficiary but may not view a
limitation on the beneficiary’s access to
coverage for frequently abused drugs as
appropriate. Given the additional
information the prescribers would have
from the Part D sponsor through case
management about the beneficiary’s
utilization of frequently abused drugs,
the prescribers’ professional opinion
may be that an adjustment to their
prescribing for, and care of, the
beneficiary is all that is needed to safely
manage the beneficiary’s use of
frequently abused drugs going forward.
We invite stakeholders to comment on
not requiring prescriber agreement to
implement pharmacy lock-in. We could
foresee a case in which the prescriber is
responsive, but does not agree with
pharmacy lock-in.
We also propose language that would
provide an exception to the case
management requirement in
§ 423.153(f)(2) when an at-risk
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beneficiary was identified as an at-risk
beneficiary by the beneficiary’s most
recent prior prescription drug benefit
plan. We discuss such cases more later
in this section. Given the foregoing, we
propose to add a paragraph (f)(4) to
§ 423.153 that reads: Requirements for
Limiting Access to Coverage for
Frequently Abused Drugs. (i) A sponsor
may not limit the access of an at-risk
beneficiary to coverage for frequently
abused drugs under paragraph (f)(3) of
this section, unless the sponsor has
done all of the following: (A) Conducted
the case management required by
paragraph (f)(2) of this section and
updated it, if necessary; (B) Obtained
the agreement of the prescribers of
frequently abused drugs for the
beneficiary that the specific limitation is
appropriate; and (C) Provided the
notices to the beneficiary in compliance
with paragraphs (f)(5) and (6) of this
section. We would also state in
subsection (ii) that if the sponsor
complied with the requirement of
paragraph (f)(2)(i)(C) of this section, and
the prescribers were not responsive after
3 attempts by the sponsor to contact
them by telephone within 10 business
days, then the sponsor has met the
requirement of paragraph (f)(4)(i)(B) of
this section. Finally, we would state in
a subsection (iii) that if the beneficiary
meets paragraph (2) of the definition of
a potential at-risk beneficiary or an atrisk beneficiary, and the sponsor has
obtained the applicable case
management information from the
sponsor of the beneficiary’s most recent
plan and updated it as appropriate, the
sponsor has met the case management
requirement in paragraph (f)(2)(i).
sradovich on DSK3GMQ082PROD with PROPOSALS2
(vii) Beneficiary Notices and Limitation
of Special Enrollment Period
(§§ 423.153(f)(5), 423.153(f)(6), 423.38)
(A) Initial Notice to Beneficiary and
Sponsor Intent To Implement Limitation
on Access to Coverage for Frequently
Abused Drugs (§ 423.153(f)(5))
The notices referred to in proposed
§ 423.153(f)(4)(i)(C) are the initial and
second notice that section 1860D–
4(c)(5)(B)(i)(I) of the Act requires Part D
sponsors to send to potential at-risk and
at-risk beneficiaries regarding their drug
management programs. We remind Part
D sponsors that under Section 504 of the
Rehabilitation Act of 1973, effective
communications requirements would
apply to both these notices. We first
discuss the initial notice.
We propose in § 423.153(f)(5) that if a
Part D plan sponsor intends to limit the
access of a potential at-risk beneficiary
to coverage for frequently abused drugs,
the sponsor would be required to
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provide an initial written notice to the
potential at-risk beneficiary. We also
propose that the language be approved
by the Secretary and be in a readable
and understandable form that contains
the language required by section 1860D–
4(c)(5)(B)(ii) of the Act to which we
propose to add detail in the regulation
text. Finally, we propose that the
sponsor be required to make reasonable
efforts to provide the prescriber(s) of
frequently abused drugs with a copy of
the notice.
We propose that § 423.153(f)(5)(i) read
as follows: Initial Notice to Beneficiary.
A Part D sponsor that intends to limit
the access of a potential at-risk
beneficiary to coverage for frequently
abused drugs under paragraph (f)(3) of
this section must provide an initial
written notice to the beneficiary.
Paragraph (f)(5)(ii) would require that
the notice use language approved by the
Secretary and be in a readable and
understandable form that provides the
following information: (1) An
explanation that the beneficiary’s
current or immediately prior Part D plan
sponsor has identified the beneficiary as
a potential at-risk beneficiary; (2) A
description of all State and Federal
public health resources that are
designed to address prescription drug
abuse to which the beneficiary has
access, including mental health and
other counseling services and
information on how to access such
services, including any such services
covered by the plan under its Medicare
benefits, supplemental benefits, or
Medicaid benefits (if the plan integrates
coverage of Medicare and Medicaid
benefits); (3) An explanation of the
beneficiary’s right to a redetermination
if the sponsor issues a determination
that the beneficiary is an at-risk
beneficiary and the standard and
expedited redetermination processes
described at § 423.580 et seq.; (4) A
request that the beneficiary submit to
the sponsor within 30 days of the date
of this initial notice any information
that the beneficiary believes is relevant
to the sponsor’s determination,
including which prescribers and
pharmacies the beneficiary would prefer
the sponsor to select if the sponsor
implements a limitation under
§ 423.153(f)(3)(ii); (5) An explanation of
the meaning and consequences of being
identified as an at-risk beneficiary,
including an explanation of the
sponsor’s drug management program,
the specific limitation the sponsor
intends to place on the beneficiary’s
access to coverage for frequently abused
drugs under the program, the timeframe
for the sponsor’s decision, and if
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applicable, any limitation on the
availability of the special enrollment
period described in § 423.38; (6) Clear
instructions that explain how the
beneficiary can contact the sponsor,
including how the beneficiary may
submit information to the sponsor in
response to the request described in
paragraph (f)(5)(ii)(C)(4); (7) Contact
information for other organizations that
can provide the beneficiary with
assistance regarding the sponsor’s drug
management program; and (8) Other
content that CMS determines is
necessary for the beneficiary to
understand the information required in
this notice.
We propose to require at
§ 423.153(f)(5)(iii) that the Part D plan
sponsor make reasonable efforts to
provide the beneficiary’s prescriber(s) of
frequently abused drugs with a copy of
the notice required under paragraph
(f)(5)(i).
The content of the initial notice we
propose in § 423.153(f)(5) closely
follows the content required by section
1860D–4(c)(5)(B)(ii) of the Act, but as
noted previously, we have proposed to
add some detail to the regulation text.
In proposed paragraph (f)(5)(ii)(C)(2)—
which would require a description of
public health resources that are
designed to address prescription drug
abuse—we propose to require that the
notice contain information on how to
access such services. We also included
a reference in proposed paragraph
(ii)(C)(4) to the fact that a beneficiary
would have 30 days to provide
information to the sponsor, which is a
timeframe we discuss later in this
preamble. We propose an additional
requirement in paragraph (ii)(C)(5) that
the sponsor include the limitation the
sponsors intends to place on the
beneficiary’s access to coverage for
frequently abused drugs, the timeframe
for the sponsor’s decision, and, if
applicable, any limitation on the
availability of the SEP. Finally, we
proposed a requirement in paragraph
(ii)(C)(8) that the notice contain other
content that CMS determines is
necessary for the beneficiary to
understand the information required in
the initial notice.
We note that our proposed
implementation of the statutory
requirements for the initial notice
would permit the notice also to be used
when the sponsor intends to implement
a beneficiary-specific POS claim edit for
frequently abused drugs. This is
consistent with our current policy and
would streamline beneficiary notices
about opioids since we propose
frequently abused drugs to consist of
opioids for 2019.
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Although section 1860D–4(c)(5) is
silent as to the sequence of the steps of
clinical contact, prescriber verification,
and the initial notice, we propose to
implement these requirements such that
they would occur in the following order:
First, the plan sponsor would conduct
the case management which
encompasses clinical contact and
prescriber verification required by
§ 423.153(f)(2) and prescriber agreement
required by § 423.153(f)(4), and second
would, as applicable, indicate the
sponsor’s intent to limit the
beneficiary’s access to frequently abused
drugs by providing the initial notice. In
our view, a sponsor cannot reasonably
intend to limit the beneficiary’s access
unless it has first undertaken case
management to make clinical contact
and obtain prescriber verification and
agreement. Further, under our proposal,
although the proposed regulatory text of
(f)(4)(i) states that the sponsor must
verify with the prescriber(s) that the
beneficiary is an at-risk beneficiary in
accordance with the applicable statutory
language, the beneficiary would still be
a potential at-risk beneficiary from the
sponsor’s perspective when the sponsor
provides the beneficiary the initial
notice. This is because the sponsor has
yet to solicit information from the
beneficiary about his or her use of
frequently abused drugs, and such
information may have a bearing on
whether a sponsor identifies a potential
at-risk beneficiary as an at-risk
beneficiary.
Moreover, we believe that in general,
a sponsor should not send a potential atrisk beneficiary an initial notice until
after the sponsor has been in contact
with the beneficiary’s prescribers of
frequently abused drugs, so as to avoid
unnecessarily alarming the beneficiary,
considering that a sponsor may learn
from the prescribers that the
beneficiary’s use of the drugs is
medically necessary, or that the
beneficiary is an exempted beneficiary.
This proposed approach is also
consistent with our current policy and
stakeholder comments. Therefore, under
this approach, a sponsor would provide
an initial notice to a potential at-risk
beneficiary if the sponsor intends to
limit the beneficiary’s access to coverage
for frequently abused drugs, and the
sponsor would provide a second notice
to an at-risk beneficiary when it actually
limits the beneficiary’s access to
coverage for frequently abused drugs.
Alternatively, the sponsor would
provide an alternate second notice if it
decides not to limit the beneficiary’s
access to coverage for frequently abused
drugs. We discuss the second notice and
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alternate second notice later in this
preamble.
We intend to develop language for the
initial notice. Therefore, the proposed
regulatory text states that the notice
must use language approved by the
Secretary.
(B) Limitation on the Special
Enrollment Period for LIS Beneficiaries
With an At-Risk Status (§ 423.38)
In addition to providing relevant
information to a potential at-risk
beneficiary, we propose that the initial
notice will notify dually- and other low
income subsidy (LIS)-eligible
beneficiaries, that they will be unable to
use the special enrollment period (SEP)
for LIS beneficiaries due to their at-risk
status. (Hereafter, this SEP is referred to
as the ‘‘duals’ SEP’’). Section 1860D–
1(b)(3)(D) of the Act requires the
Secretary to establish a Part D SEP for
full-benefit dually eligible (FBDE)
beneficiaries. This SEP, codified at
§ 423.38(c)(4), was later extended to all
other subsidy-eligible beneficiaries (75
FR 19720) so that all LIS-eligible
beneficiaries were treated uniformly.
The duals’ SEP currently allows such
individuals to make Part D enrollment
changes (that is, enroll in, disenroll
from, or change Part D plans)
throughout the year, unlike other Part D
enrollees who generally may make
enrollment changes only during the
annual election period (AEP).
Individuals using this SEP can enroll in
either a stand-alone Part D prescription
drug plan (PDP) or a Medicare
Advantage plan with prescription drug
coverage.
Section 704(a)(3) of CARA gives the
Secretary the discretion to limit the SEP
for FBDE beneficiaries outlined in
section 1860D–1(b)(3)(D) of the Act.
This limitation is related to, but distinct
from, other changes to the duals’ SEP
proposed in section III.A.11 of this
proposed rule (as discussed later). A
limitation under a sponsor’s drug
management program can only be
effective as long as the individual is
enrolled in that plan or another plan
that also has a drug management
program. Therefore, this proposed SEP
limitation would be an important tool to
reduce the opportunities for LIS-eligible
beneficiaries designated as at-risk to
switch plans. If an individual is
determined to be an at-risk beneficiary,
and is permitted to change plans using
the duals’ SEP, he or she could avoid
the drug management program by
leaving the plan before the program can
be started or by enrolling in a PDP that
does not have a drug management
program. This would allow the
beneficiary to circumvent the lock-in
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program and not receive the care
coordination such a program provides.
Even if an-risk beneficiary joined
another plan that had a drug
management program in place, there
would be challenges in terms of
preventing a gap managing their
potential or actual overutilization of
frequently abused drugs due to timing of
information sharing between the plans
and possible difference in provider
networks.
Accordingly, we are proposing to
revise § 423.38(c)(4), so that it is not
available to potential at-risk
beneficiaries or at-risk beneficiaries.
Once an individual is identified as a
potential at-risk beneficiary and the
sponsor intends to limit the
beneficiary’s access to coverage for
frequently abused drugs, the sponsor
would provide an initial notice to the
beneficiary and the duals’ SEP would no
longer be available to the otherwise
eligible individual. This means that he
or she would be unable to use the duals’
SEP to enroll in a different plan or
disenroll from the current Part D plan.
The limitation would be effective as of
the date the Part D plan sponsor
identifies an individual to be potentially
at-risk. Limiting the duals’ SEP
concurrent with the plan’s identification
of a potential at-risk beneficiary would
reduce the opportunities for such
beneficiaries to use the interval between
receipt of the initial notice and
application of the limitation (for
example, pharmacy or prescriber lockin, beneficiary-specific POS claim edit)
as an opportunity to change plans before
the restriction takes effect.
Based on the 2015 data in CMS’ OMS,
more than 76 percent of all beneficiaries
estimated to be potential at-risk
beneficiaries are LIS-eligible
individuals. Based on this data, without
an SEP limitation at the initial point of
identification, the notification of a
potential drug management program
may prompt these individuals to switch
plans immediately after receiving the
initial notice. In effect, under the
current regulations, if unchanged, the
dually- or other LIS-eligible individual,
could keep changing plans and avoid
being subject to any drug management
program.
We propose that, consistent with the
timeframes discussed in proposed
paragraph § 423.153(f)(7), if the Part D
plan sponsor takes no additional action
to identify the individual as an at-risk
beneficiary within 90 days from the
initial notice, the ‘‘potentially at-risk’’
designation and the duals’ SEP
limitation would expire. If the sponsor
determines that the potential at-risk
beneficiary is an at-risk beneficiary, the
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duals’ SEP would not be available to
that beneficiary until the date the
beneficiary’s at-risk status is terminated
based on a subsequent determination,
including a successful appeal, or at the
end of a 12-month period calculated
from the effective date the sponsor
provided the beneficiary in the second
notice as proposed at § 423.153(f)(6)
whichever is sooner.
As discussed in section III.A.11 of this
proposed rule, we are also proposing to
revise § 423.38(c)(4) to make the SEP for
FBDE or other subsidy-eligible
individuals available only in certain
circumstances. As further explained in
section III.A.11, we also are proposing
to establish a new SEP at § 423.38(c)(9)
to permit any beneficiary to make an
enrollment change when he or she has
a gain, loss, or change in Medicaid or
LIS eligibility.
We propose not to limit the
availability of this new SEP to potential
at-risk and at-risk beneficiaries. In
situations where an individual is
designated as a potential at-risk
beneficiary or an at-risk beneficiary and
later determined to be dually-eligible for
Medicaid or otherwise eligible for LIS,
that beneficiary should be afforded the
ability to receive the subsidy benefit to
the fullest extent for which he or she
qualifies and therefore should be able to
change to a plan that is more affordable,
or that is within the premium
benchmark amount if desired. Likewise,
if an individual with an ‘‘at-risk’’
designation loses dual-eligibility or LIS
status, or has a change in the level of
extra help, he or she would be afforded
an opportunity to elect a different Part
D plan, as discussed in section III.A.11
of this proposed rule. This is also a life
changing event that may have a
financial impact on the individual, and
could necessitate an individual making
a plan change in order to continue
coverage.
We note that auto- and facilitated
enrollment of LIS eligible individuals
and plan annual reassignment processes
would still apply to dual- and other LISeligible individuals who were identified
as an at-risk beneficiary in their
previous plan. This is consistent with
CMS’s obligation and general approach
to ensure Part D coverage for LISeligible beneficiaries and to protect the
individual’s access to prescription
drugs. Furthermore, we note that the
proposed enrollment limitations for
Medicaid or other LIS-eligible
individuals designated as at-risk
beneficiaries would not apply to other
Part D enrollment periods, including the
AEP or other SEPs. As discussed
previously, we propose that the ability
to use the duals’ SEP, as outlined in
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section III.A.11. of this proposed rule,
would not be permissible once the
individual is enrolled in a plan that has
identified him or her as a potential atrisk beneficiary or at-risk beneficiary,
for a dual or other LIS-eligible who
meets the definition of at-risk
beneficiary or potential at-risk
beneficiary under proposed § 423.100.
(C) Second Notice to Beneficiary and
Sponsor Implementation of Limitation
on Access to Coverage for Frequently
Abused Drugs by Sponsor
(§ 423.153(f)(6))
As previously noted, section 1860D–
4(c)(5)(B)(i)(I) of the Act requires Part D
sponsors to provide a second written
notice to at-risk beneficiaries when they
limit their access to coverage for
frequently abused drugs. Also, as with
the initial notice, our proposed
implementation of this statutory
requirement for the second notice
would permit the second notice to be
used when the sponsor implements a
beneficiary-specific POS claim edit for
frequently abused drugs.
We propose to codify this requirement
in § 423.153(f)(6)(i). Specifically, we
propose to require the sponsor to
provide the second notice when it
determines that the beneficiary is an atrisk beneficiary and to limit the
beneficiary’s access to coverage for
frequently abused drugs. We further
propose to require the second notice to
include the effective and end date of the
limitation. Thus, this second notice
would function as a written
confirmation of the limitation the
sponsor is implementing with respect to
the beneficiary, and the timeframe of
that limitation.
We also propose that the second
notice, like the initial notice, contain
language required by section 1860D–
4(c)(5)(B)(iii) of the Act to which we
propose to add detail in the regulation
text. We also propose that the second
notice, like the initial notice, be
approved by the Secretary and be in a
readable and understandable form, as
well as contain other content that CMS
determines is necessary for the
beneficiary to understand the
information required in this notice.
Finally, in § 423.153(f)(6)(iii), we
propose that the sponsor be required to
make reasonable efforts to provide the
beneficiary’s prescriber(s) of frequently
abused drugs with a copy of the notice,
as we proposed with the initial notice.
Proposed § 423.153(f)(6)(i) would read
as follows: Second notice. Upon making
a determination that a beneficiary is an
at-risk beneficiary and to limit the
beneficiary’s access to coverage for
frequently abused drugs under
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paragraph (f)(3) of this section, a Part D
sponsor must provide a second written
notice to the beneficiary. Paragraph
(f)(6)(ii) would require that the second
notice use language approved by the
Secretary and be in a readable and
understandable form that contains the
following information: (1) An
explanation that the beneficiary’s
current or immediately prior Part D plan
sponsor has identified the beneficiary as
an at-risk beneficiary; (2) An
explanation that the beneficiary is
subject to the requirements of the
sponsor’s drug management program,
including the limitation the sponsor is
placing on the beneficiary’s access to
coverage for frequently abused drugs
and the effective and end date of the
limitation; and, if applicable, any
limitation on the availability of the
special enrollment period described in
§ 423.38 et seq.; (3) The prescriber(s)
and/or pharmacy(ies) or both, if and as
applicable, from which the beneficiary
must obtain frequently abused drugs in
order for them to be covered by the
sponsor; (4) An explanation of the
beneficiary’s right to a redetermination
under § 423.580 et seq., including a
description of both the standard and
expedited redetermination processes,
with the beneficiary’s right to, and
conditions for, obtaining an expedited
redetermination; (5) An explanation that
the beneficiary may submit to the
sponsor, if the beneficiary has not
already done so, the prescriber(s) and
pharmacy(ies), as applicable, from
which the beneficiary would prefer to
obtain frequently abused drugs; (6) Clear
instructions that explain how the
beneficiary may contact the sponsor,
including how the beneficiary may
submit information to the sponsor in
response to the request described in
paragraph (f)(6)(ii)(C)(5) of this section;
and (7) Other content that CMS
determines is necessary for the
beneficiary to understand the
information required in this notice.
The content of the second notice we
propose in § 423.153(f)(6) closely
follows the content required by section
1860D–4(c)(5)(B)(iii) of the Act, but as
noted previously, we have proposed to
add some detail to the regulation text.
In proposed paragraph (2), we have
proposed language that would require a
sponsor to include the limitation the
sponsors is placing on the beneficiary’s
access to coverage for frequently abused
drugs, the effective and end date of the
limitation, and if applicable, any
limitation on the availability of the SEP.
We propose an additional requirement
in paragraph (6) that the sponsor
include instructions how the beneficiary
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may submit information to the sponsor
in response to the request described in
paragraph (4). Finally, we proposed a
requirement in paragraph (7) that the
notice contain other content that CMS
determines is necessary for the
beneficiary to understand the
information required in the initial
notice.
We note that under our current
policy, plan sponsors send only one
notice to the beneficiary if they intend
to implement a beneficiary-specific POS
opioid claim edit, which generally
provides the beneficiary with a 30-day
advance written notice and opportunity
to provide additional information, as
well as to request a coverage
determination if the beneficiary
disagrees with the edit. If our proposal
is finalized, the implementation of a
beneficiary-specific POS claim edit or a
limitation on the at-risk beneficiary’s
coverage for frequently abused drugs to
a selected pharmacy(ies) or prescriber(s)
would be an at-risk determination (a
type of initial determination that would
confer appeal rights). Also, the sponsor
would generally be required to send two
notices—the first signaling the sponsor’s
intent to implement a POS claim edit or
limitation (both referred to generally as
a ‘‘limitation’’), and the second upon
implementation of such limitation.
Under our proposal, the requirement to
send two notices would not apply in
certain cases involving at-risk
beneficiaries who are identified as such
and provided a second notice by their
immediately prior plan’s drug
management program.
sradovich on DSK3GMQ082PROD with PROPOSALS2
(D) Alternate Second Notice When Limit
on Access Coverage for Frequently
Abused Drugs by Sponsor Will Not
Occur (§ 423.153(f)(7))
We propose that if a sponsor does not
implement the limitation on the
potential at-risk beneficiary’s access to
coverage of frequently abused drugs it
described in the initial notice, then the
sponsor would be required to provide
the beneficiary with an alternate second
notice. Although not explicitly required
by the statute, we believe this notice is
consistent with the intent of the statute
and is necessary to avoid beneficiary
confusion and minimize unnecessary
appeals. We propose generally that in
such an alternate notice, the sponsor
must notify the beneficiary that the
sponsor no longer considers the
beneficiary to be a potential at-risk
beneficiary upon making such
determination; will not place the
beneficiary in its drug management
program; will not limit the beneficiary’s
access to coverage for frequently abused
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drugs; and if applicable, that the SEP
limitation no longer applies.
Specifically, we propose that
§ 423.153(f)(7)(i) would read: Alternate
second notice. (i) If, after providing an
initial notice to a potential at-risk
beneficiary under paragraph (f)(4) of this
section, a Part D sponsor determines
that the potential at-risk beneficiary is
not an at-risk beneficiary, the sponsor
must provide an alternate second
written notice to the beneficiary.
Paragraph (f)(7)(ii) would require that
the notice use language approved by the
Secretary in a readable and
understandable form containing the
following information: (1) The sponsor
has determined that the beneficiary is
not an at-risk beneficiary; (2) The
sponsor will not limit the beneficiary’s
access to coverage for frequently abused
drugs; (3) If applicable, the SEP
limitation no longer applies; (4) Clear
instructions that explain how the
beneficiary may contact the sponsor;
and (5) Other content that CMS
determines is necessary for the
beneficiary to understand the
information required in this notice.
Again, as with the initial and second
notices, we propose in a paragraph
(f)(7)(iii) that the Part D sponsor be
required to make reasonable efforts to
provide the beneficiary’s prescriber(s) of
frequently abused drugs with a copy of
the notice required by paragraph
(f)(7)(i). Also, as with the initial and
second notices, we propose in
paragraph (ii) that the notice use
language approved by the Secretary and
be in a readable and understandable
form; in paragraph (ii)(C)(4) that the
notice contain clear instructions that
explain how the beneficiary may contact
the sponsor; and in paragraph (ii)(C)(5),
that the notice contain other content
that CMS determines is necessary for
the beneficiary to understand the
information required in the notice.
(E) Timing of Notices (§ 423.153(f)(8))
Section 1860D–4(c)(5)(B)(iv) of the
Act requires a Part D sponsor to provide
the second notice to the beneficiary on
a date that is not less than 30 days after
the sponsor provided the initial notice
to the beneficiary. We interpret the
purpose of this requirement to be that
the beneficiary should have ample time
to provide information to the sponsor
that may alter the sponsor’s intended
action that is contained in the initial
notice to the beneficiary, or to provide
the sponsor with the beneficiary’s
pharmacy and/or prescriber preferences,
if the sponsor’s intent is to limit the
beneficiary’s access to coverage for
frequently abused drugs from selected a
pharmacy(ies) and/or prescriber(s).
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56353
In addition, we propose to impose a
deadline by when a sponsor must
provide the second notice or alternate
second notice to the beneficiary,
although not specifically required by
CARA. Such a requirement should
provide the sponsor with sufficient time
to complete the administrative steps
necessary to execute the action the
sponsor intends to take that was
explained in the initial notice to the
beneficiary, while acknowledging that
the sponsor would have already met in
the case management, clinical contact
and prescriber verification requirement.
In the case of an alternate second
notice, the timeframe should provide
the beneficiary with definitive notice
that the sponsor has not identified the
beneficiary as an at-risk beneficiary and
that there will be no limitation on his/
her access to coverage for frequently
abused drugs. Accordingly, we propose
that the sponsor would be required to
send either the second notice or the
alternate second notice, as applicable,
when it makes its determination or no
later than 90 calendar days after the date
on the initial notice, whichever comes
sooner.
Specifically, we propose to include at
§ 423.153(f)(8) the following: Timing of
Notices. (i) Subject to paragraph (ii) of
this section, a Part D sponsor must
provide the second notice described in
paragraph (f)(6) of this section or the
alternate second notice described in
paragraph (f)(7) of this section, as
applicable, on a date that is not less
than 30 days and not more than the
earlier of the date the sponsor makes the
relevant determination or 90 days after
the date of the initial notice described
in paragraph (f)(5) of this section. We
intend this proposed timeframe for the
sponsor to provide either the second
notice or the alternate second notice, as
applicable, to be reasonable for both
Part D sponsors and the relevant
beneficiaries and important to ensuring
clear, timely and reasonable
communication between the parties.
Section 1860D–4(c)(5)(B)(iv)(II) of the
Act explicitly provides for an exception
to the required timeframe for issuing a
second notice. Specifically, the statute
permits the Secretary to identify
through rulemaking concerns regarding
the health or safety of a beneficiary or
significant drug diversion activities that
would necessitate that a Part D sponsor
provide the second written notice to the
beneficiary before the 30 day time
period normally required has elapsed.
For this reason, we included the
language, ‘‘subject to paragraph (ii),’’ at
the beginning of proposed
§ 423.153(f)(8)(i).
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We note that the proposed definition
of at-risk beneficiary would include
beneficiaries for whom a gaining Part D
plan sponsor received a notice upon the
beneficiary’s enrollment that the
beneficiary was identified as an at-risk
beneficiary under the prescription drug
plan in which the beneficiary was most
recently enrolled and such
identification had not been terminated
upon enrollment. This proposed
definition is based on the language in
section 1860–D–4(c)(5)(C)(i)(II) of the
Act.
Given that this provision allows an atrisk identification to carry forward to
the next plan, we believe it is
appropriate to propose to permit a
gaining plan to provide the second
notice to an at-risk beneficiary so
identified by the most recent prior plan
sooner than would otherwise be
required. For the same reasons, we
believe that it would be appropriate to
permit the gaining plan to even send the
beneficiary a combined initial and
second notice, under certain
circumstances. However, because the
content of the initial notice would not
be appropriate for an at-risk beneficiary,
and because such beneficiary would
have already received an initial notice
from his or her immediately prior plan
sponsor, the content of this combined
notice should only consist of the
required content for the second notice
so as not to confuse the beneficiary.
Thus, our interpretation of section
1860D–4(c)(5)(B)(iv)(II) of the Act in
conjunction with section 1860D–
4(c)(5)(C)(i)(II) of the Act is that a
gaining Part D sponsor may send the
second notice immediately to a
beneficiary for whom the sponsor
received a notice upon the beneficiary’s
enrollment that the beneficiary was
identified as an at-risk beneficiary under
the prescription drug plan in which the
beneficiary was most recently enrolled
and such identification had not been
terminated upon disenrollment. This is
consistent with our current policy under
which a gaining sponsor may
immediately implement a beneficiaryspecific opioid POS claim edit, if the
gaining sponsor is notified that the
beneficiary was subject to such an edit
in the immediately prior plan and such
edit had not been terminated.19
We propose that sending a second
notice to an at-risk beneficiary so
identified in the most recent plan would
be permissible only if the new sponsor
is implementing a beneficiary-specific
POS claim edit for a frequently abused
19 See ‘‘Beneficiary-Level Point-of-Sale Claim
Edits and Other Overutilization Issues,’’ August 25,
2014.
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drug, or if the sponsor is implementing
a limitation on access to coverage for
frequently abused drugs to a selected
pharmacy(ies) or prescriber(s) and has
the same location of pharmacy(ies) and/
or the same prescriber(s) in its provider
network, as applicable, that the
beneficiary used to obtain frequently
abused drugs in the most recent plan.
Otherwise, we propose that the new
sponsor would be required to provide
the initial notice to the at-risk
beneficiary, even though the initial
notice is generally intended for
potential at-risk beneficiaries, and could
not provide the second notice until at
least 30 days had passed. This is
because even though there would also
be a concern for the at-risk beneficiary’s
health and safety in this latter case as
well, this concern would be outweighed
by the fact that the beneficiary had not
been afforded a chance to submit his or
her preference for a pharmacy(ies) and/
or prescriber(s), as applicable, from
which he or she would have to obtain
frequently abused drugs to obtain
coverage under the new plan’s drug
management program.
We propose to codify this policy by
adding a paragraph (ii) to
§ 423.153(f)(8), as noted earlier, to read
as follows: Immediately upon the
beneficiary’s enrollment in the gaining
plan, the gaining plan sponsor may
provide a second notice described in
paragraph (f)(6) to a beneficiary for
whom the gaining sponsor received
notice that the beneficiary was
identified as an at-risk beneficiary by
his or her most recent prior plan and
such identification had not been
terminated in accordance with
§ 423.153(f)(14), if the sponsor is
implementing either of the following:
(A) A beneficiary-specific point-of-sale
claim edit as described in paragraph
(f)(3)(i); or (B) A limitation on access to
coverage as described in
paragraph(f)(3)(ii), if such limitation
would require the beneficiary to obtain
frequently abused drugs from the same
location of pharmacy and/or the same
prescriber, as applicable, that was
selected under the immediately prior
plan under (f)(9).
Some stakeholders commented that
sponsors should be allowed to expedite
the second notice in cases of egregious
and potentially dangerous
overutilization or in cases involving an
active criminal investigation when
allowed by a court. However, given the
importance of a beneficiary having
advance notice of a pending limit on his
or her access to coverage for frequently
abused drugs and sufficient time to
respond and/or prepare, we believe
exceptions to the timing of the notices
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should be very narrow. Therefore, we
have only included a proposal for an
exception to shorten the 30 day
timeframe between the initial and
second notice that is based on a
beneficiary’s status as an at-risk
beneficiary in an immediately preceding
plan. We note that is a status the drug
management provisions of CARA
explicitly requires to be shared with the
next plan sponsor, if a beneficiary
changes plans, which means there
would be a concrete data point for this
proposed exception to the timing of the
notices. We discuss such sharing of
information later in the preamble.
(viii) Provisions Specific to Limitations
on Access to Coverage of Frequently
Abused Drugs to Selected Pharmacies
and Prescribers (§§ 423.153(f)(4),
423.153(f)(9), 423.153(f)(10),
423.153(f)(11), 423.153(f)(12),
423,153(f)(13))
Some of the drug management
program provisions in CARA are only
relevant to ‘‘lock-in’’. We propose
several regulatory provisions to
implement these provisions, as follows:
(A) Special Requirement To Limit
Access to Coverage of Frequently
Abused Drugs to Selected Prescriber(s)
(§ 423.153(f)(4))
We believe prescriber lock-in should
be a tool of last resort to manage at-risk
beneficiaries’ use of frequently abused
drugs, meaning when a different
approach has not been successful,
whether that was a ‘‘wait and see’’
approach or the implementation of a
beneficiary specific POS claim edit or a
pharmacy lock-in. Limiting an at-risk
beneficiary’s access to coverage for
frequently abused drugs from only
selected prescribers impacts the
beneficiary’s relationship with his or
her health care providers and may
impose burden upon prescribers in
terms of prescribing frequently abused
drugs.
As a result, we propose that a sponsor
may not limit an at-risk beneficiary’s
access to coverage of frequently abused
drugs to a selected prescriber(s) until at
least 6 months has passed from the date
the beneficiary is first identified as a
potential at-risk beneficiary. We propose
that this date be the date of the first
OMS report that identified the
beneficiary, so long as the beneficiary
was also reported in the most recent
OMS report that the sponsor received.
This is because limiting the
beneficiary’s access to coverage of
frequently abused drugs from a selected
prescriber would only be necessary if
the beneficiary continues to meet the
clinical guidelines despite any existing
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intervention or limitation. We discuss
OMS reports in more detail later.
We expect that the 6-month waiting
period will provide the sponsor
additional time to assess whether case
management or another tool, such as a
beneficiary-specific POS claim edit or
pharmacy lock-in has failed to resolve
the beneficiary’s overutilization of
frequently abused drugs. Sponsors have
indicated in comments on the current
policy that the case management
process can take 3 to 6 months. Also,
sponsors would need time to determine
whether the beneficiary still meets the
clinical guidelines and is thus
continuing to be reported by OMS.
Therefore, the time period we propose
was chosen to account for time needed
for the case management process and to
align with the 6 month measurement
period of the proposed clinical
guidelines.
We seek comment on whether this 6month waiting period would reduce
provider burden sufficiently to
outweigh the additional case
management, clinical contact and
prescriber verification that providers
may experience if a sponsor believes a
beneficiary’s access to coverage of
frequently abused drugs should be
limited to a selected prescriber(s).
Comments should include the
additional operational considerations
for sponsors to implement this proposal.
Given our proposal, we propose
adding a paragraph (iv) to § 423.153(f)(4)
that would state: (f)(4)(iv) A Part D
sponsor must not limit an at-risk
beneficiary’s access to coverage for
frequently abused drugs to those that are
prescribed for the beneficiary by one or
more prescribers under
§ 423.153(f)(3)(ii)(A) unless—(A) At
least 6 months has passed from the date
the beneficiary was first identified as a
potential at-risk beneficiary from the
date of the applicable CMS
identification report; and (B) The
beneficiary meets the clinical guidelines
and was reported by the most recent
CMS identification report.
We note that in conducting the case
management required under
§ 423.153(f)(4)(i)(A) in anticipation of
implementing a prescriber lock-in, the
sponsor would be expected to update
any case management it had already
conducted. Also, even if a sponsor had
already obtained the prescriber’s
agreement to implement a limitation on
the beneficiary’s coverage of frequently
abused drugs to a selected pharmacy to
comply with § 423.153(f)(4)(i)(B), for
example, the sponsor would have to
obtain the agreement of the prescriber
who would be selected to implement a
limitation on a beneficiary’s coverage of
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frequently abused drugs to a selected
prescriber. Finally, we note that even if
a sponsor had already provided the
beneficiary with the required notices to
comply with § 423.153(f)(4)(i)(C), the
sponsor would have to provide them
again in order to remain compliant,
because the beneficiary would not have
been notified about the specific
limitation on his or her access to
coverage for frequently abused drugs to
a selected prescriber(s) and has an
opportunity to select the prescriber(s).
We foresee a scenario in which a
sponsor may wish to implement a
limitation on a beneficiary’s access to
coverage of frequently abused drugs to
a selected prescriber(s) when the
sponsor’s first round of case
management, clinical contact and
prescriber verification resulted only in
sending the prescribers of frequently
abused drugs a written report about the
beneficiary’s utilization of frequently
abused drugs and taking a ‘‘wait and
see’’ approach, which did not result in
the prescribers’ adjusting their
prescriptions for frequently abused
drugs for their patient. In such a
scenario, assuming the patient still
meets the clinical guidelines and
continues to be reported by OMS, the
sponsor would need to try another
intervention to address the opioid
overuse. Another scenario could be that
the sponsor implemented a pharmacy
lock-in, but after 6-months, the
beneficiary still meets the clinical
guidelines due to receiving frequently
abused drugs from additional
prescribers.
(B) Selection of Pharmacies and
Prescribers (§§ 423.153(f)(9),
423.153(f)(10), 423.153(f)(11),
423.153(f)(12), 423.153(f)(13))
(1) Beneficiary Preferences
(§ 423.153(f)(9))
Section 1860D–4(c)(5)(D) of the Act
provides that, if a sponsor intends to
impose, or imposes, a limit on a
beneficiary’s access to coverage of
frequently abused drugs to selected
pharmacy(ies) or prescriber(s), and the
potential at-risk beneficiary or at-risk
beneficiary submits preferences for a
pharmacy(ies) or prescriber(s), the
sponsor must select the pharmacy(ies)
and prescriber(s) for the beneficiary
based on such preferences, unless an
exception applies, which we will
address later in the preamble. We
further propose that such pharmacy(ies)
or prescriber(s) must be in-network,
except if the at-risk beneficiary’s plan is
a stand-alone prescription drug benefit
plan and the beneficiary’s preference
involves a prescriber. Because stand-
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alone Part D plans (PDPs) do not have
provider networks, and thus no
prescriber would be in-network, the
plan sponsor must generally select the
prescriber that the beneficiary prefers,
unless an exception applies. We discuss
exceptions in the next section of this
preamble. In our view, it is essential
that an at-risk beneficiary must
generally select in-network pharmacies
and prescribers so that the plan is in the
best possible position to coordinate the
beneficiary’s care going forward in light
of the demonstrated concerns with the
beneficiary’s utilization of frequently
abused drugs.
Accordingly, we propose
§ 423.153(f)(9) to read: Beneficiary
preferences. Except as described in
paragraph (f)(10) of this section, if a
beneficiary submits preferences for
prescribers or pharmacies or both from
which the beneficiary prefers to obtain
frequently abused drugs, the sponsor
must do the following—(i) Review such
preferences and (ii) If the beneficiary
is—(A) Enrolled in a stand-alone
prescription drug benefit plan and
specifies a prescriber(s) or network
pharmacy(ies) or both, select or change
the selection of prescriber(s) or network
pharmacy(ies) or both for the
beneficiary based on beneficiary’s
preference(s) or (B) Enrolled in a
Medicare Advantage prescription drug
benefit plan and specifies a network
prescriber(s) or network pharmacy(ies)
or both, select or change the selection of
prescriber(s) or pharmacy(ies) or both
for the beneficiary based on the
beneficiary’s preference(s). If the
beneficiary submits preferences for a
non-network pharmacy(ies), or in the
case of a Medicare Advantage
prescription drug benefit plan a nonnetwork prescriber(s), or both, the
sponsor does not have to select or
change the selection for the beneficiary
to a non-network pharmacy or
prescriber except if necessary to provide
reasonable access.
In a paragraph (iii), we propose that
the sponsor must inform the beneficiary
of the selection in the second notice, or
if not feasible due to the timing of the
beneficiary’s submission, in a
subsequent written notice, issued no
later than 14 days after receipt of the
submission. Thus, this section would
require a Part D plan sponsor to honor
an at-risk beneficiary’s preferences for
in-network prescribers and pharmacies
from which to obtain frequently abused
drugs, unless the plan was a stand-alone
PDP and the selection involves a
prescriber. In other words, a stand-alone
PDP or MA–PD does not have to honor
a beneficiary’s selection of a nonnetwork pharmacy, except as necessary
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to provide reasonable access, which we
discuss later in this section. Also, under
our proposal, the beneficiary could
submit preferences at any time. Finally,
the sponsor would be required to
confirm the selection in writing either
in the second notice, if feasible, or
within 14 days of receipt of the
beneficiary’s submission.
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(2) Exception to Beneficiary Preferences
(§ 423.153(f)(10))
Section 1860D–4(c)(5)(D)(iv) of the
Act, provides for an exception to an atrisk beneficiary’s preference of
prescriber or pharmacy from which the
beneficiary must obtain frequently
abused drugs, if the beneficiary’s
allowable preference of prescriber or
pharmacy would contribute to
prescription drug abuse or drug
diversion by the at-risk beneficiary.
Section 1860–D–4(c)(5)(D)(iv) of the Act
requires the sponsor to provide the atrisk beneficiary with at least 30 days
written notice and a rationale for not
honoring his or her allowable preference
for pharmacy or prescriber from which
the beneficiary must obtain frequently
abused drugs under the plan.
A few commenters asserted there
should be limits to how many times
beneficiaries can submit their
preferences. Other commenters stated
there should be a strong evidence of
inappropriate action before a sponsor
can change a beneficiary’s selection.
We are not proposing to place a limit
on how many times beneficiaries can
submit their preferences, but we are
open to additional comments on this
topic. We agree with commenters who
stated that there should be a strong
evidence of inappropriate action before
a sponsor can change a beneficiary’s
selection, but we note that because such
a situation would often involve a
network pharmacy or prescriber, we
would expect that the sponsor would
also take appropriate action with respect
to the pharmacy or prescriber, such as
termination from the network.
Given the foregoing, we propose to
add the following: § 423.153(f)(10)
Exception to Beneficiary Preferences. (i)
If the Part D sponsor determines that the
selection or change of a prescriber or
pharmacy under paragraph (f)(9) of this
section would contribute to prescription
drug abuse or drug diversion by the atrisk beneficiary, the sponsor may
change the selection without regard to
the beneficiary’s preferences if there is
strong evidence of inappropriate action
by the prescriber, pharmacy or
beneficiary. (ii) If the sponsor changes
the selection, the sponsor must provide
the beneficiary with (A) At least 30 days
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advance written notice of the change;
and (B) A rationale for the change.
(3) Reasonable Access (§§ 423.100,
423.153(f)(11), 423.153(f)(12))
If a potential at-risk beneficiary or atrisk beneficiary does not submit
pharmacy or prescriber preferences,
section 1860–D–4(c)(5)(D)(i) of the Act
provides that the Part D sponsor shall
make the selection. Section 1860–D–
4(c)(5)(D)(ii) of the Act further provides
that, in making the selection, the
sponsor shall ensure that the beneficiary
continues to have reasonable access to
frequently abused drugs, taking into
account geographic location, beneficiary
preference, impact on cost-sharing, and
reasonable travel time.
We propose to add the following at
§ 423.153(f)(11): Reasonable access. In
making the selections under paragraph
(f)(12) of this section, a Part D plan
sponsor must ensure both of the
following: (i) That the beneficiary
continues to have reasonable access to
frequently abused drugs, taking into
account geographic location, beneficiary
preference, the beneficiary’s
predominant usage of a prescriber or
pharmacy or both, impact on costsharing, and reasonable travel time; and
(ii) reasonable access to frequently
abused drugs in the case of individuals
with multiple residences, in the case of
natural disasters and similar situations,
and in the case of the provision of
emergency services.
Since the statute explicitly allows the
beneficiary to submit preferences, we
interpret the additional reference to
beneficiary preference in the context of
reasonable access to mean that a
beneficiary allowable preference should
prevail over a sponsor’s evaluation of
geographic location, the beneficiary’s
predominant usage of a prescriber and/
or pharmacy impact on cost-sharing and
reasonable travel time. In the absence of
a beneficiary preference for pharmacy
and/or prescriber, however, a Part D
plan sponsor must take into account
geographic location, the beneficiary’s
predominant usage of a prescriber and/
or pharmacy, impact on cost-sharing
and reasonable time travel in selecting
a pharmacy and/or prescriber, as
applicable, from which the at-risk
beneficiary will have to obtain
frequently abused drugs under the plan.
Thus, absent a beneficiary’s allowable
preference, or the beneficiary’s selection
would contribute to prescription drug
abuse or drug diversion, the sponsor
must ensure reasonable access by
choosing the network pharmacy or
prescriber that the beneficiary uses most
frequently to obtain frequently abused
drugs, unless the plan is a stand-alone
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PDP and the selection involves a
prescriber(s). In the latter case, the
prescriber will not be a network
provider, because such plans do not
have provider networks. In urgent
circumstances, we propose that
reasonable access means the sponsor
must have reasonable policies and
procedures in place to ensure
beneficiary access to coverage of
frequently abused drugs without a delay
that may seriously jeopardize the life or
health of the beneficiary or the
beneficiary’s ability to regain maximum
function.
Determining reasonable access may be
complicated when an enrollee has
multiple addresses or his or her health
care necessitates obtaining frequently
abused drugs from more than one
prescriber and/or more than one
pharmacy. Section 1860D–4(c)(5)
addresses this issue by requiring the
Part D plan sponsor to select more than
one prescriber to prescribe frequently
abused drugs and more than one
pharmacy to dispense them, as
applicable, when it reasonably
determines it is necessary to do so to
provide the at-risk beneficiary with
reasonable access.
Given the foregoing, we propose the
following at § 423.153(f)(12): Selection
of Prescribers and Pharmacies. (i) A Part
D plan sponsor must select, as
applicable—(A) One, or, if the sponsor
reasonably determines it necessary to
provide the beneficiary with reasonable
access, more than one, network
prescriber who is authorized to
prescribe frequently abused drugs for
the beneficiary, unless the plan is a
stand-alone PDP and the selection
involves a prescriber(s), in which case,
the prescriber need not be a network
prescriber; and (B) One, or, if the
sponsor reasonably determines it
necessary to provide the beneficiary
with reasonable access, more than one,
network pharmacy that may dispense
such drugs to such beneficiary.
We also propose to address chain
pharmacies and group practices by
adding a paragraph (ii) that states: (ii)
(A) For purposes of this subsection
(f)(12) of this section, in the case of a
pharmacy that has multiple locations
that share real-time electronic data, all
such locations of the pharmacy shall
collectively be treated as one pharmacy;
and (B) For purposes of this subsection
(f)(12), in the case of a group practice,
all prescribers of the group practice
shall be treated as one prescriber.
We would interpret these provisions
to mean that a sponsor would be
required to select more than one
prescriber of frequently abused drugs, if
more than one prescriber has asserted
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during case management that multiple
prescribers of frequently abused drugs
are medically necessary for the at-risk
beneficiary. We further propose that if
no prescribers of frequently abused
drugs were responsive during case
management, and the beneficiary does
not submit preferences, the sponsor
would be required to select the
pharmacy or prescriber that the
beneficiary predominantly uses to
obtain frequently abused drugs.
(4) Confirmation of Pharmacy and
Prescriber Selection (§ 423.153(f)(13))
Section 1860D–4(c)(5)(D)(v) of the Act
requires that, before selecting a
prescriber or pharmacy, a Part D plan
sponsor must notify the prescriber and/
or pharmacy that the at-risk beneficiary
has been identified for inclusion in the
drug management program which will
limit the beneficiary’s access to coverage
of frequently abused drugs to selected
pharmacy(ies) and/or prescriber(s) and
that the prescriber and/or pharmacy has
been selected as a designated prescriber
and/or pharmacy for the at-risk
beneficiary.
We propose that plan sponsors can
obtain a network provider’s
confirmation in advance by including a
provision in the network agreement
specifying that the provider agrees to
serve as at-risk beneficiaries’ selected
prescriber or pharmacy, as applicable.
In these cases, the network provider
would agree to forgo providing specific
confirmation if selected under a drug
management program to serve an at-risk
beneficiary. However, the contract
between the sponsor and the network
provider would need to specify how the
sponsor will notify the provider of its
selection. Absent a provision in the
network contract, however, the sponsor
would be required to receive
confirmation from the prescriber(s) and/
or pharmacy(ies) that the selection is
accepted before conveying this
information to the at-risk beneficiary.
Otherwise, the plan would need to make
another selection and seek confirmation.
We propose § 423.153(f)(13) to read:
Confirmation of Selections(s). (i) Before
selecting a prescriber or pharmacy
under this paragraph, a Part D plan
sponsor must notify the prescriber or
pharmacy, as applicable, that the
beneficiary has been identified for
inclusion in the drug management
program for at-risk beneficiaries and
that the prescriber or pharmacy or both
is (are) being selected as the
beneficiary’s designated prescriber or
pharmacy or both for frequently abused
drugs. (ii) The sponsor must receive
confirmation from the prescriber(s) or
pharmacy(ies) or both that the selection
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is accepted before conveying this
information to the at-risk beneficiary,
unless the prescriber or pharmacy has
agreed in advance in its network
agreement with the sponsor to accept all
such selections and the agreement
specifies how the prescriber or
pharmacy will be notified by the
sponsor of its selection.
(ix) Drug Management Program Appeals
(§§ 423.558, 423.560, 423.562, 423.564,
423.580, 423.582, 423.584, 423.590,
423.602, 423.636, 423.638, 423.1970,
423.2018, 423.2020, 423.2022, 423.2032,
423.2036, 423.2038, 423.2046, 423.2056,
423.2062, 423.2122, and 423.2126)
Section 1860D–4(c)(5)(E) of the Act
specifies that the identification of an
individual as an at-risk beneficiary for
prescription drug abuse under a Part D
drug management program, a coverage
determination made under such a
program, the selection of a prescriber or
pharmacy, and information sharing for
subsequent plan enrollments shall be
subject to reconsideration and appeal
under section 1860D–4(h) of the Act.
This provision also permits the option
of an automatic escalation to external
review to the extent provided by the
Secretary.
As discussed earlier in this preamble,
we are proposing to integrate the lockin provisions with existing Part D
Opioid DUR Policy/OMS.
Determinations made in accordance
with any of those processes, proposed at
§ 423.153(f), and discussed previously,
are interrelated issues that we
collectively refer to as an ‘‘at-risk
determination’’ made under a drug
management program. The at-risk
determination includes prescriber and/
or pharmacy selection for lock-in,
beneficiary-specific POS claim edits for
frequently abused drugs, and
information sharing for subsequent plan
enrollments. Given the concomitant
nature of the at-risk determination and
associated aspects of the drug
management program applicable to an
at-risk beneficiary, we expect that any
dispute under a plan’s drug
management program will be
adjudicated as a single case involving a
review of all aspects of the drug
management program for the at-risk
beneficiary. While a beneficiary who is
subject to a Part D plan sponsor’s drug
management program always retains the
right to request a coverage
determination under existing § 423.566
for any Part D drug that the beneficiary
believes may be covered by their plan,
we believe that appeals of an at-risk
determination made under proposed
§ 423.153(f) should involve
consideration of all relevant elements of
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that at-risk determination. For example,
if a Part D plan determines that a
beneficiary is at-risk, implements a
beneficiary-specific claim edit on 2
drugs that beneficiary is taking and
locks that beneficiary into a specific
pharmacy, the affected beneficiary
should not be expected to raise a
dispute about the pharmacy selection
and about one of the claim edits in
distinct appeals.
We note that, while section 1860D–
4(c)(5)(B)(ii)(III) of the Act requires the
initial written notice to the beneficiary,
which identifies him or her as
potentially being at-risk, to include
‘‘notice of, and information about, the
right of the beneficiary to appeal such
identification under subsection (h),’’ we
interpret ‘‘such identification’’ to refer
to any subsequent identification that the
beneficiary is actually at-risk. Because
CARA, at section 1860D–4(c)(5)(E) of
the Act, specifically provides for appeal
rights under subsection (h) but does not
refer to identification as a potential atrisk beneficiary, we believe this
interpretation is consistent with the
statutory intent. Furthermore, when a
beneficiary is identified as being
potentially at-risk, but has not yet been
identified as at-risk, the plan is not
taking any action to limit such
beneficiary’s access to frequently abused
drugs; therefore, the situation is not ripe
for appeal. While an LIS SEP under
§ 423.38 would be restricted at the time
the beneficiary is identified as
potentially at-risk under proposed
§ 423.100, the loss of such SEP is not
appealable under section 1860D–4(h) of
the Act.
As noted previously, section 1860D–
4(c)(5)(E) of the Act specifically refers to
the Part D benefit appeals provisions in
section 1860D–4(h) of the Act, which
require Part D plan sponsors to meet the
requirements of paragraphs (4) and (5)
of section 1852(g) of the Act for benefits
in a manner similar to the manner such
requirements apply to MA
organizations. Section 1852(g)(4) of the
Act specifically provides for
independent review of
‘‘reconsiderations that affirm denial of
coverage, in whole or in part (emphasis
added).’’ We believe section 1860D–
4(c)(5)(E) of the Act broader reference to
‘‘reconsideration and appeal’’ should be
interpreted to mean that individuals
have a right to a plan level appeal,
consistent with the reconsideration
provisions under section 1860D–4(g) of
the Act, followed by the right to
independent review if the plan level
affirms the initial adverse decision. In
other words, we believe the reference to
‘‘reconsideration’’ means that a Part D
plan sponsor should conduct the initial
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level of appeal following an at-risk
determination under the plan sponsor’s
drug management program, consistent
with the existing Part D drug benefit
appeals process, despite the absence of
a specific reference to section 1860D–
4(g) of the Act.
Part D enrollees, plan sponsors, and
other stakeholders are already familiar
with the Part D benefit appeals process.
Resolving disputes that arise under a
plan sponsor’s drug management
program within the existing Part D
benefit appeals process would allow atrisk beneficiaries to be more familiar
with, and more easily access, the
appeals process instead of creating a
new process specific to appeals related
to a drug management program. Also,
allowing a plan sponsor the opportunity
to review information it used to make an
at-risk determination under the drug
management program (and any
additional relevant information
submitted as part of the appeal) would
be efficient for both the individual and
the Medicare program because it would
potentially resolve the issues at a lower
level of administrative review.
Conversely, permitting review by the
independent review entity (IRE) before
a plan sponsor has an opportunity to
review and resolve any errors or
omissions that may have been made
during the initial at-risk determination
would likely result in an unnecessary
increase in costs for plan sponsors as
well as CMS’ Part D IRE contract costs.
As noted previously, the Secretary has
the discretion under CARA to provide
for automatic escalation of drug
management program appeals to
external review. Under existing Part D
benefit appeals procedures, there is no
automatic escalation to external review
for adverse appeal decisions; instead,
the enrollee (or prescriber, on behalf of
the enrollee) must request review by the
Part D IRE. Under the existing Part D
benefit appeals process, cases are autoforwarded to the IRE only when the
plan fails to issue a coverage
determination within the applicable
timeframe. During the stakeholder call
and in subsequent written comments,
most commenters opposed automatic
escalation to the IRE, citing support for
using the existing appeals process for
reasons of administrative efficiency and
better outcomes for at-risk beneficiaries.
The majority of stakeholders supported
following the existing Part D appeals
process, and some commenters
specifically supported permitting the
plan to review its lock-in decision prior
to the case being subject to IRE review.
Stakeholders cited a variety of reasons
for their opposition, including increased
costs to plans, the IRE, and the Part D
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program. Stakeholders cited
administrative efficiency in using the
existing appeal process that is familiar
to enrollees, plans, and the IRE, while
other commenters expressed support for
automatic escalation to the IRE as a
beneficiary protection.
We are proposing that at-risk
determinations made under the
processes at § 423.153(f) be adjudicated
under the existing Part D benefit appeals
process and timeframes set forth in
Subpart M. However, we are not
proposing to revise the existing
definition of a coverage determination.
The types of decisions made under a
drug management program align more
closely with the regulatory provisions in
Subpart D than with the provisions in
Subpart M related to coverage or
payment for a drug based on whether
the drug is medically necessary for an
enrollee. Therefore, we believe it is
clearer to set forth the rules for at-risk
determinations as part of § 423.153 and
cross reference § 423.153(f) in relevant
provisions in Subpart M and Subpart U.
While a coverage determination made
under a drug management program
would be subject to the existing rules
related to coverage determinations, the
other types of initial determinations
made under a drug management
program (for example, a restriction on
the at-risk beneficiary’s access to
coverage of frequently abused drugs to
those that are prescribed for the
beneficiary by one or more prescribers)
would be subject to the processes set
forth at proposed § 423.153(f).
Consistent with existing rules for
redeterminations at § 423.582, an
enrollee who wishes to dispute an atrisk determination would have 60 days
from the date of the second written
notice to make such request, unless the
enrollee shows good cause for untimely
filing under § 423.582(c). As previously
discussed for proposed § 423.153(f)(6),
the second written notice is sent to a
beneficiary the plan has identified as an
at-risk beneficiary and with respect to
whom the sponsor limits his or her
access to coverage of frequently abused
drugs regarding the requirements of the
sponsor’s drug management programs.
Also consistent with the existing Part
D benefit appeals process, we are
proposing that at-risk beneficiaries (or
an at-risk beneficiary’s prescriber, on
behalf of the at-risk beneficiary) must
affirmatively request IRE review of
adverse plan level appeal decisions
made under a plan sponsor’s drug
management program. In other words,
under this proposal, an adverse
redetermination would not be
automatically escalated to the Part D
IRE, unless the plan sponsor fails to
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meet the redetermination adjudication
timeframe. We are also proposing to
amend the existing Subpart M rules at
§ 423.584 and § 423.600 related to
obtaining an expedited redetermination
and IRE reconsideration, respectively, to
apply them to appeals of a
determination made under a drug
management program. The right to an
expedited appeal of such a
determination, which must be
adjudicated as expeditiously as the atrisk beneficiary’s health condition
requires, would ensure that the rights of
at-risk beneficiaries are protected with
respect to access to medically necessary
drugs. While we are not proposing to
adopt auto-escalation, we believe our
proposed approach ensures that an atrisk beneficiary has the right to obtain
IRE review and higher levels of appeal
(ALJ/attorney adjudicator, Council, and
judicial review). Accordingly, we also
are proposing to add the reference to an
‘‘at-risk determination’’ to the following
regulatory provisions that govern ALJ
and Council processes: §§ 423.2018,
423.2020, 423.2022, 423.2032, 423.2036,
423.2038, 423.2046, 423.2056, 423.2062,
423.2122, and 423.2126.
Finally, we are also proposing a
change to § 423.1970(b) to address the
calculation of the amount in controversy
(AIC) for an ALJ hearing in cases
involving at-risk determinations made
under a drug management program in
accordance with proposed § 423.153(f).
Specifically, we propose that the
projected value of the drugs subject to
the drug management program be used
to calculate the amount remaining in
controversy. For example, if the
beneficiary is disputing the lock-in to a
specific pharmacy for frequently abused
drugs and the beneficiary takes 3
medications that are subject to the
plan’s drug management program, the
projected value of those 3 drugs would
be used to calculate the AIC, including
the value of any refills prescribed for the
drug(s) in dispute during the plan year.
In addition to the proposed changes
related to the implementation of drug
management program appeals, we are
also proposing to make technical
changes to § 423.562(a)(1)(ii) to remove
the comma after ‘‘includes’’ and replace
the reference to ‘‘§§ 423.128(b)(7) and
(d)(1)(iii)’’ with a reference to
‘‘§§ 423.128(b)(7) and (d)(1)(iv).’’
(x) Termination of a Beneficiary’s
Potential At-Risk or At-Risk Status
(§ 423.153(f)(14))
Section 1860–D–4(c)(5)(F) of the Act
provides that the Secretary shall
develop standards for the termination of
the identification of an individual as an
at-risk beneficiary, which shall be the
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earlier of the date the individual
demonstrates that he or she is no longer
likely to be an at-risk beneficiary in the
absence of limitations, or the end of
such maximum period as the Secretary
may specify.
Most commenters recommended a
maximum 12-month period for an atrisk beneficiary to be locked-in. We also
note that a 12-month lock-in period is
common in Medicaid lock-in
programs.20 A few commenters stated
that a physician should be able to
determine that a beneficiary is no longer
an at-risk beneficiary. One commenter
was opposed to an arbitrary termination
based on a time period.
Given that most commenters
recommended a 12-month period and
such a period is common in Medicaid
‘‘lock-in’’ program, we propose a
maximum 12-month period for both a
lock-in period, and also for the duration
of a beneficiary-specific POS claim edit
for frequently abused drugs through the
addition of the following language at
§ 423.153(f)(14): Termination of
Identification as an At-Risk Beneficiary.
The identification of an at-risk
beneficiary as such shall terminate as of
the earlier of the following—
(i) The date the beneficiary
demonstrates through a subsequent
determination, including but not limited
to, a successful appeal, that the
beneficiary is no longer likely, in the
absence of the limitations under this
paragraph, to be an at-risk beneficiary;
or
(ii) The end of a 12 calendar month
period calculated from the effective date
of the limitation, as specified in the
notice provided under paragraph (f)(6)
of this section.
Thus, we note that if a beneficiary
continues to meet the clinical guidelines
and, if the sponsor implements an
additional, overlapping limitation on
the at-risk beneficiary’s access to
coverage for frequently abused drugs,
the beneficiary may experience a
coverage limitation beyond 12-months.
The same is true for at-risk beneficiaries
who were identified as such in the most
recent prescription drug plan in which
they were enrolled and the sponsor of
his or her subsequent plan immediately
implements a limitation on coverage of
frequently abused drugs.
Section 1860–D–4(c)(5)(F)(ii) of the
Act states that nothing in CARA shall be
construed as preventing a plan from
identifying an individual as an at-risk
beneficiary after such termination on
20 Medicaid Drug Utilization Review State
Comparison/Summary Report FFY 2015 Annual
Report: Prescription Drug Fee-For Service Program
(December 2016).
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the basis of additional information on
drug use occurring after the date of
notice of such termination. Accordingly,
we note that our proposed approach to
termination of an at-risk determination
would not prevent an at-risk beneficiary
from being subsequently identified as a
potential at-risk beneficiary or at-risk
beneficiary on the basis of new
information on drug use occurring after
the date of such termination that causes
the beneficiary to once again meet the
clinical guidelines.
(xi) Data Disclosure and Sharing of
Information for Subsequent Sponsor
Enrollments (§ 423.153(f)(15))
In order for Part D sponsors to
conduct the case management/clinical
contact/prescriber verification required
by proposed § 423.153(f)(2), CMS must
identify potential at-risk beneficiaries to
sponsors who are in the sponsors’ Part
D prescription drug benefit plans. In
addition, new sponsors must have
information about potential at-risk
beneficiaries and at-risk beneficiaries
who were so identified by their
immediately prior plan and enroll in the
new sponsor’s plan and such
identification had not terminated before
the beneficiary disenrolled from the
immediately prior plan. Finally, as
discussed earlier, sponsors may identify
potential at-risk beneficiaries by their
own application of the clinical
guidelines on a more frequent basis. It
is important that CMS be aware of
which Part D beneficiaries sponsors
identify on their own, as well as which
ones have been subjected to limitations
on their access to coverage for
frequently abused drugs under sponsors’
drug management programs for Part D
program administration and other
purposes. This data disclosure process
would be consistent with current policy,
as described earlier in this preamble.
As we also discussed earlier, under
the current policy, CMS provides
quarterly reports to sponsors about
beneficiaries enrolled in their plans who
meet the OMS criteria. In turn, Part D
sponsors are expected to provide
responses to CMS through the OMS for
each case identified within 30 days of
receiving a report that reflects the status
or outcome of their case management.21
At the same time, also within 30 days,
sponsors are expected to report
additional beneficiaries to OMS that
they identify using their own opioid
overutilization identification criteria.22
21 See ‘‘Medicare Part D Overutilization
Monitoring System,’’ July 5, 2013.
22 See ‘‘Medicare Part D Overutilization
Monitoring System, January 17, 2014.
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Regarding data disclosures, section
1860D–4(c)(5)(H) of the Act provides
that, in the case of potential at-risk
beneficiaries and at-risk beneficiaries,
the Secretary shall establish rules and
procedures to require the Part D plan
sponsor to disclose data, including any
necessary individually identifiable
health information, in a form and
manner specified by the Secretary,
about the decision to impose such
limitations and the limitations imposed
by the sponsor under this part.
Sponsors also report information to
CMS’ MARx system about pending,
implemented and terminated
beneficiary-specific POS claim edit for
opioids within 7 business days of the
date on the applicable beneficiary notice
or of the termination.23 The MARx
system transfers information about
pending and implemented claim edits to
the gaining sponsor with the
beneficiary’s enrollment record if the
beneficiary disenrolls and enrolls in the
gaining sponsor’s plan. If a gaining
sponsor requests case management
information from the losing sponsor
about the beneficiary, we expect the
losing sponsor to transfer the
information to the gaining sponsor as
soon as possible, but no later than 2
weeks from the date of the gaining
sponsor’s request.24
Section 1860–D–4(c)(5)(I) of the Act
requires that the Secretary establish
procedures under which Part D
sponsors must share information when
at-risk beneficiaries or potential at-risk
beneficiaries enrolled in one
prescription drug plan subsequently
disenroll and enroll in another
prescription drug plan offered by the
next sponsor (gaining sponsor). We plan
to expand the scope of the reporting to
MARx under the current policy to
include the ability for sponsors to report
similar information to MARx about all
pending, implemented and terminated
limitations on access to coverage of
frequently abused drugs associated with
their plans’ drug management programs.
We propose to codify the data
disclosure and information sharing
process under the current policy, with
the expansion just described, by adding
the following requirement to § 423.153:
(f)(15) Data Disclosure. (i) CMS
identifies each potential at-risk
beneficiary to the sponsor of the
prescription drug plan in which the
beneficiary is enrolled. (ii) A Part D
sponsor that operates a drug
management program must disclose any
23 Final
Parts C&D 2017 Call Letter, April 4, 2016.
‘‘Beneficiary-Level Point-of-Sale Claim
Edits and Other Overutilization Issues,’’ August 25,
2014.
24 See
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data and information to CMS and other
Part D sponsors that CMS deems
necessary to oversee Part D drug
management programs at a time, and in
a form and manner, specified by CMS.
The data and information disclosures
must do all of the following: (A)
Respond to CMS within 30 days of
receiving a report about a potential atrisk beneficiary from CMS; (B) Provide
information to CMS about any potential
at-risk beneficiary that a sponsor
identifies within 30 days from the date
of the most recent CMS report
identifying potential at-risk
beneficiaries; (C) Provide information to
CMS within 7 business days of the date
of the initial notice or second notice that
the sponsor provided to a beneficiary, or
within 7 days of a termination date, as
applicable, about a beneficiary-specific
opioid claim edit or a limitation on
access to coverage for frequently abused
drugs; and (D) Transfer case
management information upon request
of a gaining sponsor as soon as possible
but no later than 2 weeks from the
gaining sponsor’s request when: (1) An
at-risk beneficiary or potential at-risk
beneficiary disenrolls from the
sponsor’s plan and enrolls in another
prescription drug plan offered by the
gaining sponsor; and (2) The edit or
limitation that the sponsor had
implemented for the beneficiary had not
terminated before disenrollment.
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(xii) Summary
Our proposal is intended to be
responsive to stakeholder input that
CMS focus on opioids; allow for
flexibility to adjust the clinical
guidelines and frequently abused drugs
in the future; is reflective of the
importance of the provider-patient
relationship; protects beneficiary’s
rights and access, and allows for
operational manageability and
consistency with the current policy to
the extent possible. This proposal, if
finalized, should result in effective Part
D drug management programs within a
regulatory framework provided by CMS,
and further reduce opioid
overutilization in the Part D program.
2. Flexibility in the Medicare Advantage
Uniformity Requirements
We have determined that providing
access to services (or specific cost
sharing for services or items) that is tied
to health status or disease state in a
manner that ensures that similarly
situated individuals are treated
uniformly is consistent with the
uniformity requirement in the Medicare
Advantage (MA) regulations at
§ 422.100(d). This regulatory
requirement is a means to implement
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both section 1852(d) of the Act, which
requires that benefits under the MA
plan be available and accessible to each
enrollee in the plan, and section 1854(c)
of the Act, which requires uniform
premiums for each enrollee in the plan.
Previously, we required MA plans to
offer all enrollees access to the same
benefits at the same level of cost
sharing. We have determined that these
statutory provisions and the regulation
at § 422.100(d) mean that we have the
authority to permit MA organizations
the ability to reduce cost sharing for
certain covered benefits, offer specific
tailored supplemental benefits, and offer
lower deductibles for enrollees that
meet specific medical criteria, provided
that similarly situated enrollees (that is,
all enrollees who meet the identified
criteria) are treated the same. For
example, reduced cost sharing
flexibility would allow an MA plan to
offer diabetic enrollees zero cost sharing
for endocrinologist visits. Similarly,
with this flexibility, a MA plan may
offer diabetic enrollees more frequent
foot exams as a tailored, supplemental
benefit. In addition, with this flexibility,
a MA plan may offer diabetic enrollees
a lower deductible. Under this example,
non-diabetic enrollees would not have
access to these diabetic-specific tailored
cost-sharing or supplemental benefits;
however, any enrollee that develops
diabetes would then have access to
these benefits.
Such flexibility under our new
interpretation of the uniformity
requirement is not without limits,
however, as section 1852(b)(1)(A) of the
Act prohibits an MA plan from denying,
limiting, or conditioning the coverage or
provision of a service or benefit based
on health-status related factors. MA
regulations (for example,
§§ 422.100(f)(2) and 422.110(a)) reiterate
and implement this non-discrimination
requirement. In interpreting these
obligations to protect against
discrimination, we have historically
indicated that the purpose of the
requirements is to protect high-acuity
enrollees from adverse treatment on the
basis of their higher cost health
conditions (79 FR 29843; 76 FR 21432;
and 74 FR 54634). As MA plans
consider this new flexibility in meeting
the uniformity requirement, they must
be mindful of ensuring compliance with
non-discrimination responsibilities and
obligations.25 MA plans that exercise
this flexibility must ensure that the cost
25 Among these responsibilities and obligations
are compliance with Title VI of the Civil Rights Act,
section 504 of the Rehabilitation Act, the Age
Discrimination Act, and section 1557 of the
Affordable Care Act.
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sharing reductions and targeted
supplemental benefits are for health
care services that are medically related
to each disease condition. CMS will be
concerned about potential
discrimination if an MA plan is
targeting cost sharing reductions and
additional supplemental benefits for a
large number of disease conditions,
while excluding other higher-cost
conditions. We will review benefit
designs to make sure that the overall
impact is non-discriminatory and that
higher acuity, higher cost enrollees are
not being excluded in favor of healthier
populations.
For example, an MA plan could
identify enrollees diagnosed with
specific diseases, such as diabetes,
chronic heart failure, and COPD, as
medically vulnerable and in need of
certain services, which could be offered
to these enrollees in the form of tailored
supplemental benefits. In identifying
eligible enrollees, the MA plan must use
medical criteria that are objective and
measurable, and the enrollee must be
diagnosed by a plan provider or have
their existing diagnosis certified or
affirmed by a plan provider to assure
equal application of the objective
criteria necessary to provide equal
treatment of similarly situated
individuals.
For contract year 2019, we are
considering issuing guidance clarifying
the flexibility MA plans have to offer
targeted supplemental benefits for their
most medically vulnerable enrollees. A
benefit package that offers differential
access to enhanced services or benefits
or reduced cost sharing or different
deductibles based on objective criteria,
and ensures equal treatment of similarly
situated enrollees, for whom such
services and benefits are useful, can be
priced at a uniform premium consistent
with the requirements for availability
and accessibility throughout the service
area for all enrollees in section
1852(d)(1)(A) of the Act and for uniform
bids and premiums in section 1854(c) of
the Act. We believe this flexibility will
help MA plans better manage health
care services for the most vulnerable
enrollees. The benefit and cost sharing
flexibility we have discussed here
applies to Part C benefits but not Part D
benefits. We are requesting comments
and/or questions from stakeholders
about the implementation of this
flexibility. We note that CMS is
currently testing value based insurance
design (VBID) through the use of our
demonstration authority under Section
1115A of the Act (42 U.S.C. 1315a,
added by Section 3021 of the Affordable
Care Act), which will include some of
the elements we have discussed
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previously. However, there are also
features of the VBID demonstration that
are unique to the demonstration test. We
expect the VBID demonstration to
provide CMS with insights into future
VBID innovations for the MA program.
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3. Segment Benefits Flexibility
In reviewing section 1854(h) of the
Social Security Act and Medicare
Advantage (MA) regulations governing
plan segments, we have determined that
the statute and existing regulations may
be interpreted to allow MA plans to vary
supplemental benefits, in addition to
premium and cost sharing, by segment,
as long as the benefits, premium, and
cost sharing are uniform within each
segment of an MA plan’s service area.
Plans segments are county-level
portions of a plan’s overall service area
which, under current CMS policy, are
permitted to have different premiums
and cost sharing amounts as long as
these premiums and cost sharing
amounts are uniform throughout the
segment. We are proposing to revise our
interpretation of the existing statute and
regulations to allow MA plan segments
to vary by benefits in addition to
premium and cost sharing, consistent
with the MA regulatory requirements
defining segments at § 422.262(c)(2).
4. Maximum Out-of-Pocket Limit for
Medicare Parts A and B Services
(§§ 422.100 and 422.101)
As provided at § 422.100(f)(4) and (5)
and § 422.101(d)(2) and (3), all Medicare
Advantage (MA) plans (including
employer group waiver plans (EGWPs)
and special needs plans (SNPs)), must
establish limits on enrollee out-ofpocket cost sharing for Parts A and B
services that do not exceed the annual
limits established by CMS. CMS added
§§ 422.100(f)(4) and (f)(5), effective for
coverage in 2011, under the authority of
sections 1852(b)(1)(A), 1856(b)(1), and
1857(e)(1) of the Act in order not to
discourage enrollment by individuals
who utilize higher than average levels of
health care services (that is, in order for
a plan not to be discriminatory) (75 FR
19709–11). Section 1858(b)(2) of the Act
requires a limit on in-network out-ofpocket expenses for enrollees in
Regional MA Plans. In addition, Local
Preferred Provider Organization (LPPO)
plans, under § 422.100(f)(5), and
Regional PPO (RPPO) plans, under
section 1858(b)(2) of the Act and
§ 422.101(d)(3), are required to have a
‘‘catastrophic’’ limit inclusive of both
in- and out-of-network cost sharing for
all Parts A and B services, the annual
limit which is also established by CMS.
All cost sharing (that is, deductibles,
coinsurance, and copayments) for Parts
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A and B services, excluding plan
premium, must be included in each
plan’s Maximum Out-of-Pocket (MOOP)
amount subject to these limits.
As discussed in the 2010 rulemaking
(75 FR 19709), CMS affords greater
flexibility in establishing Parts A and B
cost sharing to MA plans that adopt a
lower, voluntary MOOP limit than is
available to plans that adopt the higher,
mandatory MOOP limit. The percentage
of eligible Medicare beneficiaries with
access to an MA plan (excluding
employer and dual eligible special
needs plans) offering a voluntary MOOP
limit has decreased from 97.7 percent in
CY 2011 to 68.1 percent in CY 2017.
This has resulted in the percentage of
total enrollees in a voluntary MOOP
plan decreasing from 51 percent in CY
2011 to 21 percent in CY 2017.
As stated in the CY 2018 final Call
Letter 26 and in the 2010 final rule (75
FR 19710), CMS currently sets MOOP
limits based on a beneficiary-level
distribution of Parts A and B cost
sharing for individuals enrolled in
Medicare Fee-for-Service (FFS) for local
and regional MA plans. The mandatory
MOOP amount represents
approximately the 95th percentile of
projected beneficiary out-of-pocket
spending. Stated differently, 5 percent
of Medicare FFS beneficiaries are
expected to incur approximately $6,700
or more in Parts A and B deductibles,
copayments, and coinsurance. The
voluntary MOOP amount of $3,400
represents approximately the 85th
percentile of projected Medicare FFS
out-of-pocket costs. The Office of the
Actuary conducts an annual analysis to
help CMS determine the MOOP limits.
Since the MOOP requirements for local
and regional MA plans were finalized in
regulation, a strict application of the
95th and 85th percentile would have
resulted in MOOP limits for local and
regional MA plans fluctuating from
year-to-year. Therefore, CMS has
exercised discretion in order to
maintain stable MOOP limits from yearto-year, when the beneficiary-level
distribution of Parts A and B cost
sharing for individuals enrolled in
Medicare FFS is approximately equal to
the appropriate percentile. This
approach avoids enrollee confusion,
allows plans to provide stable benefit
packages year over year, and does not
discourage the adoption of the lower
voluntary MOOP amount because of
fluctuations in the amount. CMS
expects to change MOOP limits if a
26 The CY 2018 final Call Letter may be accessed
at https://www.cms.gov/Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/Announcements-andDocuments.html.
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56361
consistent pattern of increasing or
decreasing costs emerges over time.
As part of the annual Call Letter
process, stakeholders have suggested
changes to how CMS establishes MOOP
limits. Some of the comments suggested
CMS use Medicare FFS and MA
encounter data to inform its decisionmaking. Other suggestions received
have included increasing the voluntary
MOOP limit, increasing the number of
service categories that have higher cost
sharing in return for a plan offering a
lower MOOP limit, and considering
three levels of MOOP and service
category cost sharing to encourage plan
offerings with lower MOOP limits.
CMS’s goal is to establish future
MOOP limits based on the most relevant
and available data, or combination of
data, that reflects beneficiary health care
costs in the MA program and maintains
benefit stability over time. Medicare
FFS data currently represents the most
relevant and available data at this time.
CMS may consider future rulemaking
regarding the use of MA encounter cost
data to understand program health care
costs and compare to Medicare FFS data
in establishing cost sharing limits.
Under this current proposal to revise the
regulations controlling MOOP limits,
CMS might change its existing
methodology of using the 85th and 95th
percentiles of projected beneficiary outof-pocket Medicare FFS spending in the
future. CMS expects to establish future
limits by striking the appropriate
balance between limiting MOOP costs
and potential changes in premium,
benefits, and cost sharing with the goal
of making sure beneficiaries can access
affordable and sustainable benefit
packages. While CMS intends to
continue using the 85th and 95th
percentiles of projected beneficiary outof-pocket spending for the immediate
future to set MA MOOP limits, CMS
proposes to amend the regulation text in
§§ 422.100(f)(4) and (5) and
422.101(d)(2) and (d)(3) to incorporate
authority to balance factors discussed
previously. The flexibility provided by
these proposed changes will permit
CMS to annually adjust mandatory and
voluntary MOOP limits based on
changes in market conditions and to
ensure the sustainability of the MA
program and benefit options.
The proposed new authority
permitting changes in data and
methodology related to establishing
MOOP limits would be exercised by
CMS in advance of each plan year; CMS
would use the annual Call Letter and
other guidance documents to explain its
application of this proposed regulatory
standard and the data used to identify
MOOP limits in advance of bid
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deadlines. This will provide MA
organizations adequate time to comment
and prepare for changes. In addition,
CMS plans to transition any significant
changes under this proposal over time
to avoid disruption to benefit designs
and minimize potential beneficiary
confusion.
CMS proposes to codify specific
requirements because of the number of
comments received in the past about
MOOP changes. CMS proposes to
amend §§ 422.100(f)(4) and (f)(5) and
422.101(d)(2) and (d)(3) to clarify that
CMS may use Medicare FFS data to
establish annual MOOP limits. In
addition, CMS would have authority to
increase the voluntary MOOP limit to
another percentile level of Medicare
FFS, increase the number of service
categories that have higher cost sharing
in return for offering a lower MOOP
amount, and implement more than two
levels of MOOP and cost sharing limits
to encourage plan offerings with lower
MOOP limits. This proposal includes
authority to increase the number of
service categories that have higher cost
sharing in return for offering a lower
(voluntary) MOOP amount and
considering more than two levels of
MOOP (with associated cost sharing
limits) to encourage plan offerings with
lower MOOP limits. Consistent with
past practice, CMS will continue to
publish annual limits and a description
of how the regulation standard was
applied (that is, the methodology used)
in the annual Call Letter prior to bid
submission so that MA plans can submit
bids consistent with parameters that
CMS has determined to meet the cost
sharing limits requirements. CMS seeks
comments and suggestions on the topics
discussed in this section.
5. Cost Sharing Limits for Medicare
Parts A and B Services (§§ 417.454 and
422.100)
As provided at §§ 417.454(e),
422.100(f)(6), and 422.100(j), MA plan
cost sharing for Parts A and B services
specified by CMS must not exceed
certain levels. Section 422.100(f)(6)
provides that cost sharing must not be
discriminatory and CMS determines
annually the level at which certain cost
sharing becomes discriminatory.
Sections 417.454(e) and 422.100(j), on
the other hand, are based on how
section 1852(a)(1)(B)(iii) and (iv) of the
Act directs that cost sharing for certain
services may not exceed cost sharing
levels in Medicare Fee-for-Service
(FFS); under the statute and the
regulations, CMS may add to that list of
services. CMS reviews cost sharing set
by MA organizations using parameters
based on Parts A and B services that are
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more likely to have a discriminatory
impact on beneficiaries. The review
parameters are currently based on
Medicare FFS data and reflect a
combination of patient utilization
scenarios and length of stays or services
used by average to sicker patients. CMS
uses multiple utilization scenarios for
some services (for example, inpatient
care) to guard against MA organizations
distributing benefit cost sharing
amounts in a manner that is
discriminatory. Review parameters are
also established for frequently used
professional services, such as primary
and specialty care services.
CMS proposes here to amend
§ 422.100(f)(6) to clarify that it may use
Medicare FFS data to establish
appropriate cost sharing limits. In
addition, CMS intends to use MA
utilization encounter data to inform
patient utilization scenarios used to
help identify MA plan cost sharing
standards and thresholds that are not
discriminatory; we solicit comment on
whether to codify that use of MA
encounter data for this purpose in
§ 422.100(f)(6). This proposal is not
related to a statutory change.
This proposal aims to allow CMS to
use the most relevant and appropriate
information in determining whether
specific cost sharing is discriminatory
and to set standards and thresholds
above which CMS believes cost sharing
is discriminatory. CMS intends to
continue the practice of furnishing
information to MA organizations about
the methodology used to establish cost
sharing limits and the thresholds CMS
identifies as non-discriminatory through
the annual Call Letter process or Health
Plan Management System (HPMS)
memoranda and solicit comments, as
appropriate. This process allows MA
organizations to prepare plan bids
consistent with parameters that CMS
have determined to be nondiscriminatory.
As specified in section
1852(a)(1)(B)(iv) of the Act, the cost
sharing charged by MA plans for
chemotherapy administration services,
renal dialysis services, and skilled
nursing care may not exceed the cost
sharing for those services under Parts A
and B. Although CMS has not
established a specific service category
cost sharing limit for all possible
services, CMS has issued guidance that
MA plans must pay at least 50 percent
of the contracted (or Medicare
allowable) rate and that cost sharing for
services cannot exceed 50 percent of the
total MA plan financial liability for the
benefit in order for the cost sharing for
such services to be considered nondiscriminatory; CMS believes that cost
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sharing (service category deductibles,
copayments or co-insurance) that fails to
cover at least half the cost of a particular
service or item acts to discriminate
against those for whom those services
and items are medically necessary and
discourages enrollment by beneficiaries
who need those services and items. If a
plan uses a copayment method of cost
sharing, then the copayment for an innetwork Medicare FFS service category
cannot exceed 50 percent of the average
contracted rate of that service under this
guidance (Medicare Managed Care
Manual, Chapter 4, Section 50.1). Some
service categories may identify specific
benefits for which a unique copayment
would apply, while others include a
variety of services with different levels
of cost which may reasonably have a
range of copayments based on groups of
similar services, such as durable
medical equipment or outpatient
diagnostic and radiological services.
CMS affords MA plans that adopt a
lower, voluntary MOOP limit greater
flexibility in establishing Parts A and B
cost sharing than is available to plans
that adopt the higher, mandatory MOOP
limit. As discussed in section III.A.5,
CMS intends to continue to establish
more than one set of Parts A and B
service cost sharing thresholds for plans
choosing to offer benefit designs with
either a lower, voluntary MOOP limit or
the higher, mandatory MOOP limit set
under §§ 422.100(f)(4) and (5) and
422.101(d)(2) and (3). Medicare FFS
data currently represents the most
relevant and available data at this time
and is used to evaluate cost sharing for
specific services as well in applying the
standard currently at § 422.100(f)(6) and
in considering CMS’s authority to add
(by regulation) categories of services for
which cost sharing may not exceed
levels in Medicare FFS.
As noted with regard to setting MOOP
limits under §§ 422.100 and 422.101,
CMS expects that MA encounter data
will be more accurate and complete in
the future and may consider future
rulemaking regarding the use of MA
encounter to understand program health
care costs and compare to Medicare FFS
data in establishing cost sharing limits.
For reasons discussed in section III.A.5,
CMS proposes to amend § 422.100(f)(6)
to permit use of Medicare FFS to
evaluate whether cost sharing for Part A
and B services is discriminatory to set
the evaluation limits announced each
year in the Call Letter: in addition, we
propose to use MA utilization encounter
data as part of that evaluation process.
As with the proposal to authorize use of
this data for setting MOOP limits, CMS
intends to use the Advance Notice/Call
Letter process to communicate its
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application of the regulation and to
transition any significant changes over
time to avoid disruption to benefit
designs and minimize potential
beneficiary confusion.
This proposal will allow CMS to use
the most relevant and appropriate
information in determining cost sharing
standards and thresholds. For example,
analyses of MA utilization encounter
data can be used with Medicare FFS
data to establish the appropriate
utilization scenarios to determine MA
plan cost sharing standards and
thresholds. CMS seeks comments and
suggestions on this proposal,
particularly whether additional
regulation text is needed to achieve
CMS’s goal of setting and announcing
each year presumptively discriminatory
levels of cost sharing.
6. Meaningful Differences in Medicare
Advantage Bid Submissions and Bid
Review (§§ 422.254 and 422.256)
As provided at §§ 422.254(a)(4) and
422.256(b)(4), CMS will only approve a
bid submitted by a Medicare Advantage
(MA) organization if its plan benefit
package is substantially different from
those of other plans offered by the
organization in the area with respect to
key plan characteristics such as
premiums, cost sharing, or benefits
offered. MA organizations may submit
bids for multiple plans in the same area
under the same contract only if those
plans are substantially different from
one another based on CMS’s annual
meaningful difference evaluation
standards. CMS proposes to eliminate
this meaningful difference requirement
beginning with MA bid submissions for
contract year (CY) 2019. Separate
meaningful difference rules were
concurrently adopted for MA and standalone prescription drug plans (PDPs),
but this specific proposal is limited to
the meaningful difference provision
related to the MA program. This
proposal is not related to a statutory
change.
This proposal aims to improve
competition, innovation, available
benefit offerings, and provide
beneficiaries with affordable plans that
are tailored for their unique health care
needs and financial situation. CMS will
maintain requirements that prohibit
plans from misleading beneficiaries in
their communication materials, provide
CMS the authority to disapprove a bid
if a plan’s proposed benefit design
substantially discourages enrollment in
that plan by certain Medicare-eligible
individuals, and allow CMS to nonrenew a plan that fails to attract a
sufficient number of enrollees over a
sustained period of time
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(§§ 422.100(f)(2), 422.510(a)(4)(xiv),
422.2264, and 422.2260(e)). CMS
expects organizations to continue
designing plan benefit packages that,
within a service area, are different from
one another with respect to key benefit
design characteristics, so that any
potential beneficiary confusion is
minimized when comparing multiple
plans offered by the organization. For
example, beneficiaries may consider the
following factors when they make their
health care decisions: plan type, Part D
coverage, differences in provider
network, Part B and plan premiums, and
unique populations served (for example,
special needs plans, or SNPs). In
addition, CMS intends to continue the
practice of furnishing information to
MA organizations about their bid
evaluation methodology through the
annual Call Letter process and/or Health
Plan Management System (HPMS)
memoranda and solicit comments, as
appropriate. This process allows CMS to
articulate bid requirements and MA
organizations to prepare bids that satisfy
CMS requirements and standards prior
to bid submission in June each year.
Research studies indicate that
consumers, especially elderly
consumers, may be challenged by a
large number of plan choices that may:
(1) Result in not making a choice, (2)
create a bias to not change plans, and (3)
impact MA enrollment growth.27
Beneficiaries indicate they want to make
informed and effective decisions, but do
not feel qualified. As a result, they seek
help from Medicare Plan Finder (MPF),
brokers or plan representatives,
providers, and family members.
Although challenged by choices,
beneficiaries do not want their plan
choices to be limited and understand
key decision factors such as premiums,
out-of-pocket cost sharing, Part D
coverage, familiar providers, and
company offering the plan.28 CMS
continues to explore enhancements to
MPF that will improve the customer
experience; some examples of recent
updates are provided below.
As discussed later in this section,
CMS believes that it is challenging to
apply the current standardized
meaningful difference evaluation
(which is applied consistently to all
plans) in a manner that accommodates
and evaluates important considerations
objectively. CMS is concerned that the
27 McWilliams JM, Afendulis CC, McGuire TG,
Landon BE. Complex Medicare advantage choices
may overwhelm seniors—especially those with
impaired decision making. Health Aff (Millwood).
2011;30(9):1786–94.
28 Jacobson, G. Swoope, C., Perry, M. Slosar, M.
How are seniors choosing and changing health
insurance plans? Kaiser Family Foundation. 2014.
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current evaluation may create
unintended consequences related to
innovative benefit designs. In addition,
CMS’s efforts in implementing more
sophisticated approaches to consumer
engagement and decision-making
should help beneficiaries, caregivers,
and family members make informed
plan choices. For example, in MPF, plan
details have been expanded to include
MA and Part D benefits and a new
consumer friendly tool for the CY 2018
Medicare open enrollment period which
will assist beneficiaries in choosing a
plan that meets their unique and
financial needs based on a set of 10
quick questions.
Prior to implementing the meaningful
difference evaluation for CY 2011 bid
submissions, the beneficiary weighted
average number of plans per county was
about 30 in 2010 compared to 18 in
2017 (these numbers do not include
SNPs or employer group plans which
have additional criteria for enrollment).
Private-fee-for-service (PFFS) plans
represented 13 of the 30 plans in 2010
and less than 1 of the 18 plans in 2017.
The Medicare Improvements for
Patients and Providers Act of 2008
required PFFS plans to establish
contracted provider networks by 2011
and many PFFS plans non-renewed.
The weighted average number of plans
has remained relatively stable since the
decline of PFFS options. MA enrollment
continued to grow from more than 11
million in July 2010 to 18.7 million in
July 2017, fueled by the continued
overall acceptance of managed care, the
baby boom generation aging into
Medicare beginning in 2011, and
decreases in average plan premium
during the time period.
As stated in the October 22, 2009,
proposed rule (74 FR 54670 through 73)
and April 15, 2010, final rule (75 FR
19736 through 40), CMS’s goal for the
meaningful difference evaluation was to
ensure a proper balance between
affording beneficiaries a wide range of
plan choices and avoiding undue
beneficiary confusion in making
coverage selections. The meaningful
difference evaluation was initiated
when cost sharing and benefits were
relatively consistent within each plan
and similar plans within the same
contract could be readily compared by
measuring estimated out-of-pocket costs
and other factors currently integrated in
the evaluation’s methodology.
The current meaningful difference
evaluation uses estimated enrollee outof-pocket costs based on the CMS Outof-Pocket Cost (OOPC) model. This
model uses a nationally representative
cohort of beneficiaries from the
Medicare Beneficiary Surveys (MCBS)
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and is intended to be objective and
applied in a standardized and consistent
manner across plans. MCBS data
collected by CMS from beneficiaries are
used to create the cohort of beneficiaries
whose medical and prescription data are
used to estimate out-of-pocket costs.
The OOPC model generates estimated
out-of-pocket costs based on utilization
from the cohort of beneficiaries and
each plan’s benefit design entered into
the Plan Benefit Package submitted to
CMS as part of the bidding process.
Detailed information about the
meaningful difference evaluation is
available in the CY 2018 Final Call
Letter issued April 3, 2017 (pages 115–
118) and information about the CMS
OOPC model is available at: https://
www.cms.gov/Medicare/PrescriptionDrug-Coverage/
PrescriptionDrugCovGenIn/
OOPCResources.html. Estimated
enrollee cost sharing is determined by
the cost sharing amounts for Part A, B,
and D services and most mandatory
supplemental benefits (for example,
dental services). Benefit service
categories within a plan may have a
range of multiple and varying cost
sharing amounts. For example, the
outpatient procedures, tests, labs, and
radiology services benefit category
includes many services that may have a
wide range of cost sharing amounts. The
OOPC model uses the minimum or
lowest cost sharing value placed in the
Plan Benefit Package (PBP) for each
service category to estimate out-ofpocket costs in these situations. As
discussed in the CY 2018 Final Call
Letter, the differences between similar
plans must have at least a $20 per
member per month estimated
beneficiary out-of-pocket cost
difference. Differences in plan type (for
example, HMO, LPPO), SNP sub-type,
and inclusion of Part D coverage are
considered meaningful differences
which aligns with beneficiary decisionmaking. Premiums, risk scores, actual
plan utilization and enrollment are not
included in the evaluation because
these factors would introduce risk
selection, costs, and margin into the
evaluation, resulting in a negation of the
evaluation’s objectivity.
Based on CMS’s efforts to revisit MA
standards and the implementation of the
governing law to find flexibility for MA
beneficiaries and plans, MA
organizations are able to: (1) Tier the
cost sharing for contracted providers as
an incentive to encourage enrollees to
seek care from providers the plan
identifies based on efficiency and
quality data which was communicated
in CY 2011 guidance; (2) establish
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Provider Specific Plans (PSPs) designed
to offer enrollees benefits through a
subset of the overall contracted network
in a given service area, which are
sometimes referred to as narrower
networks, and which was collected in
the PBP beginning in CY 2011; and (3)
beginning in CY 2019, provide different
cost sharing and/or additional
supplemental benefits for enrollees
based on defined health conditions
within the same plan (Flexibility in the
Medicare Advantage Uniformity
Requirements). These flexibilities allow
MA organizations to provide
beneficiaries with access to health care
benefits that are tailored to individual
needs, but make it difficult for CMS to
objectively measure meaningful
differences between plans. Items 1 and
3 provide greater cost sharing flexibility
to address individual beneficiary needs,
but result in a much broader range of
cost sharing values being entered into
PBP. As discussed in the previous
paragraph, the CMS OOPC model uses
the lowest cost sharing value for each
service category to estimate out-ofpocket costs which may or may not be
a relevant comparison between different
plans for purposes of evaluating
meaningful difference when variable
cost sharing of this type is involved.
CMS remains committed to ensuring
transparency in plan offerings so that
beneficiaries can make informed
decisions about their health care plan
choices. It is also important to
encourage competition, innovation, and
provide access to affordable health care
approaches that address individual
needs. The current meaningful
difference methodology evaluates the
entire plan and does not capture
differences in benefits that are tied to
specific health conditions. As a result,
the meaningful difference evaluation
would not fully represent benefit and
cost sharing differences experienced by
enrollees and could lead to MA
organizations to focus on CMS
standards, rather than beneficiary needs,
when designing benefit packages.
In order to capture differences in
provider network, more tailored benefit
and cost sharing designs, or other
innovations, the evaluation process
would have to use more varied and
complex assumptions to identify plans
that are not meaningfully different from
one another. CMS believes that such an
evaluation could result in more
complicated and potentially confusing
benefit designs to achieve differences
between plans. This process may
require greater administrative resources
for MA organizations and CMS, while
not producing results that are useful to
beneficiaries.
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The current meaningful difference
methodology may force MA
organizations to design benefit packages
to meet CMS standards rather than
beneficiary needs. To satisfy current
CMS meaningful difference standards,
MA organizations may have to change
benefit coverage or cost sharing in
certain plans to establish the necessary
benefit value difference, even if
substantial difference exists based on
factors CMS is currently unable to
incorporate into the evaluation (such as
tiered cost sharing, and unique benefit
packages based on enrollee health
conditions). Although these changes in
benefits coverage may be positive or
negative, CMS is concerned the
meaningful difference requirement
results in organizations potentially
reducing the value of benefit offerings.
On the basis of bid review activities
performed over the past several years,
CMS is concerned that benefits may be
decreased or cost sharing increased to
satisfy the meaningful difference
evaluation. These are unintended
consequences of the existing meaningful
difference evaluation and may restrict
innovative benefit designs that address
individual beneficiary needs and
affordability.
Beneficiaries may also consider plan
and Part B premiums when choosing
among health plan options. Making
changes to the existing meaningful
difference evaluation to consider
premiums differences as sufficient to
distinguish among otherwise similar
plans may limit the value of CMS’s
evaluation by introducing factors that
plans can easily leverage, such as risk
selection, costs, and margin, to satisfy
the evaluation test without resulting in
additional benefit value or choice for
enrollees.
Stakeholders have expressed concern
that without the meaningful difference
evaluation the number of bids and plan
choices will likely increase and make
beneficiary decisions more difficult. The
number of plan bids may increase
because of a variety of factors, such as
payments, bidding and service area
strategies, serving unique populations,
and in response to other program
constraints or flexibilities. CMS expects
that eliminating the meaningful
difference requirement will improve the
plan options available for beneficiaries,
but CMS does not believe the number of
similar plan options offered by the same
MA organization in each county will
necessarily increase significantly or
create confusion in beneficiary decisionmaking. New flexibilities in benefit
design and more sophisticated
approaches to consumer engagement
and decision-making should help
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beneficiaries, caregivers, and family
members make informed plan choices
among more individualized plan
offerings. Based on the previously stated
information, CMS does not expect a
significant increase in time spent in bid
review as a direct result of eliminating
meaningful difference nor increased
health care provider burden.
In addition, new flexibilities in
benefit design may allow MA
organizations to address different
beneficiary needs within existing plan
options and reduce the need for new
plan options to navigate existing CMS
requirements. In addition, MA
organizations may be able to offer a
portfolio of plan options with clear
differences between benefits, providers,
and premiums which would allow
beneficiaries to make more effective
decisions if the MA organizations are
not required to change benefit and cost
sharing designs in order to satisfy
§§ 422.254 and 422.256. Currently, MA
organizations must satisfy CMS
meaningful difference standards (and
other requirements), rather than solely
focusing on beneficiary purchasing
needs when establishing a range of plan
options.
CMS supports beneficiary decisionmaking by providing tools and materials
that focus on key beneficiary purchasing
criteria, such as eligibility to enroll in
SNPs, need for Part D coverage, Part D
formulary and benefit coverage, plan
type preference (for example, HMO vs.
PPO), network providers, medical
benefit coverage, premiums, and the
brand or organization offering the plan
options. CMS is also taking steps to
improve information available through
MPF and 1–800–MEDICARE to help
beneficiaries, caregivers, and family
members make informed plan choices.
CMS continually evaluates consumer
engagement tools and outreach
materials (including marketing,
educational, and member materials) to
ensure information is formatted
consistently so beneficiaries can easily
compare multiple plans. CMS also
provides annual guidance and model
materials to MA organizations to assist
them in providing resources, such as the
plan’s Annual Notice of Change and
Evidence of Coverage, which contain
valuable information for the enrollee to
evaluate and select the best plan for
their needs. To reinforce informed
decision making, CMS invests
substantial resources in engagement
strategies such as 1–800–MEDICARE,
MPF, standard and electronic mail, and
social media to continuously
communicate with beneficiaries,
caregivers, family members, providers,
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community resources, and other
stakeholders.
CMS will continue to furnish
information to MA organizations and
solicit comments on bid evaluation
methodology through the annual Call
Letter process or HPMS memoranda, as
appropriate.
In addition, CMS is maintaining
requirements around plans not
misleading beneficiaries in
communication materials, disapproving
a bid if CMS finds that a plan’s
proposed benefit design substantially
discourages enrollment in that plan by
certain Medicare-eligible individuals,
and non-renewing plans that fail to
attract a sufficient number of enrollees
over a sustained period of time
(§§ 422.100(f)(2), 422.510(a)(4)(xiv),
422.2264, and 422.2260(e)). CMS
expects these measures will continue to
protect beneficiaries from
discriminatory plan benefit packages
and health plans that demonstrate a lack
of beneficiary interest if the meaningful
difference requirement is eliminated.
For all these reasons, CMS proposes to
remove §§ 422.254(a)(4) and
422.256(b)(4) to eliminate the
meaningful difference requirement for
MA bid submissions. CMS seeks
comments and suggestions on the topics
discussed in this section about making
sure beneficiaries have access to
innovative plans that meet their unique
needs.
7. Coordination of Enrollment and
Disenrollment Through MA
Organizations and Effective Dates of
Coverage and Change of Coverage
(§§ 422.66 and 422.68)
Section 1851(c)(3)(A)(ii) of the Act
provides the Secretary with the
authority to implement default
enrollment rules for the Medicare
Advantage (MA) program in addition to
the statutory direction that beneficiaries
who do not elect an MA plan are
defaulted to original (fee-for-service)
Medicare. This provision states that the
Secretary may establish procedures
whereby an individual currently
enrolled in a non-MA health plan
offered by an MA organization at the
time of his or her Initial Coverage
Election Period is deemed to have
elected an MA plan offered by the
organization if he or she does not elect
to receive Medicare coverage in another
way.
We initially addressed default
enrollment upon conversion to
Medicare in rulemaking (70 FR 4606
through 4607) in 2005, indicating that
we would retain the flexibility to
implement this provision through future
instructions and guidance to MA
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56365
organizations. Such subregulatory
guidance was established later that same
year and was applicable to the 2006
contract year. As outlined in Chapter 2
of the Medicare Managed Care Manual,
we established an optional enrollment
mechanism, whereby MA organizations
may develop processes and, with CMS
approval, provide seamless continuation
of coverage by way of enrollment in an
MA plan for newly MA eligible
individuals who are currently enrolled
in other health plans offered by the MA
organization (such as commercial or
Medicaid plans) at the time of the
individuals’ initial eligibility for
Medicare. The guidance emphasized
that MA organizations not limit
seamless continuation of coverage to
situations in which an enrollee becomes
eligible for Medicare by virtue of age,
but includes all newly eligible Medicare
beneficiaries, including those whose
Medicare eligibility is based on
disability. We did not mandate that
organizations implement a process for
seamless continuation of coverage but,
instead, gave organizations the option of
implementing such a process for its
enrollees who are approaching Medicare
eligibility. From its inception, the
guidance has required that individuals
receive advance notice of the proposed
MA enrollment and have the ability to
‘‘opt out’’ of such an enrollment prior to
the effective date of coverage. This
guidance has been in practice for the
past decade for MA organizations that
requested to use this voluntary
enrollment mechanism, but we have
encountered complaints and heard
concerns about the practice. We are
proposing new regulation text to
establish limits and requirements for
these types of default enrollments to
address these concerns and our
administrative experience with seamless
continuation of coverage, commonly
referred to as seamless conversion.
Based on our experience with the
seamless conversion process thus far,
we are proposing, to be codified at
§ 422.66(c)(2), requirements for seamless
default enrollments upon conversion to
Medicare. As proposed in more detail
later in this section, such default
enrollments would be into dual eligible
special needs plans (D–SNPs) and be
subject to five substantive conditions:
(1) The individual is enrolled in an
affiliated Medicaid managed care plan
and is dually eligible for Medicare and
Medicaid; (2) the state has approved use
of this default enrollment process and
provided Medicare eligibility
information to the MA organization; (3)
the individual does not opt out of the
default enrollment; (4) the MA
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organization provides a notice that
meets CMS requirements to the
individual; and (5) CMS has approved
the MA organization to use the default
enrollment process before any
enrollments are processed. We are also
proposing that coverage under these
types of default enrollments begin on
the first of the month that the
individual’s Part A and Part B eligibility
is effective. We are also proposing
changes to §§ 422.66(d)(1) and (d)(5)
and 422.68 that coordinate with the
proposal for § 422.66.
In the Advance Notice of
Methodological Changes for Calendar
Year (CY) 2016 for Medicare Advantage
(MA) Capitation Rates, Part C and Part
D Payment Policies and 2016 Call
Letter, we explained how entities that
sponsor Medicaid managed care
organizations (MCOs) and affiliated D–
SNPs can promote coverage of an
integrated Medicare and Medicaid
benefit through existing authority for
seamless continuation of coverage of
Medicaid MCO members as they
become eligible for Medicare. We
received positive comments from state
Medicaid agencies that supported this
enrollment mechanism and requested
that we clarify the process for approval
of seamless continuation of coverage as
a mechanism to promote enrollment in
integrated D–SNPs that deliver both
Medicare and Medicaid benefits. We
also received comments from
beneficiary advocates asking that
additional consumer protections,
including requiring written beneficiary
confirmation and a special enrollment
period for those individuals who
transition from non-Medicare products
to Medicare Advantage. We believe that
our proposal, described later in this
section, adequately addresses the
concerns on which these requests are
based, given that the default enrollment
process would be permissible only for
individuals enrolled in a Medicaid
managed care plan in states that support
this process. This means that the
Medicare plan into which individuals
would be defaulted would be one that
is offered by the same parent
organization as their existing Medicaid
plan, such that much of the information
needed by the MA plan would already
be in the possession of the MA
organization to facilitate the default
enrollment process. Also, default
enrollment would not be permitted if
the state does not actively support this
process, ensuring an accurate source of
data for use by MA organizations to
appropriately identify and notify
individuals eligible for default
enrollment.
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On October 21, 2016,29 in response to
inquiries regarding this enrollment
mechanism, its use by MA
organizations, and the beneficiary
protections currently in place, we
announced a temporary suspension of
acceptance of new proposals for
seamless continuation of coverage.
Based on our subsequent discussions
with beneficiary advocates and MA
organizations approved for this
enrollment mechanism, it is clear that
organizations attempting to conduct
seamless continuation of coverage from
commercial coverage (that is, private
coverage and Marketplace coverage)
find it difficult to comply with our
current guidance and approval
parameters. This is especially true of the
requirement to identify commercial
members who are approaching Medicare
eligibility based on disability. Also
challenging for these organizations is
the requirement that they have the
means to obtain the individual’s
Medicare number and are able to
confirm the individual’s entitlement to
Part A and enrollment in Part B no
fewer than 60 days before the MA plan
enrollment effective date.
In addition, the ability for
organizations to conduct seamless
enrollment of individuals converting to
Medicare will be further limited due to
the statutory requirement that CMS
remove Social Security Numbers (SSNs)
from all Medicare cards by April 2019.
A new Medicare number will replace
the SSN-based Health Insurance Claim
Number (HICN) on the new Medicare
cards for Medicare transactions.
Beginning in April 2018, we’ll start
mailing the new Medicare cards with
the new number to all people with
Medicare. Given the random and unique
nature of the new Medicare number, we
believe MA organizations will be
limited in their ability to automatically
enroll newly eligible Medicare
beneficiaries without having to contact
them to obtain their Medicare numbers,
as CMS does not share Medicare
numbers with organizations for their
commercial members who are
approaching Medicare eligibility. We
note that contacting the individual in
order to obtain the information
necessary to process the enrollment
does not align with the intent of default
enrollment, which is designed to
process enrollments and have coverage
automatically shift into the MA plan
without an enrollment action required
by the beneficiary.
29 https://www.cms.gov/Medicare/Eligibility-and-
Enrollment/MedicareMangCareEligEnrol/
Downloads/HPMS_Memo_Seamless_
Moratorium.pdf.
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Organizations operating Medicaid
managed care plans are better able to
meet these requirements when states
provide data, including the individual’s
Medicare number, on those about to
become Medicare eligible. As part of
coordination between the Medicare and
Medicaid programs, CMS shares with
states, via the State MMA file, data of
individuals with Medicaid who are
newly becoming entitled to Medicare;
such data includes the Medicare
number of newly eligible Medicare
beneficiaries. MA organizations with
state contracts to offer D–SNPs would be
able to obtain (under their agreements
with state Medicare agencies) the data
necessary to process the MA enrollment
submission to CMS. Therefore, we are
proposing to revise § 422.66 to permit
default enrollment only for Medicaid
managed care enrollees who are newly
eligible for Medicare and who are
enrolled into a D–SNP administered by
an MA organization under the same
parent organization as the organization
that operates the Medicaid managed
care plan in which the individual
remains enrolled. These requirements
would be codified at § 422.66(c)(2)(i) (as
a limit on the type of plan into which
enrollment is defaulted) and (c)(2)(i)(A)
(requiring existing enrollment in the
affiliated Medicaid managed care plan
as a condition of default MA
enrollment). At paragraph (c)(2)(i)(B),
we are also proposing to limit these
default enrollments to situations where
the state has actively facilitated and
approved the MA organization’s use of
this enrollment process and articulates
this in the agreement with the MA
organization offering the D–SNP, as well
as providing necessary identifying
information to the MA organization.
The option of default enrollment can
be particularly beneficial for Medicaid
managed care enrollees who are newly
eligible for Medicare, because in the
case that the parent organization of the
Medicaid managed care plan also offers
a D–SNP, default enrollment promotes
enrollment in a plan that offers some
level of integration of acute care,
behavioral health and, for eligible
beneficiaries, long-term care services
and supports, including institutional
care, and home and community-based
services (HCBS). This is in line with
CMS’ support of state efforts to increase
enrollment of dually eligible individuals
in fully integrated systems of care and
the evidence 30 that such systems
30 There is a growing evidence that integrated care
and financing models can improve beneficiary
experience and quality of care, including:
• Health Management Associates, Value
Assessment of the Senior Care Options (SCO)
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improve health outcomes. Further this
proposal will provide states with
additional flexibility and control. States
can decide if they wish to allow their
contracted Medicaid managed care
plans to use default enrollment of
Medicaid enrollees into D–SNPs and
can control which D–SNPs receive
default enrollments through two means:
The contracts that states maintain with
D–SNPs (§ 422.107(b)) and by providing
the data necessary for MA organizations
to successfully implement the process.
Under our proposal, MA organizations
can process default enrollments only for
dual-eligible individuals in states where
the contract with the state under
§ 422.107 approves it and the state
identifies eligibility and shares
necessary data with the organization.
To ensure that Medicaid beneficiaries
considered for default enrollment upon
their conversion to Medicare are aware
of the default MA enrollment and of the
changes to their Medicare and Medicaid
coverage, we also propose, at
§ 422.66(c)(2)(i)(C) and (c)(2)(iv), that
the MA organization must issue a notice
no fewer than 60 days before the default
enrollment effective date to the enrollee.
The proposed revised notice 31 must
include clear information on the D–
SNP, as well as instructions to the
individual on how to opt out (or
decline) the default enrollment and how
to enroll in Original Medicare or a
different MA plan. This notice
requirement aims to help ensure a
smooth transition of eligible individuals
into the D–SNP for those who choose
not to opt out. All MA organizations
currently approved to conduct seamless
conversion enrollment issue at least one
notice 60 days prior to the MA
enrollment effective date, so our
proposal would not result in any
additional burden to these MA
organizations using this process. Recent
discussions with MA organizations
Program, July 21, 2015, available at: https://
www.mahp.com/unify-files/
HMAFinalSCOWhitePaper_2015_07_21.pdf;
• MedPAC chapter ‘‘Care coordination programs
for dual-eligible beneficiaries,’’ June 2012, available
at: https://www.medpac.gov/docs/default-source/
reports/chapter-3-appendixes-care-coordinationprograms-for-dual-eligible-beneficiaries-june-2012report-.pdf?sfvrsn=0;
• Anderson, Wayne L., Zhanlian Fen, and Sharon
K. Long, RTI International and Urban Institute,
Minnesota Managed Care Longitudinal Data
Analysis, prepared for the U.S. Department of
Health and Human Services Assistant Secretary for
Planning and Evaluation (ASPE), March 2016,
available at: https://aspe.hhs.gov/report/minnesotamanaged-care-longitudinal-data-analysis.
31 Enrollment requirements and burden are
currently approved by OMB under control number
0938–0753 (CMS–R–267). Since this rule would not
impose any new or revised requirements/burden,
we are not making any changes to that control
number.
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currently conducting seamless
conversion enrollment have revealed
that several of them already include in
their process additional outreach,
including reminder notices and
outbound telephone calls to aid in the
transition. We believe that these
additional outreach efforts are helpful
and we would encourage their use
under our proposal.
We also propose, in paragraph
(c)(2)(i)(E) and (2)(ii), that MA
organizations must obtain approval from
CMS before implementing default
enrollment. Under our proposal in
paragraph (c)(2)(i)(B), CMS approval
would be granted only if the applicable
state approves the default enrollment
through its agreement with the MA
organization. MA organizations would
be required to implement default
enrollment in a non-discriminatory
manner, consistent with their
obligations under § 422.110; that is, MA
organizations could not select for
default enrollment only certain of the
members of the affiliated Medicaid plan
who were identified as eligible for
default enrollment. Lastly, we propose
that CMS may suspend or rescind
approval at any time if it is determined
that the MA organization is not in
compliance with the requirements. We
request comment whether this authority
to rescind approval should be broader;
we have considered whether a time
limit on the approval (such as 2 to 5
years) would be appropriate so that
CMS would have to revisit the processes
and procedures used by an MA
organization under this proposed
regulation in order to assure that the
regulation requirements are still being
followed. We are particularly interested
in comment on this point in conjunction
with our alternative (discussed later in
this section) proposal to codify the
existing parameters for this type of
seamless conversion default enrollment
such that all MA organizations would be
able to use this default enrollment
process for newly eligible and newly
enrolled Medicare beneficiaries in the
MA organization’s non-Medicare
coverage.
Under our proposal, default
enrollment of individuals at the time of
their conversion to Medicare would be
more limited than the default
enrollments Congress authorized the
Secretary to permit in section
1851(c)(3)(A)(ii) of the Act. However,
we are also proposing some flexibility
for MA organizations that wish to offer
seamless continuation of coverage to
their non-Medicare members,
commercial, Medicaid or otherwise,
who are gaining Medicare eligibility. As
discussed in more detail below,
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affirmative elections would be necessary
for individuals not enrolled in a
Medicaid managed care plan, consistent
with § 422.50. However, because
individuals enrolled in an
organization’s commercial plan, for
example would already be known to the
parent organization offering both the
non-Medicare plan and the MA plan
and the statute acknowledges that this
existing relationship is somewhat
relevant to Part C coverage, we propose
to amend § 422.66(d)(5) and to establish,
through subregulatory guidance, a new
and simplified positive (that is, ‘‘opt
in’’) election process that would be
available to all MA organizations for the
MA enrollments of their commercial,
Medicaid or other non-Medicare plan
members. To reflect our change in
policy with regard to a default
enrollment process and this proposal to
permit a simplified election process for
individuals who are electing coverage in
an MA plan offered by the same entity
as the individual’s non-Medicare
coverage, we are also proposing to add
text in § 422.66(d)(5) authorizing a
simplified election for purposes of
converting existing non-Medicare
coverage, commercial, Medicaid or
otherwise, to MA coverage offered by
the same organization. This new
mechanism would allow for a less
burdensome process for MA
organizations to offer enrollment in
their MA plans to their non-Medicare
health plan members who are newly
eligible for Medicare. As the MA
organization has a significant amount of
the information from the member’s nonMedicare enrollment, this new
simplified election process aims to
make enrollment easier for the newlyeligible beneficiary to complete and for
the MA organization to process. It
would align with the individual’s Part A
and Part B initial enrollment period
(and initial coordinated election period
for MA coverage), provided he or she
enrolled in both Medicare Parts A and
B when first eligible for Medicare. This
new election process would provide a
longer period of time for MA
organizations to accept enrollment
requests than the time period in which
MA organizations would be required to
effectuate default enrollments, as
organizations would be able to accept
enrollments throughout the individual’s
Initial Coverage Election Period (ICEP),
which for an aged beneficiary is the 7month period that begins 3 months
before the month in which the
individual turns 65 and ends 3 months
after the month in which the individual
turns 65. We would use existing
authority to create this new enrollment
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mechanism which, if implemented,
would be available to MA organizations
in the 2019 contract year. We solicit
comments on the proposed changes to
the regulation text as well as the form
and manner in which such enrollments
may occur.
This optional simplified election
process for the enrollment of nonMedicare plan members into MA upon
their initial eligibility (or initial
entitlement) for Medicare would
provide individuals the option to
remain with the organization that offers
their non-Medicare coverage. A positive
election in this circumstance provides
an additional beneficiary protection for
non-dually eligible individuals, so that
they may actively choose a Medicare
plan structure similar to that of their
commercial, Medicaid or other nonMedicare health plans, as there may be
significant differences between an
organization’s commercial plans, for
example, and its MA plans in terms of
provider networks, drug formularies,
costs and benefit structures. While these
differences may result in a more
restrictive network, a mandated change
in a primary care physician and
increased out-of-pocket costs for
converting enrollees, default enrollment
of a dually eligible individual enrolled
in a Medicaid plan into a D–SNP,
triggers no premium liability or cost
sharing for medical care or prescription
drugs above levels that apply under
Original Medicare. Further, the
individual remains in the Medicaid
managed care plan and is gaining
additional Medicare coverage, which is
not always the case in other contexts.
We solicit comment on these
coordinated proposals to implement
section 1851(c)(3)(A)(ii) in general as
discussed below and in two particular
ways: (1) To permit default MA
enrollments for dually-eligible
beneficiaries who are newly eligible for
Medicare under certain conditions and
(2) to permit simplified elections for
seamless continuations of coverage for
other newly-eligible beneficiaries who
are in non-Medicare health coverage
offered by the same parent organization
that offers the MA plan. We further
invite comments regarding whether the
CMS approval of an organization’s
request to conduct default enrollment
should be limited to a specific time
frame. In addition, we are proposing
amendments to §§ 422.66(d)(1) and
422.68 that are also related to MA
enrollment. Currently, as described in
the 2005 final rule (70 FR 4606 through
4607), § 422.66(d)(1) requires MA
organizations to accept, during the
month immediately preceding the
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month in which he or she is entitled to
both Part A and Part B, enrollment
requests from an individual who is
enrolled in a non-Medicare health plan
offered by the MA organization and who
meets MA eligibility requirements. To
better reflect section 1851(c)(3)(A)(ii),
we are proposing to amend
§ 422.66(d)(1) to add text clarifying that
seamless continuations of coverage are
available to an individual who requests
enrollment during his or her Initial
Coverage Election Period. In light of our
proposal to permit a simplified election
process for individuals who are electing
coverage in an MA plan offered by the
same parent organization as the
individual’s non-Medicare coverage, we
are also proposing a revision to
§ 422.68(a) to ensure that ICEP elections
made during or after the month of
entitlement to both Part A and Part B are
effective the first day of the calendar
month following the month in which
the election is made. This proposed
revision would codify the subregulatory
guidance that MA organizations have
been following since 2006. This
proposal is also consistent with the
proposal at § 422.66(c)(2)(iii) regarding
the effective date of coverage for default
enrollments into D–SNPs. We also
solicit comment on these related
proposals.
In conclusion, we are proposing to
add regulation text at § 422.66(c)(2)(i)
through (iv) to set limits and
requirements for a default enrollment of
the type authorized under section
1851(c)(3)(A)(ii). We are proposing a
clarifying amendment to § 422.66(d)(1)
regarding when seamless continuation
coverage can be elected and revisions to
§ 422.66(d)(5) to reflect our proposal for
a new and simplified positive election
process that would be available to all
MA organizations. Lastly, we are
proposing revisions to § 422.68(a) to
ensure that ICEP elections made during
or after the month of entitlement to both
Part A and Part B are effective the first
day of the calendar month following the
month in which the election is made.
We invite comments in general on our
proposal, as well as on the alternatives
presented. We recognize that our
proposal narrows the scope of default
enrollments compared to what CMS
approved under section 1851(c)(3)(A) of
the Act in the past. As we contemplated
the future of the seamless conversion
mechanism, we considered retaining
processes similar to how the seamless
conversion mechanism is outlined
currently in section 40.1.4 of Chapter 2
of the Medicare Managed Care Manual
and had been in practice through
October 2016. We considered proposing
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regulations to codify that guidance as
follows—
• Articulating the requirements for an
MA organization’s proposal to use the
seamless conversion mechanism,
including identifying eligible
individuals in advance of Medicare
eligibility;
• Establishing timeframes for
processing and the effective date of the
enrollment; and
• Requiring notification to
individuals at least 60 days prior to the
conversion of their right to opt-out or
decline the enrollment.
In considering this alternative, we
contemplated adding additional
beneficiary protections, including the
issuance of an additional notice to
ensure that individuals understood the
implication of taking no action. While
this alternative would have led to
increased use of the seamless
conversion enrollment mechanism than
what had been used in the past, the
operational challenges, particularly in
relation to the new Medicare
Beneficiary Identification number may
be significant for MA organizations to
overcome at this time.
We also considered proposing
regulations to limit the use of default
enrollment to only the aged population.
While this alternative would simplify a
MA organization’s ability to identify
eligible individuals, we have concerns
about disparate treatment among newly
eligible individuals based on their
reason for obtaining Medicare
entitlement.
We invite comments on our proposal
and the alternate approaches, including
the following:
• Codify the existing parameters for
this type of seamless conversion default
enrollment such that all MA
organizations would be able to use this
default enrollment process for newly
eligible and newly enrolled Medicare
beneficiaries in the MA organization’s
non-Medicare coverage.
• Codify the existing parameters for
this type of seamless conversion default
enrollment, as described previously, but
allow that use of default enrollment be
limited to only the aged population.
If commenters recommend one or
more alternate approaches, we ask for
suggested solutions that address the
concerns noted in this discussion,
particularly related to the requirement
that plans identify commercial members
who are approaching Medicare
eligibility based on disability, as well as
how plans could confirm MA eligibility
and process enrollments without access
to the individual’s Medicare number.
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8. Passive Enrollment Flexibilities To
Protect Continuity of Integrated Care for
Dually Eligible Beneficiaries
(§ 422.60(g))
Beneficiaries who are dually eligible
for both Medicare and Medicaid
typically face significant challenges in
navigating the two programs, which
include separate or overlapping benefits
and administrative processes.
Fragmentation between the two
programs can result in a lack of
coordination for care delivery,
potentially resulting in unnecessary,
duplicative, or missed services. One
method for overcoming this challenge is
through integrated care, which provides
dually eligible beneficiaries with the
full array of Medicaid and Medicare
benefits for which they are eligible
through a single delivery system,
thereby improving quality of care,
beneficiary satisfaction, care
coordination, and reducing
administrative burden.
Integrated care options are
increasingly available for dually eligible
beneficiaries, which include a variety of
integrated D–SNPs. D–SNPs can provide
greater integrated care than enrollees
would otherwise receive in other MA
plans or Medicare Fee-For-Service
(FFS), particularly when an individual
is enrolled in both a D–SNP and
Medicaid managed care organization
offered by the same organization. D–
SNPs that meet higher standards of
integration, quality, and performance
benchmarks—known as highly
integrated D–SNPs—are able to offer
additional supplemental benefits to
support integrated care pursuant to
§ 422.102(e). D–SNPs that are fully
integrated—known as Fully Integrated
Dual-Eligible (FIDE) SNPs, as defined at
§ 422.2 provide for a much greater level
of integration and coordination than
non-integrated D–SNPs, providing all
primary, acute, and long-term care
services and supports under a single
entity.
While enrollment in integrated care
options continues to grow, there are
instances in which beneficiaries may
face disruptions in coverage in
integrated care plans. These disruptions
can result from numerous factors,
including market forces that impact the
availability of integrated D–SNPs and
state re-procurements of Medicaid
managed care organizations. Such
disruptions can result in beneficiaries
being enrolled in two separate
organizations for their Medicaid and
Medicare benefits, thereby losing the
benefits of integration achieved when
the same entity offers both benefit
packages. In an effort to protect the
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continuity of integrated care for dually
eligible beneficiaries, we are proposing
a limited expansion of our regulatory
authority to initiate passive enrollment
for certain dually eligible beneficiaries
in instances where integrated care
coverage would otherwise be disrupted.
Section 1851(c)(1) of the Act
authorizes us to develop mechanisms
for beneficiaries to elect MA enrollment,
and we have used this authority to
create passive enrollment. The current
regulation at § 422.60(g) limits the use of
passive enrollment to two scenarios: (1)
In instances where there is an
immediate termination of an MA
contract; or (2) in situations in which
we determine that remaining enrolled in
a plan poses potential harm to
beneficiaries. The passive enrollment
defined in § 422.60(g) requires
beneficiaries to be provided prior
notification and a period of time prior
to the effective date to opt out of
enrollment from a plan. Current
§ 422.60(g)(3) provides every passively
enrolled beneficiary with a special
election period to allow for election of
different Medicare coverage: Selecting a
different managed care plan or opting
out of MA completely and, instead,
receiving services through Original
Medicare (a FFS delivery system). A
beneficiary who is offered a passive
enrollment is deemed to have elected
enrollment in the designated plan if he
or she does not elect to receive Medicare
coverage in another way.
Our proposal is a limited expansion of
this regulatory authority to promote
continued enrollment of dually eligible
beneficiaries in integrated care plans to
preserve and promote care integration
under certain circumstances. The
proposal includes use of these existing
opt-out procedures and special election
period. Therefore, we are proposing to
redesignate these requirements from
(g)(1) through (3) to (g)(3) through (g)(5)
respectively, with minor revisions in
proposed paragraph (g)(5) to describe
the application of special election
period and in proposed paragraph (g)(4)
to make minor grammatical changes to
the text to improve its readability and
clarity.
Our proposal is to add authority to
passively enroll full-benefit dually
eligible beneficiaries who are currently
enrolled in an integrated D–SNP into
another integrated D–SNP under certain
circumstances. We anticipate that these
proposed regulations would permit
passive enrollments only when all the
following conditions are met:
• When necessary to promote
integrated care and continuity of care;
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• Where such action is taken in
consultation with the state Medicaid
agency;
• Where the D–SNP receiving passive
enrollment contracts with the state
Medicaid agency to provide Medicaid
services; and
• Where certain other conditions are
met to promote continuity and quality
of care.
We expect that these factors would all
occur in situations when affected
beneficiaries would otherwise be
experiencing an involuntary disruption
in either their Medicare or Medicaid
coverage. We anticipate using this new
proposed authority exclusively in such
situations.
All individuals would be provided
with a special election period (which, as
established in subregulatory guidance,
lasts for 2 months), as described in
§ 422.62(b)(4), provided they are not
otherwise eligible for another SEP (for
example, under proposed
§ 423.38(c)(4)(ii)).
For illustrative purposes we have
outlined two scenarios in which this
proposed regulatory authority could be
used to promote continued access to
integrated care and maintain continuity
of care for dually eligible individuals:
• State Re-Procurement of Medicaid
Managed Care Contracts: In several
states, dually eligible beneficiaries
receive Medicaid services through
managed care plans that the state selects
through a competitive procurement
process. Some states also require that
the sponsors of Medicaid health plans
also offer a D–SNP in the same service
area to promote opportunities for
integrated care. Dually eligible
beneficiaries can face disruptions in
coverage due to routine state reprocurements of Medicaid managed care
contracts. Individuals enrolled in
Medicaid managed care plans that are
not renewed are typically transitioned
to a separate Medicaid managed care
plan. In such a scenario, dually eligible
beneficiaries enrolled in the nonrenewing Medicaid managed care plan’s
corresponding D–SNP product would
now be enrolled in two separate
organizations for their Medicaid and
Medicare services, resulting in nonintegrated coverage. Under this
proposed regulation, CMS would have
the ability, in consultation with the state
Medicaid agency that contracts with
integrated D–SNPs, to passively enroll
dually eligible beneficiaries facing such
a disruption into an integrated D–SNP
that corresponds with their new
Medicaid managed care plan, thereby
promoting continuous enrollment in
integrated care.
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• Non-Renewal of D–SNP Contracts:
Beneficiaries enrolled in an integrated
D–SNP that non-renews its MA contract
at the end of the contract year can face
disruptions in integrated care coverage,
requiring them to actively select a new
MA plan or default into Original
Medicare and a standalone prescription
drug plan. While states are permitted to
passively enroll beneficiaries for
Medicaid coverage as defined in
§ 438.54(c), CMS is not permitted to do
so for Medicare coverage when an MA
plan non-renews at the end of the
contract year, as current authority for
passive enrollment is limited to midyear
terminations. Rather, beneficiaries in
the D–SNP that is non-renewing its
contract would need to actively select
and enroll in an MA plan that integrates
their Medicare and Medicaid coverage
in order to continue the same level of
integrated care. Permitting CMS the
ability to passively enroll D–SNP
enrollees into other integrated D–SNP
plans in consultation with the state
Medicaid agency would support
beneficiaries remaining in integrated
care.
With a limited expansion of our
passive enrollment regulatory authority,
we can better promote integrated care
and continuity of care for dually eligible
beneficiaries. Therefore, we are
proposing to redesignate the
introductory text in § 422.60(g) as
paragraph (g)(1), with a new heading,
technical revisions to the existing text
that specifies when passive enrollments
may be implemented by CMS
designated as (g)(1)(i) and (ii), and a
new paragraph (iii). This new (g)(1)(iii)
would authorize CMS to passively
enroll certain dually eligible individuals
currently enrolled in an integrated D–
SNP into another integrated D–SNP,
after consulting with the state Medicaid
agency that contracts with the D–SNP or
other integrated managed care plan, to
promote continuity of care and
integrated care.
We also propose to add a new
paragraph (g)(2) to include a number of
requirements that an MA plan would
have to meet in order to qualify to
receive passive enrollments under
paragraph (g)(1)(iii). We also propose to
include in paragraph (g)(1)(iii) a
reference to new paragraph (g)(2) to
make it clear that a contract with the
state is also necessary for a D–SNP to be
eligible to receive these passive
enrollments. Specifically, we propose
that in order to receive passive
enrollments under the new authority,
MA plans must be highly integrated,
thereby restricting passive enrollment to
those MA plans that operate as a FIDE
SNP or meet the integration standard for
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a highly-integrated D–SNP, as defined
in § 422.2 and described in § 422.102(e)
respectively. In an effort to ensure
continuity of care, acquiring MA plans
would also be required to have
substantially similar provider and
facility networks and Medicare- and
Medicaid-covered benefits as the
integrated MA plan (or plans) from
which beneficiaries are passively
enrolled. MA plans receiving passive
enrollment would also be required to
not have any prohibition on new
enrollment imposed by CMS and have
appropriate limits on premium and costsharing for beneficiaries. If our proposed
paragraphs (g)(1) and (g)(2) are finalized,
we would describe in subregulatory
guidance the procedure through which
CMS would determine qualification for
passive enrollment. We also propose
that to receive these passive
enrollments, that D–SNP must meet
minimum quality standards based on
MA Star Ratings; we direct the reader to
the proposal at section III.A.12. of this
rule regarding the MA Star Rating
System. Our proposed regulation text
refers to a requirement to have a
minimum overall MA Star Rating of at
least 3 stars, which represents average
or above-average performance. The
rating for the year prior to receipt of
passive enrollment would be used in
order to provide sufficient time for
CMS, states, and MAOs to prepare for
the passive enrollment process. Lowenrollment contracts or new plans
without MA Star Ratings as defined in
§ 422.252 would also be eligible for
passive enrollment under our proposal,
as long as the plan meets all other
proposed requirements.
Our goal with this proposed
requirement is to ensure that the D–SNP
plans receiving these passive
enrollments provide high-quality care,
coverage and administration of benefits.
As passive enrollments, in some sense,
are a benefit to a plan, by providing an
enrollee and associated payments
without the plan having successfully
marketed to the enrollee, we believe that
it is important that these enrollments
are limited to plans that have
demonstrated commitment to quality.
Further, it is important to ensure that
when we are making an enrollment
decision for a beneficiary who does not
make an alternative coverage choice that
we are guided by the beneficiary’s best
interests, which are likely served by a
plan that is rated as having average or
above-average performance on the MA
Stars Rating System. However, we
recognize that MA Star Ratings do not
capture performance for those services
that would be covered under Medicaid,
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including community behavioral health
treatment and long-term services and
supports. We welcome comments on the
process for determining qualification for
passive enrollment under this proposal
and particularly on the minimum
quality standards. We request that
commenters identify specific measures
and minimum ratings that would best
serve our goals in this proposal and are
specific or especially relevant to
coverage for dually eligible
beneficiaries.
In addition to the proposed minimum
quality standards and other
requirements for a D–SNP to receive
passive enrollments, we are considering
limiting our exercise of this proposed
new passive enrollment authority to
those circumstances in which such
exercise would not raise total cost to the
Medicare and Medicaid programs. We
seek comment on this potential further
limitation on exercise of the proposed
passive enrollment regulatory authority
to better promote integrated care and
continuity of care. In particular, we seek
stakeholder feedback how to calculate
the projected impact on Medicare and
Medicaid costs from exercise of this
authority.
The intent of the proposed passive
enrollment regulatory authority is to
better promote integrated care and
continuity of care—including with
respect to Medicaid coverage—for
dually eligible beneficiaries. As such,
we would implement this authority in
consultation with the state Medicaid
agencies that are contracting with these
plan sponsors for provision of Medicaid
benefits.
We considered proposing new
beneficiary notification requirements for
passive enrollments that occur under
proposed paragraph (g)(1)(iii). We
considered requiring MA organizations
receiving the passive enrollment to
provide two notifications to all potential
enrollees prior to their enrollment
effective date. We acknowledge that
under the Financial Alignment Initiative
demonstrations, states are required to
provide two passive enrollment notices.
Under the passive enrollment authority
proposed here, we would continue to
encourage, but not require, a second
notice or additional outreach to
impacted individuals. Given the
existing beneficiary notifications that
are currently required under Medicare
regulations and concerns regarding the
quantity of notifications sent to
beneficiaries, we are not proposing to
modify the existing notification
requirements, so these existing
standards would apply for existing
passive enrollments and for the newly
proposed passive enrollment authority.
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However, we solicit comment on
alternatives regarding beneficiary
notices, including comments about the
content and timing of such notices. Our
proposal redesignates the notice
requirements to paragraph (g)(4) with
minor grammatical revisions.
Finally, we propose a technical
correction to a citation in § 422.60(g),
which discusses situations involving an
immediate termination of an MA plan as
provided in § 422.510(a)(5). This
citation is outdated, as the regulatory
language at § 422.510(a)(5) has been
moved to § 422.510(b)(2)(i)(B). We
propose to replace the current citation
with a reference to § 422.510(b)(2)(i)(B).
9. Part D Tiering Exceptions (§§ 423.560,
423.578(a) and (c))
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a. Background
Section 1860D–4(g)(2) of the Act
specifies that a beneficiary enrolled in a
Part D plan offering prescription drug
benefits for Part D drugs through the use
of a tiered formulary may request an
exception to the plan sponsor’s tiered
cost-sharing structure. The statute
requires such plan sponsors to have a
process in place for making
determinations on such requests,
consistent with guidelines established
by the Secretary. At the start of the Part
D program, we finalized regulations at
§ 423.578(a) that require plan sponsors
to establish and maintain reasonable
and complete exceptions procedures.
These procedures permit enrollees,
under certain circumstances, to obtain a
drug in a higher cost-sharing tier at the
more favorable cost-sharing applicable
to alternative drugs on a lower costsharing tier of the plan sponsor’s
formulary. Such an exception is granted
when the plan sponsor determines that
the non-preferred drug is medically
necessary based on the prescriber’s
supporting statement. The tiering
exceptions regulations establish the
general scope of issues that must be
addressed under the plan sponsor’s
tiering exceptions process. Our goal
with the exceptions rules codified in the
Part D final rule (70 FR 4352) was to
allow plan sponsors sufficient flexibility
in benefit design to obtain pricing
discounts necessary to offer optimal
value to beneficiaries, while ensuring
that beneficiaries with a medical need
for a non-preferred drug are afforded the
type of drug access and favorable costsharing called for under the law.
At the start of the program, most Part
D formularies included no more than
four cost-sharing tiers, generally with
only one generic tier. For the 2006 and
2007 plan years respectively, about 83
percent and 89 percent of plan benefit
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packages (PBPs) that offered drug
benefits through use of a tiered
formulary had 4 or fewer tiers. Since
that time, there have been substantial
changes in the prescription drug
landscape, including increasing costs of
some generic drugs, as well as the
considerable impact of high-cost drugs
on the Part D program. Plan sponsors
have responded by modifying their
formularies and PBPs, resulting in the
increased use of two generic-labeled
drug tiers and mixed drug tiers that
include brand and generic products on
the same tiers. The flexibilities CMS
permits in benefit design enable plan
sponsors to continue to offer
comprehensive prescription drug
coverage with reasonable controls on
out of pocket costs for enrollees, but
increasingly complex PBPs with more
variation in type and level of costsharing. For the 2017 plan year, about
91 percent of all Part D PBPs offer drug
benefits through use of a tiered
formulary. Over 98 percent of those
tiered PBPs use a formulary containing
5 or 6 tiers; of those, about 98 percent
contain two generic-labeled tiers.
These changes and increased
complexities, and more than a decade of
program experience, lead us to believe
that our current regulations are no
longer sufficient to ensure that tiering
exceptions are understood by
beneficiaries and adjudicated by plan
sponsors in the manner the statute
contemplates. For this reason, we
propose to amend §§ 423.560,
423.578(a) and 423.578(c) to revise and
clarify requirements for how tiering
exceptions are to be adjudicated and
effectuated.
While section 1860D–4(g)(2) of the
Act uses the terms ‘‘preferred’’ and
‘‘non-preferred’’ drug, rather than
‘‘brand’’ and ‘‘generic’’, it also gives the
Secretary authority to establish
guidelines for making a determination
with respect to a tiering exception
request. The statute further specifies
that ‘‘a non-preferred drug could be
covered under the terms applicable for
preferred drugs’’ (emphasis added) if the
prescribing physician determines that
the preferred drug would not be as
effective or would have adverse effects
for the individual. The statute therefore
contemplates that tiering exceptions
must allow for an enrollee with a
medical need to obtain favorable costsharing for a non-preferred product, but
that such access be subject to reasonable
limitations. Establishing regulations that
allow plans to impose certain
limitations on tiering exceptions helps
ensure that all enrollees have access to
needed drugs at the most favorable costsharing terms possible.
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b. General Rules
We are proposing to revise
§ 423.578(a)(2) to read as follows: ‘‘Part
D plan sponsors must establish criteria
that provide for a tiering exception
consistent with paragraphs
§ 423.578(a)(3) through (a)(6) of this
section.’’ We believe that inserting a
cross-reference to paragraph (a)(6),
which establishes allowable limitations
on tiering exceptions, and which we are
also proposing to revise, would
streamline and clarify the requirements
for such exceptions. The proposed
revisions would establish rules that
more definitively base eligibility for
tiering exceptions on the lowest
applicable cost sharing for the tier
containing the preferred alternative
drug(s) for treatment of the enrollee’s
health condition in relation to the cost
sharing of the requested, higher-cost
drug, and not based on tier labels.
c. Limitations on Tiering Exceptions
We are also proposing to revise the
regulations at § 423.578(a)(6) to specify
when a Part D plan sponsor may limit
tiering exceptions. We believe the
current text, which permits a plan
sponsor to exempt any dedicated
generic tier from its tiering exceptions
procedures, is being applied in a
manner that restricts tiering exceptions
more stringently than is appropriate.
Specifically, Part D sponsors have been
considering any tier that is labeled
‘‘generic’’ to be exempt from tiering
exceptions even if the tier also contains
brand name drugs. This has become
even more problematic with the
increase in the number of PBPs with
more than one tier labeled ‘‘generic’’.
Based on an analysis of 2017 plan data
entered into the Health Plan
Management System (HPMS), for all
Part D plans using a tiered formulary, 62
percent have indicated at least two tiers
that contain only generic drugs, and 7
percent have three such tiers. Combined
with the allowable exemption of a
specialty tier (used by 99.8 percent of
tiered Part D plans in 2017), almost twothirds of all tiered PBPs could exempt
3 of their 5 or 6 tiers from tiering
exceptions without any consideration of
medical need or placement of preferred
alternative drugs. To ensure appropriate
enrollee access to tiering exceptions, we
are proposing to revise § 423.578(a)(6) to
specify that a Part D plan sponsor would
not be required to offer a tiering
exception for a brand name drug to a
preferred cost-sharing level that applies
only to generic alternatives. Under this
proposal, however, plans would be
required to approve tiering exceptions
for non-preferred generic drugs when
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the plan determines that the enrollee
cannot take the preferred generic
alternative(s), including when the
preferred generic alternative(s) are on
tier(s) that include only generic drugs or
when the lower tier(s) contain a mix of
brand and generic alternatives. In other
words, plans would not be permitted to
exclude a tier containing alternative
drug(s) with more favorable cost-sharing
from their tiering exceptions procedures
altogether just because that lower-cost
tier is dedicated to generic drugs. As
described in the following paragraph,
we are also proposing at § 423.578(a)(6)
to establish specific tiering exceptions
policy for biological products.
Proposed § 423.578(a)(6)(iii) would
specify that, ‘‘If a Part D plan sponsor
maintains a specialty tier, as defined in
§ 423.560, the sponsor may design its
exception process so that Part D drugs
and biological products on the specialty
tier are not eligible for a tiering
exception.’’ We also propose to add the
following definition to Subpart M at
§ 423.560:
Specialty tier means a formulary costsharing tier dedicated to very high cost
Part D drugs and biological products
that exceed a cost threshold established
by the Secretary. We note that, while the
proposed definition of specialty tier
does not refer to ‘‘unique’’ drugs as
existing § 423.578(a)(7) does, we do not
intend to change the criteria for the
specialty tier, which has always been
based on the drug cost. This proposal
would retain the current regulatory
provision that permits Part D plan
sponsors to disallow tiering exceptions
for any drug that is on the plan’s
specialty tier. This policy is currently
codified at § 423.578(a)(7), which would
be revised and redesignated as
§ 423.578(a)(6)(iii). We believe that
retaining the existing policy limiting the
availability of tiering exceptions for
drugs on the specialty tier is important
because of the beneficiary protection
that limits cost-sharing for the specialty
tier to 25 percent coinsurance (up to 33
percent for plans that have a reduced or
$0 Part D deductible), ensuring that
these very high cost drugs remain
accessible to enrollees at cost sharing
equivalent to the defined standard
benefit.
We also clarify that, if the specialty
tier has cost sharing more preferable
than another tier, then a drug placed on
such other non-preferred tier is eligible
for a tiering exception down to the cost
sharing applicable to the specialty tier if
an applicable alternative drug is on the
specialty tier and the other requirements
of § 423.578(a) are met. In other words,
while plans are not required to allow
tiering exceptions for drugs on the
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specialty tier to a more preferable costsharing tier, the specialty tier is not
exempt from being considered a
preferred tier for purposes of tiering
exceptions.
We believe a shift in regulatory policy
that establishes a distinction between
non-preferred branded drugs, biological
products, and non-preferred generic and
authorized generic drugs, achieves
needed balance between limitations in
plans’ exceptions criteria and
beneficiary access, and aligns with how
many plan sponsors already design their
tiering exceptions criteria. Accordingly,
we are proposing to revise
§ 423.578(a)(6) to clarify and establish
additional limitations plans would be
permitted to place on tiering exception
requests. First, we are proposing new
paragraphs (i) and (ii), which would
permit plans to limit the availability of
tiering exceptions for the following drug
types to a preferred tier that contains the
same type of alternative drug(s) for
treating the enrollee’s condition:
• Brand name drugs for which an
application is approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(c)),
including an application referred to in
section 505(b)(2) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C.
355(b)(2)); and
• Biological products, including
follow-on biologics, licensed under
section 351 the Public Health Service
Act.
With the proposed revisions, that
approved tiering exceptions for brand
name drugs would generally be assigned
to the lowest applicable cost-sharing
associated with brand name
alternatives, and approved tiering
exceptions for biological products
would generally be assigned to the
lowest applicable cost-sharing
associated with biological alternatives.
Similarly, tiering exceptions for nonpreferred generic drugs would be
assigned to the lowest applicable costsharing associated with alternatives that
are either brand or generic drugs (see
further discussion later in this section
related to assignment of cost-sharing for
approved tiering exceptions to the
lowest applicable tier). Given the
widespread use of multiple generic tiers
on Part D formularies, and the inclusion
of generic drugs on mixed, higher-cost
tiers, we believe these changes are
needed to ensure that tiering exceptions
for non-preferred generic drugs are
available to enrollees with a
demonstrated medical need. Procedures
that allow for tiering exceptions for
higher-cost generics when medically
necessary promote the use of generic
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drugs among Part D enrollees and assist
them in managing out of pocket costs.
We are also proposing at
§ 423.578(a)(6)(i) to codify that plans are
not required to offer tiering exceptions
for brand name drugs or biological
products at the cost-sharing level of
alternative drug(s) for treating the
enrollee’s condition, where the
alternatives include only the following
drug types:
• Generic drugs for which an
application is approved under section
505(j) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(j)), or
• Authorized generic drugs as defined
in section 505(t)(3) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C.
355(t)(3)).
As discussed in the Call Letter, CMS
collects Part D plan formulary data
based on the National Library of
Medicare RxNorm concept unique
identifier (RxCUI), and not at the
manufacturer-specific National Drug
Code (NDC) level. This process does not
allow us to clearly identify whether a
plan sponsor includes coverage of
authorized generic NDCs or not. We
believe this position is consistent with
how plans currently administer their
formularies. Under this regulatory
proposal, a plan sponsor could not
completely exclude a lower tier
containing only generic and authorized
generic drugs from its tiering exception
procedures, but would be permitted to
limit the cost sharing for a particular
brand drug or biological product to the
lowest tier containing the same drug
type. Plans would be required to grant
a tiering exception for a higher cost
generic or authorized generic drug to the
cost sharing associated with the lowest
tier containing generic and/or
authorized generic alternatives when
the medical necessity criteria is met.
d. Alternative Drugs for Treatment of
the Enrollee’s Condition
In response to the 2018 Call Letter
and RFI, we received comments from
plan sponsors and PBMs requesting that
CMS provide additional guidance on
how to determine what constitutes an
alternative drug for purposes of tiering
exceptions, including establishment of
additional limitations on when such
exceptions are approvable. The statutory
language for tiering and formulary
exceptions at sections 1860D–4(g)(2)
and 1860D–4(h)(2) of the Act,
respectively, specifically refers to a
preferred or formulary drug ‘‘for
treatment of the same condition.’’ We
interpret this language to be referring to
the condition as it affects the enrollee—
that is, taking into consideration the
individual’s overall clinical condition,
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including the presence of comorbidities
and known relevant characteristics of
the enrollee and/or the drug regimen,
which can factor into which drugs are
appropriate alternative therapies for that
enrollee. The Part D statute at § 1860D–
4(g)(2) requires that coverage decisions
subject to the exceptions process be
based on the medical necessity of the
requested drug for the individual for
whom the exception is sought. We
believe that requirement reasonably
includes consideration of alternative
therapies for treatment of the enrollee’s
condition, based on the facts and
circumstances of the case.
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e. Approval of Tiering Exception
Requests
We are proposing to revise
§ 423.578(c)(3) by renumbering the
provision and adding a new paragraph
(ii) to codify our current policy that cost
sharing for an approved tiering
exception request is assigned at the
lowest applicable tier when preferred
alternatives sit on multiple lower tiers.
Under this proposal, assignment of cost
sharing for an approved tiering
exception must be at the most favorable
cost-sharing tier containing alternative
drugs, unless such alternative drugs are
not applicable pursuant to limitations
set forth under proposed § 423.578(a)(6).
We are also proposing to delete similar
language from existing (c)(3) that
proposed new paragraph (c)(3)(ii) would
replace.
f. Additional Technical Changes and
Corrections
Finally, we are proposing various
technical changes and corrections to
improve the clarity of the tiering
exceptions regulations and consistency
with the regulations for formulary
exceptions. Specifically, we are
proposing the following:
• Revise the introductory text of
§ 423.578(a) to clarify that a ‘‘requested’’
non-preferred drug for treatment of an
enrollee’s health condition may be
eligible for an exception.
• Revise § 423.578(a)(1) to include
‘‘tiering’’ when referring to the
exceptions procedures described in this
subparagraph.
• Revise § 423.578(a)(4) by making
‘‘conditions’’ singular and by adding
‘‘(s)’’ to ‘‘drug’’ to account for situations
when there are multiple alternative
drugs.
• Revise § 423.578(a)(5) by removing
the text specifying that the prescriber’s
supporting statement ‘‘demonstrate the
medical necessity of the drug’’ to align
with the existing language for formulary
exceptions at § 423.578(b)(6). The
requirement that the supporting
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statement address the enrollee’s medical
need for the requested drug is already
explained in the introductory text of
§ 423.578(a).
• Redesignate paragraphs
§ 423.578(c)(3)(i) through (iii) as
paragraphs § 423.578(c)(3)(i)(A) through
(C), respectively. This proposed change
would improve consistency between the
regulation text for tiering and formulary
exceptions.
We anticipate that the proposed
changes to the tiering exceptions
regulations will make this process more
accessible and transparent for enrollees
and less cumbersome for plan sponsors
to administer. We also believe that, by
helping plan sponsors ensure their
tiering exceptions processes comply
with CMS requirements, IRE overturn
rates for tiering exception requests will
remain low.
10. Establishing Limitations for the Part
D Special Election Period (SEP) for
Dually Eligible Beneficiaries (§ 423.38)
As discussed in section III.A.2 of this
proposed rule, the MMA added section
1860D–1(b)(3)(D) to the Act to establish
a special election period (SEP) for fullbenefit dual eligible (FBDE)
beneficiaries under Part D. This SEP,
codified at § 423.38(c)(4), was later
extended to all other subsidy-eligible
beneficiaries by regulation (75 FR
19720). The SEP allows eligible
beneficiaries to make Part D enrollment
changes (that is, enroll in, disenroll
from, or change Part D plans, including
Medicare Advantage Prescription Drug
(MA–PD) plans) throughout the year,
unlike other Part D enrollees who
generally may switch plans only during
the annual enrollment period (AEP)
each fall.
The MMA sought to strike a balance
of promoting beneficiary plan choice,
but also ensuring that FBDE
beneficiaries who did not make an
active election would still have Part D
coverage. The statute directed the
Secretary to enroll FBDE beneficiaries
into a PDP if they did not enroll in a
Part D plan on their own. (As noted
previously, CMS extended the SEP
through rulemaking to make it available
to all other subsidy-eligible
beneficiaries.) When the automatic
enrollment of subsidy-eligible
beneficiaries was originally proposed in
rulemaking, we noted that beneficiaries
would have the option to use the SEP
if they determined there was a better
plan option for them, and codified a
continuous SEP (that is, that was
available monthly).
At the time, we did not know on what
factors FBDE beneficiaries would rely to
make their plan choice. Now, with over
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10 years of programmatic experience,
we have observed certain enrollment
trends in terms of FBDE and other LIS
beneficiaries:
• Most LIS beneficiaries do not make
an active choice to join a PDP. For plan
year 2015, over 71 percent of LIS
individuals in PDPs were placed into
that plan by CMS.
• Once in a plan, whether it was a
CMS-initiated enrollment or a choice
they made on their own, most LIS
beneficiaries do not make changes
during the year. Of all LIS beneficiaries
who were eligible for the SEP in 2016,
less than 10 percent utilized it. Overall,
we have seen slight growth of SEP usage
over the past 5 years (for example, less
than 8 percent in 2012, approximately 9
percent in 2014).
• A small subset (0.8 percent) of LIS
beneficiaries use the SEP to actively
enroll in a plan of their choice and then
disenroll within 2 months.
While we know that the majority of
LIS-eligible beneficiaries do not take
advantage of the SEP, we have seen the
Medicare and Medicaid environment
evolve in such a way that it may be
disadvantageous to beneficiaries if they
changed plans during the year, let alone
if they made multiple changes. States
and plans have noted that they are best
able to provide or coordinate care if
there is continuity of enrollment,
particularly if the beneficiary is enrolled
in an integrated product (as discussed
later in this section). We now know that
in addition to choice, there are other
critical issues that must be considered
in determining when and how often
beneficiaries should be able to change
their Medicare coverage during the year,
such as coordination of MedicareMedicaid benefits, beneficiary care
management, and public health
concerns such as the national opioid
epidemic (and the drug management
programs discussed in section II.A.1). In
addition, there are different care models
available now such as dual eligible
special needs plans (D–SNPs), Fully
Integrated Dual Eligible (FIDE) SNPs,
and Medicare-Medicaid Plans (MMPs)
that are discussed later in this section
and specifically designed to meet the
needs of high risk, high needs
beneficiaries.
Current enrollment trends
demonstrate that while a majority of
subsidy-eligible beneficiaries still
receive their Part D coverage through
standalone PDPs, an increasing
percentage of beneficiaries are enrolled
in MA–PDs and other capitated
managed care products, including over
one in three dually eligible
beneficiaries. A smaller but rapidly
growing subset are enrolled in capitated
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Medicare managed care products that
also integrate Medicaid services. For
example:
• The MMA established D–SNPs to
provide coordinated care to dually
eligible beneficiaries. Between 2007 and
2016, growth in D–SNPs has increased
by almost 150 percent.
• FIDE SNPs are a type of SNP
created by the Affordable Care Act
(ACA) in 2010 designed to promote full
integration and coordination of
Medicare and Medicare benefits for
dually eligible beneficiaries by a single
managed care organization. In 2017,
there are 39 FIDE SNPs providing
coverage to approximately 155,000
beneficiaries.
• MMPs, which operate as part of a
model test under Section 1115(A) of the
Act, are fully-capitated health plans that
serve dually eligible beneficiaries
though demonstrations under the
Financial Alignment Initiative. The
demonstrations are designed to promote
full access to seamless, high quality
integrated health care across both
Medicare and Medicaid. In 2017, there
are 58 MMPs providing coverage to
nearly 400,000 beneficiaries.
The current SEP, especially in the
context of these products that integrate
Medicare and Medicaid, highlights
differences in Medicare and Medicaid
managed care enrollment policies.
Bringing Medicare and Medicaid
enrollment policies into greater
alignment, even partially, is a
mechanism to reduce complexity in the
health care system and better partner
with states. Both are important priorities
for CMS.
In addition, the application of the
continuous SEP carries different service
delivery implications for enrollees of
MA–PD plans and related products than
for standalone enrollees of PDPs. At the
outset of the Part D program, when drug
coverage for dually eligible beneficiaries
was transitioned from Medicaid to
Medicare, there were concerns about
how CMS would effectively identify,
educate, and enroll dually eligible
beneficiaries. While processes (for
example, auto-enrollment,
reassignment) were established to
facilitate coverage, the continuous SEP
served as a fail-safe to ensure that the
beneficiary was always in a position to
make a choice that best served their
healthcare needs. Unintended
consequences have resulted from this
flexibility, including, as noted by the
Medicare Payment Advisory
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Commission (MedPAC 32), opportunities
for marketing abuses.
Among the key obstacles the SEP (and
resulting plan movement) can present
are—
• Interfering with the coordination of
care among the providers, health plans,
and states;
• Hindering the ability for
beneficiaries to benefit from case
management and disease management;
• Wasting the effort and resources
needed to conduct enrollee needs
assessments and developing plans of
care for services covered by Medicare
and Medicaid;
• Limiting a plan’s opportunity for
continuous treatment of chronic
conditions; and
• Diminishing incentives for plans to
innovate and invest in serving
potentially high-cost members.
While we still support in the
underlying principle that LIS
beneficiaries should have the ability to
make an active choice, we find that plan
sponsors are better able to administer
benefits to beneficiaries, including
coordination of Medicare and Medicaid
benefits, and maximize care
management and positive health
outcomes, if dual and other LIS-eligible
beneficiaries are held to the similar
election period requirements as all other
Part D-eligible beneficiaries. Therefore,
we are proposing to amend
§ 423.38(c)(4) to make the SEP for FBDE
and other subsidy-eligible individuals
available only in certain circumstances.
These circumstances would be
considered separate and unique from
one another, so there could be situations
where a beneficiary could still use the
SEP multiple times if he or she meets
more than one of the conditions
proposed as follows. Specifically, we
are proposing to revise to § 423.38(c) to
specify that the SEP is available only as
follows:
• In new paragraph (c)(4)(i), eligible
beneficiaries (that is, those who are dual
or other LIS-eligible and meet the
definition of at-risk beneficiary or
potential at-risk beneficiary under
proposed § 423.100) would be able to
use the SEP once per calendar year.
• In new paragraph (c)(4)(iii), eligible
beneficiaries who have been assigned to
a plan by CMS or a State would be able
to use the SEP before that election
becomes effective (that is, opt out and
enroll in a different plan) or within 2
months of their enrollment in that plan.
• In new paragraph (c)(9), dual and
other LIS-eligible beneficiaries who
32 Medicare Payment Advisory Commission,
‘‘Report to Congress: Medicare Payment Policy,’’
March 2008.
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have a change in their Medicaid or LISeligible status would have an SEP to
make an election within 2 months of the
change, or of being notified of such
change, whichever is later. This SEP
would be available to beneficiaries who
experience a change in Medicaid or LIS
status regardless of whether they have
been identified as potential at-risk
beneficiaries or at-risk beneficiaries
under proposed § 423.100. In addition,
we are also proposing to remove the
phrase ‘‘at any time’’ in the introductory
language of § 423.38(c) for the sake of
clarity.
The onetime annual SEP opportunity
would be able to be used at any time of
the year to enroll in a new plan or
disenroll from the current plan,
provided that their eligibility for the
SEP has not been limited consistent
with section 1860D–1(b)(3)(D) of the
Act, as amended by CARA (as discussed
in section III.A.2. of this proposed rule).
We believe that the onetime annual SEP
would still provide dually eligible
beneficiaries adequate opportunity to
change their coverage during the year if
desired, but is also responsive to
consistent feedback we have received
from States and plans that have noted
that the current SEP, which allows
month-to-month movement, can disrupt
continuity of care, especially in
integrated care plans. They specifically
noted that effective care management
can best be achieved through
continuous enrollment.
Beneficiaries who have been enrolled
in a plan by CMS or a state (that is,
through processes such as auto
enrollment, facilitated enrollment,
passive enrollment, default enrollment
(seamless conversion), or reassignment),
would be allowed a separate, additional
use of the SEP, provided that their
eligibility for the SEP has not been
limited consistent with section 1860D–
1(b)(3)(D) of the Act, as amended by
CARA. These beneficiaries would still
have a period of time before the election
takes effect to opt out and choose their
own plan or they would be able to use
the SEP to make an election within 2
months of the assignment effective date.
Once a beneficiary has made an election
(either prior to or after the effective
date) it would be considered ‘‘used’’ and
no longer would be available. If a
beneficiary wants to change plans after
2 months, he or she would have to use
the onetime annual election opportunity
discussed previously, provided that it
has not been used yet. If that election
has been used, the beneficiary would
have to wait until they are eligible for
another election period to make a
change.
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Under a new proposed SEP,
individuals who have a change in their
Medicaid or LIS-eligible status would
have an election opportunity that is
separate from, and in addition to, the
two scenarios discussed previously. (As
discussed in section III.A.2. of this rule,
and unlike the other two conditions
discussed previously, individuals
identified as ‘‘at risk’’ would be able to
use this SEP.) This would apply to
individuals who gain, lose, or change
Medicaid or LIS eligibility. We believe
that in these instances, it would be
appropriate to give these beneficiaries
an opportunity to re-evaluate their Part
D coverage in light of their changing
circumstances. Beneficiaries eligible for
this SEP would need to use it within 2
months of the change or of being
notified of the change, whichever is
later.
We considered multiple alternatives
related to the SEP proposal. We describe
two such alternatives in the following
discussion:
Limit of two or three uses of the SEP
per year. In 2016, 1.2 million
beneficiaries used the SEP for FBDE or
other subsidy-eligible individuals,
including over 27,000 who used the SEP
three or more times, and over 1,700 who
used the SEP five or more times during
the year. These SEP changes are in
addition to changes made during the
AEP and any other election periods for
which a beneficiary may qualify. We
believe that any overuse of the SEP
creates significant inefficiencies and
impedes meaningful continuity of care
and care coordination. As such, we
considered applying a simple numerical
limit to the number of times the LIS SEP
could be used by any beneficiary within
each calendar year. We specifically
considered limits of either two or three
uses of the SEP per year.
Compared to our proposal to limit the
use of the SEP to one time per calendar
year, this alternative would permit more
opportunities for midyear changes.
However, it could still allow for a high
level of membership churning. Relative
to our proposal, it would also be less
effective in limiting the opportunities
for aggressive marketing to LIS
beneficiaries outside of the AEP. We
welcome comments on this alternative.
Limits on midyear MA–PD plan
switching. We also considered a more
complex option, drawing heavily on
earlier MedPAC recommendations.33
Under this alternative we would:
• Modify the SEP to prohibit its use
to elect a non-integrated MA–PD plan.
33 Medicare Payment Advisory Commission,
‘‘Report to Congress: Medicare Payment Policy,’’
March 2008.
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As such, the SEP would not be used for
switching between MA–PD plans,
movement from integrated products to a
non-integrated MA–PD plan, or
movement from Medicare FFS to an
MA–PD plan. Beneficiaries would still
be able to select non-integrated MA–PD
plans during other enrollment periods,
such as the AEP, the open enrollment
period (OEP) outlined in section III.C.2.
of this proposed rule, and any other SEP
for which they may be eligible; and
• Allow continuous use of the dual
SEP to allow eligible beneficiaries to
enroll into FIDE SNPs or comparably
integrated products for dually eligible
beneficiaries through model tests under
section 1115(A) of the Act.
This alternative would still permit
continuous election of Medicare FFS
with a standalone PDP throughout the
year and a continuous option to change
between standalone PDPs.
We believe this alternative would
create greater stability among plans and
limit the opportunities for misleading
and aggressive marketing to duallyeligible individuals. It would also
maintain the opportunity for continuous
enrollment into integrated products to
reflect our ongoing partnership with
states to promote integrated care.
However, this alternative would be
more complex to administer and explain
to beneficiaries, and it encourages
enrollment into a limited set of MA
plans compared to all the plans
available to the beneficiary under the
MA program. We welcome comments
on this alternative.
We believe that our proposed
approach to narrowing of the scope of
the SEP preserves a dual or other LISeligible beneficiary’s ability to make an
active choice. As noted previously, less
than 10 percent of the LIS population
used the dual SEP in 2016. We
acknowledge that even though this is a
small percentage of the population,
given the number of beneficiaries who
receive Extra Help, this equates to over
a million elections. We note, though,
that of this group, the majority (74.5
percent) used the SEP one time. Under
our proposal, this population would
still be able to make an election, thus,
we believe that the majority of
beneficiaries would not be negatively
impacted by these changes. We opted
for our proposed approach, as opposed
to the alternatives, because we believe it
encourages continuity of enrollment and
care, without overcomplicating both
beneficiary understanding of how the
SEP is available to them, as well as plan
sponsor operational responsibilities.
If the proposal is finalized, we would
revise our messaging and beneficiary
education materials as necessary to
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ensure that dual and other LIS-eligible
beneficiaries understand that the SEP is
no longer an unlimited opportunity. We
would also need to ensure that
beneficiaries who are assigned to a plan
by CMS or the State understand that
they must use the SEP within 2 months
after the new coverage begins if they
wish to change from the plan to which
they were assigned.
We note that other election periods,
including the AEP, the new OEP, or
other SEPs (for example, when moving
to a new service area), would still be
available to individuals. In addition, the
proposed limitations would also apply
to the Part C SEP established in subregulatory guidance for dual-eligible
individuals or individuals who lose
their dual-eligibility.
We welcome public comment on this
proposal and the considered
alternatives. Specifically, we seek input
on the following areas:
• Are there other limited
circumstances where the dual SEP
should be available?
• Are there special considerations
CMS should keep in mind if we finalize
this policy?
• Are there other alternative
approaches we should consider in lieu
of narrowing the scope of the SEP?
• In addition to CMS outreach
materials, what are the best ways to
educate the affected population and
other stakeholders of the new proposed
SEP parameters?
11. Medicare Advantage and Part D
Prescription Drug Program Quality
Rating System
a. Introduction
We are committed to transforming the
health care delivery system—and the
Medicare program—by putting a strong
focus on person-centered care, in
accordance with the CMS Quality
Strategy, so each provider can direct
their time and resources to each
beneficiary and improve their outcomes.
As part of this commitment, one of our
most important strategic goals is to
improve the quality of care for Medicare
beneficiaries. The Part C and D Star
Ratings support the efforts of CMS to
improve the level of accountability for
the care provided by health and drug
plans, physicians, hospitals, and other
Medicare providers. We currently
publicly report the quality and
performance of health and drug plans
on the Medicare Plan Finder tool on
www.medicare.gov in the form of
summary and overall ratings for the
contracts under which each MA plan
(including MA–PD plans) and Part D
plan is offered, with drill downs to
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ratings for domains, ratings for
individual measures, and underlying
performance data. We also post
additional measures on the display
page 34 at www.cms.gov for
informational purposes. The goals of the
Star Ratings are to display quality
information on Medicare Plan Finder for
public accountability and to help
beneficiaries, families, and caregivers
make informed choices by being able to
consider a plan’s quality, cost, and
coverage; to incentivize quality
improvement; to provide information to
oversee and monitor quality; and to
accurately measure and calculate scores
and stars to reflect true performance. In
addition, CMS has started to incorporate
efforts to recognize the challenges of
serving high risk, high needs
populations while continuing the focus
on improving health care for these
important groups.
In this rule as part of the
Administration’s efforts to improve
transparency, we propose to codify the
existing Star Ratings System for the MA
and Part D programs with some changes.
As noted later in this section in more
detail, the proposed changes include
more clearly delineating the rules for
adding, updating, and removing
measures and modifying how we
calculate Star Ratings for contracts that
consolidate. Although the rulemaking
process will create a longer lead time for
changes, codifying the Star Ratings
methodology will provide plans with
more stability to plan multi-year
initiatives, because they will know the
measures several years in advance. We
have received comments for the past
several years from MA organizations
and other stakeholders asking that CMS
use Federal Register rulemaking for the
Star Ratings System; we discuss in
section III.12.c. (regarding plans for the
transition period before the codified
rules are used) how section 1832(b)
authorizes CMS to establish and
annually modify the Star Ratings
System using the Advance Notice and
Rate Announcement process because
the system is an integral part of the
policies governing Part C payment. We
think this is an appropriate time to
codify the methodology, because the
rating system has been used for several
years now and is relatively mature so
there is less need for extensive changes
every year; the smaller degree of
flexibility in having codified regulations
rather than using the process for
adopting payment methodology changes
may be appropriate. Further, by
adopting and codifying the rules that
34 https://go.cms.gov/partcanddstarratings (under
the downloads).
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govern the Star Ratings System, we are
demonstrating a commitment to
transparency and predictability for the
rules in the system so as to foster
investment.
b. Background
We originally acted upon our
authority to disseminate information to
beneficiaries as the basis for developing
and publicly posting the 5-star ratings
system (sections 1851(d) and 1852(e) of
the Act). The MA statute explicitly
requires that information about plan
quality and performance indicators be
provided to beneficiaries in an easy to
understand language to help them make
informed plan choices. These data are to
include disenrollment rates, enrollee
satisfaction, health outcomes, and plan
compliance with requirements.
The Part D statute (at section 1860D–
1(c)) imposes a parallel information
dissemination requirement with respect
to Part D plans, and refers specifically
to comparative information on
consumer satisfaction survey results as
well as quality and plan performance
indicators. Part D plans are also
required by regulation (§ 423.156) to
make Consumer Assessment of
Healthcare Providers and Systems
(CAHPS) survey data available to CMS
and are required to submit pricing and
prescription drug event data under
statutes and regulations specific to those
data. Regulations require plans to report
on quality improvement and quality
assurance and to provide data which
CMS can use to help beneficiaries
compare plans (§§ 422.152 and
423.153). In addition we may require
plans to report statistics and other
information in specific categories
(§§ 422.516 and 423.514).
Currently, for similar reasons of
providing information to beneficiaries to
assist them in plan enrollment
decisions, we also review and rate
section 1876 cost plans on many of the
same measures and publish the results.
We also propose to continue to include
1876 cost contracts in the MA and Part
D Star Rating system to provide
comparative information to Medicare
beneficiaries making plan choices. We
propose specific text, to be codified at
§ 417.472(k), noting that 1876 cost
contracts must agree to be rated under
the quality rating system specified at
subpart D of part 422. Cost contracts are
also required by regulation (§ 17.472(j))
to make CAHPS survey data available to
CMS. As is the case today, no quality
bonus payments (QBP) would be
associated with the ratings for 1876 cost
contracts.
In line with §§ 422.152 and 423.153,
CMS uses the Healthcare Effectiveness
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Data and Information Set (HEDIS),
Health Outcomes Survey (HOS), CAHPS
data, Part C and D Reporting
requirements and administrative data,
and data from CMS contractors and
oversight activities to measure quality
and performance of contracts. We have
been displaying plan quality
information based on that and other
data since 1998.
Since 2007, we have published
annual performance ratings for standalone Medicare PDPs. In 2008, we
introduced and displayed the Star
Ratings for Medicare Advantage
Organizations (MAOs) for both Part C
only contracts (MA-only contracts) and
Part C and D contracts (MA–PDs). Each
year since 2008, we have released the
MA Star Ratings. An overall rating
combining health and drug plan
measures was added in 2011, and
differential weighting of measures (for
example, outcomes being weighted 3
times the value of process measures)
began in 2012. The measurement of year
to year improvement began in 2013, and
an adjustment (Categorical Adjustment
Index) was introduced in 2017 to
address the within-contract disparity in
performance revealed in our research
among beneficiaries that are dual
eligible, receive a low income subsidy,
and/or are disabled.
The MA and Part D Star Ratings
measure the quality of care and
experiences of beneficiaries enrolled in
MA and Part D contracts, with 5 stars as
the highest rating and 1 star as the
lowest rating. The Star Ratings provide
ratings at various levels of a hierarchical
structure based on contract type, and all
ratings are determined using the
measure-level Star Ratings. Contingent
on the contract type, ratings may be
provided and include overall, summary
(Part C and D), and domain Star Ratings.
Information about the measures, the
hierarchical structure of the ratings, and
the methodology to generate the Star
Ratings is detailed in the annually
updated Medicare Part C and D Star
Ratings Technical Notes, referred to as
Technical Notes, available at https://
go.cms.gov/partcanddstarratings.
The MA and Part D Star Ratings
System is designed to provide
information to the beneficiary that is a
true reflection of the plan’s quality and
encompasses multiple dimensions of
high quality care. The information
included in the ratings is selected based
on its relevance and importance such
that it can meet the data needs of
beneficiaries using it to inform plan
choice. While encouraging improved
health outcomes of beneficiaries in an
efficient, person centered, equitable,
and high quality manner is one of the
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primary goals of the ratings, they also
provide feedback on specific aspects of
care that directly impact outcomes, such
as process measures and the
beneficiary’s perspective. The ratings
focus on aspects of care that are within
the control of the health plan and can
spur quality improvement. The data
used in the ratings must be complete,
accurate, reliable, and valid. A delicate
balance exists between measuring
numerous aspects of quality and the
need for a small data set that minimizes
reporting burden for the industry. Also,
the beneficiary or his or her
representative must have enough
information to make an informed
decision without feeling overwhelmed
by the volume of data.
The Patient Protection and Affordable
Care Act (Pub. L. 111–148), as amended
by the Healthcare and Education
Reconciliation Act (Pub. L. 111–152),
provides for quality ratings, based on a
5-star rating system and the information
collected under section 1852(e) of the
Act, to be used in calculating payment
to MA organizations beginning in 2012.
Specifically, sections 1853(o) and
1854(b)(1)(C) of the Act provide,
respectively, for an increase in the
benchmark against which MA
organizations bid and in the portion of
the savings between the bid and
benchmark available to the MA
organization to use as a rebate. Under
the Act, Part D plan sponsors are not
eligible for quality based payments or
rebates. We finalized a rule on April 15,
2011 to implement these provisions and
to use the existing Star Ratings System
that had been in place since 2007 and
2008. (76 FR 21485–21490).35 In
addition, the Star Ratings measures are
tied in many ways to responsibilities
and obligations of MA organizations and
Part D sponsors under their contracts
with CMS. We believe that continued
poor performance on the measures and
overall and summary ratings indicates
systemic and wide-spread problems in
an MA plan or Part D plan. In April
2012, we finalized a regulation to use
consistently low summary Star
Ratings—meaning 3 years of summary
Star Ratings below 3 stars—as the basis
for a contract termination for Part C and
Part D plans. (§§ 422.510(a)(14) and
423.509(a)(13)). Those regulations
further reflect the role the Star Ratings
have had in CMS’ oversight, evaluation,
and monitoring of MA and Part D plans
to ensure compliance with the
35 The ratings were first used as part of the
Quality Bonus Payment Demonstration for 2012
through 2014 and then used for payment purposes
as specified in sections 1853(o) and 1854(b)(1)(C)
and the regulation at 42 CFR 422.258(d)(7).
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respective program requirements and
the provision of quality care and health
coverage to Medicare beneficiaries.
The true potential of the use of the
MA and Part D Star Ratings System to
reach our goals and to serve as a catalyst
for change can only be realized by
working in tandem with our many
stakeholders including beneficiaries,
industry, and advocates. The following
guiding principles have been used
historically in making enhancements to
the MA and Part D Star Ratings:
• Ratings align with the current CMS
Quality Strategy.
• Measures developed by consensusbased organizations are used as much as
possible.
• Ratings are a true reflection of plan
quality and enrollee experience; the
methodology minimizes risk of
misclassification.
• Ratings are stable over time.
• Ratings treat contracts fairly and
equally.
• Measures are selected to reflect the
prevalence of conditions and the
importance of health outcomes in the
Medicare population.
• Data are complete, accurate, and
reliable.
• Improvement on measures is under
the control of the health or drug plan.
• Utility of ratings is considered for a
wide range of purposes and goals.
++ Accountability to the public.
++ Enrollment choice for
beneficiaries.
++ Driving quality improvement for
plans and providers.
• Ratings minimize unintended
consequences.
• Process of developing methodology
is transparent and allows for multistakeholder input.
We are using these goals to guide our
proposal and how we interpret and
apply the proposed regulations once
finalized. For each provision we are
proposing, we solicit comment on
whether our specific proposed
regulation text best serves these guiding
principles. We also solicit comment on
whether additional or other principles
are better suited for these roles in
measuring and communicating quality
in the MA and Part D programs in a
comparative manner.
As we continue to consider making
changes to the MA and Part D programs
in order to increase plan participation
and improve benefit offerings to
enrollees, we would also like to solicit
feedback from stakeholders on how well
the existing stars measures create
meaningful quality improvement
incentives and differentiate plans based
on quality. We welcome all comments
on those topics, and will consider them
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for changes through this or future
rulemaking or in connection with
interpreting our regulations (once
finalized) on the Star Rating system
measures. However, we are particularly
interested in receiving stakeholder
feedback on the following topics:
• Additional opportunities to
improve measures so that they further
reflect the quality of health outcomes
under the rated plans.
• Whether CMS’ current process for
establishing the cut points for Star
Rating can be simplified, and if the
relative performance as reflected by the
existing cut points accurately reflects
plan quality.
• How CMS should measure overall
improvement across the Star Ratings
measures. We are requesting input on
additional improvement adjustments
that could be implemented, and the
effect that these adjustments could have
on new entrants (that is, new MA
organizations and/or new plans offered
by existing MA organizations).
• Additional adjustments to the Star
Ratings measures or methodology that
could further account for unique
geographic and provider market
characteristics that affect performance
(for example, rural geographies or
monopolistic provider geographies), and
the operational difficulties that plans
could experience if such adjustments
were adopted.
• In order to further encourage plan
participation and new market entrants,
whether CMS should consider
implementing a demonstration to test
alternative approaches for putting new
entrants (that is, new MA organizations)
on a level playing field with renewing
plans from a Star Ratings perspective for
a pre-determined period of time.
• Adding measures that evaluate
quality from the perspective of adopting
new technology (for example, the
percent of beneficiaries enrolled
through online brokers or the use of
telemedicine) or improving the ease,
simplicity, and satisfaction of the
beneficiary experience in a plan.
• Including survey measures of
physicians’ experiences. (Currently, we
measure beneficiaries’ experiences with
their health and drug plans through the
CAHPS survey.) Physicians also interact
with health and drug plans on a daily
basis on behalf of their patients. We are
considering developing a survey tool for
collecting standardized information on
physicians’ experiences with health and
drug plans and their services, and we
would welcome comments.
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c. Basis, Purpose and Applicability of
the Quality Star Ratings System
We propose to codify regulation text,
at §§ 422.160 and 423.180, that
identifies the statutory authority,
purpose, and applicability of the Star
Ratings System regulations we are
proposing to add to part 422 subpart D
and part 423 subpart D. Under our
proposal, the existing purposes of the
quality rating system—to provide
comparative information to Medicare
beneficiaries pursuant to sections
1851(d) and 1860D–1(c) of the Act, to
identify and apply the payment
consequences for MA plans under
sections 1853(o) and 1854(b)(1)(C) of the
Act, and to evaluate and oversee overall
and specific performance by plans—
would continue. To reflect how the Part
D ratings are used for MA–PD plan QBP
status and rebate retention allowances,
we also propose specific text, to be
codified at § 423.180(b)(2), noting that
the Part D Star Rating will be used for
those purposes.
We are proposing here, broadly stated,
to codify the current quality Star Ratings
System uses, methodology, measures,
and data collection beginning with the
measurement periods in calendar year
2019. We are proposing some changes,
such as how we handle consolidations
from the current Star Ratings program,
but overall the proposal is to continue
the Star Ratings System as it has been
developed and has stabilized. Data will
be collected and performance will be
measured using these proposed rules
and regulations for the 2019
measurement period; the associated
quality Star Ratings will be used to
assign QBP ratings for the 2022 payment
year and released prior to the annual
coordinated election period held in late
2020 for the 2021 contract year.
Application of the final regulations
resulting from this proposal will
determine whether the measures
proposed in section III.A.12.i. of the
proposed rule (Table 2) are updated,
transitioned to or from the display page,
and otherwise used in conjunction with
the 2019 performance period.
Under our proposal, the current
quality Star Ratings System and the
procedures for revising it will remain in
place for the 2019 and 2020 quality Star
Ratings. Section 1853(b) of the Act
authorizes an advance notice and rate
announcement to announce and seek
comment for proposed changes to the
MA payment methodology, which
includes the Part C and D Star Ratings
program. The statute identifies specific
notice and comment timeframes, but
that process does not require
publication in the Federal Register. We
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have used the draft and final Call Letter,
which are attachments to the Advance
Notice and final Rate Announcement
respectively,36 to propose for comment
and finalize changes to the quality Star
Ratings System since the ratings became
a component of the payment
methodology for MA and MA–PD plans.
(76 FR 214878 through 89). Because the
Star Ratings System has been integrated
into the payment methodology since the
2012 contract year (as a mechanism
used to determine how much a plan is
paid, and not the mechanism by which
(or a rule about when) a plan is paid),
the Star Ratings are part of the process
for setting benchmarks and capitation
rates under section 1853, and the
process for announcing changes to the
Star Ratings System falls within the
scope of section 1853(b). Although not
expressly required by section 1853(b),
CMS has historically solicited comment
on significant changes to the ratings
system using a Request for Comment
process before the Advance Notice and
draft Call Letter are released; this
Request for Comment 37 provides
MAOs, Part D sponsors, and other
stakeholders an opportunity to request
changes to and raise concerns about the
Star Ratings methodology and measures
before CMS finalizes its proposal for the
Advance Notice. We intend to continue
the current process at least until the
2019 measurement period that we are
proposing as the first measurement
period under these new regulations, but
we may discontinue that process at a
later date as the rulemaking process may
provide sufficient opportunity for
public input. In addition, CMS issues
annually the Technical Notes 38 that
describe in detail how the methodology
is applied from the changes in policy
adopted through the Advance Notice
and Rate Announcement process. We
intend to continue the practice of
publishing the Technical Notes during
the preview periods. Under our
proposal, we would also continue to use
the draft and final Call Letters as a
means to provide subregulatory
application), interpretation, and
guidance of the final version of these
proposed regulations where necessary.
Our proposed regulation text does not
detail these plans for continued use of
the current process and future for
36 Advance Notices and Rate Announcements are
posted each year on the CMS Web site at: https://
www.cms.gov/Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/Announcements-andDocuments.html.
37 Requests for Comment are posted at https://
go.cms.gov/partcanddstarratings under the
downloads.
38 https://go.cms.gov/partcanddstarratings (under
the downloads) for the Technical Notes.
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subregulatory guidance because we
believe such regulation text would be
unnecessary. We propose to codify the
first performance period (2019) and first
payment year (2022) to which our
proposed regulations would apply at
§ 422.160(c) and § 423.180(c).
d. Definitions
There are a number of technical and
other terms relevant to our proposed
regulations. Therefore, we propose the
following definitions for the respective
subparts in part 422 and part 423 in
paragraph (a) of §§ 422.162 and 423.182
respectively. Some proposed definitions
are discussed in more detail later in this
preamble in connection with other
proposed regulation text related to the
definition.
• CAHPS refers to a comprehensive
and evolving family of surveys that ask
consumers and patients to evaluate the
interpersonal aspects of health care.
CAHPS surveys probe those aspects of
care for which consumers and patients
are the best or only source of
information, as well as those that
consumers and patients have identified
as being important. CAHPS initially
stood for the Consumer Assessment of
Health Plans Study, but as the products
have evolved beyond health plans the
acronym now stands for Consumer
Assessment of Healthcare Providers and
Systems.
• Case-mix adjustment means an
adjustment to the measure score made
prior to the score being converted into
a Star Rating to take into account certain
enrollee characteristics that are not
under the control of the plan. For
example age, education, chronic
medical conditions, and functional
health status that may be related to the
enrollee’s survey responses.
• Categorical Adjustment Index (CAI)
means the factor that is added to or
subtracted from an overall or summary
Star Rating (or both) to adjust for the
average within-contract (or within-plan
as applicable) disparity in performance
associated with the percentages of
beneficiaries who are dually eligible for
Medicare and enrolled in Medicaid,
beneficiaries who receive a Low Income
Subsidy or have disability status in that
contract (or plan as applicable).
• Clustering refers to a variety of
techniques used to partition data into
distinct groups such that the
observations within a group are as
similar as possible to each other, and as
dissimilar as possible to observations in
any other group. Clustering of the
measure-specific scores means that gaps
that exist within the distribution of the
scores are identified to create groups
(clusters) that are then used to identify
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the four cut points resulting in the
creation of five levels (one for each Star
Rating), such that the scores in the same
Star Rating level are as similar as
possible and the scores in different Star
Rating levels are as different as possible.
Technically, the variance in measure
scores is separated into within-cluster
and between-cluster sum of squares
components. The clusters reflect the
groupings of numeric value scores that
minimize the variance of scores within
the clusters. The Star Ratings levels are
assigned to the clusters that minimize
the within-cluster sum of squares. The
cut points for star assignments are
derived from the range of measure
scores per cluster, and the star levels
associated with each cluster are
determined by ordering the means of the
clusters.
• Consolidation means when an MA
organization/Part D sponsor that has at
least two contracts for health and/or
drug services of the same plan type
under the same parent organization in a
year combines multiple contracts into a
single contract for the start of the
subsequent contract year.
• Consumed contract means a
contract that will no longer exist after a
contract year’s end as a result of a
consolidation.
• Display page means the CMS Web
site on which certain measures and
scores are publicly available for
informational purposes; the measures
that are presented on the display page
are not used in assigning Part C and D
Star Ratings.
• Domain rating means the rating that
groups measures together by dimensions
of care.
• Dual Eligible (DE) means a
beneficiary who is enrolled in both
Medicare and Medicaid.
• HEDIS is the Healthcare
Effectiveness Data and Information Set
which is a widely used set of
performance measures in the managed
care industry, developed and
maintained by the National Committee
for Quality Assurance (NCQA). HEDIS
data include clinical measures assessing
the effectiveness of care, access/
availability measures, and service use
measures.
• Highest rating means the overall
rating for MA–PDs, the Part C summary
rating for MA-only contracts, and the
Part D summary rating for PDPs.
• Highly-rated contract means a
contract that has 4 or more stars for their
highest rating when calculated without
the improvement measures and with all
applicable adjustments (CAI and the
reward factor).
• HOS means the Medicare Health
Outcomes Survey which is the first
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patient reported outcomes measure that
was used in Medicare managed care.
The goal of the Medicare HOS program
is to gather valid, reliable, and clinically
meaningful health status data in the
Medicare Advantage (MA) program for
use in quality improvement activities,
pay for performance, program oversight,
public reporting, and improving health.
All managed care organizations with
MA contracts must participate.
• Low Income Subsidy (LIS) means
the subsidy that a beneficiary receives to
help pay for prescription drug coverage
(see § 423.34 for definition of a lowincome subsidy eligible individual).
• Measurement period means the
period for which data are collected for
a measure or the performance period
that a measures covers.
• Measure score means the numeric
value of the measure or an assigned
‘missing data’ message.
• Measure star means the measure’s
numeric value is converted to a Star
Rating. It is displayed to the nearest
whole star, using a 1–5 star scale.
• Overall Rating means a global rating
that summarizes the quality and
performance for the types of services
offered across all unique Part C and Part
D measures.
• Part C Summary Rating means a
global rating that summarizes the health
plan quality and performance on Part C
measures.
• Part D Summary Rating means a
global rating of the prescription drug
plan quality and performance on Part D
measures.
• Plan Benefit Package (PBP) means a
set of benefits for a defined MA or PDP
service area. The PBP is submitted by
PDP sponsors and MA organizations to
CMS for benefit analysis, bidding,
marketing, and beneficiary
communication purposes.
• Reliability means a measure of the
fraction of the variation among the
observed measure values that is due to
real differences in quality (‘‘signal’’)
rather than random variation (‘‘noise’’);
it is reflected on a scale from 0 (all
differences in plan performance
measure scores are due to measurement
error) to 1 (the difference in plan
performance scores is attributable to real
differences in performance).
• Reward factor means a ratingspecific factor added to the contract’s
summary or overall (or both) rating if a
contract has both high and stable
relative performance.
• Statistical significance assesses how
likely differences observed in
performance are due to random chance
alone under the assumption that plans
are actually performing the same.
Although not part of the proposed
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regulatory definition, we clarify that
CMS uses statistical tests (for example,
t-test) to determine if a contract’s
measure value is statistically different
(greater than or less than depending on
the test) from the national mean for that
measure, or whether conversely, the
observed differences from the national
mean could have arisen by chance.
• Surviving contract means the
contact that will still exist under a
consolidation, and all of the
beneficiaries enrolled in the consumed
contract(s) are moved to the surviving
contracts.
• Traditional rounding rules mean
that the last digit in a value will be
rounded. If rounding to a whole
number, look at the digit in the first
decimal place. If the digit in the first
decimal place is 0, 1, 2, 3 or 4, then the
value should be rounded down by
deleting the digit in the first decimal
place. If the digit in the first decimal
place is 5 or greater, then the value
should be rounded up by 1 and the digit
in the first decimal place deleted.
e. Contract Ratings
Star Ratings and data reporting are at
the contract level for most measures.
Currently, data for measures are
collected at the contract level including
data from all PBPs under the contract,
except for the following Special Needs
Plan (SNP)-specific measures which are
collected at the PBP level: Care for
Older Adults—Medication Review, Care
for Older Adults—Functional Status
Assessment, and Care for Older
Adults—Pain Assessment. The SNPspecific measures are rolled up to the
contract level by using an enrollmentweighted mean of the SNP PBP scores.
Subject to the discussion later in this
section about the feasibility and burden
of collecting data at the PBP (plan) level
and the reliability of ratings at the plan
level, we propose to continue the
practice of calculating the Star Ratings
at the contract level and all PBPs under
the contract would have the same
overall and/or summary ratings.
However, beneficiaries select a plan,
rather than a contract, so we have
considered whether data should be
collected and measures scored at the
plan level. We have explored the
feasibility of separately reporting quality
data for individual D–SNP PBPs, instead
of the current reporting level. For
example, in order for CAHPS measures
to be reliably scored, the number of
respondents must be at least 11 people
and reliability must be at least 0.60. Our
current analyses show that, at the PBP
level, CAHPS measures could be
reliably reported for only about onethird of D–SNP PBPs due to sample size
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issues, and HEDIS measures could be
reliably reported for only about onequarter of D–SNP PBPs. If reporting
were done at the plan level, a significant
number of D–SNP plans would not be
rated and in lieu of a Star Rating,
Medicare Plan Finder would display
that the plan is ‘‘too small to be rated.’’
However, when enough data are
available, plan level quality reporting
would better reflect the quality of care
provided to enrollees in that plan. Planlevel quality reporting would also give
states that contract with D–SNPs planspecific information on their
performance and provide the public
with data specific to the quality of care
for dual eligible (DE) beneficiaries
enrolled in these plans. For all plans as
well as D–SNPs, reporting at the plan
level would significantly increase plan
burden for data reporting and would
have to be balanced against the
availability of additional clinical
information available at the plan level.
Plan-level ratings would also potentially
increase the ratings of higherperforming plans when they are in
contracts that have a mix of high and
low performing plans. Similarly, planlevel ratings would also potentially
decrease the ratings of lower-performing
plans that are currently in contracts
with a mix of high and low performing
plans. Measurement reliability issues
due to small sample sizes would also
decrease our ability to measure true
performance at the plan level and add
complexities to the rating system. We
are soliciting comments on balancing
the improved precision associated with
plan level reporting (relative to contract
level reporting) with the negative
consequences associated with an
increase in the number of plans without
adequate sample sizes for at least some
measures; we ask for comments about
this for D–SNPs and for all plans as we
continue to consider whether rating at
the plan level is feasible or appropriate.
In particular, we are interested in
feedback on the best balance and
whether changing the level at which
ratings are calculated and reported
better serves beneficiaries and our goals
for the Star Ratings System.
We are also exploring whether some
measure data could be reported at a
higher level (parent organization versus
contract) to ease and simplify reporting
and still remain useful (for example, call
center measures as we anticipate that
parent organizations use a consolidated
call center to serve all contracts and
plans) to incorporate into the Star
Ratings. Further, we are exploring if
contract market area reporting is feasible
when a contract covers a large
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geographic area. For example, when
HEDIS reporting began in 1997, there
were contract-specific market areas that
evolved into reporting by market area
for five states with large Medicare
populations.39 We are planning to
continue work in this area to determine
the best reporting level for each measure
that most accurately reflects
performance and minimizes to the
extent possible plan reporting burden.
As we consider alternative reporting
units, we welcome comments and
suggestions about requiring reporting at
different levels (for example, parent
organization, contract, plan, or
geographic area) by measure.
We propose to continue at this time
calculating the same overall and/or
summary Star Ratings for all PBPs
offered under an MA-only, MA–PD, or
PDP contract. We propose to codify this
policy in regulation text at §§ 422.162(b)
and 423.182(b). We also propose a cost
plan regulation at § 417.472(k) to require
cost contracts to be subject to the part
422 and part 423 Medicare Advantage
and Part D Prescription Drug Program
Quality Rating System as they are
measured and rated like an MA plan.
Specifically, we propose, at paragraph
(b)(1) that CMS will calculate overall
and summary ratings at the contract
level and propose regulation text that
cross-references other proposed
regulations regarding the calculation of
measure scoring and rating, and
domain, summary and overall ratings.
Further, we propose to codify, at (b)(2)
of each section, that data from all PBPs
offered under a contract will continue to
be used to calculate the ratings for the
contract. For SNP specific measures
collected at the PBP level, we propose
that the contract level score would be an
enrollment-weighted mean of the PBP
scores using enrollment in each PBP as
reported as part of the measure
specification, which is consistent with
current practice. The proposed text is
explicit that domain and measure
ratings, other than the SNP-specific
measures, are based on data from all
PBPs under the contract.
f. Contract Consolidations
We are proposing a change in how
contract-level Star Ratings are assigned
in the case of contract consolidations.
We have historically permitted MAOs
and Part D sponsors to consolidate
contracts when a contract novation
occurs or to better align business
practices. As noted in MedPAC’s March
2016 Report to Congress (https://
aspe.hhs.gov/pdf-report/report39 The following states were divided into multiple
market areas: CA, FL, NY, OH, and TX.
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congress-social-risk-factors-andperformance-under-medicares-valuebased-purchasing-programs), there has
been a continued increase in the
number of enrollees being moved from
lower Star Rating contracts that do not
receive a QBP to higher Star Rating
contracts that do receive a QBP as part
of contract consolidations, which
increases the size of the QBPs that are
made to MAOs due to the large
enrollment increase in the higher rated,
surviving contract. We are worried that
this practice results in masking low
quality plans under higher rated
surviving contracts. This does not
provide beneficiaries with accurate and
reliable information for enrollment
decisions, and it does not truly reward
higher quality contracts. We propose
here to modify from the current policy
the calculation of Star Ratings for
surviving contracts that have
consolidated. Instead of assigning the
surviving contract the Star Rating that
the contract would have earned without
regard to whether a consolidation took
place, we propose to assign and display
on Medicare Plan Finder Star Ratings
based on the enrollment-weighted mean
of the measure scores of the surviving
and consumed contract(s) so that the
ratings reflect the performance of all
contracts (surviving and consumed)
involved in the consolidation. Under
this proposal, the calculation of the
measure, domain, summary, and overall
ratings would be based on these
enrollment-weighted mean scores. The
number of contracts this would impact
is small relative to all contracts that
qualify for QBPs. During the period
from 1/1/2015 through 1/1/2017 annual
consolidations for MA contracts ranged
from a low of 7 in 2015 to a high of 19
in 2016 out of approximately 500 MA
contracts. As proposed in
§§ 422.162(b)(3)(i)–(iii) and
423.182(b)(3)(i)–(iii), CMS will use
enrollment-weighted means of the
measure scores of the consumed and
surviving contracts to calculate ratings
for the first and second plan years
following the contract consolidations.
We believe that use of enrollmentweighted means will provide a more
accurate snapshot of the performance of
the underlying plans in the new
consolidated contract, such that both
information to beneficiaries and QBPs
are not somehow inaccurate or
misleading. We also propose, however,
that the process of weighting the
enrollment of each contract and
applying this general rule would vary
depending on the specific types of
measures involved in order to take into
account the measurement period and
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data collection processes of certain
measures. Our proposal would also treat
ratings for determining quality bonus
payment (QBP) status for MA contracts
differently than displayed Star Ratings
for the first year following the
consolidation for consolidations that
involve the same parent organization
and plans of the same plan type.
We propose to codify our new policy
at §§ 422.162(b)(3) and 423.182(b)(3).
First, we propose generally, at
paragraph (b)(3)(i) of each regulation,
that CMS will assign Star Ratings for
consolidated contracts using the
provisions of paragraph (b)(3). We are
proposing in § 422.162(b)(3) both a
specific rule to address the QBP rating
following the first year after the
consolidation and a rule for subsequent
years. As Part D plan sponsors are not
eligible for QBPs, the Part D regulation
text is proposed without the QBP
aspect. We propose in
§ 422.162(b)(3)(iv) and
§ 423.182(b)(3)(ii) the process for
assigning Star Ratings for posting on the
Medicare Plan Finder for the first 2
years following the consolidation.
For the first contract year following a
consolidation, as proposed at
paragraphs § 422.162(b)(3)(iv) and
§ 423.182(b)(3)(ii), we propose to use the
enrollment-weighted means as
calculated below to set Star Ratings for
publication (and, in § 422.162(b)(3)(iii),
use of certain enrollment-weighted
means for establishing QBP status:
• The Star Ratings measure scores for
the consolidated entity’s first plan year
would be based on enrollment-weighted
measure scores using the July
enrollment of the measurement period
of the consumed and surviving contracts
for all measures, except the surveybased and call center measures.
• The survey-based measures (that is,
CAHPS, HOS, and HEDIS measures
collected through CAHPS or HOS)
would use enrollment of the surviving
and consumed contracts at the time the
sample is pulled for the rating year. For
example, for a contract consolidation
that is effective January 1, 2021 the
CAHPS sample for the 2021 Star Ratings
would be pulled in January 2020 so
enrollment in January 2020 would be
used. The call center measures would
use mean enrollment during the study
period. We believe that these proposals
for survey-based measures are more
nuanced and account for how the data
underlying those measures are gathered.
By using the enrollment-weighted
means we are reflecting the true
underlying performance of both the
surviving and consumed contracts.
For the second year following the
consolidation, for all MA and Part D
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Sponsors, the Star Ratings would be
calculated as follows:
• The enrollment-weighted measure
scores using the July enrollment of the
measurement period of the consumed
and surviving contracts would be used
for all measures except HEDIS, CAHPS,
and HOS.
• The current reporting requirements
for HEDIS and HOS already combine
data from the surviving and consumed
contract(s) following the consolidation,
so we are not proposing any
modification or averaging of these
measure scores. For example, for HEDIS
if an organization consolidates one or
more contracts during the change over
from measurement to reporting year,
then only the surviving contract is
required to report audited summary
contract-level data but it must include
data on all members from all contracts
involved. For this reason, we are
proposing regulation text that HEDIS
and HOS measure data will be used as
reported in the second year after
consolidation.
• The CAHPS survey sample that
would be selected following the
consolidation would be modified to
include enrollees in the sample universe
from which the sample is drawn from
both the surviving and consumed
contracts. If there are two contracts (that
is, Contract A is the surviving contract
and Contract B is the consumed
contract) that consolidate, and Contract
A has 5,000 enrollees eligible for the
survey and Contract B has 1,000 eligible
for the survey, the universe from which
the sample would be selected would be
6,000.
After applying these rules for
calculating the measure scores in the
first and second year after
consolidation, CMS would use the other
rules proposed in §§ 422.166 and
423.186 to calculate the measure,
domain, summary, and overall Star
Ratings for the consolidated contract. In
the third year after consolidation and
subsequent years, the performance
period for all the measures would be
after the consolidation, so our proposal
is limited to the Star Ratings issued the
first 2 years after consolidation.
When consolidations involve two or
more contracts for health and/or drug
services of the same plan type under the
same parent organization combining
into a single contract at the start of a
contract year, we propose to calculate
the QBP rating for that first year
following the consolidation using the
enrollment-weighted mean, using
traditional rounding rules, of what
would have been the QBP ratings of the
surviving and consumed contracts using
the contract enrollment in November of
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the year the Star Ratings were released.
In November of each year following the
release of the ratings on Medicare Plan
Finder, the preliminary QBP ratings are
displayed in the Health Plan
Management System (HPMS) for the
year following the Star Ratings year. For
example, the first year the consolidated
entity is in operation is plan year 2020;
the 2020 QBP rating displayed in HPMS
in November 2018 would be based on
the 2019 Star Ratings (which are
released in October 2018) and
calculated using the weighted mean of
the November 2018 enrollment of the
surviving and consumed contracts.
Because the same parent organization is
involved in these situations, we believe
that many administrative processes and
procedures are identical in the Medicare
health plans offered by the sponsoring
organization, and using a weighted
mean of what would have been their
QBP ratings accurately reflects their
performance for payment purposes. In
subsequent years after the first year
following the consolidation, QBPs status
would be determined based on the
consolidated entity’s Star Rating posted
on Medicare Plan Finder. Under our
proposal, the measure, domain,
summary, and in the case of MA–PD
plans the overall Star Ratings posted on
Medicare Plan Finder for the second
year following consolidation would be
based on the enrollment-weighted
measure scores so would include data
from all contracts involved.
Consequently, the ratings used for QBP
status determinations would reflect the
care provided by both the surviving and
consumed contracts.
In conclusion, we are proposing a
new set of rules regarding the
calculation of Star Ratings for
consolidated contracts to be codified at
paragraphs (b)(3)(i) through (iv) of
§§ 422.162 and 423.182. In most cases,
we propose that the Star Ratings for the
first and second year following the
consolidation to be an enrollmentweighted mean of the scores at the
measure level for the consumed and
surviving contracts. For the QBP rating
for the first year following the
consolidation, we propose to use the
enrollment-weighted mean of the QBP
rating of the surviving and consumed
contracts (which would be the overall or
summary rating depending on the plan
type) rather than averaging measure
scores. We solicit comment on this
proposal and whether our separate
treatment of different measure types
during the first and second year
adequately addresses the differences in
how data are collected (and submitted)
for those measures during the different
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periods. We would also like to know
whether sponsoring organizations
believe that the special rule for
consolidations involving the same
parent organization and same plan types
adequately addresses how those
situations are different from cases where
an MA organization buys or sells a plan
or contract from or to a different entity
and whether these rules should be
extended to situations where there are
different parent organizations involved.
For commenters that support the latter,
we also request comment on how CMS
should determine that the same
administrative processes are used and
whether attestations from sponsoring
organizations or evidence from prior
audits should be required to support
such determinations.
g. Data Sources
Under 1852(e) of the Act, MA
organizations are required to collect,
analyze, and report data that permit
measurement of health outcomes and
other indices of quality. The Star
Ratings System is based on information
collected consistent with section
1852(e) of the Act. Section 1852(e)(3)(B)
of the Act prohibits the collection of
data on quality, outcomes, and
beneficiary satisfaction other than the
types of data that were collected by the
Secretary as of November 1, 2003; there
is a limited exception for SNPs to
collect, analyze, and report data that
permit the measurement of health
outcomes and other indicia of quality.
The statute does not require that only
the same data be collected, but that we
do not change or expand the type of
data collected until after submission of
a Report to Congress (prepared in
consultation with MA organizations and
accrediting bodies) that explains the
reason for the change(s). We clarify here
that the types of data included under
the Star Ratings System are consistent
with the types of data collected as of
November 1, 2003. Since 1997,
Medicare managed care organizations
have been required to annually report
quality of care performance measures
through HEDIS. We have also been
conducting the CAHPS survey since
1997 to measure beneficiaries’
experiences with their health plans, and
since 2007 we have been measuring
experiences with drug plans with
CAHPS. HOS began in 1998 to capture
changes in the physical and mental
health of MA enrollees. To some extent,
these surveys have been revised and
updated over time, but the same types
of data—clinical measures, beneficiary
experiences, and changes in physical
and mental health, respectively—have
remained the focus of these surveys. In
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addition, there are several measures in
the Stars Ratings System that are based
on performance that address telephone
customer service, members’ complaints,
disenrollment rates, and appeals;
however these additional measures are
not collected directly from the
sponsoring organizations for the
primary purpose of quality
measurement. These additional
measures are calculated from
information that CMS has gathered as
part of the administration of the
Medicare program, such as information
on appeals forwarded to the
Independent Review Entity under
subparts M, enrollment, and compliance
and enforcement actions.
The Part D program was implemented
in 2006, and while there is no parallel
provision regarding applicable Part D
sources of data, we have used similar
datasets, for example CAHPS survey
data, for beneficiaries’ experiences with
prescription drug plans. Section 1860D–
4(d) of the Act specifically directs the
administration and collection of data
from consumer surveys in a manner
similar to those conducted in the MA
program. All of these measures reflect
structure, process, and outcome indices
of quality that form the measurement set
under Star Ratings. Since 2007, we have
publicly reported a number of measures
related to the drug benefit as part of the
Star Ratings. For MA organizations that
offer prescription drug coverage, we
have developed a series of measures
focusing on administration of the drug
benefit. Similar to MA measures of
quality relative to health services, the
Part D measures focus on customer
service and beneficiary experiences,
effectiveness, and access to care relative
to the drug benefit. We believe that the
Part D Star Ratings are consistent with
the limitation expressed in section
1852(e) of the Act even though the
limitation does not apply to our
collection of Part D quality data from
Part D sponsors.
We intend to continue to base the
types of information collected in the
Part C Star Ratings on section 1852(e) of
the Act, and we propose at
§ 422.162(c)(1) that the type of data used
for Star Ratings will be data consistent
with the section 1852(e) limits and data
gathered from CMS administration of
the MA program. In addition, we
propose in § 422.162(c)(1) and in
§ 423.182(c)(1) to include measures that
reflect structure, process, and outcome
indices of quality, including Part C
measures that reflect the clinical care
provided, beneficiary experience,
changes in physical and mental health,
and benefit administration, and Part D
measures that reflect beneficiary
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experiences and benefit administration.
The measures encompass data
submitted directly by MA organizations
(MAOs) and Part D sponsors to CMS,
surveys of MA and Part D enrollees,
data collected by CMS contractors, and
CMS administrative data. We also
propose, primarily so that the regulation
text is complete on this point, a
regulatory provision at §§ 422.162(c)(2)
and 423.182(c)(2) that requires MA
organizations and Part D plan sponsors
to submit unbiased, accurate, and
complete quality data as described in
paragraph(c)(1) of each section. Our
authority to collect quality data is clear
under the statute and existing
regulations, such as section
1852(e)(3)(A) and 1860D–4(d) and
§§ 422.12(b)(2) and 423.156. We propose
the paragraph (c)(2) regulation text to
ensure that the quality ratings system
regulations include a regulation on this
point for readers and to avoid confusion
in the future about the authority to
collect this data. In addition, it is
important that the data underlying the
ratings are unbiased, accurate, and
complete so that the ratings themselves
are reliable. This proposed regulation
text would clearly establish the
sponsoring organization’s responsibility
to submit data that can be reliably used
to calculate ratings and measure plan
performance.
h. Adding, Updating, and Removing
Measures
We are committed to continuing to
improve the Part C and D Star Ratings
System by focusing on improving
clinical and other outcomes. We
anticipate that new measures will be
developed and that existing measures
will be updated over time. NCQA and
the Pharmacy Quality Alliance (PQA)
continually work to update measures as
clinical guidelines change and develop
new measures focused on health and
drug plans. To address these anticipated
changes, we propose in §§ 422.164 and
423.184 specific rules to govern the
addition, update, and removal of
measures. We also propose to apply
these rules to the measure set proposed
in this rulemaking, to the extent that
there are changes between the final rule
and the Star Ratings based on the
performance periods beginning on or
after January 2019.
As discussed in more detail in the
following paragraphs, we propose the
following general rules to govern
adding, updating, and removing
measures:
• For data quality issues identified
during the calculation of the Star
Ratings for a given year, we propose to
continue our current practice of
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removing the measure from the Star
Ratings.
• That new measures and substantive
updates to existing measures would be
added to the Star Ratings System based
on future rulemaking but that prior to
such a rulemaking, CMS would
announce new measures and
substantive updates to existing
measures and solicit feedback using the
process described for changes in and
adoption of payment and risk
adjustment policies in section 1853(b) of
the Act (that is the Call Letter
attachment to the Advance Notice and
Rate Announcement).
• That existing measures (currently
existing or existing after a future
rulemaking) used for Star Ratings would
be updated with regular updates from
the measure stewards through the
process described for changes in and
adoption of payment and risk
adjustment policies in section 1853(b) of
the Act when the changes are not
substantive.
• That existing measures (currently
existing or existing after a future
rulemaking) used for Star Ratings would
be removed from use in the Star Ratings
when there has been a change in clinical
guidelines associated with the measure
or reliability issues identified in
advance of the measurement period;
CMS would announce the removal
using the process described for changes
in and adoption of payment and risk
adjustment policies in section 1853(b) of
the Act. Removal might be permanent or
temporary, depending on the basis for
the removal.
We are proposing specific rules for
updating and removal that would be
implemented through subregulatory
action, so that rulemaking will not be
necessary for certain updates or
removals. Under this proposal, CMS
would announce application of the
regulation standards in the Call Letter
attachment to the Advance Notice and
Rate Announcement process under
section 1853(b) of the Act.
First, we propose to codify, at
§§ 422.164(a) and 423.184(a), regulation
text stating the general rule that CMS
would add, update, and remove
measures used to calculate Star Ratings
as provided in §§ 422.164 and 423.184.
In each paragraph regarding addition,
updating, and removal of measures and
the use of improvement measures, we
also propose rules to identify when
these types of changes would not
involve rulemaking based on
application of the standards and
authority in the regulation text. Under
our proposal, CMS would solicit
feedback of its application of the rules
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using the draft and final Call Letter each
year.
Second, we propose, in paragraph (b)
of these sections, that CMS would
review the quality of the data on which
performance, scoring, and rating of
measures is done each year. We propose
to continue our current practice of
reviewing data quality across all
measures, variation among
organizations and sponsors, and
measures’ accuracy, reliability, and
validity before making a final
determination about inclusion of
measures in the Star Ratings. The intent
is to ensure that Star Ratings measures
accurately measure true plan
performance. If a systemic data quality
issue is identified during the calculation
of the Star Ratings, we would remove
the measure from that year’s rating
under proposed paragraph (b).
Third, we propose to address the
addition of new measures in paragraph
(c).
In identifying whether to add a
measure, we will be guided by the
principles we listed in section
III.A.12.b. of the proposed rule.
Measures should be aligned with best
practices among payers and the needs of
the end users, including beneficiaries.
Our strategy is to continue to adopt
measures when they are available,
nationally endorsed, and in alignment
with the private sector, as we do today
through the use of measures developed
by NCQA and the PQA, and the use of
measures that are endorsed by the
National Quality Forum (NQF). We
propose to codify this standard for
adopting new measures at
§§ 422.164(c)(1) and 423.184(c)(1). We
do not intend this standard to require
that a measure be adopted by an
independent measure steward or
endorsed by NQF in order for us to
propose its use for the Star Ratings, but
that these are considerations that will
guide us as we develop such proposals.
We also propose that CMS may develop
its own measures as well when
appropriate to measure and reflect
performance in the Medicare program.
For the 2021 Star Ratings, we propose
(at section III.A.12.) of the proposed rule
to have measures that encompass
outcome, intermediate outcome,
patient/consumer experience, access,
process, and improvement measures. It
is important to have a mix of different
types of measures in the Star Ratings
program to understand how all of the
different facets of the provision of
health and drug services interact. For
example, process measures are
evidence-based best practices that lead
to clinical outcomes of interest. Process
measures are generally easier to collect,
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while outcome measures are sometimes
more challenging requiring in some
cases medical record review and more
sophisticated risk-adjustment
methodologies.
Over time new measures will be
added and measures will be removed
from the Star Ratings program to meet
our policy goals. As new measures are
added, our general guidelines for
deciding whether to propose new
measures through future rulemaking
will use the following criteria:
• Importance: The extent to which
the measure is important to making
significant gains in health care
processes and experiences, access to
services and prescription medications,
and improving health outcomes for MA
and Part D enrollees.
• Performance Gap: The extent to
which the measure demonstrates
opportunities for performance
improvement based on variation in
current health and drug plan
performance.
• Reliability and Validity: The extent
to which the measure produces
consistent (reliable) and credible (valid)
results.
• Feasibility: The extent to which the
data related to the measure are readily
available or could be captured without
undue burden and could be
implemented by the majority of MA and
Part D contracts.
• Alignment: The extent to which the
measure or measure concept is included
in one or more existing federal, State,
and/or private sector quality reporting
programs.
We would balance these criteria as
part of our decision making process so
that each new measure proposed for
addition to the Star Ratings meets each
criteria in some fashion or to some
extent. We intend to apply these criteria
to identify and adopt new measures for
the Star Ratings, which will be done
through future rulemaking that includes
explanations for how and why we
propose to add new measures. When we
identify a measure that meets these
criteria, we propose to follow the
process in our proposed paragraphs
(c)(2) through (4) of §§ 422.164 and
423.184. We would initially solicit
feedback on any potential new measures
through the Call Letter.
As new performance measures are
developed and adopted, we propose, at
§§ 422.164(c)(3) and (4) and
423.184(c)(3) and (4), that they would
initially be incorporated into the display
page for at least 2 years but that we
would keep a new measure on the
display page for a longer period if CMS
finds there are reliability or validity
issues with the measure. As noted in the
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Introduction, the rulemaking process
will create a longer lead time for
changes, in particular to add a new
measure to the Star Ratings or to make
substantive changes to measures as
discussed later in this section. Here is
an example timeline for adding a new
measure to the Star Ratings. In this
scenario, the new measure has already
been developed by the NCQA and the
PQA, and endorsed by the NQF.
Otherwise, that process may add an
extra 3 to 5 years to the timeline.
• January 2019: Solicit feedback on
whether to add the new measure in the
draft 2020 Call Letter.
• April 2019: Summarize feedback on
adding the new measure in the 2020
Call Letter.
• 2020/2021: Propose adding the new
measure to the 2024 Star Ratings (2022
measurement period) in a proposed
rule; finalize through rulemaking (for 1/
1/2022 effective date).
• 2020: Performance period and
collection of data for the new measure
and collection of data for posting on the
2022 display page.
• 2021: Performance period and
collection of data for the new measure
and collection of data for posting on the
2023 display page.
• Fall 2021: Publish new measure on
the 2022 display page (2020
measurement period).
• January 1, 2022: Applicability date
of new measure for Star Ratings.
• 2022: Performance period and
collection of data for the new measure
and collection of data for inclusion in
the 2024 Star Ratings.
• Fall 2022: Publish new measure on
the 2023 display page (2021
measurement period).
• Fall 2023: Publish new measure in
the 2024 Star Ratings (2022
measurement period).
• 2025: QBP status and rebate
retention allowances are determined for
the 2025 payment year.
Fourth, at §§ 422.164(d) and
423.184(d) we propose to address
updates to measures based on whether
an update is substantive or nonsubstantive. Since quality measures are
routinely updated (for example, when
clinical codes are updated), we propose
to adopt rules for the incorporation of
non-substantive updates to measures
that are part of the Star Ratings System
without going through new rulemaking.
As proposed in paragraphs (d)(1) of
§§ 422.164 and 423.184, we would only
incorporate updates without rulemaking
for measure specification changes that
do not substantively change the nature
of the measure.
Substantive changes (for example,
major changes to methodology) to
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existing measures would be proposed
and finalized through rulemaking. In
paragraphs (d)(2) of §§ 422.164 and
423.184, we propose to initially solicit
feedback on whether to make the
substantive measure update through the
Call Letter prior to the measurement
period for which the update would be
initially applicable. For example, if the
change announced significantly
expands the denominator or population
covered by the measure (for example,
the age group included in the measures
is expanded), the measure would be
moved to the display page for at least 2
years and proposed through rulemaking
for inclusion in Star Ratings. We intend
this process for substantive updates to
be similar to the process we would use
for adopting new measures under
proposed paragraph (c). As appropriate,
the legacy measure may remain in the
Star Ratings while the updated measure
is on the display page if, for example,
the updated measure expands the
population covered in the measure and
the legacy measure would still be
relevant and measuring a critical topic
to continue including in the Star Ratings
while the updated measure is on
display. Adding the updated measure to
the Star Ratings would be proposed
through rulemaking.
We propose to adopt rules to
incorporate specification updates that
are non-substantive in paragraph (d)(1).
Non-substantive updates that occur (or
are announced by the measure steward)
during or in advance of the
measurement period will be
incorporated into the measure and
announced using the Call Letter. We
propose to use such updated measures
to calculate and assign Star Ratings
without the updated measure being
placed on the display page. This is
consistent with current practice.
In paragraph (d)(1)(i–v) of §§ 422.164
and paragraph (d)(1)(i–v) of 423.184, we
propose to codify a non-exhaustive list
for identifying non-substantive updates
announced during or prior to the
measurement period and how we would
treat them under our proposal. The list
includes updates in the following
circumstances:
• If the change narrows the
denominator or population covered by
the measure with no other changes, the
updated measure would be used in the
Star Ratings program without
interruption. For example, if an
additional exclusion—such as excluding
nursing home residents from the
denominator—is added, the change
would be considered non-substantive
and would be incorporated
automatically. In our view, changes to
narrow the denominator generally
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benefit Star Ratings of sponsoring
organizations and should be treated as
non-substantive for that reason.
• If the change does not meaningfully
impact the numerator or denominator of
the measure, the measure would
continue to be included in the Star
Ratings. For example, if additional
codes are added that increase the
number of numerator hits for a measure
during or before the measurement
period, such a change would not be
considered substantive because the
sponsoring organization would
generally benefit from that change. This
type of administrative (billing) change
has no impact on the current clinical
practices of the plan or its providers,
and thus would not necessitate
exclusion from the Star Ratings System
of any measures updated in this way.
• The clinical codes for quality
measures (such as HEDIS measures) are
routinely revised as the code sets are
updated. For updates to address
revisions to the clinical codes without
change in the intent of the measure and
the target population, the measure
would remain in the Star Ratings
program and would not move to the
display page. Examples of clinical codes
that might be updated or revised
without substantively changing the
measure include:
++ ICD–10–CM (‘‘ICD–10’’) code sets.
Annually, there are new ICD 10 coding
updates, which are effective from
October 1 through September 30th of
any given year.
++ Current Procedural Terminology
(CPT) codes. These codes are published
and maintained by the American
Medical Association (AMA) to describe
tests, surgeries, evaluations, and any
other medical procedure performed by a
healthcare provider on a patient.
++ Healthcare Common Procedure
Coding System (HCPCS) codes. These
codes cover items, supplies, and nonphysician services not covered by CPT
codes.
++ National Drug Code (NDC). The
PQA updates NDC lists biannually,
usually in January and July.
• If the measure specification change
is providing additional clarifications
such as the following, the measure
would also not move to the display page
since this does not change the intent of
the measure but provides more
information about how to meet the
measure specifications:
++ Adding additional tests that
would meet the numerator
requirements.
++ Clarifying documentation
requirements (for example, medical
record documentation).
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++ Adding additional instructions to
identify services or procedures that
meet (or do not meet) the specifications
of the measure.
• If the measure specification change
is adding additional data sources, the
measure would also not move to the
display page because we believe such
changes are merely to add alternative
ways to collect the data to meet the
measure specifications without
changing the intent of the measure.
We solicit comment on our proposal
to add non-substantive updates to
measures and using the updated
measure (replacing the legacy measure)
to calculate Star Ratings. In particular,
we are interested in stakeholders’ views
whether only non-substantive updates
that have been adopted by a measure
steward after a consensus-based or
notice and comment process should be
added to the Star Ratings under this
proposed authority. Further, we solicit
comment on whether there are other
examples or situations involving nonsubstantive updates that should be
explicitly addressed in the regulation
text or if our proposal is sufficiently
extensive.
In addition to updates and additions
of measures, we are proposing rules to
address the removal of measures from
the Star Ratings to be codified in
§§ 422.164(e) and 423.184(e). In
paragraph (e)(1) of each section, we
propose the two circumstances under
which a measure would be removed
entirely from the calculation of the Star
Ratings. The first circumstance would
be changes in clinical guidelines that
mean that the measure specifications are
no longer believed to align with or
promote positive health outcomes. As
clinical guidelines change, we would
need the flexibility to remove measures
from the Star Ratings that are not
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consistent with current guidelines. We
are proposing to announce such
subregulatory removals through the Call
Letter so that removals for this reason
are accomplished quickly and as soon as
the disconnect with positive clinical
outcomes is definitively identified. We
note that this proposal is consistent
with our current practice. For example,
previously we retired the Glaucoma
Screening measure for HEDIS 2015 after
the U.S. Preventive Services Task Force
concluded that the clinical evidence is
insufficient to assess the balance of
benefits and harms of screening for
glaucoma in adults.
In addition to removal of measures
because of changes in clinical
guidelines, we currently review
measures continually to ensure that the
measure remains sufficiently reliable
such that it is appropriate to continue
use of the measure in the Star Ratings.
We propose, at paragraph (e)(1)(ii), that
we would also have authority to
subregulatorily remove measures that
show low statistical reliability so as to
move swiftly to ensure the validity and
reliability of the Star Ratings, even at
the measure level. We will continue to
analyze measures to determine if
measure scores are ‘‘topped out’’ (that
is, showing high performance across all
contracts decreasing the variability
across contracts and making the
measure unreliable) so as to inform our
approach to the measure, or if measures
have low reliability. Although some
measures may show uniform high
performance across contracts and little
variation between them, we seek
evidence of the stability of such high
performance, and we want to balance
how critical the measures are to
improving care, the importance of not
creating incentives for a decline in
performance after the measures
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56385
transition out of the Star Ratings, and
the availability of alternative related
measures. If, for example, performance
in a given measure has just improved
across all contracts, or if no other
measures capture a key focus in Star
Ratings, a ‘‘topped out’’ measure which
would have lower reliability may be
retained in Star Ratings. Under our
proposal to be codified at paragraph
(e)(2), we would announce application
of this rule through the Call Letter in
advance of the measurement period.
We request comment on these
proposals regarding the processes to
add, update, and remove Star Ratings
measures.
i. Measure Set for Performance Periods
Beginning on or After January 1, 2019
We are proposing the measures
included in Table 2 to be collected for
performance periods beginning on or
after January 1, 2019 for the 2021 Part
C and D Star Ratings. The CAHPS
measure specification, including casemix adjustment, is described in the
Technical Notes and at mapdpcahps.org. The HOS measure
specification, including case-mix
adjustment, is described at (https://
hosonline.org/globalassets/hos-online/
survey-results/hos_casemix_coefficient_
tables_c17.pdf). These specifications are
part of our proposal.
We are not proposing to codify this
list of measures and specifications in
regulation text in light of the regular
updates and revisions contemplated by
our proposals at §§ 422.164 and
423.184. We intend, as proposed in
paragraph (a) of these sections, that the
Technical Notes for each year’s Star
Ratings would include the applicable
full list of measures.
BILLING CODE 4120–01–P
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The measure descriptions listed in this table are high-level descriptions. The Star Ratings measure specifications supporting
document, Medicare Part C & D Star Ratings Technical Notes, provides detailed specifications for each measure. Detailed
specifications include, where appropriate, the identification of a measure's: (1) numerator, (2) denominator, (3) calculation, (4)
timeframe, (5) case-mix adjustment, and (6) exclusions. The Technical Notes document is updated annually. In addition, where
appropriate, the Data Source descriptions listed in this table reference the technical manuals of the measure stewards. The annual Star
Ratings are produced in the fall of the prior year. For example, Star Ratings for the year 2020 are produced in the fall of2019.
1. If a measurement period is listed as 'the calendar year 2 years prior to the Star Ratings year' and the Star Ratings year is 2020,
the measurement period is referencing the January 1, 2018 to December 31, 2018 period.
2. For CARPS, HOS, and HEDIS/HOS measures, the measurement period is listed as 'most recent data submitted for the survey
of enrollees.' See measure stewards' technical manuals, as referenced in Data Source column, for the specific measurement
periods of the most recent data submitted.
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3.
TABLE 2A: PART C MEASURES
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Measure
Breast Cancer
Screening (BCS)
28NOP2
Colorectal Cancer
Screening (COL)
Annual Flu Vaccine
EP28NO17.000
Measure Description
Domain
Percent of female plan members
aged 52-7 4 who had a
mammogram during the past 2
years
Percent of plan members aged
50 to 75 who had appropriate
screenings for colorectal cancer.
Staying Healthy
Screenings,
Tests and
Vaccines
Staying Healthy
Screenings,
Tests and
Vaccines
Staying Healthy
Screenings,
Tests and
VaCCines
Percent of plan members who
received an influenza
vaccination prior to flu season.
Measure
Category
and
Weight
Data Source
Measurement
Period
NQF
Endorsement
Statistical
Method for
Assigning
Star Rating
Reporting
Requirements
(Contract Type)
Process Measure
Weight of 1
HE DIS*
The calendar year
2 years prior to the
Star Ratings year
#0031
Clustering
MA-PD and MA-only
Process Measure
Weight of 1
HE DIS*
The calendar year
2 years prior to the
Star Ratings year
#0034
Clustering
MA-PD and MA-only
Process Measure
Weight of 1
CAHPS**
Most recent data
submitted for the
survey of enrollees
#0040
Relative
Distribution and
Significance
Testmq
MA-PD and MA-only
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TABLE 2: PROPOSED INDIVIDUAL STAR RATING MEASURES FOR PERFORMANCE PERIODS BEGINNING ON
OR AFTER JANUARY 1, 2019
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Improving or
Maintaining Mental
Health
Frm 00053
Monitoring Physical
Activity (PAO)
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Adult BMI
Assessment (ABA)
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Special Needs Plan
(SNP) Care
Management
Care for Older
Adults (COA) Medication Review
28NOP2
Care for Older
Adults (COA) Functional Status
Assessment
Care for Older
Adults (COA)- Pain
Assessment
Measurement
Period
NQF
Endorsement
Statistical
Method for
Assigning
Star Rating
Reporting
Requirements
(Contract Type)
Measure Description
Domain
Percent of plan members aged
65 or older whose physical
health status was the same or
better than expected after 2
years
Percent of plan members aged
65 or older whose mental health
was the same or better than
expected after 2 years
Percent of plan members aged
65 or older who had a doctor's
visit in the pas112 months and
who received advice to start,
increase or maintain their level
exercise or physical activity
Percent of plan members 18-7 4
years of age who had an
outpatient visit and whose body
mass index (BMI) was
documented.
Percent of eligible Special
Needs Plan (SNP) enrollees
who received a health risk
assessment (HRA)
Percent of Special Needs Plan
enrollees 66 years and older
who received at least one
medication review conducted by
a prescribing practitioner or
clinical pharmacist and the
presence of a medication list in
the med1cal record.
Percent of Special Needs Plan
enrollees 66 years and older
who received at least one
functional status assessment.
Percent of Special Needs Plan
enrollees 66 years and older
who received at least one pain
assessment.
Slaying Healthy
Screenings,
Tests and
Vaccines
Outcome
Measure
We1ght of3
Hos~·
Most recent data
submitted for the
survey of enrollees
Not Applicable
Clustering
MA-PD and MA-only
Slaying Healthy
Screenings,
Tests and
Vaccines
Slaying Healthy
Screenings,
Tests and
Vaccines
Outcome
Measure
We1ght of3
Hos~·
Most recent data
submitted for the
survey of enrollees
Not Applicable
Clustering
MA-PD and MA-only
Process Measure
We1ght of1
HEDIS I HOS*~
Most recent data
submitted for the
survey of enrollees
#0029
Clustering
MA-PD and MA-only
Slaying Healthy
Screenings,
Tests and
Vaccines
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0421
Clustering
MA-PD and MA-only
Managing
Chronic (Long
Term)
Conditions
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
Part C Plan
Reporting
The calendar year
2 years prior to the
Star Ratings year
Not Applicable
Clustering
Special Needs Plans
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0553
Clustering
Special Needs Plans
Managing
Chronic (Long
Term)
Conditions
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
Not Applicable
Clustering
Special Needs Plans
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
Not Applicable
Clustering
Special Needs Plans
Data Source
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Measure
Improving or
Maintaining
Physical Health
Measure
Category
and
Weight
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Measure Description
Percent of female plan enrollees
67 - 85 who suffered a fracture
and who had either a bone
mineral density (BMD) test or
prescription for a drug to treat
osteoporosis in the 6 months
after the fracture
Percent of diabetic enrollees 1875 with diabetes (type 1 and
type 2) who received an eye
exam (retinal).
Percent of diabetic enrollees 1875 with diabetes (type 1 and
type 2) who had medical
attention for nephropathy
Percent of diabetic enrollees 1875 whose most recent HbA 1c
level is greater than 9%, or who
were not tested.
Percent of plan members 18-85
years of age who had a
diagnosis of hypertension (HTN)
and whose blood pressure was
adequately controlled (<140/90)
for members 18-59 years of age
and 60-85 years of age with
diagnosis of diabetes or (150/90)
for members 60-85 without a
diagnosis of diabetes.
Percent of plan members who
were diagnosed with rheumatoid
arthritis and who were
dispensed at least one
ambulatory prescription for a
disease modifying antirheumatic drug (DMARD).
Percent of plan members 65
years of age or older who had a
fall or had problems with
balance or walk1ng in the past 12
months, who were seen by a
practitioner in the past 12
months and received fall risk
intervention from their current
practitioner.
Diabetes Care
(CDC) - Eye Exam
Diabetes Care
(CDC) - Kidney
Disease Monitoring
Diabetes Care
(CDC) - Blood
Sugar Controlled
Controlling Blood
Pressure (CBP)
Rheumatoid
Arthritis
Management
(ART)
28NOP2
Reducing the Risk
of Falling (FRiv1)
EP28NO17.002
Domain
Data Source
Measurement
Period
NQF
Endorsement
Statistical
Method for
Assigning
Star Rating
Reporting
Requirements
(Contract Type)
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0053
Clustering
MA-PD and MA-only
Managing
Chronic (Long
Term)
Conditions
Managing
Chronic (Long
Term)
Conditions
Managing
Chronic (Long
Term)
Conditions
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0055
Clustering
MA-PD and MA-only
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0062
Clustering
MA-PD and MA-only
Intermediate
Outcome
Measure
We1qht of3
Intermediate
Outcome
Measure
We1ght of3
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0059
Clustering
MA-PD and MA-only
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0018
Clustering
MA-PD and MA-only
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0054
Clustering
MA-PD and MA-only
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
HEDIS I HOS***
Most recent data
submitted for the
survey of enrollees
#0035
Clustering
MA-PD and MA-only
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Measure
Osteoporosis
Management 1n
Women who had a
Fracture (OMVV)
Measure
Category
and
Weight
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Measurement
Period
NQF
Endorsement
Statistical
Method for
Assigning
Star Rating
Reporting
Requirements
(Contract Type)
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Measure
Measure Description
Improving Bladder
Control (MUI)
Percent of plan members 65
years of age or older who
reported having a urine leakage
problem in the past 6 months
and who received treatment for
their current urine leakage
problem
Percent of plan members 18
years of age and older for whom
medications were reconciled the
date of discharge through 30
days after discharge (31 total
days)
Percent of acute inpatient stays
that were followed by an
unplanned acute readmission for
any diagnosis within 30 days, for
members 65 years of age and
older. Rates of readmission are
risk-adjusted
Percent of the best possible
score the plan earned on how
easy it is for members to get
needed care, including care from
specialists.
Percent of the best possible
score the plan earned on how
quickly members get
appointments and care.
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
HEDIS I HOS*~
Most recent data
submitted for the
survey of enrollees
#0030
Clustering
MA-PD and MA-only
Managing
Chronic (Long
Term)
Conditions
Process Measure
We1ght of1
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#0554
Clustering
MA-PD and MA-only
Managing
Chronic (Long
Term)
Conditions
Outcome
Measure
We1ght of3
HEDIS*
The calendar year
2 years prior to the
Star Ratings year
#1768
Clustering
MA-PD and MA-only, except
for 1876 Cost Plans
Member
Experience with
Health Plan
CAHPS~
Most recent data
submitted for the
survey of enrollees
#0006
Relative
Distribution and
Significance
Testing
MA-PD and MA-only
CAHPS~
Most recent data
submitted for the
survey of enrollees
#0006
Relative
Distribution and
Significance
Testing
MA-PD and MA-only
Percent of the best possible
score the plan earned on how
easy it is for members to get
information and help from the
plan when needed.
Percent of the best possible
score the plan earned from
members who rated the quality
of the health care they received.
Member
Experience with
Health Plan
CAHPS~
Most recent data
submitted for the
survey of enrollees
#0006
Relative
Distribution and
Significance
Testing
MA-PD and MA-only
CAHPS~
Most recent data
submitted for the
survey of enrollees
#0006
Relative
Distribution and
Significance
Testing
MA-PD and MA-only
Percent of the best possible
score the plan earned from
members who rated the health
plan.
Member
Experience with
Health Plan
Pat1ents'
Experience and
Complaints
Measure
We1ght of 1.5
Pat1ents'
Experience and
Complaints
Measure
We1ght of 1.5
Pat1ents'
Experience and
Complaints
Measure
We1qht of 1.5
Pat1ents'
Experience and
Complaints
Measure
We1ght of 1.5
Pat1ents'
Experience and
Complaints
Measure
We1ght of 1.5
CAHPS~
Most recent data
submitted for the
survey of enrollees
#0006
Relative
Distribution and
Significance
Testing
MA-PD and MA-only
Medication
Reconciliation
Post-Discharge
(lv1RP)
Plan All-Cause
Readmissions
(PCR)
Fmt 4701
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Getting Needed
Care
E:\FR\FM\28NOP2.SGM
Getting
Appointments and
Care Quickly
Customer Service
28NOP2
Rating of Health
Care Quality
Rating of Health
Plan
Domain
Member
Experience with
Health Plan
Member
Experience with
Health Plan
Data Source
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Category
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EP28NO17.004
Complaints about
the Health Plan
NQF
Endorsement
Reporting
Requirements
(Contract Type)
Measure Description
Domain
Percent of the best possible
score the plan earned on how
well the plan coordinates
members' care. (This includes
whether doctors had the records
and information they needed
about members care and how
quickly members got their test
results)
Rate of complaints, logged into
the Complaint Tracking Module
(CTM), about the health plan per
1,000 members
Member
Experience with
Health Plan
Pat1ents'
Experience and
Complaints
Measure
We1ght of 1.5
CAHPS~
Most recent data
submitted for the
survey of enrollees
Not Applicable
Relative
Distribution and
Significance
Testing
MA-PD and MA-only
Member
Complaints and
Changes in the
Health Plan's
Performance
Member
Complaints and
Changes in the
Health Plan's
Performance
Member
Complaints and
Changes in the
Health Plan's
Performance
Health Plan
Customer
Serv1ce
Pat1ents'
Experience and
Complaints
Measure
We1ght of 1.5
Pat1ents'
Experience and
Complaints
Measure
We1ght of 1.5
Improvement
Measure
We1ght of5
Complaints
Tracking Module
(CTM)
The calendar year
2 years prior to the
Star Ratings year
Not Applicable
Clustering
MA-PD and MA-only
Medicare
Beneficiary
Database Suite
of Systems
(MBDSS)
Star Ratings
The calendar year
2 years prior to the
Star Ratings year
Not Applicable
Clustering
MA-PD and MA-only
The current and
prior Star Ratings
years
Not Applicable
Clustering
MA-PD and MA-only
Measures
Capturing
Access
We1ght of 1.5
Independent
Review Entity
(IRE)
The calendar year
2 years prior to the
Star Ratings year
Not Applicable
Clustering
MA-PD and MA-only
Measures
Capturing
Access
We1ght of 1.5
Independent
Review Entity
(IRE)
The calendar year
2 years prior to the
Star Ratings year
Not Applicable
Clustering
MA-PD and MA-only
Members Choosing
to Leave the Plan
Percent of plan members who
chose to leave the plan.
Health Plan Quality
Improvement
Measure of a health plan's
performance, whether improved
or declined from 1 year to the
next(§ 422.164(0).
Plan Makes T1mely
Decisions about
Appeals
Percent of plan members who
got a timely response when they
made an appeal request to the
health plan about a decision to
refuse payment or coverage,
1nclud1ng cases d1sm1ssed by the
IRE because the plan has
subsequently approved
coverage/payment.
Percent of appeals where a
plan's decision was "upheld" by
the Independent Review Entity
(IRE) of all the plan's appeals
(upheld, overturned, and
partially overturned appeals
only) that the IRE reviewed.
Review1ng Appeals
Decisions
Measurement
Period
Statistical
Method for
Assigning
Star Rating
Health Plan
Customer
Serv1ce
Data Source
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Care Coordination
Measure
Category
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Weight
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Measure Description
Percent of time that TTY
services and foreign language
1nterpretat1on were available
when needed by prospective
members who called the health
plan's prospective enrollee
customer service phone number.
Percent of plan members (males
21-75 years of age and females
40-75 years of age) who were
identified as having clinical
atherosclerotic cardiovascular
disease (ASCVD) and were
dispensed at least one high or
moderate-intensity stat1n
medication.
Stalin Therapy for
Patients with
Cardiovascular
Disease (SPC)
Domain
Data Source
Health Plan
Customer
Serv1ce
Measures
Capturing
Access
Weight of 1 5
Call Center
Managing
Chronic (Long
Term)
Conditions
Process Measure
Weight of 1
HE DIS*
Statistical
Method for
Assigning
Star Rating
Reporting
Requirements
(Contract Type)
Measurement
Period
NQF
Endorsement
Data collected ftrst
half of the year
prior to the Star
Ratings year
Not Applicable
Clustering
MA-PD and fi!IA-only, except
for 1876 Cost Plans
The calendar year
Not Applicable
Clustering
MA-PD and MA-only
2 years prior to the
Star Ratings year
Sfmt 4725
* I~CQA HEDIS Technical Specifications, Volume 2
**Medicare Advantage and Prescription Drug Plan CAHPS Survey Quality Assurance Protocols & Technical Specifications Manual (hltp.llrna-pdpcacips.crg.'enlgualtty-assurcncel)
*** NCQA HE DIS Specifications for the Medtcare Health Outcomes Survey, Volume 6
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TABLE 2B: PART D MEASURES
28NOP2
Measure
Call Center- Foreign
Language Interpreter and
TTY Availability
Metric
Percent of time that TTY
services and foreign language
interpretation were avatlable
when needed by prospective
members who called the
health plan's prospective
enrollee customer servtce
phone number.
Domain
Drug Plan
Customer
Service
Measure
Category
and Weight
Measures
Capturing Access
Weight of 1.5
Data
Source
Call Center
Measurement
Period
NQF
Endorsement
Data collected first
half of the year
prior to the Star
Ratings year
Not Applicable
Statistical
Method for
Assigning
Star Rating
Clustering
Reporting
Requirements by
Contract Type
MA-PD and PDP, except
1876 Cost Plans
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Call CenterForeign Language
Interpreter and TTY
Availability
Measure
Category
and
Weight
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Members Choosing to
Leave the Plan
Percent of plan members who
chose to leave the plan.
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Drug Plan Quality
Improvement
Measure of a drug plan's
performance, whether
improved or declined from 1
year to the next(§ 422184(0)
Rating of Drug Plan
Percent of the best possible
score the plan earned from
members who rated the
prescription drug plan.
Getting Needed
Prescnptton Drugs
Percent of the best possible
score the plan earned on how
easy it is for members to get
the prescription drugs they
need ustng the plan.
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Domain
Data
Source
Measurement
Period
NQF
Endorsement
Statistical
Method for
Assigning
Star Rating
Reporting
Requirements by
Contract Type
Drug Plan
Customer
Servtce
Measures
Capturing Access
Wetght of 1.5
Independent
Review Entity
(IRE)
The calendar year
two years prior to
the Star Ratmgs
year
Not Applicable
Clustering
MA-PD and PDP
Drug Plan
Customer
Service
Measures
Capturing Access
Weight of 1.5
Independent
Review Entity
(IRE)
The calendar year
2 years prior to the
Star Rattngs year
Not Applicable
Clustering
MA-PD and PDP
Member
Complaints and
Changes in the
Drug Plan's
Performance
Member
Complaints and
Changes in the
Drug Plan's
Performance
experience and
outcomes
Member
Complaints and
Changes in the
Drug Plan's
Performance
Member
Expenence wtth
the Drug Plan
Patients'
Experience and
Complaints
Measure
Weiqht of 1.5
Patients'
Experience and
Complaints
Measure
Weight of 1 5
Complaints
Tracking
Module (CTM)
The calendar year
2 years prior to the
Star Rattngs year
Not Applicable
Clustering
MA-PD and PDP
Medicare
Beneficiary
Database Suite
of Systems
(MBDSS)
The calendar year
2 years prior to the
Star Rattngs year
Not Applicable
Clustering
MA-PD and PDP
Improvement
Measure
Weight of5
Star Ratings
The current and
prior Star Ratings
years
Not Applicable
Clustering
MA-PD and PDP
Patients'
Expenence and
Complaints
Measure
Weight of 1.5
Patients'
Experience and
Complaints
Measure
Weight of 1.5
CAHPs-
Most recent data
subrn ttted for the
survey of enrollees
Not Applicable
Relative
Dtstrtbutton and
Stgnificance
Testing
MA-PD and PDP
CAHPs-
Most recent data
subrn itted for the
survey of enrollees
Not Applicable
Relative
Distribution and
Stgnificance
Testing
MA-PD and PDP
Member
Expenence with
the Drug Plan
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Metric
Rate of cases auto-forwarded
to the Independent Review
Entity (IRE) because the plan
exceeded decision timeframes
for coverage determinations or
redeterminations.
Percent of appeals where a
plan's decision was "upheld'
by the Independent Review
Entity (IRE) of all the plan's
appeals (upheld, overturned,
and partially overturned
appeals only) that the IRE
revtewed.
Rate of complaints about the
drug plan per 1,000 members.
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Appeals Auto-Forward
Measure
Category
and Weight
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Domain
Data
Source
Measurement
Period
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28NOP2
A score comparing the prices
Drug Safety and
Process Measure
POE data, lv1PF
The calendar year
members actually pay for their
Accuracy of
Weight of 1
Pricing Files
2 years prior to the
drugs to the drug prices the
Star Ratrngs year
Drug Pricing
plan provided for the Medicare
Plan Finder website.
Medication Adherence for
Percent of plan members with
Drug Safety and
Intermediate
Prescription
The calendar year
Drabetes Medicatrons
a prescnptron for drabetes
Accuracy of
Outcome
Drug Event
2 years prior to the
medication who fill their
Drug Pricing
Measure
(POE) data
Star Ratrngs year
prescription often enough to
Weight of3
cover 80% or more of the time
they are supposed to be
takinq the medication.
Medication Adherence for
Percent of plan members with
Drug Safety and
Intermediate
Prescription
The calendar year
Hypertension (RAS
a prescriptron for a blood
Accuracy of
Outcome
Drug Event
2 years prior to the
antagonists)
pressure medication who fill
Drug Pricing
Measure
(POE) data
Star Ratrngs year
therr prescription often enough
Weight of3
to cover 80% or more of the
trme they are supposed to be
takinq the medication.
Medication Adherence for
Percent of plan members with
Drug Safety and
Intermediate
Prescription
The calendar year
Cholesterol (Statins)
a prescriptron for a cholesterol
Accuracy of
Outcome
Drug Event
2 years prior to the
medication (a stalin drug) who
Drug Pricing
Measure
(POE) data
Star Ratrngs year
fill their prescription often
Weight of3
enough to cover 80% or more
of the time they are supposed
to be taking the medrcation.
MTM Program Completion
Percent of Medication
Drug Safety and
Process Measure
Part D Plan
The calendar year
Rate for CrviR
Therapy Management (MTrvl)
Accuracy of
Weight of 1
Reporting
2 years prior to the
program enrollees who
Drug Pricing
Star Ratrngs year
received a Comprehensive
Medication Revrew (CMR)
Statrn Use in Persons with
Percent of the number of plan
Drug Safety and
Intermediate
Prescription
The calendar year
Drabetes (SUPD)
members 40-75 years old who
Accuracy of
Outcome
Drug Event
2 years prior to the
were dispensed at least two
Drug Pricing
Measure
(POE) data
Star Ratrngs year
diabetes medication fills and
Weight of3
received a stalin medication
. I~CQA HEDIS Technical frll.
Specifications, Volume 2
**Medicare Advantage and Prescription Drug Plan CAHPS Survey Quality Assurance Protocols & Technical Specifications Manual
*** NCQA HE DIS Specifications for the Medrcare Health Outcomes Survey
NQF
Endorsement
Statistical
Method for
Assigning
Star Rating
Reporting
Requirements by
Contract Type
Not Applicable
Clustering
fviA-PD and PDP
#0541
Clustering
MA-PD and PDP
#0541
Clustering
MA-PD and PDP
#0541
Clustering
MA-PD and PDP
Not Applicable
Clustering
MA-PD and PDP
#2712
Clustering
fviA-PD and PDP
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j. Improvement Measures
In the 2013 Part C and D Star Ratings,
we implemented the Part C and D
improvement measures (CY2013 Rate
Announcement, https://www.cms.gov/
Medicare/Health-Plans/
MedicareAdvtgSpecRateStats/
Downloads/Announcement2013.pdf).
The improvement measures address the
overall improvement or decline in
individual measure scores from the
prior to the current year. We propose to
continue the current methodology
detailed in the Technical Notes for
calculating the improvement measures
and to codify it at §§ 422.164(f) and
423.184(f). For a measure to be included
in the improvement calculation, the
measure must have numeric value
scores in both the current and prior year
and not have had a substantive
specification change during those years.
In addition, the improvement measure
will not include any data on measures
that are already focused on
improvement (for example, HOS
measures focused on improving or
maintaining physical or mental health).
The Part C improvement measure
includes only Part C measure scores,
and the Part D improvement measure
includes only Part D measure scores. All
measures meeting these criteria would
be included in the improvement
measures under our proposal at
paragraph (f)(1)(i) through (iv) of
§§ 422.164 and 423.184.
Annually, the subset of measures to
be included in the improvement
measures following these criteria would
be announced through the Call Letter,
similar to our proposal for regular
updates and removal of measures.
Under our proposal, once the measures
to be used for the improvement
measures are identified, CMS would
determine which contracts have
sufficient data for purposes of applying
and scoring the improvement
measure(s). Following current practices,
the improvement measure score would
be calculated only for contracts that
have numeric measure scores for both
years for at least half of the measures
identified for use in the improvement
measure. We propose this standard for
determining contracts eligible for an
improvement measure at paragraph
(f)(2).
We propose at part §§ 422.164(f)(3)
and (4) and 423.184(f)(3) and (4) the
process for calculating the improvement
measure score(s) and a special rule for
any identified improvement measure for
a contract that received a measure-level
Star Rating of 5 in each of the 2 years
examined, but whose associated
measure score indicates a statistically
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significant decline in the time period.
The improvement measure would be
calculated in a series of distinct steps:
• The improvement change score (the
difference in the measure scores in the
2-year period) would be determined for
each measure that has been identified as
part of an improvement measure and for
which a contract has a numeric score for
each of the 2 years examined.
• Each contract’s improvement
change score would be categorized as a
significant change or not by employing
a two tailed t-test with a level of
significance of 0.05.
• The net improvement per measure
category (outcome, access, patient
experience, process) would be
calculated by finding the difference
between the weighted number of
significantly improved measures and
significantly declined measures, using
the measure weights associated with
each measure category.
• The improvement measure score
would then be determined by
calculating the weighted sum of the net
improvement per measure category
divided by the weighted sum of the
number of eligible measures.
• The improvement measure score
would be converted to a measure-level
Star Rating using the hierarchical
clustering algorithm.
The improvement measure score cut
points would be determined using two
separate clustering algorithms.
Improvement measure scores of zero
and above would use the clustering
algorithm to determine the cut points
for the Star Rating levels of 3 and above.
Improvement measure scores below zero
would be clustered to determine the cut
points for 1 and 2 stars. The Part D
improvement measure thresholds for
MA–PDs and PDPs would be reported
separately.
We propose a special rule in
paragraph (f)(3) to hold harmless
sponsoring organizations that have 5star ratings for both years on a measure
used for the improvement measure
calculation. This hold harmless
provision was added in 2014 to avoid
the unintended consequence for
contracts that score 5 stars on a subset
of measures in each of the 2 years. For
any identified improvement measure for
which a contract received a rating of 5
stars in each of the years examined, but
for which the measure score
demonstrates a statistically significant
decline based on the results of the
significance testing (at a level of
significance of 0.05) on the change
score, the measure will be categorized as
having no significant change. The
measure will be included in the count
of measures used to determine
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eligibility for the improvement measure
and in the denominator of the
improvement measure score. The intent
of the hold harmless provision for a
contract that receives a measure rating
of 5 stars for each year is to prevent the
measure from lowering a contract’s
improvement measure when the
contract still demonstrates high
performance. We propose in section
III.A.12. of this proposed rule another
hold harmless provision to be codified
at §§ 422.166(g)(1) and 423.186(g)(1).
We request comment on the
methodology for the improvement
measures, including rules for
determining which measures are
included, the conversion to a Star
Rating, and the hold harmless provision
for individual measures that are used for
the determination of the improvement
measure score.
k. Data Integrity
The data underlying a measure score
and rating must be complete, accurate,
and unbiased for it to be useful for the
purposes we have proposed at
§§ 422.160(b) and 423.180(b). As part of
the current Star Ratings methodology,
all measures and the associated data
have multiple levels of quality
assurance checks. Our longstanding
policy has been to reduce a contract’s
measure rating if we determine that a
contract’s measure data are incomplete,
inaccurate, or biased. Data validation is
a shared responsibility among CMS,
CMS data providers, contractors, and
Part C and D sponsors. When applicable
(for example, data from the IRE, PDE,
call center), CMS expects sponsoring
organizations to routinely monitor their
data and immediately alert CMS if
errors or anomalies are identified so
CMS can address these errors.
We propose to codify at §§ 422.164(g)
and 423.184(g) specific rules for the
reduction of measure ratings when CMS
identifies incomplete, inaccurate, or
biased data that have an impact on the
accuracy, impartiality, or completeness
of data used for the impacted measures.
Data may be determined to be
incomplete, inaccurate, or biased based
on a number of reasons, including
mishandling of data, inappropriate
processing, or implementation of
incorrect practices that impacted
specific measure(s). One example of
such situations that give rise to such
determinations includes a contract’s
failure to adhere to HEDIS, HOS, or
CAHPS reporting requirements. Our
modifications to measure-specific
ratings due to data integrity issues are
separate from any CMS compliance or
enforcement actions related to a
sponsor’s deficiencies. This policy and
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these rating reductions are necessary to
avoid falsely assigning a high star to a
contract, especially when deficiencies
have been identified that show we
cannot objectively evaluate a sponsor’s
performance in an area.
As a standard practice, we check for
flags that indicate bias or non-reporting,
check for completeness, check for
outliers, and compare measures to the
previous year to identify significant
changes which could be indicative of
data issues. CMS has developed and
implemented Part C and Part D
Reporting Requirements Data Validation
standards to assure that data reported by
sponsoring organizations pursuant to
§§ 422.516 and 423.514 satisfy the
regulatory obligation. Sponsor
organizations should refer to specific
guidance and technical instructions
related to requirements in each of these
areas. For example, information about
HEDIS measures and technical
specifications is posted on: https://
www.ncqa.org/
HEDISQualityMeasurement/
HEDISMeasures.aspx. Information about
Data Validation of Reporting
Requirements data is posted on: https://
www.cms.gov/Medicare/PrescriptionDrug-Coverage/
PrescriptionDrugCovContra/
PartCDDataValidation.html and https://
www.cms.gov/Medicare/PrescriptionDrug-Coverage/
PrescriptionDrugCovContra/
RxContracting_
ReportingOversight.html.
We propose, in paragraphs (g)(1)(i)
through (iii), rules for specific
circumstances where we believe a
specific response is appropriate. First,
we propose a continuation of a current
policy: To reduce HEDIS measures to 1
star when audited data are submitted to
NCQA with an audit designation of
‘‘biased rate’’ or BR based on an
auditor’s review of the data if a plan
chooses to report; this proposal would
also apply when a plan chooses not to
submit and has an audit designation of
‘‘non-report’’ or NR. Second, we
propose to continue to reduce Part C
and D Reporting Requirements data, that
is, data required pursuant to §§ 422.514
and 423.516, to 1 star when a contract
did not score at least 95 percent on data
validation for the applicable reporting
section or was not compliant with data
validation standards/sub-standards for
data directly used to calculate the
associated measure. In our view, data
that do not reach at least 95 percent on
the data validation standards are not
sufficiently accurate, impartial, and
complete for use in the Star Ratings. As
the sponsoring organization is
responsible for these data and submits
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20:14 Nov 27, 2017
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them to CMS, we believe that a negative
inference is appropriate to conclude that
performance is likely poor. Third, we
propose a new specific rule to authorize
scaled reductions in Star Ratings for
appeal measures in both Part C and Part
D.
The data downgrade policy was
adopted to address instances when the
data that would be used for specific
measures are not reliable for measuring
performance due to their
incompleteness or biased/erroneous
nature. For instances where the integrity
of the data is compromised because of
the action or inaction of the sponsoring
organization (or its subcontractors or
agents), this policy reflects the
underlying fault of the sponsoring
organization for the lack of data for the
applicable measure. Without some
policy for reduction in the rating for
these measures, sponsoring
organizations could ‘‘game’’ the Star
Ratings and merely fail to submit data
that illustrate poor performance. We
believe that removal of the measure
from the ratings calculation would
unintentionally reward poor data
compilation and submission activities
such that our only recourse is to reduce
the rating to 1 star for affected measures.
For verification and validation of the
Part C and D appeals measures, we
propose to use statistical criteria to
determine if a contract’s appeals
measure-level Star Ratings would be
reduced for missing IRE data. The
criteria would allow us to use scaled
reductions for the appeals measures to
account for the degree to which the data
are missing. The completeness of the
IRE data is critical to allow fair and
accurate measurement of the appeals
measures. All plans are responsible and
held accountable for ensuring high
quality and complete data to maintain
the validity and reliability of the
appeals measures.
In response to stakeholder concerns
about CMS’ prior practice of reducing
measure ratings to one star based on any
finding of data inaccuracy,
incompleteness, or bias, CMS initiated
the Timeliness Monitoring Project
(TMP) in CY 2017.40 The first
submission for the TMP was for the
measurement year 2016 related to Part
C organization determinations and
reconsiderations and Part D coverage
40 This project was discussed in the November 28,
2016 HPMS memo, ‘‘Industry-wide Appeals
Timeliness Monitoring.’’ https://www.cms.gov/
Medicare/Prescription-Drug-Coverage/
PrescriptionDrugCovGenIn/Downloads/Industrywide-Timeliness-Monitoring.pdf, https://
www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovGenIn/Downloads/
Industry-wide-Appeals-Timeliness-MonitoringMemo-November-28-2016.pdf.
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56395
determinations and redeterminations.
The timeframe for the submitted data
was dependent on the enrollment of the
contract with smaller contracts
submitting data from a three-month
period, medium-sized contracts
submitting data from a two-month
period, and larger contracts submitting
data from a one-month period.41
We propose to use multiple data
sources whenever possible, such as the
TMP data or information from audits to
determine whether the data at the
Independent Review Entity (IRE) are
complete. Given the financial and
marketing incentives associated with
higher performance in Star Ratings,
safeguards are needed to protect the Star
Ratings from actions that inflate
performance or mask deficiencies.
CMS is proposing to reduce a
contract’s Part C or Part D appeal
measures Star Ratings for IRE data that
are not complete or otherwise lack
integrity based on the TMP or audit
information. The reduction would be
applied to the measure-level Star
Ratings for the applicable appeals
measures. There are varying degrees of
data issues and as such, we are
proposing a methodology for reductions
that reflects the degree of the data
accuracy issue for a contract instead of
a one-size fits all approach. The
methodology would employ scaled
reductions, ranging from a 1-star
reduction to a 4-star reduction; the most
severe reduction for the degree of
missing IRE data would be a 4-star
reduction which would result in a
measure-level Star Rating of 1 star for
the associated appeals measures (Part C
or Part D). The data source for the scaled
reduction is the TMP or audit data,
however the specific data used for the
determination of a Part C IRE data
completeness reduction are
independent of the data used for the
Part D IRE data completeness reduction.
If a contract receives a reduction due to
missing Part C IRE data, the reduction
would be applied to both of the
contract’s Part C appeals measures.
Likewise, if a contract receives a
reduction due to missing Part D IRE
data, the reduction would be applied to
both of the contract’s Part D appeals
measures. We solicit comment on this
proposal and its scope; we are looking
in particular for comments related to
how to use the process we are proposing
41 Contracts with a mean annual enrollment of
less than 50,000 are required to submit data for a
three-month time period. Contracts with a mean
enrollment of at least 50,000 but at most 250,000
are required to submit data for a two-month time
period. Contracts with a mean enrollment greater
than 250,000 are required to submit data for a onemonth period.
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proposed to be determined by the
quotient of the number of untimely
cases not auto-forwarded to the IRE and
the total number of untimely cases.
The projected number of cases not
forwarded to the IRE in a 3-month
period would be calculated by
multiplying the number of cases found
not to be forwarded to the IRE based on
the TMP or audit data by a constant
determined by the TMP time period.
Contracts with mean annual
enrollments greater than 250,000 that
submitted data from 1-month period
would have their number of cases found
not to be forwarded to the IRE based on
the TMP data multiplied by the constant
3.0. Contracts with mean enrollments of
50,000 but at most 250,000 that
submitted data from a 2-month period
would have their number of cases found
not to be forwarded to the IRE based on
the TMP data multiplied by the constant
1.5. Small contracts with mean
enrollments less than 50,000 that
submitted data for a 3-month period
would have their number of cases found
not to be forwarded to the IRE based on
the TMP data multiplied by the constant
1.0.
Under this proposal, contract ratings
would be subject to a possible reduction
due to lack of IRE data completeness if
both following conditions are met• The
calculated error rate is 20 percent or
more.
• The projected number of cases not
forwarded to the IRE is at least 10 in a
3-month period.
The requirement for a minimum
number of cases is needed to address
statistical concerns with precision and
small numbers. If a contract meets only
one of the conditions, the contract
would not be subject to reductions for
IRE data completeness issues.
If a contract is subject to a possible
reduction based on the aforementioned
conditions, a confidence interval
estimate for the true error rate for the
contract would be calculated using a
Score Interval (Wilson Score Interval) at
a confidence level of 95 percent.
The midpoint of the score interval
would be determined using Equation 3.
The z score that corresponds to a level
of statistical significance of 0.05,
commonly denoted as za/2 but for ease
of presentation represented here as z.
(The z value that will be used for the
purpose of the calculation of the
interval is 1.959964.).
For the Part C appeals measures, the
midpoint of the confidence interval
would be calculated using Equation 3
along with the calculated error rate from
the TMP, which is determined by
Equation 1. The total number of cases in
Equation 3 is the number of cases that
should have been in the IRE for the Part
C TMP data.
For the Part D appeals measures, the
midpoint of the confidence interval
would be calculated using Equation 3
along with the calculated error rate from
the TMP, which is determined by
Equation 2. The total number of cases in
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contract, with smaller contracts
submitting data from a three-month
period, medium-sized contracts
submitting data from a 2-month period,
and larger contracts submitting data
from a one-month period, the use of a
projected number of cases allows a
consistent time period for the
application of the criteria proposed.
The calculated error rate formula
(Equation 1) for the Part C measures is
proposed to be determined by the
quotient of the number of cases not
forwarded to the IRE and the total
number of cases that should have been
forwarded to the IRE. The number of
cases that should have been forwarded
to the IRE is the sum of the number of
cases in the IRE during TMP or audit
data collection period and the number
of cases not forwarded to the IRE during
the same period.
EP28NO17.008 EP28NO17.009
Rating (before the application of the
reduction) and the identified scaled
reduction is less than one, the contract
would receive a measure-level Star
Rating of 1 star for the appeals measure.
The error rate for the Part C and Part
D appeals measures using the TMP or
audit data and the projected number of
cases not forwarded to the IRE for a 3month period would be used to identify
contracts that may be subject to an
appeals-related IRE data completeness
reduction. A minimum error rate is
proposed to establish a threshold for the
identification of contracts that may be
subject to a reduction. The
establishment of the threshold allows
the focus of the possible reductions on
contracts with error rates that have the
greatest potential to distort the signal of
the appeals measures. Since the
timeframe for the TMP data is
dependent on the enrollment of the
The calculated error rate formula
(Equation 2) for the Part D measures is
sradovich on DSK3GMQ082PROD with PROPOSALS2
in this proposal to account for data
integrity issues discovered through
means other than the TMP and audits of
sponsoring organizations.
CMS’ proposed scaled reduction
methodology is a three-stage process
using the TMP or audit information to
determine: First, whether a contract may
be subject to a potential reduction for
the Part C or Part D appeals measures;
second, the basis for the estimate of the
error rate; and finally, whether the
estimated error rate is significantly
greater than the cut points for the scaled
reductions of 1, 2, 3, or 4 stars.
Once the scaled reduction for a
contract is determined using this
methodology, the reduction would be
applied to the contract’s associated
appeals measure-level Star Ratings. The
minimum measure-level Star Rating is 1
star. If the difference between the
associated appeals measure-level Star
Federal Register / Vol. 82, No. 227 / Tuesday, November 28, 2017 / Proposed Rules
Equation 3 is the total number of
untimely cases for the Part D appeals
measures.
Letting the calculated error rate be
represented by and the total number of
56397
cases represented as n, Equation 3 can
be streamlined as Equation 4:
For each contract subject to a possible
reduction, the lower bound of the
interval estimate of the error rate would
be compared to each of the thresholds
in Table 3. If the contract’s calculated
lower bound is higher than the
threshold, the contract would receive
the reduction that corresponds to the
highest threshold that is less than the
lower bound. In other words, the
contract’s lower bound is being
employed to determine whether the
contract’s error rate is significantly
greater than the thresholds of 20
percent, 40 percent, 60 percent, and 80
percent. The proposed scaled reductions
are in Table 3, and would be codified
in narrative form at paragraph
(g)(1)(iii)(D) of both regulations.
The reductions due to IRE data
completeness issues would be applied
after the calculation of the measurelevel Star Rating for the appeals
measures. The reduction would be
applied to the Part C appeals measures
and/or the Part D appeals measures.
It is important to note that a contract’s
lower bound could be statistically
significantly greater than more than one
threshold. The reduction would be
determined by the highest threshold
that the contract’s lower bound exceeds.
For example, if the lower bound for a
contract is 64.560000 percent, the
contract’s estimated value is
significantly greater than the thresholds
of 20 percent, 40 percent, and 60
percent because the lower bound value
64.560000 percent is greater than each
of these thresholds. The lower bound for
the contract’s confidence interval is not
greater than 80 percent. The contract
would be subject to the reduction that
corresponds to the 60 percent threshold,
which is three stars.
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to address the degree of missing IRE
TABLE 3—APPEALS MEASURE STAR
RATINGS REDUCTIONS BY THE IN- data.
COMPLETE DATA ERROR RATE
l. Measure-Level Star Ratings
Proposed thresholds using
the lower bound of
confidence interval
estimate of the error rate
(%)
20
40
60
80
Reduction for
incomplete
IRE data
(stars)
..........................................
..........................................
..........................................
..........................................
1
2
3
4
We propose regulation text at
§ 422.164(g)(1)(iii)(A) through (N) and
§ 423.184(g)(1)(iii)(A) through (K) to
codify these parameters and formulas
for the scaled reductions. We note that
the proposed text for the Part C
regulation includes specific paragraphs
related to MA and MA–PD plans that
are not included in the proposed text for
the Part D regulation but that the two
are otherwise identical.
In addition, we propose in
§§ 422.164(g)(2) and 423.184(g)(2) to
authorize reductions in a Star Rating for
a measure when there are other data
accuracy concerns (that is, those not
specified in paragraph (g)(1)). We
propose an example in paragraph (g)(2)
of another circumstance where CMS
would be authorized to reduce ratings
based on a determination that
performance data are incomplete,
inaccurate, or biased. We also propose
this other situation would result in a
reduction of the measure rating to 1 star.
We have taken several steps in past
years to protect the integrity of the data
we use to calculate Star Ratings.
However, we welcome comments about
alternative methods for identifying
inaccurate or biased data and comments
on the proposed policies for reducing
stars for data accuracy and
completeness issues. Further, we
welcome comments on the proposed
methodology for scaled reductions for
the Part C and Part D appeals measures
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We propose in §§ 422.166(a) and
423.186(a) the methods for calculating
Star Ratings at the measure level. As
part of the Part C and D Star Ratings
System, Star Ratings are currently
calculated at the measure level. To
separate a distribution of scores into
distinct groups or star categories, a set
of values must be identified to separate
one group from another group. The set
of values that break the distribution of
the scores into non-overlapping groups
is a set of cut points. We propose to
continue to determine cut points by
applying either clustering or a relative
distribution and significance testing
methodology; we propose to codify this
policy in paragraphs (a)(1) of each
section. We propose in paragraphs (a)(2)
and (a)(3) of each section that for nonCAHPS measures, we would use a
clustering methodology and that for
CAHPS measures, we would use relative
distribution and significance testing.
Measure scores would be converted to a
5-star scale ranging from 1 to 5, with
whole star increments for the cut points.
A rating of 5 stars would indicate the
highest Star Rating possible, while a
rating of 1 star would be the lowest
rating on the scale. Consistent with
current policy, we propose to use the
two methodologies described as follows
to convert measure scores to measurelevel Star Ratings.
The clustering method would be
applied to all Star Ratings measures,
except for the CAHPS measures. For
each individual measure, we would
determine the measure cut points using
all measure scores for all contracts
required to report that do not have
missing, flagged as biased, or erroneous
data. For the Part D measures, we
propose to determine MA–PD and PDP
cut points separately. The scores would
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The lower bound of the confidence
interval estimate for the error rate is
calculated using Equation 5 below:
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be grouped such that scores within the
same rating (that is 1 star, 2 stars, etc.)
are as similar as possible, and scores in
different ratings are as different as
possible. The hierarchical clustering
algorithm and the associated tree and
cluster assignments using SAS (a
statistical software package) are
currently used to determine the cut
points for the assignment of the
measure-level Star Ratings. We intend to
continue use of this software under this
proposal, but improvements in
statistical analysis will not result in
rulemaking or changes in these
proposed rules. Rather, we believe that
the software used to apply the clustering
methodology is generally irrelevant.
Conceptually, the clustering algorithm
identifies natural gaps within the
distribution of the scores and creates
groups (clusters) that are then used to
identify the cut points that result in the
creation of a pre-specified number of
categories. The Euclidean distance
between each pair of contracts’ measure
scores serves as the input for the
clustering algorithm. The hierarchical
clustering algorithm begins with each
contract’s measure score being assigned
to its own cluster. Ward’s minimum
variance method is used to separate the
variance of the measure scores into
within-cluster and between-cluster sum
of squares components in order to
determine which pairs of clusters to
merge. For the majority of measures, the
final step in the algorithm is done a
single time with five categories
specified for the assignment of
individual scores to cluster labels. The
cluster labels are then ordered to create
the 1 to 5-star scale. The range of the
values for each cluster (identified by
cluster labels) is examined and would
be used to determine the set of cut
points for the Star Ratings. The measure
score that corresponds to the lower
bound for the measure-level ratings of 2
through 5 would be included in the starspecific rating category for a measure for
which a higher score corresponds to
better performance. For a measure for
which a lower score is better, the
process would be the same except that
the upper bound within each cluster
label would determine the set of cut
points. The measure score that
corresponds to the cut point for the
ratings of 2 through 5 would be
included in the star-specific rating
category. In cases where multiple
clusters have the same measure score
value range, those clusters would be
combined, leading to fewer than 5
clusters. Under our proposal to use
clustering to set cut points, we would
not require the same number of
observations (contracts) within each
rating and instead would use a datadriven approach.
As proposed in paragraphs (a)(2)(ii) of
each section the improvement measures
for Part C and Part D would require the
clustering algorithm to be done twice for
the identification of the cut points that
would allow the conversion of the
improvement measure scores to the star
scale. The Part D improvement measure
score clustering for MA–PDs and PDPs
would be reported separately.
Improvement scores of zero or greater
would be assigned at least 3 stars for the
improvement Star Rating, while
improvement scores less than zero
would be assigned either 1 or 2 stars.
The clustering would be conducted
separately for improvement measure
scores greater than or equal to zero and
those with improvement measure scores
less than zero. For contracts with
improvement scores greater than or
equal to zero, the clustering process
would result in three clusters with
measure-level Star Ratings of 3, 4, or 5
with the lower bound of each cluster
serving as the cut point for the
associated Star Rating. For those
contracts with improvement scores less
than zero, the clustering algorithm
would result in two clusters with
measure-level Star Ratings of 1 or 2.
We propose in paragraphs (a)(3) of
each section to use percentile standing
relative to the distribution of scores for
other contracts, measurement reliability
standards, and statistical significance
testing to determine star assignments for
the CAHPS measures. This method
would combine evaluating the relative
percentile distribution of scores with
significance testing and measurement
reliability standards in order to
maximize the accuracy of star
assignments based on scores produced
from the CAHPS survey. For CAHPS
measures, contracts are first classified
into base groups by comparisons to
percentile cut points defined by the
current-year distribution of case-mix
adjusted contract means. Percentile cut
points would then be rounded to the
nearest integer on the 0–100 reporting
scale, and each base group would
include those contracts whose rounded
mean score is at or above the lower limit
and below the upper limit. Then, the
number of stars assigned would be
determined by the base group
assignment, the statistical significance
and direction of the difference of the
contract mean from the national mean,
an indicator of the statistical reliability
of the contract score on a given measure
(based on the ratio of sampling variation
for each contract mean to betweencontract variation), and the standard
error of the mean score. Table 4, which
we propose to codify at §§ 422.166(a)(3)
and 423.186(a)(3), details the CAHPS
star assignment rules for each rating. All
statistical tests, including comparisons
involving standard error, would be
computed using unrounded scores.
We propose that if the reliability of a
CAHPS measure score is very low for a
given contract, less than 0.60, the
contract would not receive a Star Rating
for that measure. For purposes of
applying the criterion for 1 star on Table
3, at item (c), low reliability scores
would be defined as those with at least
11 respondents and reliability greater
than or equal to 0.60 but less than 0.75
and also in the lowest 12 percent of
contracts ordered by reliability. The
standard error would be considered
when the measure score is below the
15th percentile (in base group 1),
significantly below average, and has low
reliability: In this case, 1 star would be
assigned if and only if the measure score
is at least 1 standard error below the
unrounded cut point between base
groups 1 and 2. Similarly, when the
measure score is at or above the 80th
percentile (in base group 5),
significantly above average, and has low
reliability, 5 stars would be assigned if
and only if the measure score is at least
1 standard error above the unrounded
cut point between base groups 4 and 5.
sradovich on DSK3GMQ082PROD with PROPOSALS2
TABLE 4—CAHPS STAR ASSIGNMENT RULES
Star
Criteria for assigning star ratings
1 ......................
A contract is assigned one star if both criteria (a) and (b) are met plus at least one of criteria (c) and (d):
(a) Its average CAHPS measure score is lower than the 15th percentile; AND
(b) its average CAHPS measure score is statistically significantly lower than the national average CAHPS measure score;
(c) the reliability is not low; OR
(d) its average CAHPS measure score is more than one standard error (SE) below the 15th percentile.
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56399
TABLE 4—CAHPS STAR ASSIGNMENT RULES—Continued
Star
Criteria for assigning star ratings
2 ......................
A contract is assigned two stars if it does not meet the one-star criteria and meets at least one of these three criteria:
(a) Its average CAHPS measure score is lower than the 30th percentile and the measure does not have low reliability; OR
(b) its average CAHPS measure score is lower than the 15th percentile and the measure has low reliability; OR
(c) its average CAHPS measure score is statistically significantly lower than the national average CAHPS measure score
and below the 60th percentile.
A contract is assigned three stars if it meets at least one of these three criteria:
(a) Its average CAHPS measure score is at or above the 30th percentile and lower than the 60th percentile, AND it is not
statistically significantly different from the national average CAHPS measure score; OR
(b) its average CAHPS measure score is at or above the 15th percentile and lower than the 30th percentile, AND the reliability is low, AND the score is not statistically significantly lower than the national average CAHPS measure score; OR
(c) its average CAHPS measure score is at or above the 60th percentile and lower than the 80th percentile, AND the reliability is low, AND the score is not statistically significantly higher than the national average CAHPS measure score.
A contract is assigned four stars if it does not meet the 5-star criteria and meets at least one of these three criteria:
(a) Its average CAHPS measure score is at or above the 60th percentile and the measure does not have low reliability;
OR
(b) its average CAHPS measure score is at or above the 80th percentile and the measure has low reliability; OR
(c) its average CAHPS measure score is statistically significantly higher than the national average CAHPS measure score
and above the 30th percentile.
A contract is assigned five stars if both criteria (a) and (b) are met plus at least one of criteria (c) and (d):
(a) Its average CAHPS measure score is at or above the 80th percentile; AND
(b) its average CAHPS measure score is statistically significantly higher than the national average CAHPS measure score;
(c) the reliability is not low; OR
(d) its average CAHPS measure score is more than one SE above the 80th percentile.
3 ......................
4 ......................
sradovich on DSK3GMQ082PROD with PROPOSALS2
5 ......................
We request comments on our
proposed methods to determine cut
points. For certain measures, we
previously published pre-determined 4star thresholds. If commenters
recommend pre-determined 4-star
thresholds, we request suggestions on
how to minimize generating Star Ratings
that do not reflect a contract’s ‘‘true’’
performance, otherwise referred to as
the risk of ‘‘misclassifying’’ a contract’s
performance (for example, scoring a
‘‘true’’ 4-star contract as a 3-star
contract, or vice versa, or creating
‘‘cliffs’’ in Star Ratings and therefore,
potential benefits between plans with
nearly identical Star Ratings on different
sides of a fixed threshold), and how to
continue to create incentives for quality
improvement. We also welcome
comments on alternative
recommendations for revising the cut
point methodology. For example, we are
considering methodologies that would
minimize year-to-year changes in the
cut points by setting the cut points so
they are a moving average of the cut
points from the two or three most recent
years or setting caps on the degree to
which a measure cut point could change
from one year to the next. We welcome
comments on these particular
methodologies and recommendations
for other ways to provide stability for
cut points from year to year.
m. Hierarchical Structure of the Ratings
We propose to continue our existing
policy to use a hierarchical structure for
the Star Ratings. The basic building
block of the MA Star Ratings System is,
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and under our proposal would continue
to be, the measure. Because the MA Star
Ratings System consists of a large
collection of measures across numerous
quality dimensions, the measures would
be organized in a hierarchical structure
that provides ratings at the measure,
domain, Part C summary, Part D
summary, and overall levels. The
regulation text at §§ 422.166 and
423.186 is built on this structure and
provides for calculating ratings at each
‘‘level’’ of the system. The organization
of the measures into larger groups
increases both the utility and efficiency
of the rating system. At each aggregated
level, ratings are based on the measurelevel stars. Ratings at the higher level
are based on the measure-level Star
Ratings, with whole star increments for
domains and half-star increments for
summary and overall ratings; a rating of
5 stars would indicate the highest Star
Rating possible, while a rating of 1 star
would be the lowest rating on the scale.
Half-star increments are used in the
summary and overall ratings to allow for
more variation at the higher hierarchical
levels of the ratings system. We believe
this greater variation and the broader
range of ratings provide more useful
information to beneficiaries in making
enrollment decisions while remaining
consistent with the statutory direction
in sections 1853(o) and 1854(b) of the
Act to use a 5-star system. These
policies for the assignment of stars
would be codified with other rules for
the ratings at the domain, summary, and
overall level. Domain ratings employ an
unweighted mean of the measure-level
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stars, while the Part C and D summary
and overall ratings employ a weighted
mean of the measure-level stars and up
to two adjustments. We propose to
codify these policies at paragraphs
(b)(2), (c)(1) and (d)(1) of §§ 422.166 and
423.186.
n. Domain Star Ratings
Groups of measures that together
represent a unique and important aspect
of quality and performance are
organized to form a domain. Domain
ratings summarize a plan’s performance
on a specific dimension of care.
Currently the domains are used purely
for purposes of displaying data on
Medicare Plan Finder to organize the
measures and help consumers interpret
the data. We propose to continue this
policy at §§ 422.166(b)(1)(i) and
423.186(b)(1)(i).
At present, there are nine domains—
five for Part C measures for MA-only
and MA–PDs plans and four for Part D
measures for MA–PDs. We propose to
continue to group measures for
purposes of display on Medicare Plan
Finder and to continue use of the same
domains as in current practice in
§§ 422.166(b)(1)(i) and 423.196(b)(1)(i).
The current domains are listed in Tables
5 and 6.
TABLE 5—PART C DOMAINS
Domain
Staying Healthy: Screenings, Tests and Vaccines.
Managing Chronic (Long Term) Conditions.
Member Experience with Health Plan.
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TABLE 5—PART C DOMAINS—
Continued
Domain
Member Complaints and Changes in the
Health Plan’s Performance.
Health Plan Customer Service.
TABLE 6—PART D DOMAINS
Domain
Drug Plan Customer Service.
Member Complaints and Changes in the
Drug Plan’s Performance.
Member Experience with the Drug Plan.
Drug Safety and Accuracy of Drug Pricing.
sradovich on DSK3GMQ082PROD with PROPOSALS2
Currently, Star Ratings for domains
are calculated using the unweighted
mean of the Star Ratings of the included
measures. They are displayed to the
nearest whole star, using a 1–5 star
scale. We propose to continue this
policy at paragraph (b)(2)(ii). We also
propose that a contract must have stars
for at least 50 percent of the measures
required to be reported for that domain
for that contract type to have that
domain rating calculated in order to
have enough data to reflect the
contract’s performance on the specific
dimension. For example, if a contract is
rated only on one measure in Staying
Healthy: Screenings, Tests and
Vaccines, that one measure would not
necessarily be representative of how the
contract performs across the whole
domain so we do not believe it is
appropriate to calculate and display a
domain rating. We propose to continue
this policy by providing, at paragraph
(b)(2)(i), that a minimum number of
measures must be reported for a domain
rating to be calculated.
o. Part C and D Summary Ratings
In the current rating system the Part
C summary rating provides a rating of
the health plan quality and the Part D
summary rating provides a rating of the
prescription drug plan quality. We are
proposing, at §§ 422.166(c) and
423.186(c), to codify regulation text
governing the adoption of Part C
summary ratings and Part D summary
ratings. An MA-only plan and a Part D
standalone plan would receive a
summary rating only for, respectively,
Part C measures and Part D measures.
First, in paragraphs (c)(1) of each
section, we propose the overall formula
for calculating the summary ratings for
Part C and Part D. Under current policy,
the summary rating for an MA-only
contract is calculated using a weighted
mean of the Part C measure-level Star
Ratings with up to two adjustments: The
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reward factor (if applicable) and the
categorical adjustment index (CAI);
similarly, the current summary rating
for a PDP contract is calculated using a
weighted mean of the Part D measurelevel Star Ratings with up to two
adjustments: The reward factor (if
applicable) and the CAI. We propose in
§§ 422.166(c)(1) and 423.186(c)(1) that
the Part C and Part D summary ratings
would be calculated as the weighted
mean of the measure-level Star Ratings
with an adjustment to reward
consistently high performance (reward
factor) and the application of the CAI,
pursuant to paragraph (f) (where we
propose the specifics for these
adjustments) for Parts C and D,
respectively.
Second, and also consistent with
current policy, we propose an MA-only
contract and PDP would have a
summary rating calculated only if the
contract meets the minimum number of
rated measures required for its
respective summary rating: A contract
must have scores for at least 50 percent
of the measures required to be reported
for the contract type to have the
summary rating calculated. The
proposed regulation text would be
codified as paragraph (c)(2)(i) of
§§ 422.166 and 423.186. The same rules
would be applied to both the Part C and
Part D summary ratings for the
minimum number of rated measures
and flags for display. We would apply
this regulation to require a MA–PD to
have a Part C and a Part D summary
rating if the minimum requirement of
rated measures for each summary rating
type is met. The improvement measures
are based on identified measures that
are each counted towards meeting the
proposed requirement for the
calculation of a summary rating. We
propose (at paragraph (c)(2)(ii)) that the
improvement measures themselves are
not included in the count of minimum
number of measures for the Part C or
Part D summary ratings.
Third, we propose a paragraph (c)(3)
in both §§ 422.166 and 423.186 to
provide that the summary ratings are on
a 1 to 5 star scale in half-star
increments. Traditional rounding rules
would be employed to round the
summary rating to the nearest half-star.
The summary rating would be displayed
in HPMS and Medicare Plan Finder to
the nearest half-star. As proposed in
§§ 422.166(h) and 423.186(h), if a
contract has not met the measure
requirement for calculating a summary
rating, the display in HPMS (and on
Medicare Plan Finder) for the applicable
summary rating would be the flag ‘‘Not
enough data available’’ or if the
measurement period is less than 1 year
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past the contract’s effective date the flag
would be ‘‘Plan too new to be
measured’’.
We welcome comments on the
calculations for the Part C and D
summary ratings.
p. Overall Rating
The overall Star Rating is a global
rating that summarizes the plan’s
quality and performance for the types of
services offered by the plans under the
rated contract. We propose at
§§ 422.166(d) and 423.186(d) to codify
the standards for calculating and
assigning overall Star Ratings for MA–
PD contracts. The overall rating for an
MA–PD contract is proposed to be
calculated using a weighted mean of the
Part C and Part D measure level Star
Ratings, respectively, with an
adjustment to reward consistently high
performance described in paragraph
(f)(1) and the application of the CAI,
pursuant to described in paragraph
(f)(2).
Consistent with current policy, we
propose at paragraph (d)(2) that an MA–
PD would have an overall rating
calculated only if the contract receives
both a Part C and Part D summary
rating, and scores for at least 50% of the
measures are required to be reported for
the contract type to have the overall
rating calculated. As with the Part C and
D summary ratings, the Part C and D
improvement measures would not be
included in the count for the minimum
number of measures for the overall
rating. Any measure that shares the
same data and is included in both the
Part C and Part D summary ratings
would be included only once in the
calculation for the overall rating; for
example, Members Choosing to Leave
the Plan and Complaints about the Plan.
As with summary ratings, we propose
that overall MA–PD ratings would use a
1 to 5 star scale in half-star increments;
traditional rounding rules would be
employed to round the overall rating to
the nearest half-star. These policies are
proposed as paragraphs (d)(2)(i) through
(iv).
In accordance with our general
proposed policy at §§ 422.166(h) and
423.186(h), the overall rating would be
posted on HPMS and Medicare Plan
Finder, with specific messages for lack
of ratings for certain reasons. Applying
that rule, if an MA–PD contract has only
one of the two required summary
ratings, the overall rating would not be
calculated and the display in HPMS
would be the flag ‘‘Not enough data
available.’’
For QBP purposes, low enrollment
contracts and new MA plans are defined
in § 422.252. Low enrollment contract
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means a contract that could not
undertake Healthcare Effectiveness Data
and Information Set (HEDIS) and Health
Outcomes Survey (HOS) data
collections because of a lack of a
sufficient number of enrollees to
reliably measure the performance of the
health plan; new MA plan means a MA
contract offered by a parent organization
that has not had another MA contract in
the previous 3 years. Low enrollment
contracts and new plans do not receive
an overall or summary rating because of
the lack of necessary data. However,
they are treated as qualifying plans for
the purposes of QBPs. Section
1853(o)(3)(A)(ii)(II) of the Act, as
implemented at § 422.258(d)(7),
provides that for 2013 and subsequent
years, CMS shall develop a method for
determining whether an MA plan with
low enrollment is a qualifying plan for
purposes of receiving an increase in
payment under section 1853(o). This
determination is applied at the contract
level and thus determines whether a
contract (meaning all plans under that
contract) is a qualifying contract. The
statute, at section 1853(o)(3)(A)(iii) of
the Act, provides for treatment of new
MA plans as qualifying plans eligible for
a specific QBP. We therefore propose, at
§§ 422.166(d)(3) and 423.186(d)(3), that
low enrollment contracts (as defined in
§ 422.252 of this chapter) and new MA
plans (as defined in § 422.252 of this
chapter) do not receive an overall and/
or summary rating; they would be
treated as qualifying plans for the
purposes of QBPs as described in
§ 422.258(d)(7) of this chapter and
announced through the process
described for changes in and adoption
of payment and risk adjustment policies
in section 1853(b) of the Act. This
proposal would merely codify existing
policy and practice.
q. Measure Weights
Prior to the 2012 Part C and D Plan
Ratings (now known as Star Ratings), all
individual measures included in the
program were weighted equally,
suggesting equal importance. Based on
feedback from stakeholders, including
health and drug plans and beneficiary
advocacy groups, we moved to provide
greater weight to clinical outcomes and
lesser weight to process measures.
Patient experience and access measures
were also given greater weight than
process measures, but not as high as
outcome measures. The differential
weighting was implemented to help
create further incentives to drive
improvement in clinical outcomes,
patient experience, and access. These
differential weights for measures were
implemented for the 2012 Ratings
following a May 2011 Request for
Comments and adopted in the CY2013
Rate Announcement and Final Call
Letter.
In the Contract Year 2012 Final Rule
for Changes to the Medicare Advantage
and the Medicare Prescription Drug
Benefit Programs rule (79 FR 21486), we
stated that scoring methodologies
should also consider improvement as an
independent goal. To this end, we
implemented in the CY 2013 Rate
Announcement the Part C and D
improvement measures that measure the
overall improvement or decline in
individual measure scores from the
prior to the current year. Given the
importance of recognizing quality
improvement as an independent goal,
for the 2015 Star Ratings, we proposed
and subsequently finalized through the
2015 Rate Announcement and final Call
Letter an increase in the weight of the
improvement measure from 3 times to 5
times that of a process measure. This
weight aligns the Part C and D Star
Ratings program with value-based
purchasing programs in Medicare feefor-service which heavily weight
improvement.
We are proposing in §§ 422.166(e) and
423.186(e) to continue the current
weighting of measures in the Part C and
D Star Ratings program by assigning the
highest weight (5) to improvement
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measures, followed by outcome and
intermediate outcome measures (weight
of 3), then by patient experience/
complaints and access measures (weight
of 1.5), and finally process measures
(weight of 1). We are considering
increasing the weight of the patient
experience/complaints and access
measures and are interested in
stakeholder feedback on this potential
change in order to reflect better the
importance of these issues in plan
performance. If we were to increase the
weight, we are considering increasing it
from a weight of 1.0 to between 1.5 and
3 similar to outcome measures. This
increased weight would reflect CMS’
commitment to serve Medicare
beneficiaries by putting the patients
first, including their assessments of the
care received by plans. We solicit
comment on this point, particularly the
potential change in the weight of the
patient experience/complaints and
access measures.
Table 7 includes the proposed
measure categories, the definitions of
the measure categories, and the weights.
In calculating the summary and overall
ratings, a measure given a weight of 3
counts three times as much as a measure
given a weight of 1. In section III.A.12.
of this proposed rule, we propose (as
Table 2) the measure set and include the
category and weight for each measure;
those weight assignments are consistent
with this proposal. We propose that as
new measures are added to the Part C
and D Star Ratings, we would assign the
measure category based on these
categories and the regulation text
proposed at §§ 422.166(e) and
423.186(e), subject to two exceptions.
We propose in paragraphs (e)(2) of each
section as the first exception, to assign
new measures to the Star Ratings
program a weight of 1 for their first year
in the Star Ratings. In subsequent years
the weight associated with the measure
weighting category would be used. This
is consistent with current policy.
TABLE 7—MEASURE CATEGORIES, DEFINITIONS AND WEIGHTS
Definition
Improvement .......................
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Measure category
Part C and Part D improvement measures are derived through comparisons of a contract’s current and prior year measure scores.
Outcome measures reflect improvements in a beneficiary’s health and are central to assessing
quality of care. Intermediate outcome measures reflect actions taken which can assist in improving a beneficiary’s health status. Controlling Blood Pressure is an example of an intermediate outcome measure where the related outcome of interest would be better health status
for beneficiaries with hypertension.
Patient experience measures reflect beneficiaries’ perspectives of the care and services they received.
Access measures reflect processes and issues that could create barriers to receiving needed
care. Plan Makes Timely Decisions about Appeals is an example of an access measure.
Outcome and Intermediate
Outcome.
Patient Experience/Complaints.
Access .................................
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3
1.5
1.5
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TABLE 7—MEASURE CATEGORIES, DEFINITIONS AND WEIGHTS—Continued
Measure category
Definition
Process ...............................
Process measures capture the health care services provided to beneficiaries which can assist in
maintaining, monitoring, or improving their health status.
sradovich on DSK3GMQ082PROD with PROPOSALS2
In addition, we propose (at
§§ 422.166(e)(3) and 423.186(e)(3)) a
second exception to the general
weighting rule for MA and Part D
contracts that have service areas that are
wholly located in Puerto Rico. We
recognize the additional challenge
unique to Puerto Rico related to the
medication adherence measures used in
the Star Ratings Program due to the lack
of Low Income Subsidy (LIS). For the
2017 Star Ratings, we implemented a
different weighting scheme for the Part
D medication adherence measures in the
calculation of the overall and summary
Star Ratings for contracts that solely
serve the population of beneficiaries in
Puerto Rico. We propose, at
§§ 422.166(e)(3) and 423.186(e)(3), to
continue to reduce the weights for the
adherence measures to 0 for the
summary and overall rating calculations
and maintain the weight of 3 for the
adherence measures for the
improvement measure calculations for
contracts that solely serve the
population of beneficiaries in Puerto
Rico. We request comment on our
proposed weighting strategy for Measure
Weights generally and for Puerto Rico,
including the weighting values
themselves.
r. Application of the Improvement
Measure Scores
Consistent with current policy, we
propose at §§ 422.166(g) and 423.186(g)
a hold harmless provision for the
inclusion or exclusion of the
improvement measure(s) for highlyrated contracts’ highest ratings. We are
proposing, in paragraphs (g)(1)(i)
through (iii), a series of rules that
specify when the improvement measure
is included in calculating overall and
summary ratings.
MA–PDs would have the hold
harmless provisions for highly-rated
contracts applied for the overall rating.
For an MA–PD that receives an overall
rating of 4 stars or more without the use
of the improvement measures and with
all applicable adjustments (CAI and the
reward factor), a comparison of the
rounded overall rating with and without
the improvement measures is done. The
overall rating with the improvement
measures used in the comparison would
include up to two adjustments, the
reward factor (if applicable) and the
CAI. The overall rating without the
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Weight
improvement measures used in the
comparison would include up to two
adjustments, the reward factor (if
applicable) and the CAI. The higher
overall rating would be used for the
overall rating. For an MA–PD that has
an overall rating of 2 stars or less
without the use of the improvement
measure and with all applicable
adjustments (CAI and the reward factor),
the overall rating would exclude the
improvement measure. For all others,
the overall rating would include the
improvement measure.
MA-only and PDPs would have the
hold harmless provisions for highlyrated contracts applied for the Part C
and D summary ratings, respectively.
For an MA-only or PDP that receives a
summary rating of 4 stars or more
without the use of the improvement
measure and with all applicable
adjustments (CAI and the reward factor),
a comparison of the rounded summary
rating with and without the
improvement measure and up to two
adjustments, the reward factor (if
applicable) and CAI, is done. The higher
summary rating would be used for the
summary rating for the contract’s
highest rating. For MA-only and PDPs
with a summary rating of 2 stars or less
without the use of the improvement
measure and with all applicable
adjustments (CAI and the reward factor),
the summary rating would exclude the
improvement measure. For all others,
the summary rating would include the
improvement measure. MA–PDs would
have their summary ratings calculated
with the use of the improvement
measure regardless of the value of the
summary rating.
In addition, at paragraph (g)(2), we
also propose text to clarify that
summary ratings use only the
improvement measure associated with
the applicable Part C or D performance.
We welcome comments on the hold
harmless improvement provision we
propose to continue to use, particularly
any clarifications in how and when it
should be applied.
s. Reward Factor (Formerly Referred to
as Integration Factor)
In 2011, the integration factor was
added to the Star Ratings methodology
to reward contracts that have
consistently high performance. The
integration factor was later renamed the
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1
reward factor. (The reference to either
reward or integration factor refers to the
same aspect of the Star Ratings.) This
factor is calculated separately for the
Part C summary rating, Part D summary
rating for MA–PDs, Part D summary
rating for PDPs, and the overall rating
for MA–PDs. It is currently added to the
summary (Part C or D) and overall rating
of contracts that have both high and
stable relative performance for the
associated summary or overall rating.
The contract’s performance will be
assessed using its weighted mean
relative to all rated contracts without
adjustments.
The contract’s stability of
performance will be assessed using its
weighted variance relative to all rated
contracts at the same rating level
(overall, summary Part C, and summary
Part D). The Part D summary thresholds
for MA–PDs are determined
independently of the thresholds for
PDPs. We propose to codify the
calculation and use of the reward factor
in §§ 422.166(f)(1) and 423.186(f)(1).
Annually, we propose to update the
performance and variance thresholds for
the reward factor based upon the data
for the Star Ratings year, consistent with
current policy. A multistep process
would be used to determine the values
that correspond to the thresholds for the
reward factors for the summary and/or
overall Star Ratings for a contract. The
determination of the reward factors
would rely on the contract’s ranking of
its weighted variance and weighted
mean of the measure-level stars to the
summary or overall rating relative to the
distribution of all contracts’ weighted
variance and weighted mean to the
summary and/or overall rating. A
contract’s weighted variance would be
calculated using the quotient of the
following two values: (1) The product of
the number of applicable measures
based on rating-type and the sum of the
products of the weight of each
applicable measure and its squared
deviation 42 and (2) the product of one
less than the number of applicable
measures and the sum of the weights of
the applicable measures. A contract’s
weighted mean performance would be
42 A deviation is the difference between the
performance measure’s Star Rating and the
weighted mean of all applicable measures for the
contract.
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found by calculating the quotient of the
following two values: (1) The sum of the
products of the weight of a measure and
its associated measure-level Star Ratings
of the applicable measures for the
rating-type and (2) the sum of the
weights of the applicable measures for
the rating type. The thresholds for the
categorization of the weighted variance
and weighted mean for contracts would
be based upon the distribution of the
calculated values of all rated contracts
of the same type. Because highly-rated
contracts may have the improvement
measure(s) excluded in the
determination of their final highest
rating, each contract’s weighted
variance and weighted mean is
calculated both with and without the
improvement measures.
A contract’s weighted variance is
categorized into one of three mutually
exclusive categories, identified in Table
8A, based upon the weighted variance
of its measure-level Star Ratings and its
ranking relative to all other contracts’
weighted variance for the rating type
(Part C summary for MA–PDs and MAonly, overall for MA–PDs, Part D
summary for MA–PDs, and Part D
summary for PDPs), and the manner in
which the highest rating for the contract
was determined—with or without the
improvement measure(s). For an MA–
PD’s Part C and D summary ratings, its
ranking is relative to all other contracts’
weighted variance for the rating type
(Part C summary, Part D summary) with
the improvement measure. Similarly, a
contract’s weighted mean is categorized
into one of three mutually exclusive
categories, identified in Table 8B, based
on its weighted mean of all measurelevel Star Ratings and its ranking
relative to all other contracts’ weighted
means for the rating type (Part C
summary for MA–PDs and MA-only,
overall, Part D summary for MA–PDs,
and Part D summary for PDPs) and the
manner in which the highest rating for
the contract was determined—with or
without the improvement measure(s).
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For an MA–PD’s Part C and D summary
ratings, its ranking is relative to all other
contracts’ weighted means for the rating
type (Part C summary, Part D summary)
with the improvement measure. Further,
the same threshold criterion is
employed per category regardless of
whether the improvement measure was
included or excluded in the calculation
of the rating. The values that correspond
to the thresholds are based on the
distribution of all rated contracts and
are determined with and without the
improvement measure(s) and exclusive
of any adjustments. Table 8A details the
criteria for the categorization of a
contract’s weighted variance for the
summary and overall ratings. Table 8B
details the criteria for the categorization
of a contract’s weighted mean
(performance) for the overall and
summary ratings. The values that
correspond to the cutoffs are provided
each year during the plan preview and
are published in the Technical Notes.
TABLE 8A—CATEGORIZATION OF A CONTRACT BASED ON ITS WEIGHTED VARIANCE RANKING
Variance category
Ranking
Low ..............................................................................................................
Medium ........................................................................................................
High .............................................................................................................
Below the 30th percentile.
At or above the 30th percentile to less than the 70th percentile.
At or above the 70th percentile.
TABLE 8B—CATEGORIZATION OF A CONTRACT BASED ON WEIGHTED MEAN (PERFORMANCE) RANKING
Weighted mean
(performance)
category
Ranking
High .............................................................................................................
Relatively High ............................................................................................
Other ............................................................................................................
These definitions of high, medium,
and low weighted variance ranking and
high, relatively high, and other
weighted mean ranking would be
codified in narrative form in paragraph
(f)(1)(ii).
At or above the 85th percentile.
At or above the 65th percentile to less than the 85th percentile.
Below the 65th percentile.
A contract’s categorization for both
weighted mean and weighted variance
determines the value of the reward
factor. Table 9 shows the values of the
reward factor based on the weighted
variance and weighted mean
categorization; these values would be
codified, as a chart, in paragraph
(f)(i)(iii). The weighted variance and
weighted mean thresholds for the
reward factor are available in the
Technical Notes and updated annually.
TABLE 9—CATEGORIZATION OF A CONTRACT FOR THE REWARD FACTOR
sradovich on DSK3GMQ082PROD with PROPOSALS2
Weighted variance
Weighted mean
(performance)
Low .............................................................................................
Medium .......................................................................................
Low .............................................................................................
Medium .......................................................................................
High ............................................................................................
High ............................................................................................
High ............................................................................................
Relatively High ............................................................................
Relatively high ............................................................................
Other ...........................................................................................
We propose to continue the use of a
reward factor to reward contracts with
consistently high and stable
performance over time. Further, we
propose to continue to employ the
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methodology described in this
subsection to categorize and determine
the reward factor for contracts. As
proposed in paragraphs (c)(1) and (d)(1),
these reward factor adjustments would
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Reward
factor
0.4
0.3
0.2
0.1
0.0
be applied at the summary and overall
rating level.
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t. Categorical Adjustment Index
A growing body of evidence links the
prevalence of beneficiary-level social
risk factors with performance on
measures included in Medicare valuebased purchasing programs, including
MA and Part D Star Ratings. With
support from our contractors, we
undertook research to provide scientific
evidence as to whether MA
organizations or Part D sponsors that
enroll a disproportionate number of
vulnerable beneficiaries are
systematically disadvantaged by the
current Star Ratings. In 2014, we issued
a Request for Information to gather
information directly from organizations
to supplement the data that CMS
collects, as we believe that plans and
sponsors are uniquely positioned to
provide both qualitative and
quantitative information that is not
available from other sources. In
February and September 2015, we
released details on the findings of our
research.43 We have also reviewed
reports about the impact of socioeconomic status (SES) on quality
ratings, such as the report published by
the NQF posted at
www.qualityforum.org/risk_adjustment_
ses.aspx and the Medicare Payment
Advisory Commission’s (MedPAC)
Report to the Congress: Medicare
Payment Policy posted at https://
www.medpac.gov/docs/default-source/
reports/march-2016-report-to-thecongress-medicare-paymentpolicy.pdf?sfvrsn=0. We have more
recently been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE 44) and the National Academies
of Sciences, Engineering, and Medicine
on the issue of measuring and
accounting for social risk factors in
CMS’ value-based purchasing and
quality reporting programs, and we have
been considering options on how to
address the issue in these programs. On
December 21, 2016, ASPE submitted a
Report to Congress on a study it was
required to conduct under section 2(d)
of the Improving Medicare Post-Acute
Care Transformation (IMPACT) Act of
2014. The study analyzed the effects of
certain social risk factors of Medicare
43 The February release can be found at https://
www.cms.gov/medicareprescription-drug-coverage/
prescriptiondrugcovgenin/performancedata.html.
The September release can be found at https://
www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovGenIn/Downloads/
Research-on-the-Impact-of-Socioeconomic-Statuson-Star-Ratingsv1-09082015.pdf.
44 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
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beneficiaries on quality measures and
measures of resource use in nine
Medicare value-based purchasing
programs. The report also included
considerations for strategies to account
for social risk factors in these programs.
A January 10, 2017 report released by
the National Academies of Sciences,
Engineering, and Medicine provided
various potential methods for measuring
and accounting for social risk factors,
including stratified public reporting.45
We have also engaged NCQA and the
PQA to examine their measure
specifications used in the Star Ratings
program to determine if re-specification
is warranted. The majority of measures
used for the Star Ratings program are
consensus-based. Measure
specifications can be changed only by
the measure steward (the owner and
developer of the measure). Thus,
measure scores cannot be adjusted for
differences in enrollee case mix unless
required by the measure steward.
Measure re-specification is a multiyear
process. For example, NCQA has a
standard process for reviewing any
measure and determining whether a
measure requires re-specification.
NCQA’s re-evaluation process is
designed to ensure any resulting
measure updates have desirable
attributes of relevance, scientific
soundness, and feasibility:
• Relevance describes the extent to
which the measure captures information
important to different groups, for
example, consumers, purchasers,
policymakers. To determine relevance,
NCQA assesses issues such as health
importance, financial importance, and
potential for improvement among
entities being measured.
• Scientific soundness captures the
extent to which the measure adheres to
clinical evidence and whether the
measure is valid, reliable, and precise.
• Feasibility captures the extent to
which a measure can be collected at
reasonable cost and without undue
burden. To determine feasibility, NCQA
also assesses whether a measure is
precisely specified and can be audited.
The overall process for assessing the
value of re-specification emphasizes
multi-stakeholder input, use of
evidence-based guidelines and data, and
wide public input.
Beginning with 2017 Star Ratings, we
implemented the CAI that adjusts for
the average within-contract disparity in
performance associated with the
45 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press—https://www.nap.edu/
catalog/21858/accounting-for-social-risk-factors-inmedicare-payment-identifying-social.
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percentages of beneficiaries who receive
a low income subsidy and/or are dual
eligible (LIS/DE) and/or have disability
status. We developed the CAI as an
interim analytical adjustment while we
developed a long-term solution. The
adjustment factor varies by a contract’s
categorization into a final adjustment
category that is determined by a
contract’s proportion of LIS/DE and
beneficiaries with disabilities. By
design, the CAI values are monotonic in
at least one dimension (LIS/DE or
disability status) and thus, contracts
with larger LIS/DE and/or disability
percentages realize larger positive
adjustments. MA–PD contracts can have
up to three rating-specific CAI
adjustments—one for the overall Star
Rating and one for each of the summary
ratings (Part C and Part D). MA-only
contracts can have one adjustment for
the Part C summary rating. PDPs can
have one adjustment for the Part D
summary rating. We propose to codify
the calculation and use of the reward
factor and the CAI in §§ 422.166(f)(2)
and 423.186(f)(2), while we consider
other alternatives for the future.
As is currently done today, the
adjusted measure scores of a subset of
the Star Ratings measures would serve
as the foundation for the determination
of the index values. Measures would be
excluded as candidates for adjustment if
the measures are already case-mix
adjusted for SES (for example, CAHPS
and HOS outcome measures), if the
focus of the measurement is not a
beneficiary-level issue but rather a plan
or provider-level issue (for example,
appeals, call center, Part D price
accuracy measures), if the measure is
scheduled to be retired or revised
during the Star Rating year in which the
CAI is being applied, or if the measure
is applicable to only Special Needs
Plans (SNPs) (for example, SNP Care
Management, Care for Older Adults
measures). We propose to codify these
paragraphs for determining the
measures for CAI values at paragraph
(f)(2)(ii).The categorization of a
beneficiary as LIS/DE for the CAI would
rely on the monthly indicators in the
enrollment file. For the determination of
the CAI values, the measurement period
would correspond to the previous Star
Ratings year’s measurement period. For
the identification of a contract’s final
adjustment category for its application
of the CAI in the current year’s Star
Ratings Program, the measurement
period would align with the Star Ratings
year. If a beneficiary was designated as
full or partially dually eligible or
receiving a LIS at any time during the
applicable measurement period, the
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beneficiary would be categorized as LIS/
DE. For the categorization of a
beneficiary as disabled, we would
employ the information from the Social
Security Administration (SSA) and
Railroad Retirement Board (RRB) record
systems. Disability status would be
determined using the variable original
reason for entitlement (OREC) for
Medicare. The percentages of LIS/DE
and disability per contract would rely
on the Medicare enrollment data from
the applicable measurement year. The
counts of beneficiaries for enrollment
and categorization of LIS/DE and
disability would be restricted to
beneficiaries that are alive for part or all
of the month of December of the
applicable measurement year. Further, a
beneficiary would be assigned to the
contract based on the December file of
the applicable measurement period. We
propose to codify these paragraphs for
determining the enrollment counts at
paragraph (f)(2)(i)(B).
Using the subset of the measures that
meet the basic inclusion requirements,
we propose to select the measure set for
adjustment based on the analysis of the
dispersion of the LIS/DE within-contract
differences using all reportable numeric
scores for contracts receiving a rating in
the previous rating year. For the
selection of the Part D measures, MA–
PDs and PDPs would be independently
analyzed. For each contract, the
proportion of beneficiaries receiving the
measured clinical process or outcome
for LIS/DE and non-LIS/DE beneficiaries
would be estimated separately, and the
difference between the LIS/DE and nonLIS/DE performance rates per contract
would be calculated. CMS would use a
logistic mixed effects model for
estimation purposes that includes LIS/
DE as a predictor, random effects for
contract and an interaction term of
contract and LIS/DE.
Using the analysis of the dispersion of
the within-contract disparity of all
contracts included in the modelling, the
measures for adjustment would be
identified employing the following
decision criteria: (1) A median absolute
difference between LIS/DE and non-LIS/
DE beneficiaries for all contracts
analyzed is 5 percentage points or more
or 46 (2) the LIS/DE subgroup performed
better or worse than the non-LIS/DE
subgroup in all contracts. We propose to
codify these paragraphs for the selection
criteria for the adjusted measures for the
CAI at paragraph (f)(2)(iii).
The Part D measures for PDPs would
be analyzed separately. In order to apply
46 The use of the word ‘or’ in the decision criteria
implies that if one condition or both conditions are
met, the measure would be selected for adjustment.
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consistent adjustments across MA–PDs
and PDPs, the Part D measures would be
selected by applying the selection
criteria to MA–PDs and PDPs
independently and, then, selecting
measures that met the criteria for either
delivery system. The measure set for
adjustment of Part D measures for MA–
PDs and PDPs would be the same after
applying the selection criteria and
pooling the Part D measures for MA–
PDs and PDPs. We propose to codify
these paragraphs for the selection of the
adjusted measure set for the CAI for
MA–PDs and PDPs at (f)(2)(iii)(C). We
also seek comment on the proposed
methodology and criteria for the
selection of the measures for
adjustment. Further, we seek comment
on alternative methods or rules to select
the measures for adjustment for future
rulemaking.
Annually, while the CAI is being
developed using the rules we are
proposing here, we would release on
CMS.gov an updated analysis of the
subset of the Star Ratings measures
identified for adjustment using this rule
as ultimately finalized. Basic descriptive
statistics would include the minimum,
median, and maximum values for the
within-contract variation for the LIS/DE
differences. The set of measures for
adjustment for the determination of the
CAI would be announced in the draft
Call Letter.
We propose, at paragraph (f)(2)(iv) of
each regulation, to determine the
adjusted measure scores for LIS/DE and
disability status from regression models
of beneficiary-level measure scores that
adjust for the average within-contract
difference in measure scores for MA or
PDP contracts. The approach employed
to determine the adjusted measure
scores approximates case-mix
adjustment using a beneficiary-level,
logistic regression model with contract
fixed effects and beneficiary-level
indicators of LIS/DE and disability
status, similar to the approach currently
used to adjust CAHPS patient
experience measures. However, unlike
CAHPS case-mix adjustment, the only
adjusters would be LIS/DE and
disability status.
The sole purpose of the adjusted
measure scores is for the determination
of the CAI values. The adjusted measure
scores would be converted to a measurelevel Star Rating using the measure
thresholds for the Star Ratings year that
corresponds to the measurement period
of the data employed for the CAI
determination.
All contracts would have their
adjusted summary rating(s) and for MA–
PDs, an adjusted overall rating,
calculated employing the standard
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methodology proposed at §§ 422.166
and 423.186 (which would also be
outlined in the Technical Notes each
year), using the subset of adjusted
measure-level Star Ratings and all other
unadjusted measure-level Star Ratings.
In addition, all contracts would have
their summary rating(s) and for MA–
PDs, an overall rating, calculated using
the traditional methodology and all
unadjusted measure-level Star Ratings.
For the annual development of the
CAI, the distribution of the percentages
for LIS/DE and disabled using the
enrollment data that parallels the
previous Star Ratings year’s data would
be examined to determine the number of
equal-sized initial groups for each
attribute (LIS/DE and disabled). The
initial categories would be created using
all groups formed by the initial LIS/DE
and disabled groups. The total number
of initial categories would be the
product of the number of initial groups
for LIS/DE and the number of initial
groups for the disabled dimension.
The mean difference between the
adjusted and unadjusted summary or
overall ratings per initial category
would be calculated and examined. The
initial categories would then be
collapsed to form the final adjustment
categories. The collapsing of the initial
categories to form the final adjustment
categories would be done to enforce
monotonicity in at least one dimension
(LIS/DE or disabled). The mean
difference within each final adjustment
category by rating-type (Part C, Part D
for MA–PD, Part D for PDPs, or overall)
would be the CAI values for the next
Star Ratings year.
The percentage of LIS/DE is a critical
element in the categorization of
contracts into the final adjustment
category to identify a contract’s CAI.
Starting with the 2017 Star Ratings, we
applied an additional adjustment for
contracts that solely serve the
population of beneficiaries in Puerto
Rico to address the lack of LIS in Puerto
Rico. The adjustment results in a
modified percentage of LIS/DE
beneficiaries that is subsequently used
to categorize contracts into the final
adjustment category for the CAI.
We propose to continue this
adjustment and to calculate the
contract-level modified LIS/DE
percentage for Puerto Rico using the
following sources of information: The
most recent data available at the time of
the development of the model of both
the 1-year American Community Survey
(ACS) estimates for the percentage of
people living below the Federal Poverty
Level (FPL) and the ACS 5-year
estimates for the percentage of people
living below 150 percent of the FPL, and
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the Medicare enrollment data from the
same measurement period used for the
Star Ratings year.
The data to develop the model would
be limited to the 10 states, drawn from
the 50 states plus the District of
Columbia, with the highest proportion
of people living below the FPL as
identified by the 1-year ACS estimates.
Further, the Medicare enrollment data
would be aggregated from MA contracts
that had at least 90 percent of their
enrolled beneficiaries with mailing
addresses in the 10 highest poverty
states. A linear regression model would
be developed using the known LIS/DE
percentage and the corresponding DE
percentage from the subset of MA
contracts.
The estimated slope from the linear
regression approximates the expected
relationship between LIS/DE for each
contract in Puerto Rico and its DE
percentage. The intercept term is
adjusted for use with Puerto Rico
contracts by assuming that the Puerto
Rico model will pass through the point
(x, y) where x is the observed average
DE percentage in the Puerto Rico
contracts based on the enrollment data,
and y is the expected average percentage
of LIS/DE in Puerto Rico. The expected
average percentage of LIS/DE in Puerto
Rico (the y value) is not observable, but
is estimated by multiplying the
observed average percentage of LIS/DE
in the 10 highest poverty states by the
ratio based on the most recent 5-year
ACS estimates of the percentage living
below 150 percent of the FPL in Puerto
Rico compared to the corresponding
percentage in the set of 10 states with
the highest poverty level. (Further
details of the methodology can be found
in the CAI Methodology Supplement
available at https://go.cms.gov/
partcanddstarratings.)
Using the model developed from this
process, the estimated modified LIS/DE
percentage for contracts operating solely
in Puerto Rico would be calculated. The
maximum value for the modified LIS/
DE indicator value per contract would
be capped at 100 percent. All estimated
modified LIS/DE values for Puerto Rico
would be rounded to 6 decimal places
when expressed as a percentage.
We propose to continue to employ the
LIS/DE indicator for contracts operating
solely in Puerto Rico while the CAI is
being used as an interim analytical
adjustment. Further, we propose that
the modeling results would continue to
be detailed in the appendix of the
Technical Notes and the modified LIS/
DE percentages would be available for
contracts to review during the plan
previews.
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We propose to continue the use of the
CAI while the measure stewards
continue their examination of the
measure specifications and ASPE
completes their studies mandated by the
IMPACT Act and formalizes final
recommendations. Contracts would be
categorized based on their percentages
of LIS/DE and disability using the data
as outlined previously. The CAI value
would be the same for all contracts
within each final adjustment category.
The CAI values would be determined
using data from all contracts that meet
reporting requirements from the prior
year’s Star Rating data. The CAI
calculation for the PDPs would be
performed separately and use the PDP
specific cut points. Under our proposal,
CMS would include the CAI values in
the draft and final Call Letter
attachment of the Advance Notice and
Rate Announcement each year while the
interim solution is applied. The values
for the CAI value would be displayed to
6 decimal places. Rounding would take
place after the application of the CAI
value and if applicable, the reward
factor; standard rounding rules would
be employed. (All summary and overall
Star Ratings are displayed to the nearest
half-star.)
While we consider the
recommendations from the ASPE report,
findings from measure developers, and
work by NQF on risk adjustment for
quality measures, we are continuing to
collaborate with stakeholders. We are
seeking to balance accurate
measurement of genuine plan
performance, effective identification of
disparities, and maintenance of
incentives to improve the outcomes for
disadvantaged populations. Keeping
this in mind, we continue to seek public
comment on whether and how we
should account for low SES and other
social risk factors in the Part C and D
Star Ratings.
We look forward to continuing to
work with stakeholders as we consider
the issue of accounting for LIS/DE,
disability and other social risk factors
and reducing health disparities in CMS
programs. As we have stated previously,
we are continuing to consider options to
how to measure and account for social
risk factors in our Star Ratings program.
What we discovered though our
research to date is, although a
sponsoring organization’s
administrative costs may increase as a
result of enrolling significant numbers
of beneficiaries with LIS/DE status or
disabilities, the impacts of SES on the
quality ratings are quite modest, affect
only a small subset of measures, and do
not always negatively impact the
measures. However, CMS would like to
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better understand whether, how, and to
what extent a sponsoring organization’s
administrative costs differ for caring for
low-income beneficiaries and we
welcome comment on that topic.
Administrative costs may include nonmedical costs such as transportation
costs, coordination costs, marketing,
customer service, quality assurance and
costs associated with administering the
benefit. We continue our commitment
toward ensuring that all beneficiaries
have access to and receive excellent
care, and that the quality of care
furnished by plans is assessed fairly in
CMS programs.
u. High and Low Performing Icons
Consistent with our current practice,
we are proposing regulation text to
govern assignment of high and low
performing icons at §§ 422.166(i) and
423.186(i). We propose to continue
current policy that a contract would
receive a high performing icon as a
result of its performance on the Part C
and D measures. The high performing
icon would be assigned to an MA-only
contract for achieving a 5-star Part C
summary rating, a PDP contract for a 5star Part D summary rating, and an MA–
PD contract for a 5-star overall rating.
We propose that a contract would
receive a low performing icon as a result
of its performance on the Part C or Part
D summary ratings. The low performing
icon would be calculated by evaluating
the Part C and Part D summary ratings
for the current year and the past 2 years
(for example, the 2016, 2017, and 2018
Star Ratings). If the contract had any
combination of Part C and Part D
summary ratings of 2.5 or lower in all
3 years of data, it would be marked with
a low performing icon. A contract must
have a summary rating in either Part C
or Part D for all 3 years to be considered
for this icon. These rules would be
codified at §§ 422.166(i)(2)(i) and
423.186(i)(2)(i).
We also propose, at paragraph
(i)(2)(ii), to continue our policy of
disabling the Medicare Plan Finder
online enrollment function for Medicare
health and prescription drug plans with
the low-performing icon to ensure that
beneficiaries are fully aware that they
are enrolling in a plan with low quality
and performance ratings; we believe this
is an important beneficiary protection to
ensure that the decision to enroll in a
low rated and low performing plan has
been thoughtfully considered.
Beneficiaries who still want to enroll in
a low-performing plan or who may need
to in order to get the benefits and
services they require (for example, in
geographical areas with limited plans)
will be warned, via explanatory
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messaging of the plan’s poorly rated
performance and directed to contact the
plan directly to enroll.
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v. Plan Preview of Star Ratings
We propose in §§ 422.166(i)(3) and
423.186(i)(3) that CMS have plan
preview periods before each Star
Ratings release, consistent with current
practice. Part C and D sponsors can
preview their Star Ratings data in HPMS
prior to display on the Medicare Plan
Finder. During the first plan preview,
we expect Part C and D sponsors to
closely review the methodology and
their posted numeric data for each
measure. The second plan preview
would include any revisions made as a
result of the first plan preview. In
addition, our preliminary Star Ratings
for each measure, domain, summary
score, and overall score would be
displayed. During the second plan
preview, we expect Part C and D
sponsors to again closely review the
methodology and their posted data for
each measure, as well as their
preliminary Star Rating assignments. As
part of this regulation, we are proposing
that CMS continue to offer plan preview
periods, but are not codifying the details
of each period because over time the
process has evolved to provide more
data to sponsors to help validate their
data. We envision it to continue to
evolve in the future and do not believe
that codifying specific display content is
necessary.
It is important that Part C and D
sponsors regularly review their
underlying measure data that are the
basis for the Part C and D Star Ratings.
For measures that are based on data
reported directly from sponsors, any
issues or problems should be raised well
in advance of CMS’ plan preview
periods. A draft version of the Technical
Notes would be available during the
first plan preview. The draft is then
updated for the second plan preview
and finalized when the ratings data have
been posted to Medicare Plan Finder.
We welcome comments on the
proposed plan preview process.
w. Technical Changes
We also propose a number of
technical changes to other existing
regulations that refer to the quality
ratings of MA and Part D plans; we
propose to make technical changes to
refer to the proposed new regulation
text that provides for the calculation
and assignment of Star Ratings.
Specifically, we propose:
• In § 422.258(d)(7), to revise
paragraph (d)(7) to read: Increases to the
applicable percentage for quality.
Beginning with 2012, the blended
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benchmark under paragraphs (a) and (b)
of this section will reflect the level of
quality rating at the plan or contract
level, as determined by the Secretary.
The quality rating for a plan is
determined by the Secretary according
to the 5-star rating system (based on the
data collected under section 1852(e) of
the Act) specified in subpart D of this
part 422. Specifically, the applicable
percentage under paragraph (d)(5) of
this section must be increased according
to criteria in paragraphs (d)(7)(i) through
(v) of this section if the plan or contract
is determined to be a qualifying plan or
a qualifying plan in a qualifying county
for the year.
• In § 422.260(a), to revise the
paragraph to read: Scope. The
provisions of this section pertain to the
administrative review process to appeal
quality bonus payment status
determinations based on section 1853(o)
of the Act. Such determinations are
made based on the overall rating for
MA–PDs and Part C summary rating for
MA-only contracts for the contract
assigned pursuant to subpart 166 of this
part 422.
• In § 422.260(b), to revise the
definition of ‘‘quality bonus payment
(QBP) determination methodology’’ to
read: Quality bonus payment (QBP)
determination methodology means the
quality ratings system specified in
subpart 166 of this part 422 for
assigning quality ratings to provide
comparative information about MA
plans and evaluating whether MA
organizations qualify for a QBP.
• In § 422.504(a)(18), to revise
paragraph (a)(18) to read: To maintain a
Part C summary plan rating score of at
least 3 stars pursuant to the 5-star rating
system specified in subpart 166 of this
part 422. A Part C summary plan rating
is calculated as provided in § 422.166.
• In § 423.505(b)(26), to revise
paragraph (b)(26) to read: Maintain a
Part D summary plan rating score of at
least 3 stars pursuant to the 5-star rating
system specified in subpart 186 of this
part 423. A Part D summary plan rating
is calculated as provided in § 423.186.
We welcome comment on these
technical changes and whether there are
additional changes that should be made
to account for our proposal to codify the
Star Ratings methodology and measures
in regulation text.
12. Any Willing Pharmacy Standards
Terms and Conditions and Better Define
Pharmacy Types (§§ 423.100, 423.505)
Section 1860D–4(b)(1)(A) of the Act
and § 423.120(a)(8)(i) require a Part D
plan sponsor to contract with any
pharmacy that meets the Part D plan
sponsor’s standard terms and conditions
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for network participation. Section
423.505(b)(18) requires Part D plan
sponsors to 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.
In the preamble to final rule
published on January 28, 2005 (January
2005 final rule) (70 FR 4194) which
implemented § 423.120(a)(8)(i) and
§ 423.505(b)(18), we indicated that
standard terms and conditions,
particularly for payment terms, could
vary to accommodate geographic areas
or types of pharmacies, so long as all
similarly situated pharmacies were
offered the same terms and conditions.
We also stated that we viewed these
standard terms and conditions as a
‘‘floor’’ of minimum requirements that
all similarly situated pharmacies must
abide by, but that Part D plans could
modify some standard terms and
conditions to encourage participation by
particular pharmacies. We believe this
approach strikes an appropriate balance
between the any willing pharmacy
requirement at section 1860D–4(b)(1)(A)
of the Act and the provisions of section
1860D–4(b)(1)(B) of the Act, which
permits Part D plan sponsors to offer
reduced cost sharing at preferred
pharmacies.
The balancing of these goals has led
to the development of preferred
pharmacy networks in which certain
pharmacies agree to additional or
different terms from the standard terms
and conditions. This has resulted in the
development of ‘‘standard’’ terms and
conditions that in some cases has had
the effect, in our view, of circumventing
the any willing pharmacy requirements
and inappropriately excluding
pharmacies from network participation.
This section is intended to clarify or
modify our interpretation of the existing
regulations to ensure that plan sponsors
can continue to develop and maintain
preferred networks while fully
complying with the any willing
pharmacy requirement.
First, we intend to clarify that the any
willing pharmacy requirement applies
to all pharmacies, regardless of how
they have organized one or more lines
of pharmacy business. Second, we
propose to revise the definition of retail
pharmacy and define mail-order
pharmacy. Third, we propose to clarify
our regulatory requirements for what
constitutes ‘‘reasonable and relevant’’
standard contract terms and conditions.
Finally, we propose to codify our
existing guidance with respect to when
a pharmacy must be provided with a
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Part D plan sponsor’s standard terms
and conditions.
a. Any Willing Pharmacy Required for
All Pharmacy Business Models
With the pharmaceutical distribution
and pharmacy practice landscape
evolving rapidly, and because
pharmacies now frequently have
multiple lines of business, many
pharmacies no longer fit squarely into
traditional pharmacy type
classifications. For example,
compounding pharmacies and specialty
pharmacies, including but not limited to
manufacturer-limited-access
pharmacies, and those that may
specialize in certain drugs, disease
states, or both, are increasingly
common, and Part D enrollees
increasingly need access to their
services. As noted previously, in
implementing the any willing pharmacy
provision, we indicated that standard
terms and conditions could vary to
accommodate different types of
pharmacies so long as all similarly
situated pharmacies were offered the
same terms and conditions. In the
original rule to implement Part D (70 FR
4194, January 28, 2005), we defined
certain types of pharmacies (that is,
retail, mail order, Long Term Care
(LTC)/institutional, and I/T/U [Indian
Health Service, Indian tribe or tribal
organization, or urban Indian
organization]) at § 423.100 to
operationalize various statutory
provisions that specifically mention
these types of pharmacies (for example,
section 1860D–4(b)(1)(C)(iv) of the Act).
However, these definitions were never
intended to limit the scope of the any
willing pharmacy requirement.
Nevertheless, we have anecdotal
evidence that some Part D plan sponsors
have declined to permit willing
pharmacies to participate in their
networks on the grounds that they do
not meet the Part D plan sponsor’s
definition of a pharmacy type for which
it has developed standard terms and
conditions.
Section 1860D–4(b)(1)(A) of the Act
requires Part D plan sponsors to permit
the participation of ‘‘any pharmacy’’
that meets the standard terms and
conditions. Accordingly, it is not
appropriate for Part D plan sponsors to
offer standard terms and conditions for
network participation that are specific
to only one particular type of pharmacy,
and then decline to permit a willing
pharmacy to participate on the grounds
that it does not squarely fit into that
pharmacy type. Therefore, we are
clarifying in this preamble that although
Part D sponsors may continue to tailor
their standard terms and conditions to
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various types of pharmacies, Part D plan
sponsors may not exclude pharmacies
with unique or innovative business or
care delivery models from participating
in their contracted pharmacy network
on the basis of not fitting in the correct
pharmacy type classification. In
particular, we consider ‘‘similarly
situated’’ pharmacies to include any
pharmacy that has the capability of
complying with standard terms and
conditions for a pharmacy type, even if
the pharmacy does not operate
exclusively as that type of pharmacy.
Thus, Part D plan sponsors must not
exclude pharmacies from their retail
pharmacy networks solely on the basis
that they, for example, maintain a
traditional retail business while also
specializing in certain drugs or diseases
or providing home delivery service by
mail to surrounding areas. Or as another
example, a Part D plan sponsor must not
preclude a pharmacy from network
participation as a retail pharmacy
because that pharmacy also operates a
home infusion book of business, or vice
versa. Later in this section we are
proposing to codify our requirements for
when a Part D sponsor must provide a
pharmacy with a copy of its standard
terms and conditions. These
requirements, if finalized, would apply
to all pharmacies, regardless of whether
they fit into traditional pharmacy
classifications or have unique or
innovative business or care delivery
models.
b. Revise the Definition of Retail
Pharmacy and Add a Definition of MailOrder Pharmacy
Since the inception of the Part D
program, Part D statute, regulations, and
sub-regulatory guidance have referred to
‘‘mail-order’’ pharmacy and services
without defining the term ‘‘mail order’’.
Unclear references to the term ‘‘mail
order’’ have generated confusion in the
marketplace over what constitutes
‘‘mail-order’’ pharmacy or services. This
confusion has contributed to complaints
from pharmacies and beneficiaries
regarding how Part D plan sponsors
classify pharmacies for network
participation, the Plan Finder, and Part
D enrollee cost-sharing expectations.
Additionally, pharmacies that are not
mail-order pharmacies, but that may
offer home delivery services by mail
(relative to that pharmacy’s overall
operation), have complained because
Part D plan sponsors classified them as
mail-order pharmacies for network
participation and required them to be
licensed in all United States, territories,
and the District of Columbia, as would
be required for traditional mail-order
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pharmacies providing a mail-order
benefit.
In creating the Part D program, the
Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173) added
the convenient access provision of
section 1860D–4(b)(1)(C) of the Act and
the level playing field provision of
section 1860D–4(b)(1)(D) of the Act. The
convenient access provisions, as
codified at § 423.120(a)(1)–(7), require
Part D plan sponsors to secure the
participation in their networks a
sufficient number of pharmacies that
dispense (other than by mail order)
drugs directly to patients to ensure
convenient access (consistent with rules
established by the Secretary) and
includes special provisions for
standards with respect to Long Term
Care (LTC) and I/T/U pharmacies (as
defined at § 423.100). The level playing
field provision, as codified at
§ 423.120(a)(10), requires Part D plan
sponsors to permit enrollees to receive
the same benefits, including extended
days’ supplies, through a pharmacy
(other than a mail-order pharmacy) (that
is, a retail pharmacy), although the Part
D plan sponsor may require the enrollee
to pay a higher level of cost-sharing to
do so.
We currently define ‘‘retail
pharmacy’’ at § 423.100 to mean ‘‘any
licensed pharmacy that is not a mailorder pharmacy from which Part D
enrollees could purchase a covered Part
D drug without being required to receive
medical services from a provider or
institution affiliated with that
pharmacy.’’ Although we did not define
‘‘non-retail pharmacy,’’ § 423.120(a)(3)
provides that ‘‘a Part D plan’s contracted
pharmacy network may be
supplemented by non-retail pharmacies,
‘‘including pharmacies offering home
delivery via mail-order and institutional
pharmacies,’’ provided the convenient
access requirements are met (emphasis
added). In the preamble to our January
2005 final rule, we also stated,
‘‘examples of non-retail pharmacies
include I/T/U, FQHC, Rural Health
Center (RHC) and hospital and other
provider-based pharmacies, as well as
Part D [plan]-owned and operated
pharmacies that serve only plan
members’’ (see 70 FR 4249). We also
stated ‘‘home infusion pharmacies will
not count toward Part D plans’
pharmacy access requirements (at
§ 423.120(a)(1)) because they are not
retail pharmacies’’ (see 70 FR 4250).
Since 2005, our regulation at
§ 423.120(a) has included access
requirements for retail, home infusion,
LTC, and I/T/U pharmacies. While mailorder pharmacies could be considered
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one of several subsets of non-retail
pharmacies, we never defined the term
mail-order pharmacy in regulation, nor
have we specified access or service-level
requirements at § 423.120(a) for mailorder pharmacies.
As discussed previously, our
classifications of certain types of
pharmacies were never intended to limit
or exclude participation of pharmacies,
such as pharmacies with multiple lines
of business, that do not fit into one of
these classifications. Additionally, we
have recognized since our January 2005
final rule that pharmacies may have
multiple lines of business, including
retail pharmacies that may offer home
delivery services (see 70 FR 4235 and
4255).
Nonetheless, despite this guidance
and specific access requirements for
LTC and HI pharmacies at § 423.120(a),
some Part D plan sponsors interpreted
‘‘including pharmacies offering home
delivery via mail-order and institutional
pharmacies’’ at § 423.120(a)(3) to mean
that any pharmacies, even retail
pharmacies, that may offer home
delivery services by mail are mail-order
pharmacies. Although § 423.120(a)(3)
specifically allows for access to nonretail pharmacies, and we intended
‘‘including pharmacies offering home
delivery via mail-order and institutional
pharmacies’’ to mean home infusion
pharmacies, mail-order pharmacies,
long-term care pharmacies, or other
non-retail pharmacies that offer home
delivery services by mail, some Part D
plan sponsors began to require any
interested pharmacies, even retail
pharmacies, that may offer home
delivery services by mail to contract as
mail-order pharmacies in order to
participate in the plan’s contracted
pharmacy network. Because Part D plan
sponsors frequently require contracted
mail-order pharmacies to be licensed in
all United States, territories, and the
District of Columbia, the classification
of any pharmacies that may offer home
delivery services by mail as mail-order
pharmacies for purposes of contracting
with Part D plan sponsors as a network
pharmacy, including licensure
requirements, led to complaints from
beneficiaries and pharmacies, including
retail, specialty, and other pharmacies.
Although the language at
§ 423.120(a)(3) is specific to non-retail
pharmacies, there is a great deal of
confusion regarding mail-order
pharmacy in the Part D marketplace. We
believe it is inappropriate to classify
pharmacies as ‘‘mail-order pharmacies’’
solely on the basis that they offer home
delivery by mail. Because the statute at
section 1860D–4(b)(1)(D) of the Act
discusses cost sharing in terms of mail
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order versus other non-retail
pharmacies, mail-order cost sharing is
unique to mail-order pharmacies, as we
have proposed to define the term. For
example, while a non-retail home
infusion pharmacy may provide services
by mail, cost-sharing is commensurate
with retail cost-sharing. Therefore, to
clarify what a mail-order pharmacy is,
we propose to define mail-order
pharmacy at § 423.100 as a licensed
pharmacy that dispenses and delivers
extended days’ supplies of covered Part
D drugs via common carrier at mailorder cost sharing.
Although we propose to add the
definition of mail-order pharmacy, we
also believe that our existing definition
of retail pharmacy has contributed, in
part, to the confusion in the Part D
marketplace. As discussed previously,
the existing definition of ‘‘retail
pharmacy’’ at § 423.100 means ‘‘any
licensed pharmacy that is not a mailorder pharmacy from which Part D
enrollees could purchase a covered Part
D drug without being required to receive
medical services from a provider or
institution affiliated with that
pharmacy.’’ This definition, given the
rapidly evolving pharmacy practice
landscape, may be a source of some
confusion given that it expressly
excludes mail-order pharmacies, but not
other non-retail pharmacies such as
home infusion or specialty pharmacies.
We note that Medicaid recently
adopted a definition of ‘‘retail
community pharmacy.’’ Pursuant to
section 1927(k)(10) of the Act, as
amended by section 2503 of the
Affordable Care Act (ACA), for purposes
of Medicaid prescription drug coverage,
CMS defines ‘‘retail community
pharmacy’’ at § 447.504(a) as ‘‘an
independent pharmacy, a chain
pharmacy, a supermarket pharmacy, or
a mass merchandiser pharmacy that is
licensed as a pharmacy by the state and
that dispenses medications to the walkin general public at retail prices. Such
term does not include a pharmacy that
dispenses prescription medications to
patients primarily through the mail,
nursing home pharmacies, long-term
care facility pharmacies, hospital
pharmacies, clinics, charitable or notfor-profit pharmacies, government
pharmacies, or pharmacy benefit
managers.’’ Although this definition
adds greater clarity about the locations
or practice settings where retail
pharmacies may be found, we were
concerned that, for the purposes of the
Part D program, the mention of
additional types of pharmacies in our
regulation could contribute to more
confusion instead of less.
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However, two aspects of this
definition are similar to Part D statutory
language in section 1860D–4(b)(1)(C)
and (D) of the Act. The first is the
concept that a retail pharmacy is open
to dispense prescription medications to
the walk-in general public, which
echoes the requirement at section
1860D–4(b)(1)(C) of the Act that Part D
plan sponsors secure the participation
in their networks a sufficient number of
pharmacies that dispense (other than
mail order) drugs directly to patients.
The second is the concept that
prescriptions are dispensed at retail
prices, or for the Part D program, retail
cost-sharing, which echoes the
requirement at section 1860D–4(b)(1)(D)
of the Act that Part D plan sponsors
permit enrollees to receive benefits
(which may include a 90-day supply of
drugs or biologicals) through a
pharmacy (other than a mail-order
pharmacy), with any differential in
charge paid by such enrollees. Because
these concepts are consistent with the
Part D statute, we believe their inclusion
in our definition of retail pharmacy at
§ 423.100 would be appropriate.
Therefore, to clarify what a retail
pharmacy is, we propose to revise the
definition of retail pharmacy at
§ 423.100. First, we note that the
existing definition of ‘‘retail pharmacy’’
is not in alphabetical order, and we
propose a technical change to move it
such that it would appear in
alphabetical order. Second, we propose
to incorporate the concepts of being
open to the walk-in general public and
retail cost-sharing such that the
definition of retail pharmacy would
mean ‘‘any licensed pharmacy that is
open to dispense prescription drugs to
the walk-in general public from which
Part D enrollees could purchase a
covered Part D drug at retail cost sharing
without being required to receive
medical services from a provider or
institution affiliated with that
pharmacy.’’
Although we were originally unsure
whether Part D enrollees would need
routine access to specialty drugs and
specialty pharmacies beyond our out-ofnetwork requirements (see 70 FR 4250),
as the Part D program has evolved, the
use of specialty drugs in the Part D
program has grown exponentially and
will likely continue to do so. The June
2016 MedPAC report (available at
https://www.medpac.gov/docs/defaultsource/reports/chapter-6-improvingmedicare-part-d-june-2016-report-.pdf)
notes growth in the use of specialty
drugs in the Part D program is currently
outpacing other drugs and health
spending, generally. Such drugs are
often high-cost and complex, for
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diseases including, but not limited to,
cancer, Hepatitis C, HIV/AIDS, multiple
sclerosis, and rheumatoid arthritis. The
report also highlights that each year
since 2009, more than half of the United
States Food and Drug Administration
(FDA) approvals have been for specialty
drugs. Because many specialty drugs
can be self-administered on an
outpatient basis, even in the patient’s
home, and for chronic or long-term use,
increasing numbers of Part D enrollees
need routine access to specialty drugs
and specialty pharmacies. Nonetheless,
because the pharmacy landscape is
changing so rapidly, we believe any
attempt by us to define specialty
pharmacy could prematurely and
inappropriately interfere with the
marketplace, and we decline to propose
a definition of specialty pharmacy at
this time.
Similar to specialty pharmacy, we
also decline to further define non-retail
pharmacy. The pharmacy types that we
define and propose to modify and
define in regulation describe functional
lines of business that an individual
pharmacy may have, solely, or in
combination. However, unlike mail
order, home infusion, I/T/U, FQHC,
LTC, hospital, other institutional, other
provider-based, and ‘‘members-only’’
Part D plan-owned and operated
pharmacy types or lines of business that
comprise ‘‘non-retail’’, the term ‘‘nonretail’’ does not, itself, define a unique
pharmacy functional line of business,
and does not lend itself to a clear
definition. Consistent with statutory any
willing pharmacy and preferred
pharmacy provisions, mail-order
pharmacies may be preferred or nonpreferred. Part D plan sponsors may
establish unique non-preferred mailorder cost-sharing, or may establish
such non-preferred mail-order cost
sharing commensurate with those for
retail pharmacies.
We solicit comment on our proposed
definition of mail-order pharmacy and
our proposed modification to the
definition of retail pharmacy.
Specifically, we solicit comment
regarding whether stakeholders believe
these definitions strike the right balance
to resolve confusion in the marketplace,
afford Part D plan sponsor flexibility,
and incorporate recent innovations in
pharmacy business and care delivery
models.
c. Treatment of Accreditation and Other
Similar Any Willing Pharmacy
Requirements in Standard Terms and
Conditions
As noted previously, since the
beginning of the Part D program, we
have considered standard terms and
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conditions for network participation to
set a ‘‘floor’’ of minimum requirements
by which all similarly situated
pharmacies must abide. We further
believe it is reasonable for a Part D plan
sponsor to require additional terms and
conditions beyond those required in the
standard contract for network
participation for pharmacies to have
preferred status. Therefore, we
implemented the requirements of
section 1860D–4(b)(1)(A) of the Act by
requiring that standard terms and
conditions be ‘‘reasonable and
relevant,’’ but declined to further define
‘‘reasonable and relevant’’ in order to
provide Part D plans with maximum
flexibility to structure their standard
terms and conditions.
We note that a pharmacy’s ability to
participate in a preferred or specially
labeled subset of the Part D plan
sponsor’s larger contracted pharmacy
network or to offer preferred cost
sharing assumes that, at a minimum, the
pharmacy is able to participate in the
network. Where there are barriers to a
pharmacy’s ability to participate in the
network at all, it raises the question of
whether the standard (that is, entrylevel) terms and conditions are
reasonable and relevant.
It has been our longstanding policy
that Part D plans cannot restrict access
to certain Part D drugs to specialty
pharmacies within their Part D network
in such a manner that contravenes the
convenient access protections of section
1860D–4(b)(1)(C) of the Act and
§ 423.120(a) of our regulations. (See
Q&A at https://www.cms.gov/Medicare/
Prescription-Drug-Coverage/
PrescriptionDrugCovContra/Downloads/
QASpecialtyAccess_051706.pdf). In
2006, we informed sponsors they cannot
restrict access to drugs on the
‘‘specialty/high cost’’ tier to a subset of
network pharmacies, except when
necessary to meet FDA-mandated
limited dispensing requirements (for
example, Risk Evaluation and
Mitigation Strategies (REMS) processes)
or to ensure the appropriate dispensing
of Part D drugs that require
extraordinary special handling, provider
coordination, or patient education when
such extraordinary requirements cannot
be met by a network pharmacy (that is,
a contracted network pharmacy that
does not belong to the restricted subset).
Since 2006, it has been our general
policy that these types of special
requirements for Part D plan sponsors to
limit dispensing of specialty drugs be
directly linked to patient safety or
regulatory reasons.
As the specialty drug distribution
market has grown, so has the number of
organizations competing to distribute or
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dispense specialty drugs, such as
pharmacy benefit managers (PBMs),
health plans, wholesalers, health
systems, physician practices, retail
pharmacy chains, and small,
independent pharmacies (see the URAC
White Paper, ‘‘Competing in the
Specialty Pharmacy Market: Achieving
Success in Value-Based Healthcare,’’
available at https://info.urac.org/
specialtypharmacyreport). CMS is
concerned that Part D plan sponsors
might use their standard pharmacy
network contracts in a way that
inappropriately limits dispensing of
specialty drugs to certain pharmacies. In
fact, we have received complaints from
pharmacies that Part D plan sponsors
have begun to require accreditation of
pharmacies, including accreditation by
multiple accrediting organizations, or
additional Part D plan-/PBM-specific
credentialing criteria, for network
participation. We agree that there is a
role in the Part D program for pharmacy
accreditation, to the extent pharmacy
accreditation requirements in network
agreements promote quality assurance.
In particular, we support Part D plan
sponsors that want to negotiate an
accreditation requirement in exchange
for, for example, designating a
pharmacy as a specialty or preferred
pharmacy in the Part D plan sponsor’s
contracted pharmacy network. However,
we do not support the use of Part D plan
sponsor- or PBM-specific credentialing
criteria, in lieu of, or in addition to,
accreditation by recognized accrediting
organizations, apart from drug-specific
limited dispensing criteria such as FDAmandated REMS or to ensure the
appropriate dispensing of Part D drugs
that require extraordinary special
handling, provider coordination, or
patient education when such
extraordinary requirements cannot be
met by a network pharmacy (as
discussed previously). Moreover, we are
especially concerned about anecdotal
reports that allege such standard terms
and conditions for network
participation are waived, for example,
when a Part D plan sponsor needs a
particular pharmacy in its network in
order to meet convenient access
requirements, or even for certain
pharmacies that received preferred
pharmacy status.
If the premise of accreditation or Part
D plan sponsor- or PBM-specific
credentialing requirements is to ensure
more stringent quality standards, then
there is no reasonable explanation for
why a quality-related standard term or
condition could be waived for situations
when the Part D plan sponsor needs a
particular pharmacy in its contracted
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pharmacy network in order to meet the
convenient access standards or to
designate a particular pharmacy with
preferred pharmacy status. A term or
condition which can be dropped in such
situations is by definition not
‘‘standard’’ according to the plain
meaning of the word. Waivers or
inconsistent application of such
standard terms and conditions is an
explicit acknowledgement that such
terms and conditions are not necessary
for the ability of a pharmacy to perform
its core functions, and are thus neither
reasonable nor relevant for any willing
pharmacy standard terms and
conditions.
It has been our longstanding policy to
leave the establishment of pharmacy
practice standards to the states, and we
do not intend to change that now. We
continue to believe pharmacy practice
standards established by the states
provide applicable minimum standards
for all pharmacy practice standards, and
§ 423.153(c)(1) requires representation
that network providers are required to
comply with minimum standards for
pharmacy practice as established by the
states.
Additionally, because a pharmacy’s
ability to dispense certain medications
is not dependent on it having the ability
to dispense other medications, it is not
relevant for sponsors to require
pharmacies to dispense a particular
roster of certain drugs or drugs for
certain disease states in order to receive
standard terms and conditions for
network participation as a contracted
network pharmacy for that Part D plan
sponsor. Consequently, consistent with
our longstanding policy, discussed
previously, we would not expect Part D
plan sponsors to limit dispensing of
certain drugs or drugs for certain disease
states to a subset of network
pharmacies, except when necessary to
meet FDA-mandated limited dispensing
requirements (for example, Risk
Evaluation and Mitigation Strategies
(REMS) processes) or except as required
by applicable state law(s) if the
contracted network pharmacy is capable
of and appropriately licensed under
applicable state law(s) for doing so. We
solicit comment on this topic.
d. Timing of Contracting Requirements
CMS has received complaints over the
years from pharmacies that have sought
to participate in a Part D plan sponsor’s
contracted network but have been told
by the Part D plan sponsor that its
standard terms are not available until
the sponsor has completed all other
network contracting. In other instances,
pharmacies have told us that Part D plan
sponsors delay sending them the
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requested terms and conditions for
weeks or months or require pharmacies
to complete extensive paperwork
demonstrating their eligibility to
participate in the sponsor’s network
before the sponsor will provide a
document containing the standard terms
and conditions. CMS believes such
actions have the effect of frustrating the
intent of the any willing pharmacy
requirement, and as a result, we believe
it is necessary to codify specific
procedural requirements for the delivery
of pharmacy network standard terms
and conditions.
To this end, we propose to establish
deadlines by which Part D plan
sponsors must furnish their standard
terms and conditions to requesting
pharmacies. The first deadline we
propose to establish is the date by
which Part D plan sponsors must have
standard terms and conditions available
for pharmacies that request them. By
mid-September of each year, Part D plan
sponsors have signed a contract with
CMS committing them to delivering the
Part D benefit through an accessible
pharmacy network during the upcoming
year and have provided information
about that network to CMS for posting
on the Medicare Plan Finder Web site.
At that point, Part D plan sponsors
should have had ample opportunity to
develop standard contract terms and
conditions for the upcoming plan year.
Therefore, we propose to require at
§ 423.505(b)(18)(i) that Part D plan
sponsors have standard terms and
conditions readily available for
requesting pharmacies no later than
September 15 of each year for the
succeeding benefit year.
The second deadline we propose
concerns the promptness of Part D plan
sponsors’ responses to pharmacy
requests for standard terms and
conditions. As discussed previously, we
propose to require all Part D plan
sponsors to have standard terms and
conditions developed and ready for
distribution by September 15. Therefore,
we propose to require at
§ 423.505(b)(18)(ii) that, after that date
and throughout the following plan year,
Part D plan sponsors must provide the
applicable standard terms and
conditions document to a requesting
pharmacy within two business days of
receipt of the request. Part D plan
sponsors would be required to clearly
identify for interested pharmacies the
avenue (for example, phone number,
email address, Web site) through which
they can make this request. In instances
where the Part D plan sponsor requires
a pharmacy to execute a confidentiality
agreement with respect to the terms and
conditions, the Part D plan sponsor
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would be required to provide the
confidentiality agreement within two
business days after receipt of the
pharmacy’s request and then provide
the standard terms and conditions
within 2 business days after receipt of
the signed confidentiality agreement.
While Part D plan sponsors may ask
pharmacies to demonstrate that they are
qualified to meet the Part D plan
sponsors’ standard terms and conditions
before executing the contract, Part D
plan sponsors would be required to
provide the pharmacy with a copy of the
contract terms for its review within the
two-day timeframe. If finalized, this
proposed requirement would permit
pharmacies to do their due diligence
with respect to whether a Part D plan
sponsor’s standard terms and conditions
are acceptable at the same time Part D
plan sponsors are conducting their own
review of the qualifications of the
requesting pharmacy. We specifically
seek comment on whether these
timeframes are the right length to
address our goal but are operationally
realistic. We also request examples of
situations where a longer timeframe
might be needed.
13. Changes to the Days’ Supply
Required by the Part D Transition
Process
We promulgated regulations under
the authority of section 1860D–
11(d)(2)(B) of the Act to require Part D
sponsors to provide for an appropriate
transition process for enrollees
prescribed Part D drugs that are not on
the prescription drug plan’s formulary
(including Part D drugs that are on a
sponsor’s formulary but require prior
authorization or step therapy under a
plan’s utilization management rules).
These regulations are codified at
§ 423.120(b)(3). Specifically, these
regulations require that a Part D sponsor
ensure certain enrollees access to a
temporary supply of drugs within the
first 90 days under a new plan
(including drugs that are on a plan’s
formulary but require prior
authorization or step therapy under a
plan’s utilization management rules) by
ensuring a temporary fill when an
enrollee requests a fill of a nonformulary drug during this time period.
In the outpatient setting, the supply
must be for at least 30 days of
medication, unless the prescription is
written for less. In the LTC setting, this
supply must be for up to at least 91 days
and may be up to 98 days, consistent
with the dispensing increment, unless a
less amount is prescribed.
We propose to make two changes to
these regulations. First, we propose to
shorten the required transition days’
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supply in the long-term care (LTC)
setting to the same supply currently
required in the outpatient setting.
Second, we propose a technical change
to the current required days’ transition
supply in the outpatient setting to be a
month’s supply.
We provided our rationale for the
transition fill days’ supply requirement
in the LTC setting in CMS final rule
CMS–4085–F published on April 15,
2010 (75 FR 19678). In that final rule,
we stated that for a new enrollee in a
LTC facility, the temporary supply may
be for up to 31 days (unless the
prescription is written for less than 31
days), consistent with the dispensing
practices in the LTC industry. We
further stated that, due to the often
complex needs of LTC residents that
often involve multiple drugs and
necessitate longer periods in order to
successfully transition to new drug
regimens, we will require sponsors to
honor multiple fills of non-formulary
Part D drugs, as necessary during the
entire length of the 90-day transition
period. Thus, we required a Part D
sponsor to provide a LTC resident
enrolled in its Part D plan with at least
a 31 day supply of a prescription with
refills provided, if needed, up to a 93
days’ supply (unless the prescription is
written for less) (75 FR 19721). In a
subsequent final rule published on
April 15, 2011, we changed the 93 days’
supply to 91 to 98 days’ supply, as
noted previously, to acknowledge
variations in days’ supplies that could
result from the short-cycle dispensing of
brand drugs in the LTC setting (76 FR
21460 and 21526).
We received and responded to a
comment in the April 2010 final rule
about transition and a longer timeframe
in the LTC setting. We stated that a
number of commenters supported our
proposal of requiring an extended
transition supply for enrollees residing
in LTC facilities but that commenters
requested that we provide the same
protections to individuals requiring LTC
in community-based settings. In our
response to the comment, we indicated
that residents of LTC institutions were
more limited in access to prescribing
physicians hired by LTC facilities due to
a limited visitation schedule and more
likely to require extended transition
timeframes in order for the physician to
work with the facility and LTC
pharmacies on transitioning residents to
formulary drugs. We further stated that
we believed that community-based
enrollees, in contrast, were less limited
in their access to prescribing physicians
and did not require an extended
transition period to work with their
physicians to successfully transition to
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a formulary drug. (75 FR 19721). Thus,
the requirement to provide longer
transition fill days’ supply in the LTC
setting was a result of our concerns that
a longer timeframe would be needed in
the LTC setting.
After more than 10 years of
experience with Part D in LTC facilities,
we have not seen the concerns that we
expressed in the 2010 final rule
materialize. We are not aware of any
evidence that transition for a Part D
beneficiary in the LTC setting
necessarily takes any longer than it does
for a beneficiary in the outpatient
setting. We understand that it is
common for Part D beneficiaries in the
LTC setting to be cared for by on-staff
or consultant physicians and other
health professionals with prescriptive
authority who are under contract with
the LTC facility. Additionally, we also
understand that Part D beneficiaries in
the LTC setting are typically served by
an on-site pharmacy or one under
contract to service the LTC facility.
Given this structure of the LTC setting,
we understand that the LTC prescribers
and pharmacies are readily available to
address transition for Part D
beneficiaries in the LTC setting. In
addition, LTC facilities now have many
years’ experience with the Medicare
Part D program generally and transition
specifically.
While our concerns about the needed
timeframe for transition in the LTC
setting do not seem to have
materialized, we have continuing
concerns about drug waste and the costs
associated with such waste in the LTC
setting. Some of these concerns have
been addressed by our rule requiring the
short-cycle dispensing of brand drugs to
Part D beneficiaries in LTC facilities in
the April 2011 final rule. That rule,
codified at 42 CFR 423.154, requires
that all Part D sponsors require all
network pharmacies servicing LTC
facilities to dispense certain solid oral
doses of covered Part D brand-name
drugs to enrollees in such facilities in
no greater than 14-day increments at a
time to reduce drug waste. However, we
now believe that CMS could eliminate
additional drug waste and cost by no
longer requiring a longer transition
days’ supply in the LTC setting.
Therefore, we are proposing that the
transition days’ supply in the LTC
setting be the same as it is in the
outpatient setting.
Our second proposed change involves
the current required 30 days’ transition
supply in the outpatient setting, which
is codified at § 423.120(b)(3)(iii)(A). We
have received a number of inquiries
from Part D sponsors regarding
scenarios involving medications that do
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not easily add up to a 30 days’ supply
when dispensed (for example, drugs
that typically are dispensed in 28-day
packages). Historically, our response to
those inquiries has been that the
regulation requires plans to provide at
least 30 days of medication, which
requires plans to dispense more than
one package to comply with the text of
the regulation. However, the intent of
the regulation was for the transition fill
in the outpatient setting to be for at least
a month’s supply. For this reason, we
are proposing a change to the regulation
from ‘‘30 days’’ to ‘‘a month’s supply.’’
If finalized, this change would mean
that the regulation would require that a
transition fill in the outpatient setting be
for a supply of at least a month of
medication, unless the prescription is
written by the prescriber for less.
Therefore, the supply would have to be
for at least the days’ supply that the
applicable Part D prescription drug
plans has approved as its retail month’s
supply in its Plan Benefit Package
submitted to CMS for the relevant plan
year, again, unless the prescription is
written by the prescriber for less.
Together, our two proposals—if
finalized—would mean that § 423.120
(b)(3)(iii)(A) would be consolidated into
§ 423.120 (b)(3)(iii) to read that the
transition process must ‘‘[e]nsure the
provision of a temporary fill when an
enrollee requests a fill of a nonformulary drug during the time period
specified in paragraph (b)(3)(ii) of this
section (including Part D drugs that are
on a plan’s formulary but require prior
authorization or step therapy under a
plan’s utilization management rules) by
providing a one-time, temporary supply
of at least a month’s supply of
medication, unless the prescription is
written by a prescriber for less than a
month’s supply and requires the Part D
sponsor to allow multiple fills to
provide up to a total of a month’s
supply of medication.’’ Section
423.120(b)(3)(iii)(B) would be
eliminated.
Please note that we also are proposing
in II.A.15. Expedited Substitutions of
Certain Generics and Other Midyear
Formulary Changes to revise
§ 423.120(b)(3)(i)(B) to state that the
transition process is not applicable in
cases in which a Part D sponsor
substitutes a generic drug for a brand
name drug as specified under paragraph
§ 423.120(b)(3)(iv) or § 423.120(b)(6) of
this section.
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14. Expedited Substitutions of Certain
Generics and Other Midyear Formulary
Changes (§§ 423.100, 423.120, and
423.128)
Section 1860D–4(b)(3)(E) of the Act
requires Part D sponsors to provide
‘‘appropriate notice’’ to the Secretary,
affected enrollees, authorized
prescribers, pharmacists, and
pharmacies regarding any decision to
either: (1) Remove a drug from its
formulary, or (2) make any change in the
preferred or tiered cost-sharing status of
a drug. Section 423.120(b)(5)
implements that requirement by
defining appropriate notice as that given
at least 60 days prior to such change
taking effect during a given contract
year. We have recognized that both
current and prospective enrollees of a
prescription drug plan need to have the
most current formulary information by
the time of the annual election period
described in § 423.38(b) in order to
enroll in the Part D plan that best suits
their particular needs. To this end,
§ 423.120(b)(6) prohibits Part D sponsors
and MA organizations from removing a
covered Part D drug from a formulary or
changing the preferred or tiered costsharing status of a covered Part D drug
between the beginning of the annual
election period described in
§ 423.38(b)(2) and 60 days subsequent to
the beginning of the contract year
associated with that annual election
period. Our concern has been to prevent
situations in which Part D sponsors
change their formularies early in the
contract year without providing
appropriate notice as described in
§ 423.120(b)(5) to new enrollees. Thus,
§ 423.120(b)(6) has required that all
materials distributed during the annual
election period reflect the formulary the
Part D sponsor will offer at the
beginning of the contract year for which
it is enrolling Part D eligible
individuals. Lastly, under
§ 423.128(d)(2)(iii), Part D sponsors
must also provide current and
prospective Part D enrollees with at
least 60 days’ notice regarding the
removal or change in the preferred or
tiered cost-sharing status of a Part D
drug on its Part D plan’s formulary. The
general notice requirements and burden
are currently approved by OMB under
control number 0938–0964 (CMS–
10141).
MedPAC observed that the continuity
of a plan’s formulary is very important
to all beneficiaries in order to maintain
access to the medications that were
offered by the plan at the time the
beneficiaries enrolled. While we agree
with MedPAC’s assertion, we
acknowledge the need to balance
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formulary continuity with requests from
Part D sponsors to provide greater
flexibility to make midyear changes to
formularies. Indeed, MedPAC made its
observation in a report that suggested
that CMS’s rules regarding formulary
changes warranted examination. There
MedPAC pointed out, among other
things, that CMS could provide Part D
sponsors with greater flexibility to make
changes such as adding a generic drug
and removing its brand name version
without first receiving agency approval.
(MedPAC, Report to the Congress:
Medicare and the Health Care Delivery
System, June 2016, page 192.)
This proposed rule would implement
MedPAC’s recommendation by
permitting generic substitutions without
advance approval as specified later in
this section. We have also taken this
opportunity to examine our regulations
to determine how to otherwise facilitate
the use of certain generics. Currently,
Part D sponsors can add drugs to their
formularies at any time; however, there
is no guarantee that enrollees will
switch from their brand name drugs to
newly added generics. Therefore, Part D
sponsors seeking to better manage the
Part D benefit may choose to remove a
brand name drug, or change its
preferred or tiered cost-sharing, and
substitute or add its therapeutic
equivalent. But even this takes some
time: Under current regulations, Part D
sponsors must submit formulary change
requests to CMS and provide specified
notice before removing drugs or
changing their cost-sharing (except for
unsafe drugs or those withdrawn from
the market). As noted earlier, the
general notice requirements and burden
are currently approved by OMB under
control number 0938–0964 (CMS–
10141). Also, as detailed previously,
§ 423.120(b)(5)(i) requires 60 days’
notice to specified entities prior to the
effective date of changes and 60 days’
direct notice to affected enrollees or a 60
day refill. The ability of Part D sponsors
to make generic substitutions as
approved by CMS is further limited by
the fact that as detailed previously,
under § 423.120(b)(6), Part D sponsors
generally cannot remove drugs or make
cost-sharing changes from the start of
the annual election period (AEP) until 2
months after the plan year begins.
We propose to provide Part D
sponsors with more flexibility to
implement generic substitutions as
follows: The proposed provisions would
permit Part D sponsors meeting all
requirements to immediately remove
brand name drugs (or to make changes
in their preferred or tiered cost-sharing
status), when those Part D sponsors
replace the brand name drugs with (or
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add to their formularies) therapeutically
equivalent newly approved generics—
rather than having to wait until the
direct notice and formulary change
request requirements have been met.
The proposed provisions would also
allow sponsors to make those specified
generic substitutions at any time of the
year rather than waiting for them to take
effect 2 months after the start of the plan
year. Related proposals would require
advance general and retrospective direct
notice to enrollees and notice to entities;
clarify online notice requirements;
except specified generic substitutions
from our transition policy; and conform
our definition of ‘‘affected enrollees.’’
Lastly, to address stakeholder requests
for greater flexibility to make midyear
formulary changes in general, we are
also proposing to decrease the days of
enrollee notice and refill required when
(aside from generic substitution and
drugs deemed unsafe or withdrawn
from the market) drug removal or
changes in cost-sharing will affect
enrollees.
Specifically, we propose to add a new
paragraph (b)(5)(iv) to § 423.120 to
permit Part D sponsors to immediately
remove, or change the preferred or
tiered cost-sharing of, brand name drugs
and substitute or add therapeutically
equivalent generic drugs provided
specified requirements are met. The
generic drug would need to be offered
at the same or a lower cost-sharing and
with the same or less restrictive
utilization management criteria
originally applied to the brand name
drug. The Part D sponsor could not have
as a matter of timing been able to
previously request CMS approval of the
change because the generic drug had not
yet been released to the market. Also,
the Part D sponsor must have previously
provided prospective and current
enrollees general notice that certain
generic substitutions could occur
without additional advance notice. As
proposed, we would permit Part D
sponsors to substitute a generic drug for
a brand name drug immediately rather
than make that change effective, for
instance, at the start of the next month.
However, we solicit comment as to
whether there would be a reason to
require such a delay, especially given
the fact that we are proposing not to
require advance direct notice (rather,
only advance general notice) or CMS
approval. The proposed regulation
would also require that, when generic
drug substitutions occur, Part D
sponsors must provide direct notice to
affected enrollees and other specified
notice to CMS and other entities. We
also propose to specify in a revision to
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§ 423.120(b)(3)(i)(B) that the transition
process is not applicable in cases in
which a Part D sponsor substitutes a
generic drug for a brand name drug
under paragraph (b)(6) of this section.
A proposed exception to
§ 423.120(b)(6) would permit Part D
sponsors to make the above specified
changes (removing covered Part D drugs
from their formularies, or changing their
cost-sharing, when substituting or
adding their generic equivalents) during
any time of the year. That section
generally provides—with a current
exception only for unsafe drugs and
drugs removed from the market—that
Part D sponsors generally cannot
remove drugs or make cost-sharing
changes between the beginning of the
AEP and 60 days after the plan year
begins. We believe that revising this
provision would assist Part D sponsors
by permitting substitutions to take place
effect during a longer time period than
is currently permitted. Given that the
previous exception would permit
generic substitutions prior to the start of
the calendar year, we also propose to
conform the definition of ‘‘affected
enrollees’’ to clarify that applicable
changes must affect their access to drugs
during the current plan year.
We are aware that some may be
concerned about not requiring advance
CMS approval or advance direct notice
to enrollees prior to making the
permitted generic substitutions, or
requiring a transition fill. But we would
only permit immediate substitution
when the generics are deemed
therapeutically equivalent to the brand
name drug being removed by the
Federal Drug and Food Administration
(FDA) and meet other requirements
specified later in this section. This
would not apply to follow-on biological
products under current FDA guidance.
The FDA has, in fact noted that, ‘‘A
generic drug is a medication created to
be the same as an existing approved
brand-name drug in dosage form, safety,
strength, route of administration,
quality, and performance
characteristics.’’ (‘‘Generic Drug Facts,’’
see FDA Web site, https://www.fda.gov/
Drugs/ResourcesForYou/Consumers/
BuyingUsingMedicineSafely/
UnderstandingGenericDrugs/
ucm167991.htm, accessed September
19, 2017, hereafter FDA, ‘‘Abbreviated
New Drug Application (ANDA):
Generics’’.) Additionally, immediate
generic substitution has long been an
established bedrock of commercial
insurance, and we are not aware of any
harm to the insured resulting from such
policies.
Also, we do not believe a transition
policy would be appropriate for these
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situations: The purpose of the transition
process is to make sure that the medical
needs of enrollees are safely
accommodated in that they do not go
without their medications or face an
abrupt change in treatment. If the
proposal to permit Part D sponsors to
immediately substitute generics for
brand name drugs upon market release
were finalized, most enrollees in this
situation would not have had an
opportunity to try the drug prior to the
drug substitution to see how it worked
for them. In other words, an enrollee
could not be certain that a generic
substitution would not work, would
constitute an abrupt change in
treatment, or that the enrollee would be
better served by taking no medication
rather than the generic unless he or she
had previously tried the generic drug.
Moreover, we have built beneficiary
protections into the proposed
provisions. First, proposed
§ 423.120(b)(5)(iv)(A) addresses safety
concerns by permitting Part D sponsors
to add only therapeutically equivalent
generic drugs. This means the FDA must
have approved the generic drug in an
abbreviated new drug application
pursuant to section 505(j) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C.
355(j)), and it must be listed with the
innovator drug in the publication
‘‘Approved Drug Products with
Therapeutic Equivalence Evaluations’’
(commonly known as the Orange Book)
in which the FDA identifies drug
products approved on the basis of safety
and effectiveness by the FDA, and be
considered by the FDA to be
therapeutically equivalent to the brand
name drug.
Second, we share the concern that
prospective enrollees could be misled
by Part D sponsors that deliberately
offer brand name drugs during open
enrollment periods only to remove them
or change their cost-sharing as quickly
as possible during the plan year. We
believe that our proposed provision
would address such problems: Under
proposed § 423.120(b)(5)(iv)(B), a Part D
sponsor cannot substitute a generic for
a brand name drug unless it could not
have previously requested formulary
approval for use of that drug. As a
matter of operations, CMS permits Part
D sponsors to submit formularies, and
their respective change requests, only
during certain windows. Under
proposed § 423.120(b)(5)(iv)(B), a Part D
sponsor could not remove a brand name
drug or change its preferred or tiered
cost-sharing if that Part D sponsor could
have included its generic equivalent
with its initial formulary submission or
during a later update window.
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However, to be certain, that we have
not missed practical or other
complications that would hinder the
ability of Part D sponsors to timely seek
approval within the CMS timeframes,
we solicit comment as to whether we
should consider immediate substitution,
potentially in limited circumstances, of
specified generics for which Part D
sponsors could have previously
requested formulary approval. At the
same time, we remain mindful of
beneficiary protections and are hesitant
to simply permit substitution of any
generics regardless of how long they
have been on the market. Accordingly,
we welcome suggestions of any other
practical cut-offs, as well as information
on possible effects on beneficiaries that
could result if we were to permit Part D
sponsors to substitute specified generics
that have been on the market for longer
time periods.
Third, we believe the two-pronged
approach of the proposed provision
would provide appropriate notice for
this type of formulary change. The
general notice requirement of proposed
§ 423.120(b)(iv)(C) would require that,
before making any generic substitutions,
a Part D sponsor provide all prospective
and current enrollees with notice in the
formulary and other applicable
beneficiary communication materials
stating that the Part D sponsor can
remove, or change the preferred or
tiered cost-sharing of, any brand name
drug immediately without additional
advance notice (beyond the general
advance notice) when a new equivalent
generic is added. This would, for
instance, include the Evidence of
Coverage (EOC). Proposed
§ 423.120(b)(iv)(C) would also require
that this general notice advise
prospective and current enrollees that
they will get direct notice about any
specific drug substitutions made that
would affect them and that the direct
notice would advise them of the steps
they could take to request coverage
determinations and exceptions.
Therefore, the general notice would
advise enrollees about what might take
place before any changes occur.
When the Part D sponsor substitutes
a generic for a brand name drug, the
proposed direct notice provision,
§ 423.120(b)(5)(iv)(E), would require the
Part D sponsor to provide affected
enrollees with direct notice consistent
with § 423.120(b)(5)(ii). We currently
require Part D sponsors to provide this
information 60 days before such
changes are made. Under the proposed
changes, enrollees would receive the
same information they receive under the
current regulation—the only difference
being that the notice could be provided
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after the effective date of the generic
substitution. As discussed earlier, under
the proposed provision Part D sponsors
seeking to make immediate
substitutions would be newly required
to have previously provided general
notice in beneficiary communication
materials such as formularies and EOCs
that certain generic substitutions could
take place without additional advance
notice.
We understand there may be concerns
that the direct notice identifying the
specific drug substitution would arrive
after the formulary change has already
taken place. As explained previously,
we believe generic substitutions pose no
threat to enrollee safety. Also, as noted
earlier, we are proposing to revise
§ 423.120(b)(6) to permit generic
substitutions to take place throughout
the entire year. This means that, under
the proposed provision, a Part D
sponsor meeting all the requirements
would be able to substitute a generic
drug for a brand name drug well before
the actual start of the plan year (for
instance, if a generic drug became
available on the market days after the
summer update). There is nothing in our
regulation that would prohibit advance
notice and, in fact, we would encourage
Part D sponsors to provide direct notice
as early as possible to any beneficiaries
who have reenrolled in the same plan
and are currently taking a brand name
drug that will be replaced with a generic
drug with the start of the next plan year.
We would also anticipate that Part D
sponsors will be promptly updating the
formularies posted online and provided
to potential beneficiaries to reflect any
permitted generic substitutions—and at
a minimum meeting any current timing
requirements provided in applicable
guidance. At this time we are not
proposing to set a regulatory deadline
by which Part D sponsors must update
their formularies before the start of the
new plan year. However, if we were to
finalize this provision and thereafter
find that Part D sponsors were not
timely updating their formularies, we
would reexamine this policy. And we
would note, as regards timing, that
§ 423.128(d)(2)(iii) requires that the
current formulary posted online be
updated at least monthly.
In cases in which the Part D sponsor
would necessarily have to send notice
after the fact, for example instances in
which a drug is not released to the
market until after the beginning of the
plan year and the Part D sponsor then
immediately makes a generic
substitution, the proposed general
notice would have already advised
enrollees that they would receive
information about any specific drug
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generic substitutions that affected them
and that they would still be able to
request coverage determinations and
exceptions. While the timing would
most likely mean most enrollees would
only be able to make such requests after
receiving a generic drug fill, in the vast
majority of cases, an enrollee could not
be certain that a generic substitution
would not work unless he or she
actually tried the generic drug.
Additionally, we are strongly
encouraging Part D sponsors to provide
the retrospective direct notices of these
generic substitutions (including direct
notice to affected enrollees and notice to
entities including CMS) no later than by
the end of the month after which the
change becomes effective. While
sponsors are required to report this
information to both enrollees and
entities including CMS, we currently are
not proposing to codify the end of
month timing requirement; however, if
we were to finalize this provision and
thereafter find that Part D sponsors were
not timely providing retrospective
notice, we would reexamine this policy.
Fourth, enrollees would be protected
from higher cost-sharing under
proposed paragraph (b)(5)(iv)(A), which
would require Part D sponsors to offer
the generic with the same or lower costsharing and the same or less restrictive
utilization management criteria as the
brand name drug.
We also believe requirements and
guidance regarding beneficiary
communications will continue to
provide beneficiary protections. Section
423.128(e)(5) currently requires Part D
sponsors to furnish directly to enrollees
an explanation of benefits (EOB) that
includes any applicable formulary
changes for which Part D plans are
required to provide notice as described
in § 423.120(b)(5). As noted previously,
§ 423.128(d)(2)(iii) currently requires
Part D sponsors to post at least 60 days’
notice of removals and cost-sharing
changes online for current and
prospective Part D enrollees. In light of
our proposal for generic substitutions
described previously, we propose to
modify § 423.128(d)(2)(iii) to require
Part D sponsors to provide ‘‘timely’’
notice under 423.120(b)(5). This would
mean that, under the proposed
provision, a Part D sponsor would need
to provide at least 30 days’ online notice
to affected enrollees before removing
drugs or making cost-sharing changes
except when adding a therapeutically
equivalent generic as specified, and as
has currently been the requirement,
removing unsafe or withdrawn drugs.
Part D sponsors could provide online
notice after the effective date of changes
only in those limited instances.
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As regards content, § 423.128(d)(2)(iii)
requires—and would continue to do so
under the proposed revisions—that Part
D sponsors post online notice regarding
any removal or change in the preferred
or tiered cost-sharing status of a Part D
drug on its Part D plan’s formulary.
Posting information online related to
removing a specific drug or changing its
cost-sharing solely to meet the content
requirements of § 423.128(d)(2)(iii)
cannot replace general notice under
proposed § 423.120(b)(5)(iv)(C); direct
notice to affected enrollees under
§ 423.120(b)(5)(ii); or notice to CMS
when required under § 423.120(b)(5).
For instance, as noted in the January,
28, 2005 final rule (70 FR 4265), we
view online notification under
§ 423.128(d)(2)(iii) on its own as an
inadequate means of providing specific
information to the enrollees who most
need it, and we consider it an additional
way that Part D sponsors provide notice
of formulary changes to affected
enrollees.
However, we do not mean to restrict
or otherwise affect other rules governing
the provisions of materials online. For
instance, if Part D sponsors were able to
fulfill CMS marketing and beneficiary
communications requirements by
posting a specific document online
rather than providing it in paper, the
fact the document was posted online
would not preclude it from providing
general notice required under our
proposed provisions. In other words, if
otherwise valid, provision of general
notice in a document posted online
could suffice as notice as regards that
specified document under proposed
§ 423.120(b)(5)(iv)(C). In contrast, we do
not wish to suggest that posting one
type of notice online would necessarily
suffice to meet distinct notice
requirements. For instance, providing
the general advance notice that would
be required under § 423.120(b)(5)(iv)(C)
in a document posted online could not
meet the online content requirements of
§ 423.128(d)(2)(iii) related to providing
information about removing drugs or
changing their cost-sharing. Nor, as
noted previously, could the opposite
apply: Posting the content required
under § 423.128(d)(2)(iii) online could
not fulfill the advance general notice
requirements that would be required
under proposed § 423.120(b)(5)(iv)(C)
(or suffice to provide direct notice to
affected enrollees under
§ 423.120(b)(5)(ii) or notice to CMS
under § 423.120(b)(5)).
In addition to requiring the direct
notice to affected enrollees discussed
previously, proposed § 423.120(b)(iv)(D)
would also require Part D sponsors to
provide the following entities with
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notice of the generic substitutions
consistent with § 423.120(b)(5)(ii): CMS,
State Pharmaceutical Assistance
Programs (as defined in § 423.454),
entities providing other prescription
drug coverage (as described in
§ 423.464(f)(1)), authorized prescribers,
network pharmacies, and pharmacists.
(To avoid repetition, we propose to
revise the provision to refer to all of
these entities as ‘‘CMS and other
specified entities’’ for the purposes of
§ 423.120(b).) Even though, as proposed,
a Part D sponsor that met all of the
requirements would be able to make the
generic substitution immediately
without submitting any formulary
change requests to CMS, the Part D
sponsor must include the generic
substitution in the next available
formulary submission to CMS. We note
that Part D plans can determine the
most effective means to communicate
formulary change information to State
Pharmaceutical Assistance Programs,
entities providing other prescription
drug coverage, authorized prescribers,
network pharmacies, and pharmacists
and that, under our proposed provision,
we would consider online posting
sufficient for those purposes.
Lastly as part of our reexamination of
the need to generally provide Part D
sponsors greater flexibility in formulary
changes, we plan to decrease the
amount of direct notice required in
cases where the removal of a drug or
change in cost-sharing status will affect
enrollees currently taking the drug.
(This would contrast proposed notice
requirements that would apply to
immediate substitution of specified
generics. There we would also require
advance general notice that such
changes can occur, and direct notice of
the specific changes could be provided
after their effective date.) Section
423.120(b)(5)(i) currently requires at
least 60 days’ notice to all entities prior
to the effective date of changes and at
least 60 days’ direct notice to affected
enrollees or a 60 day refill upon the
request of an affected enrollee. We
propose to reduce the notice
requirement in both instances to at least
30 days and the refill requirement to a
month. Beneficiaries would be affected,
and therefore receive the 30 days’ notice
or a month refill, in cases in which, for
instance, Part D sponsors planned to
add prior authorization requirements as
a result of new safety-related
information or clinical guidelines. This
proposal would permit Part D sponsors
to institute formulary changes in half
the time.
We are, again, aware that some may
be concerned that we are reducing the
number of days advance notice afforded
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to enrollees in these instances. But
again, we believe current CMS
requirements provide the necessary
beneficiary protections, and that 30
(rather than 60) days’ notice still will
afford enrollees sufficient time to either
change to a covered alternative drug or
to obtain needed prior authorization or
an exception for the drug affected by the
formulary change. Existing CMS
regulations establish robust beneficiary
protections in the coverage and appeals
process, including expedited
adjudication timeframes for exigent
circumstances (maximum timeframe of
24 hours for coverage determinations
and 72 hours for level 1 and 2 appeals),
and a requirement that Part D plan
sponsors automatically forward all
untimely coverage determinations and
redeterminations to the IRE for
independent review. Further, while 60
days’ notice is currently required, we
have no evidence to suggest that
beneficiaries are currently utilizing the
full 60 days. The reduction to 30 days
would align these requirements with the
timeframes for transition fills. And, with
over 11 years of program experience, we
have no evidence to suggest that 30 days
has been an insufficient temporary days
supply for transition fills.
(Note we are also proposing to amend
the refill amount to months (namely a
month) rather than days (it was 60 days
previously) to conform to a proposed
revision to the transition policy
regulations at § 423.120(b)(3).) For
further discussion, see section III.A.15
of this proposed rule, Changes to the
Transition.)
Summary: The following provides a
high level summary of notice changes
proposed in § 423.120(b). Details on
these requirements appear in the
preamble and proposed provisions. This
summary does not address other
proposed changes (for instance, changes
to transition requirements); notice
provisions we do not propose to change
(for instance, notice for safety edits); or
other rules that may also apply (for
instance, marketing and beneficiary
communications rules regarding
formulary updates).
• Notice required for expedited
substitutions of certain generics: Part D
sponsors that would otherwise be
permitted to make certain generic
substitutions as specified under
proposed § 423.120(b)(5)(iv) would be
required to provide the following types
of notice:
++ Advance general notice in the
formulary and EOC and other applicable
beneficiary communications stating that
such changes may occur without notice.
++ Notice that identifies the specific
drug substitution made—which may be
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provided after the effective date of the
change—as follows:
—Direct notice to affected enrollees.
—Notice posted online for current and
prospective enrollees.
—Notice to CMS.
—Notice to other entities.
• Notice and refill required for certain
other midyear formulary changes: Part D
sponsors that would be otherwise
permitted to remove or change the
preferred or tiered cost-sharing status of
drugs would be required to provide the
below types of notice and refills under
proposed § 423.120(b)(5)(i) and (ii).
However, these notice requirements do
not apply when removing drugs deemed
unsafe by the FDA or removed from the
market by manufacturers (for applicable
requirements see § 423.120(b)(5)(iii).)
• For affected enrollees—
++ Advance direct written notice at
least 30 days prior to the effective date;
or
++ Written notice of the change and
a month supply of the brand name drug
under the same terms as provided before
the change; and
• For entities and other enrollees:
++ Advance notice identifying the
specific drug changes to be made at least
30 days prior to the effective date of the
change as follows:
—Notice posted online for current and
prospective enrollees;
—Notice to CMS; and
—Notice to other entities.
15. Treatment of Follow-On Biological
Products as Generics for Non-LIS
Catastrophic and LIS Cost Sharing
Similar to the introduction of an
abbreviated approval pathway for
generic drugs provided by the HatchWaxman Act in 1984 to spur more
competition through quicker approvals
and introduction of lower cost
therapeutic alternatives in the
marketplace, Congress enacted the
‘‘Biologics Price Competition and
Innovation Act of 2009’’ to balance
innovation and consumer interests.
Specifically, section 7002 of the ACA
amended section 351 of the Public
Health Service Act (PHS Act) (42 U.S.C.
262), adding a subsection (k) to create
an abbreviated licensure pathway for
follow-on biological products that are
demonstrated to be either ‘‘biosimilar’’
to or ‘‘interchangeable’’ with a United
States Food and Drug Administration
(FDA) licensed reference biological
product. According to the FDA, ‘‘a
biosimilar product is a biological
product that is approved based on a
showing that it is highly similar to an
FDA-approved biological product,
known as a reference product, and has
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no clinically meaningful differences in
terms of safety and effectiveness from
the reference product. Only minor
differences in clinically inactive
components are allowable in biosimilar
products.’’ However, ‘‘an
interchangeable biological product is
biosimilar to an FDA-approved
reference product and meets additional
standards for interchangeability. An
interchangeable biological product may
be substituted for the reference product
by a pharmacist without the
intervention of the health care provider
who prescribed the reference product.’’
(See https://www.fda.gov/Drugs/
DevelopmentApprovalProcess/
HowDrugsareDevelopedandApproved/
ApprovalApplications/Therapeutic
BiologicApplications/Biosimilars/)
Biosimilar biological products are, by
definition, not interchangeable, and are
not substitutable without a new
prescription. Follow-on biological
products are listed in the FDA’s Purple
Book: Lists of Licensed Biological
Products with Reference Product
Exclusivity and Biosimilarity or
Interchangeability Evaluations,
available at https://www.fda.gov/Drugs/
DevelopmentApprovalProcess/How
DrugsareDevelopedandApproved/
ApprovalApplications/Therapeutic
BiologicApplications/Biosimilars/
ucm411418.htm. Part D plan sponsors
are also encouraged to monitor the
FDA’s Web site for new biologic (BLA)
approvals at https://
www.accessdata.fda.gov/scripts/cder/
drugsatfda/index.cfm?fuseaction=
Reports.ReportsMenu.
Sections 1860D–2(b)(4) and 1860D–
14(a)(1)(D)(ii–iii) of the Act specify
lower Part D maximum copayments for
low-income subsidy (LIS) eligible
individuals for generic drugs and
preferred drugs that are multiple source
drugs (as defined in section
1927(k)(7)(A)(i) of the Act) than are
available for all other Part D drugs.
Currently the statutory cost sharing
levels are set at the maximums. CMS
does not interpret the statutory language
to mean that each plan can establish
lower LIS cost sharing on drugs, but
rather, that CMS, through rulemaking,
could establish lower cost sharing than
the maximum amount, and it would
therefore be the same for all Part D
plans.
For the Part D program, CMS defines
a ‘‘generic drug’’ at § 423.4 as a drug for
which an application under section
505(j) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(j)) is
approved. Biosimilar and
interchangeable biological products do
not meet the section 1927(k)(7)
definition of a multiple source drug or
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the CMS definition of a generic drug at
§ 423.4. Consequently, follow-on
biological products are subject to the
higher Part D maximum copayments for
LIS eligible individuals and non-LIS
Part D enrollees in the catastrophic
portion of the benefit applicable to all
other Part D drugs. While the statutory
maximum LIS copayment amounts
apply to all phases of the Part D benefit,
the statute only specifies non-LIS
maximum copayments for the
catastrophic phase. CMS clarified the
applicable LIS and non-LIS catastrophic
cost sharing in a March 30, 2015 Health
Plan Management System (HPMS)
memorandum. We advised that
additional guidance may be issued for
interchangeable biological products at a
later date.
Nonetheless, treatment of follow-on
biological products, which are generally
high-cost, specialty drugs, as brands for
the purposes of non-LIS catastrophic
and LIS cost sharing generated a great
deal confusion and concern for plans
and advocates alike, and CMS received
numerous requests to redefine generic
drug at § 423.4. Advocates expressed
concerns that LIS enrollees were
required to pay the higher brand
copayment for biosimilar biological
products. Stakeholders who contacted
us asserted treatment of biosimilar
biological products as brands for
purposes of LIS cost-sharing creates a
disincentive for LIS enrollees to choose
lower cost alternatives. Some of these
stakeholders also expressed similar
concerns for non-LIS enrollees in the
catastrophic portion of the benefit.
We agree and propose to revise the
definition of generic drug at § 423.4 to
include follow-on biological products
approved under section 351(k) of the
PHS Act (42 U.S.C. 262(k)) solely for
purposes of cost-sharing under sections
1860D–2(b)(4) and 1860D–
14(a)(1)(D)(ii–iii) of the Act. Lower cost
sharing for lower cost alternatives will
improve enrollee incentives to choose
follow-on biological products over more
expensive reference biological products,
and will reduce costs to both Part D
enrollees and the Part D program.
While CMS generally seeks to
encourage the utilization of lower cost
follow-on biological products, we
propose to limit inclusion of follow-on
biological products in the definition of
generic drug to purposes of non-LIS
catastrophic cost sharing and LIS cost
sharing only because we want to avoid
causing any confusion or
misunderstanding that CMS treats
follow-on biological products as generic
drugs in all situations. We do not
believe that would be appropriate
because the same FDA requirements for
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generic drug approval (for example,
therapeutic equivalence) do not apply to
biosimilar biological products, currently
the only available follow-on biological
products. Accordingly, CMS currently
considers biosimilar biological products
more like brand name drugs for
purposes of transition or midyear
formulary changes because they are not
interchangeable. In these contexts,
treating biosimilar biological products
the same as generic drugs would
incorrectly signal that CMS has deemed
biosimilar biological products (as
differentiated from interchangeable
biological products) to be
therapeutically equivalent. This could
jeopardize Part D enrollee safety and
may generate confusion in the
marketplace through conflation with
other provisions due to the many places
in the Part D statute and regulation
where generic drugs are mentioned.
Therefore, we believe the proposed
change to treat follow-on biological
products as generics should be limited
to purposes of non-LIS catastrophic and
LIS cost sharing only.
We propose to modify the definition
of generic drug at § 423.4 as follows:
• We propose to redesignate the
existing definition as paragraph (i).
• We propose to add a new paragraph
(ii) to state ‘‘for purposes of cost sharing
under sections 1860D–2(b)(4) and
1860D–14(a)(1)(D) of the Act only, a
biological product for which an
application under section 351(k) of the
Public Health Service Act (42 U.S.C.
262(k)) is approved.’’
We solicit comment on this proposed
change to the definition of generic drug
at § 423.4.
16. Eliminating the Requirement To
Provide PDP Enhanced Alternative (EA)
to EA Plan Offerings With Meaningful
Differences (§ 423.265)
CMS has the authority under section
1857(e)(1) of the Act, incorporated for
Part D by section 1860D–12(b)(3)(D) of
the Act, to establish additional contract
terms that CMS finds ‘‘necessary and
appropriate,’’ as well as authority under
section 1860D–11(d)(2)(B) of the Act to
propose regulations imposing
‘‘reasonable minimum standards’’ for
Part D sponsors. Using this authority we
previously issued regulations to ensure
that multiple plan offerings by Part D
sponsors represent meaningful
differences to beneficiaries with respect
to benefit packages and plan cost
structures. At that time, separate
meaningful difference rules were
concurrently adopted for MA and standalone PDPs. This section addresses
proposed changes to our regulations
pertaining strictly to meaningful
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differences in PDP plan offerings. One
of the underlying principles in the
establishment of the Medicare Part D
prescription drug benefit is that both
market competition and the flexibility
provided to Part D sponsors in the
statute would result in the offering of a
broad array of cost effective prescription
drug coverage options for Medicare
beneficiaries. We continue to support
the concept of offering a variety of
prescription drug coverage choices for
Medicare beneficiaries consistent with
our commitment to afford beneficiaries
access to the prescription drugs they
need.
PDP sponsors must offer throughout a
PDP region a basic plan that consists of:
Standard deductible and cost sharing
amounts (or actuarial equivalents); an
initial coverage limit based on a set
dollar amount of claims paid on the
beneficiary’s behalf during the plan
year; a coverage gap phase; and finally,
catastrophic coverage that applies once
a beneficiary’s out-of-pocket
expenditures for the year have reached
a certain threshold. Prior to our
adopting regulations requiring
meaningful differences between each
PDP sponsor’s plan offerings in a PDP
Region, our guidance allowed sponsors
that offered a basic plan to offer
additional basic plans in the same
region, as long as they were actuarially
equivalent to the basic plan structure
described in the statute. These sponsors
could also offer enhanced alternative
plans that provide additional value to
beneficiaries in the form of reduced
deductibles, reduced copays, coverage
of some or all drugs while the
beneficiary is in the gap portion of the
benefit, coverage of drugs that are
specifically excluded as Part D drugs
under paragraph (2)(ii) of the definition
of Part D drug under § 423.100, or some
combination of those features. As we
have gained experience with the Part D
program, we have made consistent
efforts to ensure that the number and
type of plan benefit packages PDP
sponsors may market to beneficiaries are
no more numerous than necessary to
afford beneficiaries choices from among
meaningfully different plan options. To
that end, CMS sets differential out-ofpocket cost (OOPC) targets each year,
using an analysis performed on the
previous year’s bid submissions, to
ensure contracting organizations submit
bids that clearly offer differences in
value to beneficiaries. Published
annually in the Call Letter, the
threshold differentials are defined for a
basic and enhanced plan, as well as for
two enhanced plans, when offered by a
parent organization in the same region.
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For example, in CY 2018, a basic and
enhanced plan are required at minimum
to provide for a $20 out-of-pocket
difference, while two enhanced plans
are required to have at least a $30
differential. Over the years, the
thresholds have ranged from $18 to $23
between basic and enhanced plans, and
from $12 to $34 between two enhanced
plans. We issued regulations in 2010, at
§ 423.265(b)(2), that established our
authority to deny bids that are not
meaningfully different from other bids
submitted by the same organization in
the same service area. Our application
of this authority has eliminated PDP
sponsors’ ability to offer more than one
basic plan in a PDP region since all
basic plan benefit packages must be
actuarially equivalent to the standard
benefit structure discussed in the
statute, and in guidance we have also
limited to two the number of enhanced
alternative plans that we approve for a
single PDP sponsor in a PDP region. As
part of the same 2010 rulemaking, we
also established at § 423.507(b)(1)(iii)
our authority to terminate existing plan
benefit packages that do not attract a
number of enrollees sufficient to
demonstrate their value in the Medicare
marketplace. Both of these authorities
have been effective tools in encouraging
the development of a variety of plan
offerings that provide meaningful
choices to beneficiaries.
We continue to be committed to
maintaining benefit flexibility and
efficiency throughout both the MA and
Part D programs. We wish to continue
the trend of using transparency,
flexibility, program simplification, and
innovation to transform the MA and
Part D programs for Medicare enrollees
to have options that fit their individual
health needs. In our April 2017 Request
for Information (RFI), we offered
stakeholders the opportunity to submit
their ideas on how to better accomplish
these goals. In response to the RFI, we
received two comments specific to the
meaningful difference requirement for
PDPs. One commenter urged us to
eliminate meaningful difference
requirements to allow market
competition to determine the
appropriate number and type of plan
offerings. Alternatively, it was suggested
that if the meaningful difference
standard is retained, we should revise it
to allow plans to be treated as
meaningfully different based on
differences in plan characteristics not
previously considered by CMS. The
commenter contends that the
meaningful difference requirement, as
currently applied, unfairly limits the
number of plan offerings and
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beneficiary choices. Specifically, it was
argued that the meaningful difference
test does not recognize premiums as
elements constituting meaningful
differences, despite this being an
extremely important factor for
beneficiaries in making enrollment
decisions. Another commenter
recommended that we lower the OOPC
differentials between basic and
enhanced PDP offerings but at a
minimum, we should lower the OOPC
differential between enhanced PDP
offerings.
While we received relatively few
comments related to meaningful
difference in response to the RFI, we did
receive a number of comments both in
support of and opposing the proposed
increase in the meaningful difference
threshold between enhanced PDP
offerings we announced in the Draft CY
2018 Call Letter. Those in favor of our
proposal believe that the increase would
help to ensure that sponsors are offering
meaningfully different plans and would
minimize beneficiary confusion.
Commenters opposed to the proposal
argued that the increase would lead to
more expensive plans and would
effectively limit plan choice. They
argued that expanding OOPC
differentials would ultimately create
more beneficiary disruption as sponsors
would have to consolidate plans that do
not meet the new threshold. This result
would directly contradict our request
that plan sponsors consider options to
minimize beneficiary disruption.
Commenters suggested that we should
utilize OOPC estimates as they were
originally intended, to ensure that
beneficiaries receive a minimum
additional value from enhanced plans.
They added that steady and reasonable
OOPC thresholds will give beneficiaries
more consistent benefits and lower
premiums.
We appreciate the importance of
ensuring adequate plan choice for
beneficiaries and the value of multiple
plan offerings with a diversity of
benefits, now and in the future. We
agree with the argument that two
enhanced plans offered by a plan
sponsor could vary with respect to their
plan characteristics and benefit design,
such that they might appeal to different
subsets of Medicare enrollees, but in the
end have similar out-of-pocket
beneficiary costs. We continue to
believe however that a meaningful
difference, that takes into account outof-pocket costs, be maintained between
basic and enhanced plans to ensure that
there is a meaningful value for
beneficiaries given the supplemental
Part D premium associated with the
enhanced plans. Therefore, effective for
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Contract Year (CY) 2019, we propose to
revise the Part D regulations at § 423.265
(b)(2) to eliminate the PDP EA to EA
meaningful difference requirement,
while maintaining the requirement that
enhanced plans be meaningfully
different from the basic plan offered by
a plan sponsor in a service area. We
believe these proposed revisions will
help us accomplish the balance we wish
to strike with respect to encouraging
competition and plan flexibilities while
still providing PDP choices to
beneficiaries that represent meaningful
choices in benefit packages. Anticipated
impacts to this change include: (1) A
modest increase in the number of plans
that would be offered by PDP sponsors
(if the EA to EA meaningful difference
requirement was the sole barrier to a
PDP sponsors offering a second EA plan
in a region) and (2) a potential decrease
in the average supplemental Part D
premium.
We also announce our future intent to
reexamine, with the benefit of
additional information, how we define
the meaningful difference requirement
between basic and enhanced plans
offered by a PDP sponsor within a
service area. We recognize that the
current OOPC methodology is only one
method for evaluating whether the
differences between plan offerings are
meaningful, and will investigate
whether the current OOPC model or an
alternative methodology should be used
to evaluate meaningful differences
between PDP offerings. While we intend
to conduct our own analyses, we also
seek stakeholder input on how to define
meaningful difference as it applies to
basic and enhanced Part D plans. CMS
will continue to provide guidance for
basic and enhanced plan offering
requirements in the annual Call Letter.
Beneficiaries can continue to rely on
the many resources CMS makes
available, such as the Medicare Plan
Finder (MPF), 1–800–MEDICARE and
the Medicare and You Handbook, to
assist them and their caregivers in
making the best plan choices that meet
their individual health needs. To the
extent that CMS finds its elimination
results in potential beneficiary
confusion or harm, CMS will consider
reinstating the meaningful difference
requirement through future rule making
or consider taking other action.
17. Request for Information Regarding
the Application of Manufacturer Rebates
and Pharmacy Price Concessions to
Drug Prices at the Point of Sale
a. Introduction
Part D sponsors and their contracted
PBMs have been increasingly successful
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in recent years at negotiating price
concessions from pharmaceutical
manufacturers, network pharmacies,
and other such entities. Between 2010
and 2015, the amount of all forms of
price concessions received by Part D
sponsors and their PBMs increased
nearly 24 percent per year, about twice
as fast as total Part D gross drug costs,
according to the cost and price
concession data Part D sponsors
submitted to CMS for payment
purposes.
The data Part D sponsors submit to
CMS as part of the annual required
reporting of direct or indirect
remuneration (DIR) show that
manufacturer rebates, which comprise
the largest share of all price concessions
received, have accounted for much of
this growth.47 The data also show that
manufacturer rebates have grown
dramatically relative to total Part D
gross drug costs each year since 2010.
Rebate amounts are negotiated between
manufacturers and sponsors or their
PBMs, independent of CMS, and are
often tied to the sponsor driving
utilization toward a manufacturer’s
product through, for instance, favorable
formulary tier placement and costsharing requirements.
The DIR data show similar trends for
pharmacy price concessions. Pharmacy
price concessions, net of all pharmacy
incentive payments, have grown faster
than any other category of DIR received
by sponsors and PBMs and now buy
down a larger share of total Part D gross
drug costs than ever before. Such price
concessions are negotiated between
pharmacies and sponsors or their PBMs,
again independent of CMS, and are
often tied to the pharmacy’s
performance on various measures
defined by the sponsor or its PBM.
When manufacturer rebates and
pharmacy price concessions are not
reflected in the price of a drug at the
point of sale, beneficiaries might see
lower premiums, but they do not benefit
through a reduction in the amount they
must pay in cost-sharing, and thus, end
up paying a larger share of the actual
cost of a drug. Moreover, given the
increase in manufacturer rebates and
pharmacy price concessions in recent
years, the point-of-sale price of a drug
that a Part D sponsor reports on a PDE
record as the negotiated price is
rendered less transparent at the
individual prescription level and less
47 Sponsors report all DIR to CMS annually by
category at the plan level. DIR categories include:
Manufacturer rebates, administrative fees above fair
market value, price concessions for administrative
services, legal settlements affecting Part D drug
costs, pharmacy price concessions, drug costrelated risk-sharing settlements, etc.
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representative of the actual cost of the
drug for the sponsor when it does not
include such discounts. Finally,
variation in the treatment of rebates and
price concessions by Part D sponsors
may have a negative effect on the
competitive balance under the Medicare
Part D program, as explained later in
this section.
At the time the Part D program was
established, we believed, as discussed
in the Part D final rule that appeared in
the January 28, 2005 Federal Register
(70 FR 4244), that market competition
would encourage Part D sponsors to
pass through to beneficiaries at the
point of sale a high percentage of the
manufacturer rebates and other price
concessions they received, and that
establishing a minimum threshold for
the rebates to be applied at the point of
sale would only serve to undercut these
market forces. However, actual Part D
program experience has not matched
expectations in this regard. In recent
years, only a handful of plans have
passed through a small share of price
concessions to beneficiaries at the point
of sale. Instead, because of the
advantages that accrue to sponsors in
terms of premiums (also an advantage
for beneficiaries), the shifting of costs,
and plan revenues, from the way rebates
and other price concessions applied as
DIR at the end of the coverage year are
treated under the Part D payment
methodology, sponsors may have
distorted incentives as compared to
what we intended in 2005.
Therefore, in this request for
information we discuss considerations
related to and solicit comment on
requiring sponsors to include at least a
minimum percentage of manufacturer
rebates and all pharmacy price
concessions received for a covered Part
D drug in the drug’s negotiated price at
the point of sale. Feedback received will
be used for consideration in future
rulemaking on this topic.
b. Background
Section 1860D–2(d)(1) of the Act
requires that a Part D sponsor provide
beneficiaries with access to negotiated
prices for covered Part D drugs. Under
our current regulations at § 423.100, the
negotiated price is the price paid to the
network pharmacy or other network
dispensing provider for a covered Part D
drug dispensed to a plan enrollee that
is reported to CMS at the point of sale
by the Part D sponsor. This point of sale
price is used to calculate beneficiary
cost-sharing. More broadly, the
negotiated price is the primary basis by
which the Part D benefit is adjudicated,
and is used to determine plan,
beneficiary, manufacturer (in the
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coverage gap), and government liability
during the course of the payment year,
subject to final reconciliation following
the end of the coverage year.
Under current law, when not
explicitly required to do so for certain
types of pharmacy price concessions,
Part D sponsors can choose whether to
reflect various price concessions,
including manufacturer rebates, they or
their intermediaries receive in the
negotiated price. Specifically, section
1860D–2(d)(1)(B) of the Act merely
requires that negotiated prices ‘‘shall
take into account negotiated price
concessions, such as discounts, direct or
indirect subsidies, rebates, and direct or
indirect remunerations, for covered part
D drugs . . . .’’ In other words, Part D
sponsors are allowed, but generally not
currently required, to apply rebates and
other price concessions at the point of
sale to lower the price upon which
beneficiary cost-sharing is calculated.
To date, sponsors have elected to
include rebates and other price
concessions in the negotiated price at
the point-of-sale only very rarely. All
rebates and other price concessions that
are not included in the negotiated price
must be reported to CMS as DIR at the
end of the coverage year and are used
in our calculation of final plan
payments, which, under the statute, are
required to be based on costs actually
incurred by Part D sponsors, net of all
applicable DIR.
(1) Premiums and Plan Revenues
The main benefit to a Part D
beneficiary of price concessions applied
as DIR at the end of the coverage year
(and not to the negotiated price at the
point of sale) comes in the form of a
lower plan premium. A sponsor must
factor into its plan bid an estimate of the
DIR expected to be generated—that is, it
must lower its estimate of plan liability
by a share of the projected DIR—which
has the effect of reducing the price of
coverage under the plan. Under the
current Part D benefit design, price
concessions that are applied post-pointof-sale, as DIR, reduce plan liability, and
thus premiums, more than price
concessions applied at the point of sale.
When price concessions are applied to
reduce the negotiated price at the point
of sale, some of the concession amount
is apportioned to reduce beneficiary
cost-sharing, as explained in this
section, instead of plan and government
liability; this is not the case when price
concessions are applied post-point-ofsale, where the majority of the
concession amount accrues to the plan,
and the remainder accrues to the
government. Therefore, to the extent
that plan bids reflect accurate DIR
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estimates, the rebates and other price
concessions that Part D sponsors and
their PBMs negotiate, but do not include
in the negotiated price at the point of
sale, put downward pressure on plan
premiums, as well as the government’s
subsidies of those premiums. The
average Part D basic beneficiary
premium has grown at an average rate
of only about 1 percent per year
between 2010 and 2015, and is
projected to decline in 2018, due in part
to sponsors’ projecting DIR growth to
outpace the growth in projected gross
drug costs each year. The average
Medicare direct subsidy paid by the
government to cover a share of the cost
of coverage under a Part D plan has also
declined, by an average of 8.1 percent
per year between 2010 and 2015, partly
for the same reason.
However, any DIR received that is
above the projected amount factored
into a plan’s bid contributes primarily to
plan profits, not lower premiums. The
risk-sharing construct established under
Part D by statute allows sponsors to
retain as plan profit the majority of all
DIR that is above the bid-projected
amount.48 Our analysis of Part D plan
payment and cost data indicates that in
recent years, DIR amounts Part D
sponsors and their PBMs actually
received have consistently exceeded
bid-projected amounts.
To capture the relative premium and
other advantages that price concessions
applied as DIR offer sponsors over lower
point-of-sale prices, sponsors sometimes
opt for higher negotiated prices in
exchange for higher DIR and, in some
cases, even prefer a higher net cost drug
over a cheaper alternative. This may put
upward pressure on Part D program
costs and, as explained below, shift
costs from the Part D sponsor to
beneficiaries who utilize drugs in the
form of higher cost-sharing and to the
government through higher reinsurance
and low-income cost-sharing subsidies.
(2) Cost-Shifting
When manufacturer rebates and other
price concessions are not reflected in
the negotiated price at the point of sale
(that is, applied instead as DIR at the
end of the coverage year), beneficiary
cost-sharing, which is generally
calculated as a percentage of the
negotiated price, becomes larger,
covering a larger share of the actual cost
of a drug. Although this is especially
true when a Part D drug is subject to
coinsurance, it is also true when a drug
48 Medicare shares risk with Part D sponsors on
the drug costs for which they are liable using
symmetrical risk corridors and through the payment
of 80 percent reinsurance in the catastrophic phase
of the benefit.
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is subject to a copay because Part D
rules require that the copay amount be
at least actuarially equivalent to the
coinsurance required under the defined
standard benefit design. For many Part
D beneficiaries who utilize drugs and
thus incur cost-sharing expenses, this
means, on average, higher overall out-ofpocket costs, even after accounting for
the premium savings tied to higher DIR.
For the millions of low-income
beneficiaries whose out-of-pocket costs
are subsidized by Medicare through the
low income cost-sharing subsidy, those
higher costs are borne by the
government. This potential for costshifting grows increasingly pronounced
as manufacturer rebates and pharmacy
price concessions increase as a
percentage of gross drug costs and
continue to be applied outside of the
negotiated price. Numerous research
studies further suggest that the higher
cost-sharing that results can impede
beneficiary access to necessary
medications, which leads to poorer
health outcomes and higher medical
care costs for beneficiaries and
Medicare.49 50 51 These effects of higher
beneficiary cost-sharing under the
current policies regarding the
determination of negotiated prices must
be weighed against the impact on
beneficiary access to affordable drugs of
the lower premiums that are currently
charged for Part D coverage.
Moreover, beneficiaries progress
through the four phases of the Part D
benefit as their total gross drug costs
and cost-sharing obligations increase.
Because both of these values are
calculated based on the negotiated
prices reported at the point of sale,
when manufacturer rebates and
pharmacy price concessions are not
applied at the point of sale, the higher
negotiated prices that result move Part
D beneficiaries more quickly through
the Part D benefit. This, in turn, shifts
more of the total drug spend into the
catastrophic phase, where Medicare
liability is highest (80 percent, paid as
reinsurance) and plan liability, after the
closing of the coverage gap, is lowest (15
percent). Part D program experience
further suggests that sponsors are able to
offset their already limited liability in
the catastrophic phase by capturing
additional rebates from manufacturers,
49 Michele Heisler et al., ‘‘The Health Effects of
Restricting Prescription Medication Use Because of
Cost,’’ Medical Care, 626–634 (2004).
50 Peter Bach, ‘‘Limits on Medicare’s Ability to
Control Rising Spending on Cancer Drugs,’’ The
New England Journal of Medicine, 360, 626–633
(2009).
51 Sonya Blesser Streeter et al., ‘‘Patient and Plan
Characteristics Affecting Abandonment of Oral
Oncolytic Prescriptions,’’ Journal of Oncology
Practice, 7, no. 3S, 46S–51S (2011).
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the largest share of which, under current
Part D rules, as explained previously,
are allocated to reduce plan liability.
Consistent with this benefit, we note
that sponsors have negotiated more high
price-high rebate arrangements,
especially in recent years, which has
caused the proportion of costs for which
the plan sponsor is at risk to shrink
when those higher rebates are not
passed on at the point of sale. Under
current rules, therefore, Part D sponsors
may have weak incentives, and, in some
cases even, no incentive, to lower prices
at the point of sale or to choose lower
net cost alternatives to high cost-highly
rebated drugs when available.
(3) Transparency and Differential
Treatment
Given the significant growth in
manufacturer rebates and pharmacy
price concessions in recent years, when
such amounts are not reflected in the
negotiated price, at least to some degree,
the true price of a drug to the plan is
not available to consumers at the point
of sale, nor is it reflected on the
Medicare Prescription Drug Plan Finder
(Plan Finder) tool. Consequently,
consumers cannot efficiently minimize
both their costs and costs to the
taxpayers by seeking and finding the
lowest-cost drug or the lowest-cost drug
and pharmacy combination.
The quality of information available
to consumers is even less conducive to
producing efficient choices when
rebates and other price concessions are
treated differently by different Part D
sponsors; that is, when they are applied
to the point-of-sale price to differing
degrees and/or estimated and factored
into plan bids with varying degrees of
accuracy. First, when some sponsors
include price concessions in negotiated
prices while others treat them as DIR,
negotiated prices no longer have a
consistent meaning across the Part D
program, undermining meaningful price
comparisons and efficient choices by
consumers. Second, if a sponsor’s bid is
based on an estimate of net plan liability
that is understated because the sponsor
has been applying price concessions as
DIR at the end of the coverage year
rather than using them to reduce the
negotiated price at the point of sale, it
follows that the sponsor may be able to
submit a lower bid than a competitor
that applies price concessions at the
point of sale or opts for lower net cost
alternatives to high cost-highly rebated
drugs when available. This lower bid
results in a lower plan premium that
must be paid by enrollees in the plan,
which could allow the sponsor to
capture additional market share. The
resulting competitive advantage
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accruing to one sponsor over another in
this scenario stems only from a
technical difference in how plan costs
are reported to CMS. Therefore, the
opportunity for differential treatment of
rebates and price concessions could
result in bids that are not comparable
and in premiums that are not valid
indicators of relative plan efficiency.
c. Manufacturer Rebates to the Point of
Sale
We are soliciting comment from
stakeholders on how we might most
effectively design a policy requiring Part
D sponsors to pass through at the point
of sale a share of the manufacturer
rebates they receive, in order to mitigate
the effects of the DIR construct 52 on
costs to both beneficiaries and
Medicare, competition, and efficiency
under Part D. In this section, we put
forth for consideration potential
parameters for such a policy and seek
detailed comments on their merits, as
well as the merits of any alternatives
that might better serve our goals of
reducing beneficiary costs and better
aligning incentives for Part D sponsors
with the interests of beneficiaries and
taxpayers. We specifically seek
comment on how this issue could be
addressed without increasing
government costs and without reducing
manufacturer payments under the
coverage gap discount program. We
encourage all commenters to provide
quantitative analytical support for their
ideas wherever possible.
Specifically, we are considering
requiring, through future rulemaking,
Part D sponsors to include in the
negotiated price reported to CMS for a
covered Part D drug a specified
minimum percentage of the costweighted average of rebates provided by
drug manufacturers for covered Part D
drugs in the same therapeutic category
or class. We will refer to the rebate
amount that we would require be
included in the negotiated price for a
covered Part D drug as the ‘‘point-of-sale
rebate.’’ Under such a policy, sponsors
could apply as DIR at the end of the
coverage year only those manufacturer
rebates received in excess of the total
point-of-sale rebates. In the unlikely
event that total manufacturer rebate
dollars received for a drug are less than
the total point-of-sale rebates, the
difference would be reported at the end
of the coverage year as negative DIR.
52 We use the term ‘‘DIR construct’’ to refer to
how DIR is treated under current Part D payment
rules and the advantages that accrue to Part D
sponsors when they apply rebates and other price
concessions as DIR at the end of the coverage year.
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(1) Specified Minimum Percentage
We are considering setting the
minimum percentage of manufacturer
rebates that must be passed through at
the point of sale at a point less than 100
percent of the applicable average rebate
amount for drugs in the same drug
category or class. For operational ease,
we are considering setting the same
minimum percentage, which we would
specify in regulation, for all rebated
drugs in all years—that is, the minimum
percentage would not change by drug
category or class or by year.
It is important to note that we are not
considering requiring that 100 percent
of rebates be applied at the point of sale.
As explained earlier, the statutory
definition of negotiated price in section
1860D–2(d)(1)(B) of the Act requires
that ‘‘negotiated prices shall take into
account negotiated price concessions,
such as discounts, direct or indirect
subsidies, rebates, and direct or indirect
remunerations, for covered part D drugs
. . .’’ (emphasis added). We believe this
language, particularly when read in the
context of the requirement in section
1860D–2(d)(2) of the Act that Part D
sponsors report the aggregate price
concessions made available ‘‘by a
manufacturer which are passed through
in the form of lower subsidies, lower
monthly beneficiary prescription drug
premiums, and lower prices through
pharmacies and other dispensers,’’
contemplates that Part D sponsors have
some flexibility in determining how to
apply manufacturer rebates in order to
reduce costs under the plan.
Furthermore, we are cognizant of the
fact that while requiring that a higher
share of rebates be included in the
negotiated price would more
meaningfully address the concerns
highlighted earlier and lead to larger
cost-sharing savings for many
beneficiaries, doing so would also result
in larger premium increases for all
beneficiaries, as discussed in greater
detail later in this section, and lower
flexibility for Part D sponsors in regards
to the treatment of manufacturer rebates,
and thus, for some sponsors, weaker
incentives to participate in the Part D
program. We aim to set the minimum
percentage of rebates that must be
applied at the point of sale at a point
that allows an appropriate balance
between these outcomes and thus
achieves the greatest possible increase
in beneficiary access to affordable drugs.
We are soliciting comment on the
minimum percentage of manufacturer
rebates that should be reflected in the
negotiated price in order to achieve this
balance. We are also seeking comment
on how and how often, if at all, that
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minimum percentage should be updated
by CMS, and what factors should be
considered in making any such change.
We request that commenters provide
analytical justification for their ideas
wherever possible. We also are seeking
comment on the effect that specifying a
minimum percentage of rebates that
must be reflected in the negotiated price
would have on the competition for
rebates under Part D and the total rebate
dollars received by Part D sponsors and
PBMs.
(2) Applicable Average Rebate Amount
We are also particularly interested in
stakeholder feedback regarding the
following methodology to calculate the
applicable average rebate amount, a
specified minimum percentage of which
would be required to be applied at the
point of sale:
• Rebate Year: We are considering
requiring that point-of-sale rebate
amounts be based on average
manufacturer rebates expected to be
received for each drug category or class
under the manufacturer rebate
agreements for the current payment
year, not historical rebate experience.
To the extent that rebate agreements are
structured with contingencies that
would be unclear at the point of sale,
sponsors would be required to base the
point-of-sale rebate amount on a good
faith estimate of the rebates expected to
be received. We solicit comments on
whether this approach would ensure
that the price available to beneficiaries
at the point of sale reflects the actual
price of a drug at that time, or if an
alternative approach would do so more
effectively.
• Rebated Drugs: We are considering
requiring that the average rebate amount
be calculated using only drugs for
which manufacturers provide rebates.
We believe including non-rebated drugs
in this calculation would serve only to
drive down the average manufacturer
rebates, which would dampen the
intended effects of any change.
Additionally, we would likely
consider each drug product with a
unique 11-digit national drug code
(NDC) separately for purposes of
calculating the average rebate amount.
PDE and rebate data submitted to CMS
show that gross drug costs and rebate
rates under a plan can vary even for the
same drugs produced by the same
manufacturer that are packaged
differently and thus have different
NDC–11 identifiers. Therefore, we
believe that the average rebate amounts
are more likely to be accurate when
calculated based on the gross drug cost
and rebate data at the 11-digit NDC
level. We solicit comment on whether
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specifying such a requirement would
also serve to ensure consistency in how
average rebates are calculated across
sponsors, which would make prices
more comparable across Part D plans
and enforcement easier.
• Plan-Level Average: We are
considering requiring that average
rebate amounts be calculated separately
for each plan (that is, calculated at the
plan-benefit-package level). In other
words, the same average rebate amount
would not apply to the point-of-sale
price for a covered drug across all plans
under one contract, nor across all
contracts under one sponsor. We believe
this approach would result in the
calculation of more accurate average
rebates because the PDE and rebate data
that are submitted by sponsors
demonstrate that gross drug costs and
rebate levels are not the same across all
plans under one contract, nor across all
contracts under one sponsor. This
approach would also largely be
consistent with how sponsors develop
cost estimates for their Part D bids
because benefit designs, including
formulary structure, and assumptions
about enrollee characteristics and
utilization vary by plan, even for
multiple plans under one contract.
Similarly, final payments are calculated
by CMS at the plan level, based on the
data submitted by the sponsor. We
solicit comment on whether the most
appropriate approach for calculating the
average rebate amount for point-of-sale
application would be to do so at the
plan level, using plan-specific
information, given that moving a
portion of manufacturer rebates to the
point of sale would impact plan liability
and payments, or if another approach
would be more appropriate.
• Drug Category or Class: We are
considering requiring that the
manufacturer rebate amount applied to
the point-of-sale price for a covered
drug be based on the plan’s average
rebate amount calculated for the rebated
drugs in the same category or class. We
are considering requiring sponsors to
determine the average rebate amount at
the therapeutic category or class level,
rather than a drug-specific rebate
amount, in order to maintain the
confidentiality of any manufacturersponsor/PBM pricing relationship with
respect to an individual drug. Given that
rebate rates are typically negotiated at
the individual drug level, we believe
that the drug category/class-average
approach we are considering would
help maintain fair competition among
drug manufacturers, as well as Part D
sponsors, by preventing competitors
from reverse engineering the particulars
of any proprietary pricing arrangement.
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This approach would also increase price
transparency over the status quo,
especially at the drug category or class
level, and improve market competition
and efficiency under Part D as a result.
In addition to feedback on this general
approach and our rationale for it, we are
seeking comment, in particular, on the
drug classification system that Part D
sponsors should be required to use to
calculate their drug category/class-level
average rebate amounts and why that
system would be most appropriate for
use in such a point-of-sale rebate policy.
We also are seeking comment on the
effect of calculating average rebates at
the drug category/class level on
competition and, in turn, on the total
rebate dollars received.
We are also particularly interested in
comments on how an average rebate
amount should be calculated for a drug
that is the only rebated drug in its drug
category or class. An alternative
approach would be necessary in this
case because the average rebate amount
calculated under the general approach
we have described above would equal
the drug-specific rebate amount, which,
if included in the negotiated price,
could result in the release of proprietary
pricing information. We ask that
commenters explain how any
alternative they suggest for the only
rebated drug scenario would address
this concern and comment on the level
of price transparency that would be
achieved under the suggested
alternative.
• Weighting: We are considering
requiring that when calculating the
applicable average rebate amount for a
particular drug category, the
manufacturer rebate amount for each
individual drug in that category be
weighted by the total gross drug costs
incurred for that drug, under the plan,
over the most recent month, quarter,
year, or another time period to be
specified in future rulemaking for which
cost data is available. We believe a
weighted average is more accurate than
a simple average because sponsors do
not receive the same level of rebates for
all drugs in a particular drug category or
class, and thus, contrary to the
assumption underlying a simple
average, not all drugs contribute equally
to the final average rebate percentage for
a drug category or class received by the
sponsor under a plan at the end of a
payment year. A gross drug costweighted average ensures that drugs
with higher utilization, higher costs, or
both will be more important to the final
average rebate rate realized for the drug
category or class than lower utilization,
lower cost, or lower cost-lower
utilization drugs in the category or class.
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In the case of a drug with less time on
the market than the time period for
which cost data would be required
under this weighting approach or of a
plan that has not been active in the Part
D program for the time period required
under the weighting approach, we are
considering requiring that the drug’s
rebate amount be weighted by a
sponsor’s projection of total gross drug
costs for the plan that takes into account
any plan-specific cost experience
already available. If no plan-specific
cost experience is available when
calculating average rebate amounts,
such as at the beginning of a payment
year for a new plan, are considering
requiring sponsors to use the same drug
cost projections on which they base
their Part D bids. Further, for
operational ease, it appears the
manufacturer rebates used in the
calculation of the average rebate amount
would need to include all manufacturer
rebates received for the drug, including
all point-of-sale rebates. Then, in order
not to double count the point-of-sale
rebates, the total gross drug costs used
to weight the average under this
methodology would have to be based on
the drug’s price at the point of sale
before it is lowered by any manufacturer
rebates or other price concessions
applied at the point of sale. We are
interested in stakeholder feedback on
these considerations.
For an illustration of how the
weighted-average rebate amount for a
particular drug category or class would
be calculated, see the point-of-sale
rebate example later in this section.
• Timing: We are considering
requiring Part D sponsors to recalculate
the applicable average rebate amount
every month, quarter, year, or another
time period to be specified in future
rulemaking, in order to ensure that the
average reflects current cost experience
and manufacturer rebate information.
We believe that a requirement to
recalculate the average rebate amount
should balance the need to sustain a
level of price transparency throughout
the entire year with the additional
burden on sponsors associated with
more frequent updates. We are seeking
comment on how often the applicable
cost-weighted drug category/classaverage rebate amount, and thus the
point-of-sale rebate for any drug, should
be recalculated.
(3) Point-of-Sale Rebate Drugs
We are considering limiting the
application of any point-of-sale rebate
requirement to only rebated drugs.
Under this approach, the calculated
average rebate amount would only be
required to be applied to the point-of-
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sale prices for drugs that are rebated,
with each drug identified by its unique
NDC–11 identifier. The alternative
would result in a manufacturer that
provides no rebates for a particular drug
benefiting from a direct competitor’s
rebate, as the competitor’s rebate would
be used to lower the negotiated price
and thereby potentially increasing sales
of the non-rebated drug. However, to be
clear, under this potential approach,
sponsors would maintain their
flexibility to include in the negotiated
price for any drug, including a nonrebated drug, manufacturer rebates and
other price concessions above those
required to be included in the
negotiated price for rebated drugs under
a point-of-sale rebate policy such as the
one we describe here.
Moreover, in order to limit the impact
on premiums for all beneficiaries of
adopting a requirement that sponsors
include a portion of manufacturer
rebates in the negotiated price at the
point of sale, we are also seeking
comment on the merits or limitations of,
a more targeted version of the policy
approach that would require sponsors to
pass through a minimum percentage of
rebates at the point of sale only for
specific drugs or drug categories or
classes. Under this alternative approach,
the point-of-sale rebate policy would
apply only for drugs or drug categories
or classes that most directly contribute
to increasing Part D drug costs in the
catastrophic phase of coverage or drugs
with high price-high rebate
arrangements; such drugs or drug
categories or classes are likely to have
the most significant impact on
beneficiary costs and serve to increase
program costs overall, as discussed
previously. We are interested in
stakeholder feedback on whether
targeting the rebate requirement in such
a way would effectively address the
misaligned sponsor incentives and
market inefficiencies that exist under
Part D today as a result of the DIR
construct. In addition to general
comments on the alternative, more
targeted policy approach, we are
particularly interested in
recommendations for the criteria that
we might use to determine which drugs
or drug categories or classes to target
under such an alternative approach.
(4) Point-of-Sale Rebate Example
To illustrate how the weightedaverage rebate amount for a particular
drug class would be calculated under a
point-of-sale rebate requirement that
includes the features described earlier,
we provide the following example:
suppose drugs A, B, and C are the only
three rebated drugs on the plan’s
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56423
formulary in a particular drug class. The
negotiated prices, before application of
the point-of-sale rebates, for the three
drugs in the current time period are
$200, $100, and $75, respectively. The
manufacturer rebates expected by the
plan in this payment year, given the
information available in the current
period, for drugs A, B, and C equal 20,
10, and 5 percent, respectively, of the
drugs’ pre-rebate negotiated prices. Over
the previous time period, total gross
drug costs incurred under the plan for
drug A equaled $2 million, for drug B
equaled $750,000, and for drug C
equaled $150,000. Therefore, the gross
drug cost-weighted average rebate rate
for this drug class in the current time
period is calculated as the following:
[($2 million × 20 percent) + ($750,000
× 10 percent) + ($150,000 × 5 percent)]/
($2 million + $750,000 + $150,000), or
16.64 percent. If we were to require that
a minimum 50 percent of the average
rebate be applied at the point of sale for
all rebated drugs in this drug class (and
the plan only applies the minimum
required percentage), the final
negotiated prices for drugs A, B, and C,
now equal to $183.36, $91.68, and
$68.76, respectively, would be 8.32
percent (50 percent of 16.64 percent)
lower than the pre-rebated prices.
For each of the three drugs in this
example, beneficiary out-of-pocket costs
would be lower under the approach we
are considering than under the status
quo. Assuming, for instance, these drugs
are subject to a 25 percent coinsurance,
the enrollee’s costs for the three drugs
under this approach would be $45.84
(25 percent of $183.36) for drug A,
$22.92 (25 percent of $91.68) for drug B,
and $17.19 (25 percent of $68.76) for
drug C. Under the status quo, the
enrollee’s costs would be $50 for drug
A ($4.16 higher), $25 for drug B ($2.08
higher), and $18.75 for drug C ($1.56
higher).
Any difference between the rebates
applied at the point of sale and those
actually received would be captured as
DIR through reporting at the end of the
coverage year. Assume, for instance,
that total gross drug costs for drugs A,
B, and C equal $1.5 million, $1 million,
and $200,000, respectively, in this
period. The actual manufacturer rebates
received, therefore, will equal $300,000,
$100,000, and $10,000, respectively, for
drugs A, B, and C in this period, based
on the plan’s expected rebate rates of 20,
10, and 5 percent, respectively, for the
three drugs in this payment year. Based
on the point-of-sale rebate rate
calculated above for the applicable drug
class and the total gross drug cost
assumptions provided for the three
drugs, we calculate the total point-of-
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sale rebates in this period to be
$124,786.48 (8.32 percent of $1.5
million) for drug A, $83,189.66 (8.32
percent of $1 million) for drug B, and
$16,637.93 (8.32 percent of $200,000)
for drug C. Therefore, the manufacturer
rebates applied by the plan as DIR at the
end of the coverage year for the three
drugs, respectively, would be
$175,215.52, $16,810.34, and –$6,637.93
and total $185,387.93 across the drug
class.
(5) Additional Considerations
Under the policy approach that we are
considering here for moving
manufacturer rebates to the point of
sale, the responsibility for calculating
the appropriate point-of-sale rebate
amount over the course of the year
would fall on Part D sponsors given
their role in administering the Medicare
drug benefit. We would leverage
existing reporting mechanisms to review
the sponsors’ calculations, as we do
with other cost data required to be
reported. Specifically, we would likely
use the estimated rebates at point-of-sale
field on the PDE record to collect pointof-sale rebate information, and the
manufacturer rebates fields on the
Summary and Detailed DIR Reports to
collect final manufacturer rebate
information at the plan and NDC levels.
Differences between the manufacturer
rebate amounts applied at the point of
sale and rebates actually received would
become apparent when comparing the
data collected through those means at
the end of the coverage year.
Additionally, we note that in
accordance with § 423.505(k) of the Part
D regulations, a Part D sponsor is
required to certify the accuracy,
completeness, and truthfulness of all
data related to payment, including the
PDE data and information on allowable
costs that it submits for purposes of risk
corridor and reinsurance payment. A
Part D sponsor certifies its Part D cost
data by signing and submitting
attestations to CMS. By signing the
attestations, the Part D sponsor certifies
(based on best knowledge, information,
and belief) that the PDE data, DIR data,
and any other information provided for
the purposes of determining payment to
the plan for the applicable contract year
are accurate, complete, and truthful. If
we were to move forward with a pointof-sale rebate policy, we would also
consider amending § 423.505(k) to add a
new requirement that the CEO, CFO, or
COO attest (based on best knowledge,
information, and belief) to the accuracy,
completeness, and truthfulness of the
average rebate amount included in the
negotiated price and reported on the
PDE. The submission of accurate,
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complete, and truthful data regarding
the average rebate amount included in
the negotiated price would be necessary
to ensure accurate reinsurance and risk
corridor payments.
Under the approach we are
considering, if a Part D sponsor
discovers errors after the certification
has been made (that is, after the
attestation has been signed), the Part D
sponsor would submit corrected PDE
data, and, under most circumstances,
CMS would reconcile the error through
the reopening process described at
§ 423.346. All reopenings are at the
discretion of CMS. CMS performs a
global reopening approximately 4 years
after the initial reconciliation for that
contract year. A Part D sponsor’s
reopening request resulting from errors
in PDE data discovered after the global
reopening for the contract year in which
the error occurred would be evaluated
by CMS on a case by case basis. Any
errors in the calculation of the average
rebate amount that result in
overpayments would be required to be
reported and returned consistent with
§ 423.360 and the applicable
subregulatory guidance on
overpayments.
We note that prior to the submission
of the attestation, and more specifically,
prior to the PDE submission deadline
for the initial reconciliation for a
contract year, if a Part D sponsor
discovers an issue with the average
rebate amount included in the
negotiated price and reported on the
PDE, all affected PDEs would need to be
adjusted or deleted in accordance with
applicable CMS guidance. As of the
publication of this request for
information, the applicable guidance is
October 6, 2011 CMS memorandum,
Revision to Previous Guidance Titled
‘‘Timely Submission of Prescription
Drug Event (PDE) Records and
Resolution of Rejected PDEs.’’
We encourage stakeholders to
comment on what other enforcement
and oversight mechanisms should be
instituted to ensure compliance with
any potential point-of-sale rebate
requirement. We are particularly
interested in stakeholder feedback on
how we might ensure accurate rebate
amounts are applied at the point of sale
when rebate agreements are structured
with contingencies that would be
unclear at the point of sale.
We also seek stakeholder comment on
what, if any, special considerations
should be taken into account in the
design of a point-of-sale rebate policy,
for Part D employer group waiver plans
(EGWPs). We are also interested in
feedback on what particular effects
requiring Part D sponsors to apply some
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manufacturer rebates at the point of sale
would have on the EGWP market, as
well as on how such a requirement
might impact the retiree drug subsidy
program.
Finally, we note that the negotiated
price is also the basis by which
manufacturer liability for discounts in
the coverage gap is determined. Under
section 1860D–14A(g)(6) of the Act, the
negotiated price used for coverage gap
discounts is based on the definition of
negotiated price in the version of
§ 423.100 that was in effect as of the
passage of the Patient Protection and
Affordable Care Act (PPACA). Under
this definition, the negotiated price is
‘‘reduced by those discounts, direct or
indirect subsidies, rebates, other price
concessions, and direct or indirect
remuneration that the Part D sponsor
has elected to pass through to Part D
enrollees at the point of sale’’ (emphasis
added). Because this definition of
negotiated price only references the
price concessions that the Part D
sponsor has elected to pass through at
the point of sale, we are uncertain as to
whether we would have the authority to
require sponsors include in the
negotiated price the weighted-average
rebate amounts that would be required
to be passed through under any
potential point-of-sale rebate policy, for
purposes of determining manufacturer
coverage gap discounts. We intend to
consider this issue further and will
address it in any future rulemaking
regarding the requirements for
determining the negotiated price that is
available at the point of sale.
(6) Impacts of Applying Manufacturer
Rebates at the Point of Sale
Under a point-of-sale rebate policy
designed as we have described in this
comment solicitation, beneficiaries
would see lower prices at the pharmacy
point-of-sale, and on Plan Finder,
beginning immediately in the year the
policy takes effect. Lower point-of-sale
prices would result directly in lower
cost-sharing costs for non-low income
beneficiaries, especially for those who
use drugs in highly competitive, highlyrebated categories or classes. For low
income beneficiaries whose out-ofpocket costs are subsidized through
Medicare’s low-income cost-sharing
subsidy, cost-sharing savings resulting
from lower point-of-sale prices would
accrue to the government. Plan
premiums would likely increase as a
result of such a point-of-sale rebate
policy—if some rebates are required to
be passed through to beneficiaries at the
point of sale, fewer such concessions
could be apportioned to reduce plan
liability, which would have the effect of
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increasing the cost of coverage under
the plan. At the same time, the
reduction in cost-sharing obligations for
the average beneficiary would likely be
large enough to lower their overall outof-pocket costs. The increasing cost of
coverage under Part D plans as a result
of rebates being applied at the point of
sale likely would have a more
significant impact on government costs,
which would increase overall due to the
significant growth in Medicare’s direct
subsidies of plan premiums and low
income premium subsidies.
Partially offsetting the increase in
direct subsidy and low income premium
subsidy costs for the government would
be decreases in Medicare’s reinsurance
and low income cost-sharing subsidies.
Decreases in Medicare’s reinsurance
subsidy result when lower negotiated
prices slow down the progression of
beneficiaries through the Part D benefit
and into the catastrophic phase, and
when the government’s 80 percent
reinsurance payments for allowable
drug costs incurred in the catastrophic
phase are based on lower negotiated
prices. Similarly, low income cost-
56425
sharing subsidies would decrease if
beneficiary cost-sharing obligations
decline due to the reduction in prices at
the point of sale. Finally, the slower
progression of beneficiaries through the
Part D benefit would also have the effect
of reducing manufacturer gap discount
payments as fewer beneficiaries would
enter the coverage gap phase or progress
entirely through it.
The following tables summarize the
10-year impacts we have modeled for
when 33, 66, 90, and 100 percent of all
manufacturer rebates are applied at the
point of sale: 53
TABLE 10A—TOTAL IMPACTS FOR 2019 THROUGH 2028
[In $billions]
33%
Beneficiary Costs .............................................................................................
Cost-Sharing .............................................................................................
Premium ...................................................................................................
Government Costs ...........................................................................................
Direct Subsidy ..........................................................................................
Reinsurance ..............................................................................................
LI Cost-Sharing Subsidy ...........................................................................
LI Premium Subsidy .................................................................................
Manufacturer Gap Discount .............................................................................
66%
¥$19.6
¥28.8
9.2
27.3
62.8
¥21.7
¥16.6
2.9
¥9.7
90%
¥$39.1
¥57.8
18.7
55.1
128.1
¥44.7
¥34.2
5.9
¥19.4
100%
¥$53.2
¥78.9
25.7
75.5
177.4
¥62.2
¥47.7
8.1
¥26.4
¥$56.9
¥85.2
28.3
82.1
200.0
¥73.1
¥53.7
8.9
¥29.4
TABLE 10B—2019–2028 PER MEMBER-PER MONTH IMPACTS
33%
Beneficiary Costs .............................................................................................
Cost-Sharing .............................................................................................
Premium ...................................................................................................
Government Costs ...........................................................................................
Direct Subsidy ..........................................................................................
Reinsurance ..............................................................................................
LI Cost-Sharing Subsidy ...........................................................................
LI Premium Subsidy .................................................................................
Manufacturer Gap Discount .............................................................................
66%
¥$30.33
¥44.61
14.29
42.38
97.45
¥33.76
¥25.80
4.49
¥15.01
90%
¥$60.58
¥89.50
28.92
85.40
198.93
¥69.57
¥53.06
9.10
¥30.02
100%
¥$82.42
¥122.26
39.83
117.01
275.43
¥96.84
¥74.11
12.53
¥40.93
¥$88.13
¥131.97
43.84
127.22
310.58
¥113.75
¥83.42
13.81
¥45.48
TABLE 10C—2019–2028 IMPACTS—PERCENT CHANGE
33%
sradovich on DSK3GMQ082PROD with PROPOSALS2
Beneficiary Costs .............................................................................................
Cost-Sharing .............................................................................................
Premium ...................................................................................................
Government Costs ...........................................................................................
Direct Subsidy ..........................................................................................
Reinsurance ..............................................................................................
LI Cost-Sharing Subsidy ...........................................................................
LI Premium Subsidy .................................................................................
Manufacturer Gap Discount .............................................................................
66%
¥3
¥6
4
2
24
¥3
¥4
4
¥7
90%
¥5
¥12
7
4
49
¥7
¥9
8
¥13
100%
¥7
¥16
10
5
67
¥9
¥12
11
¥18
¥8
¥17
11
6
76
¥11
¥14
12
¥20
While we did not account for
behavioral changes when modeling
these impacts, requiring rebates to be
applied at the point of sale might induce
changes in sponsor behavior related to
drug pricing that would further reduce
the cost of the Part D program for
beneficiaries and taxpayers.
Specifically, requiring that at least a
minimum percentage of manufacturer
rebates be used to lower the price at the
point of sale could limit the potential
for sponsors to leverage the benefits that
accrue to them when price concessions
are applied as DIR at the end of the
53 Assumptions: (1) For purposes of calculating
impacts only, we assume that total rebates will
equal about 20 percent of allowable Part D drug
costs projected for each year modeled, and that
rebates are perfectly substituted with the point-ofsale discount in all phases of the Part D benefit,
including the coverage gap phase.
(2) Used 2016 distribution of costs by benefit
phase to form assumptions.
(3) Assumed no other behavioral changes by
sponsors, beneficiaries, or others.
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coverage year rather than as discounts at
the point of sale, and thus potentially
better align sponsors’ incentives with
those of beneficiaries and taxpayers. For
example, we believe such an approach
could reduce the incentive for sponsors
to favor high cost-highly rebated drugs
to lower net cost alternatives, when
such alternatives are available, and also
potentially increase the incentive for
sponsors and PBMs to negotiate lower
prices at the point of sale instead of
higher DIR. We seek comment on the
extent to which a point-of-sale rebate
policy might be expected to further
align the incentives for beneficiaries,
sponsors, and taxpayers.
Finally, we believe requiring that
some manufacturer rebates be applied at
the point of sale as we are considering
doing would improve price
transparency and limit the opportunity
for differential reporting of costs and
price concessions, which may have a
positive effect on market competition
and efficiency. We solicit comment on
whether basing the rebate applied at the
point of sale on average rebates at the
drug category/class level, as described
previously, would meaningfully
increase price transparency over the
status quo by ensuring a consistent
percentage of the rebates received are
reflected in the price at the point of sale,
while also protecting the details of any
manufacturer-sponsor pricing
relationship.
d. Pharmacy Price Concessions to Point
of Sale
In recent years, a growing proportion
of Part D sponsors and their contracted
PBMs have entered into payment
arrangements with Part D network
pharmacies in which a pharmacy’s
reimbursement for a covered Part D drug
is adjusted after the point of sale based
on the pharmacy’s performance on
various measures defined by the
sponsor or its PBM. Furthermore, we
understand that the share of
pharmacies’ reimbursements that is
contingent upon their performance
under such arrangements has also
grown steadily each year. As a result,
sponsors and PBMs have been
recouping increasing sums from
network pharmacies after the point of
sale (pharmacy price concessions) for
‘‘poor performance’’ relative to
standards defined by the sponsor or
PBM. These sums are far greater than
those paid to network pharmacies after
the point of sale (pharmacy incentive
payments) for ‘‘high performance.’’ We
refer to pharmacy price concessions and
incentive payments collectively as
pharmacy payment adjustments. These
findings are largely based on the
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aggregate pharmacy payment
adjustment data submitted to CMS by
Part D sponsors as part of the annual
required reporting of DIR, which show
that performance-based pharmacy price
concessions, net of all pharmacy
incentive payments, increased most
dramatically after 2012.
In order to address the effects of the
DIR construct, as it relates to pharmacy
payment adjustments, on cost,
competition, and efficiency under Part
D, in the Part C and Part D final rule that
appeared in the May 23, 2014 Federal
Register (79 FR 29844), we amended the
definition of ‘‘negotiated prices’’ at
§ 423.100 to require Part D sponsors to
include in the negotiated price at the
point of sale all pharmacy price
concessions and incentive payments to
pharmacies, with an exception, which
was intended to be narrow, allowed for
contingent pharmacy payment
adjustments that cannot reasonably be
determined at the point of sale (the
reasonably determined exception).
However, when we formulated these
requirements in 2014, the most recent
year for which DIR data was available
was 2012 and we did not anticipate the
growth of performance-based pharmacy
payment arrangements that we have
observed in subsequent years. We now
understand that the reasonably
determined exception we currently
allow applies more broadly than we had
initially envisioned because of the shift
by Part D sponsors and their PBMs
towards these types of contingent
pharmacy payment arrangements, and,
as a result, this exception prevents the
current policy from having the intended
effect on price transparency,
consistency, and beneficiary costs.
Specifically, we have heard from
several stakeholders that have suggested
that the reasonably determined
exception applies to all performancebased pharmacy payment adjustments.
The amount of these adjustments, by
definition, is contingent upon
performance measured over a period
that extends beyond the point of sale
and, thus, cannot be known in full at the
point of sale. Therefore, performancebased pharmacy payment adjustments
cannot ‘‘reasonably be determined’’ at
the point of sale as they cannot be
known in full at the point of sale. We
initially proposed, in a September 29,
2014 memorandum entitled Direct and
Indirect Remuneration (DIR) and
Pharmacy Price Concessions, that if the
amount of the post-point of sale
pharmacy payment adjustment could be
reasonably approximated at the point of
sale, the adjustment should be reflected
in the negotiated price, even if the
actual amount of the payment
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adjustment was subject to later
reconciliation and thus not known in
full at the point of sale. However, we
did not finalize that interpretation
because we determined that it was
inconsistent with the existing regulation
given that it would have effectively
eliminated the reasonably determined
exception from inclusion in the
negotiated price for all pharmacy price
concessions, as we stated in our followup memorandum of the same name
released on November 5, 2014.
Given the predominance of
performance-contingent pharmacy
payment arrangements, we do not
believe that the existing requirement
that pharmacy price concessions be
included in the negotiated price can be
implemented in a manner that achieves
meaningful price transparency, ensures
that all pharmacy payment adjustments
are taken into account consistently by
all Part D sponsors, and prevents the
shifting of costs onto beneficiaries and
taxpayers. Therefore, we are soliciting
comment from stakeholders on how we
might update the requirements
governing the determination of
negotiated prices, to better reflect
current pharmacy payment
arrangements, so as to ensure that the
reported price at the point of sale
includes all pharmacy price
concessions. In this section, we put
forth for consideration one potential
approach for doing so and seek
comments on its merits, as well as the
merits of any alternatives that might
better serve our goals of reducing
beneficiary costs and better aligning
incentives for Part D sponsors with the
interests of beneficiaries and taxpayers.
We encourage all commenters to
provide quantitative analytical support
for their ideas wherever possible.
(1) All Pharmacy Price Concessions
We are considering revising the
definition of negotiated price at
§ 423.100 to remove the reasonably
determined exception and to require
that all price concessions from
pharmacies be reflected in the
negotiated price that is made available
at the point of sale and reported to CMS
on a PDE record, even when such
concessions are contingent upon
performance by the pharmacy. We
believe we have the discretion to require
that all pharmacy price concessions be
applied at the point of sale, and not just
a share of the amounts as we discussed
earlier for manufacturer rebates. Such a
requirement would preserve the
flexibilities provided under section
1860D–2(d)(1)(B) of the Act with respect
to the treatment of manufacturer rebates,
while also allowing for greater
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transparency and consistency in the
reporting of pharmacy price
concessions. First, section 1860D–
2(d)(2) of the Act, which provides the
context critical to our interpretation that
sponsors are granted flexibility in how
to apply manufacturer rebates, does not
contemplate price concessions from
sources other than manufacturers, such
as pharmacies, being passed through in
various ways. Second, even when all
price concessions from pharmacies are
required to be applied at the point of
sale, sponsors would retain the
flexibility to determine how to apply
manufacturer rebates and other price
concessions received from sources other
than pharmacies in order to reduce costs
under the plan. Finally, we believe that
requiring that all pharmacy price
concessions be applied at the point of
sale would ensure that negotiated prices
‘‘take into account’’ at least some price
concessions and, therefore, would be
consistent with the plain language of
section 1860D–2(d)(1)(B) of the Act. We
are considering requiring all, and not
only a share of, pharmacy price
concessions be included in the
negotiated price in order to maximize
the level of price transparency and
consistency in the determination of
negotiated prices and bids and
meaningfully reduce the shifting of
costs from sponsors to beneficiaries and
taxpayers.
(2) Lowest Possible Reimbursement
In order to effectively capture all
pharmacy price concessions at the point
of sale consistently across sponsors, we
are considering requiring the negotiated
price to reflect the lowest possible
reimbursement that a network pharmacy
could receive from a particular Part D
sponsor for a covered Part D drug.
Under this approach, the price reported
at the point of sale would need to
include all price concessions that could
potentially flow from network
pharmacies, as well as any dispensing
fees, but exclude any additional
contingent amounts that could flow to
network pharmacies and increase prices
over the lowest reimbursement level,
such as incentive fees. That is, if a
performance-based payment
arrangement exists between a sponsor
and a network pharmacy, the point-ofsale price of a drug reported to CMS
would need to equal the final
reimbursement that the network
pharmacy would receive for that
prescription under the arrangement if
the pharmacy’s performance score were
the lowest possible. If a pharmacy is
ultimately paid an amount above the
lowest possible contingent incentive
reimbursement (such as in situations
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where a pharmacy’s performance under
a performance-based arrangement
triggers a bonus payment or a smaller
penalty than that assessed for the lowest
level of performance), the difference
between the negotiated price reported to
CMS on the PDE record and the final
payment to the pharmacy would need to
be reported as negative DIR. For an
illustration of how negotiated prices
would be reported under such an
approach, see the example provided
later in this section.
We are interested in public comment
on whether requiring the negotiated
price at the point of sale to reflect the
lowest possible pharmacy
reimbursement would effectively
address recent developments in
industry practices, that is, the growing
prevalence of performance-based
pharmacy payment arrangements, and
ensure that all pharmacy price
concessions are included in the
negotiated price, and thus shared with
beneficiaries, in a consistent manner by
all Part D sponsors. By requiring that
sponsors assume the lowest possible
pharmacy performance when reporting
the negotiated price, we would be
prescribing a standardized way for Part
D sponsors to treat the unknown (final
pharmacy performance) at the point of
sale under a performance-based
payment arrangement, which many Part
D sponsors and PBMs have identified as
the most substantial operational barrier
to including such concessions at the
point of sale. We are also interested in
public comment on whether requiring
the negotiated price to be the lowest
possible pharmacy reimbursement
would serve to maximize the costsharing savings accruing to beneficiaries
by passing through all potential
pharmacy price concessions at the point
of sale.
Further, we are interested in public
comment on whether this approach
would be clearer for Part D sponsors to
follow than the requirements in place
today, which require Part D sponsors to
assess which types of pharmacy
payment adjustments fall under the
reasonably determined exception. We
are interested in public comment on
whether providing such additional
clarity and thus limiting the need for
interpretation of the requirements by
Part D sponsors would improve
consistency in the application of the
requirements regarding pharmacy price
concessions across sponsors, as well as
reducing sponsor burden in terms of the
resources necessary to ensure
compliance in the absence of clear
guidance. In addition, we welcome
feedback on whether the change we
describe here would improve the quality
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56427
of pricing information available across
Part D plans and thus improve market
competition and cost-efficiency under
Part D.
Requiring the negotiated price to
reflect the lowest possible pharmacy
reimbursement, would move the
negotiated price closer to the final
reimbursement for most network
pharmacies under current pharmacy
payment arrangements and thus closer
to the actual cost of the drug for the Part
D sponsor. We are interested in public
comment on whether such an outcome
would help us to achieve meaningful
price transparency. We have learned
from the DIR data reported to CMS and
feedback from numerous stakeholders
that pharmacies rarely receive an
incentive payment above the original
reimbursement rate for a covered claim.
We gather that performance under most
arrangements dictates only the
magnitude of the amount by which the
original reimbursement is reduced, and
most pharmacies do not achieve
performance scores high enough to
qualify for a substantial, if any,
reduction in penalties. Therefore, we
seek comment on whether a
requirement that the negotiated price
reflect the lowest possible
reimbursement to a network pharmacy,
including all potential pharmacy price
concessions, is likely to capture the
actual price of the drug at a network
pharmacy, or at least move closer to it.
Finally, we are considering requiring
that all contingent incentive payments
be excluded from the negotiated price
because including the actual amount of
any contingent incentive payments to
pharmacies in the negotiated price
would make drug prices appear higher
at a ‘‘high performing’’ pharmacy,
which receives an incentive payment,
than at a ‘‘poor performing’’ pharmacy,
which is assessed a penalty. This
pricing differential could potentially
create a perverse incentive for
beneficiaries to choose a lower
performing pharmacy for the advantage
of a lower price. We seek comment on
whether such an approach would
prevent this unintended consequence
and thus avoid reducing the
competitiveness of high performing
pharmacies by increasing the negotiated
price charged to the beneficiary at those
pharmacies.
(3) Lowest Possible Reimbursement
Example
To illustrate how Part D sponsors and
their intermediaries would report costs
under the approach we are considering,
we provide the following example:
Suppose that under a performancebased payment arrangement between a
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Part D sponsor and its network
pharmacy, the sponsor will: (1) Recoup
5 percent of its total Part D-related
payments to the pharmacy at the end of
the contract year for the pharmacy’s
failure to meet performance standards;
(2) recoup no payments for average
performance; or (3) provide a bonus
equal to 1 percent of total payments to
the pharmacy for high performance. For
a drug that the sponsor has agreed to
pay the pharmacy $100 at the point of
sale, the pharmacy’s final
reimbursement under this arrangement
would be: (1) $95 for poor performance;
(2) $100 for average performance; or (3)
$101 for high performance. However,
under all performance scenarios, the
negotiated price reported to CMS on the
PDE at the point of sale for this drug
would be $95, or the lowest
reimbursement possible under the
arrangement. Thus, if a plan enrollee
were required to pay 25 percent
coinsurance for this drug, then the
enrollee’s costs under all scenarios
would be 25 percent of $95, or $23.75,
which is less than the $25 the enrollee
would pay today (when the negotiated
price is likely to be reported as $100).
Any difference between the reported
negotiated price and the pharmacy’s
final reimbursement for this drug would
be reported as DIR at the end of the
coverage year. The sponsor would
report $0 as DIR under the poor
performance scenario ($95 minus $95),
¥ $5 as DIR under the average
performance scenario ($95 minus $100),
and ¥ $6 as DIR under the high
performance scenario ($95 minus $101),
for every covered claim for this drug
purchased at this pharmacy.
(4) Additional Considerations
As with the policy approach that we
described previously for moving
manufacturer rebates to the point of
sale, we would leverage existing
reporting mechanisms to confirm that
sponsors are appropriately applying
pharmacy price concessions at the point
of sale, as we do with other cost data
required to be reported. Specifically, we
would likely use the estimated rebates
at point-of-sale field on the PDE record
to also collect point-of-sale pharmacy
price concessions information, and
fields on the Summary and Detailed DIR
Reports to collect final pharmacy price
concession information at the plan and
NDC levels. Differences between the
amounts applied at the point of sale and
amounts actually received, therefore,
would become apparent when
comparing the data collected through
those means at the end of the coverage
year.
Finally, as noted previously, the
negotiated price is also the basis by
which manufacturer liability for
discounts in the coverage gap
determined. Under section 1860D–
14A(g)(6) of the Act, the definition of
negotiated price used for coverage gap
discounts is based on the regulatory
definition of the negotiated price in the
version of § 423.100 that was in effect as
of the passage of the PPACA. As
discussed previously, this definition of
negotiated price only references the
price concessions that the Part D
sponsor has elected to pass through at
the point of sale. As such, we are
uncertain as to whether we would have
the authority to require sponsors
include pharmacy price concessions in
the negotiated price for purposes of
determining manufacturer coverage gap
discounts. We intend to consider this
issue further and will address it in any
future rulemaking regarding the
requirements for determining the
negotiated price that is available at the
point of sale.
(5) Impacts for Applying Pharmacy
Price Concessions at the Point of Sale
Requiring that all pharmacy price
concessions that sponsors and PBMs
receive be used to lower the price at the
point of sale, as we described earlier,
would affect beneficiary, government,
and manufacturer costs largely in the
same manner as discussed previously in
regards to moving manufacturer rebates
to the point of sale. The difference is in
the magnitude of the impacts given that
sponsors and PBMs receive significantly
higher sums of manufacturer rebates
than of pharmacy price concessions.
The following table summarizes the 10year impacts we have modeled for
moving all pharmacy price concessions
to the point of sale: 54
TABLE 11—2019–2028 POINT-OF-SALE PHARMACY PRICE CONCESSIONS IMPACTS
Total
(billions)
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Beneficiary Costs .........................................................................................................................
Cost-Sharing .........................................................................................................................
Premium ...............................................................................................................................
Government Costs .......................................................................................................................
Direct Subsidy ......................................................................................................................
Reinsurance ..........................................................................................................................
LI Cost-Sharing Subsidy .......................................................................................................
LI Premium Subsidy .............................................................................................................
Manufacturer Gap Discount .........................................................................................................
Moreover, while not accounted for
when modeling these impacts, we seek
comment on whether requiring that all
pharmacy price concessions be included
in the negotiated price, as we have
described, would also lead to prices and
Part D bids and premiums being more
accurately comparable and reflective of
relative plan efficiencies, with no unfair
competitive advantage accruing to one
sponsor over another based on a
technical difference in how costs are
reported. We are further interested in
comments on whether this outcome
could make the Part D market more
competitive and efficient.
54 Assumptions: (1) For purposes of calculating
impacts only, we assume that pharmacy price
concession will equal about 3 percent of allowable
Part D costs projected for each year modeled, and
that the concession amounts are perfectly
substituted with the point-of-sale discount in all
phases of the Part D benefit, including the coverage
gap phase.
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¥$10.4
¥16.1
5.7
16.6
33.5
¥8.8
¥9.9
1.8
¥5.0
Per memberper month
Percent
change
¥$16.09
¥24.89
8.79
25.65
51.89
¥13.74
¥15.23
2.73
¥7.69
¥1
¥3
2
1
13
¥1
¥3
2
¥3
B. Improving the CMS Customer
Experience
1. Restoration of the Medicare
Advantage Open Enrollment Period
(§§ 422.60, 422.62, 422.68, 423.38 and
423.40)
Section 4001 of the Balanced Budget
Act of 1997 (BBA), added section
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(2) Used 2016 distribution of costs by benefit
phase to form assumptions.
(3) Assumed no other behavioral changes by
sponsors, beneficiaries, or others.
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1851(e) of the Act establishing specific
parameters in which elections can be
made and/or changed during open
enrollment and disenrollment periods
under the Medicare Advantage (MA)
program. In addition, section 1851(e)(6)
of the Act permits MA organizations, at
their discretion, to choose not to accept
enrollment requests during the open
enrollment period (that is, choose to be
closed to accept enrollments for all or a
portion of the enrollment period). The
Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) amended section
1851(e)(2) of the Act to further establish
open enrollment periods during which
MA-eligible individuals were limited to
a single election to (that is, enroll,
disenroll, or change MA plans) during
such period.
From 2007 to 2010, the Act outlined
an Open Enrollment Period (OEP)—
referred to hereafter as the ‘‘old OEP’’—
which provided MA-eligible individuals
one opportunity to make an enrollment
change between January 1 and March
31. It permitted new enrollment into an
MA plan from Original Medicare,
switches between MA plans, and
disenrollment from a MA plan to
Original Medicare. During this old OEP,
individuals were not allowed to make
changes to their Part D coverage. Hence,
an individual who had Part D coverage
through a Medicare Advantage
Prescription Drug plan (MA–PD plan)
could only use the old OEP to switch to
(1) another MA–PD plan; or (2) Original
Medicare with a Prescription Drug Plan
(PDP). This old OEP did not permit
someone enrolled in either an MA-only
plan or Original Medicare without a
PDP to enroll in Part D coverage through
this enrollment opportunity. The old
OEP was codified at § 422.62(a)(5) in
2005 (see 70 FR 4587).
In 2010, section 3204 of the Patient
Protection and Affordable Care Act
modified section 1851(e)(2)(C) of the
Act to no longer offer the old OEP and
instead provide a different enrollment
period for MA enrollees to leave the MA
program and return to Original
Medicare in the first 45 days of the
calendar year. The statute further
permitted individuals who utilized this
disenrollment opportunity to enroll in a
Part D plan upon their return to Original
Medicare. On April 15, 2011, we
amended § 422.62(a)(5) and codified
§§ 422.62(a)(7) and 423.38(d) to conform
with this statutory change and to
establish the current Medicare
Advantage Disenrollment Period
(MADP) with its coordinating Part D
enrollment period. These changes were
effective for the 2011 plan year (76 FR
21442 and43).
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Section 17005 of the 21st Century
Cures Act (the Cures Act) modified
section 1851(e)(2) of the Act to
eliminate the MADP and to establish,
beginning in 2019, a new OEP—
hereafter referred to as the ‘‘new OEP’’—
to be held from January 1 to March 31
each year. Subject to the MA plan being
open to enrollees as provided under
§ 422.60(a)(2), this new OEP allows
individuals enrolled in an MA plan to
make a one-time election during the first
3 months of the calendar year to switch
MA plans or to disenroll from an MA
plan and obtain coverage through
Original Medicare. In addition, this
provision affords newly MA-eligible
individuals (those with Part A and Part
B) who enroll in a MA plan, the
opportunity to also make a one-time
election to change MA plans or drop
MA coverage and obtain Original
Medicare. Newly eligible MA
individuals can only use this new OEP
during the first 3 months in which they
have both Part A and Part B. Similar to
the old OEP, enrollments made using
the new OEP are effective the first of the
month following the month in which
the enrollment is made, as outlined in
§ 422.68(c). In addition, an MA
organization has the option under
section 1851(e)(6) of the Act to
voluntarily close one or more of its MA
plans to OEP enrollment requests. If an
MA plan is closed for OEP enrollments,
then it is closed to all individuals in the
entire plan service area who are making
OEP enrollment requests. All MA plans
must accept OEP disenrollment
requests, regardless of whether or not it
is open for enrollment.
There are a few key differences
between the old OEP and the new OEP
as authorized by the Cures Act. Unlike
the old OEP, this new OEP permits
changes to Part D coverage for
individuals who, prior to the change in
election during the new OEP, were
enrolled in an MA plan. As eligibility to
use the new OEP is available only for
MA enrollees, the ability to make
changes to Part D coverage is limited to
any individual who uses the OEP;
however, the new OEP does not provide
enrollment rights to any individual who
is not enrolled in an MA plan during the
applicable 3-month period. Individuals
who use the new OEP to make changes
to their MA coverage may also enroll in
or disenroll from Part D coverage. For
example, an individual enrolled in an
MA–PD plan may use the new OEP to
switch to: (1) Another MA–PD plan; (2)
an MA-only plan; or (3) Original
Medicare with or without a PDP. The
new OEP would also allow an
individual enrolled in an MA-only plan
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56429
to switch to—(1) another MA-only plan;
(2) an MA–PD plan; or (3) Original
Medicare with or without a PDP.
However, this enrollment period does
not allow for Part D changes for
individuals enrolled in Original
Medicare, including those with
enrollment in stand-alone PDPs.
In addition, individuals with
enrollment in Original Medicare or
other Medicare health plan types, such
as cost plans, are not able use the new
OEP to enroll in an MA plan, regardless
of whether or not they have Part D. We
note that the inability for an individual
enrolled in Original Medicare to use the
new OEP is a significant difference from
the old OEP. Furthermore, and
significantly different from the old OEP,
unsolicited marketing is prohibited by
statute during this period.
To implement the changes required
by the Cures Act, we propose the
following revisions:
• Amend current § 422.62(a)(5) and
add §§ 423.38(e) and 423.40(e) to
establish the new OEP starting 2019 and
the corresponding limited Part D
enrollment period.
• Amend §§ 422.62(a)(7), 422.68(f),
423.38(d) and 423.40(d) to end the
MADP at the end of 2018.
• Remove current regulations in
§ 422.62(a)(3) and (a)(4) that outline
historical OEPs which have not been in
existence for more than a decade. As
these past enrollment periods are no
longer relevant to the current
enrollment periods available to MAeligible individuals, we are proposing to
delete these paragraphs and renumber
the enrollment periods which follow
them. As such, we propose that § 422.62
(a)(5) become § 422.62 (a)(3), and both
§§ 422.62 (a)(6) and (a)(7) be
renumbered as §§ 422.62(a)(4) and
(a)(5), respectively.
• Amend new redesignated paragraph
(a)(4) (proposed to be redesignated from
(a)(6)) to make two technical changes to
replace the phrase ‘‘as defined by CMS’’
with ‘‘as defined in § 422.2’’ and to
capitalize ‘‘original Medicare.’’
• As noted previously, and discussed
in section III.C.7, §§ 422.2268 and
423.2268 would be revised to prohibit
marketing to MA enrollees during the
OEP.
• Conforming technical edits to
update cross references in
§§ 422.60(a)(2), 422.62(a)(5)(iii), and
422.68(c).
2. Reducing the Burden of the
Compliance Program Training
Requirements (§§ 422.503 and 423.504)
Sections 1857(e) and 1860D–
12(b)(3)(D) of the Act specify that
contracts with MA organizations and
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Part D sponsors shall contain other
terms and conditions that the Secretary
may find necessary and appropriate. We
have previously established that all Part
C and Part D contracting organizations
must have the necessary administrative
and management arrangements to have
an effective compliance program, as
reflected in § 422.503(b)(4)(vi) and
§ 423.504(b)(4)(vi). Effective compliance
programs are those designed and
implemented to prevent, detect and
correct Medicare non-compliance, fraud
waste and abuse and address improper
conduct in a timely and welldocumented manner. Medicare noncompliance may include inaccurate and
untimely payment or delivery of items
or medical services, complaints from
providers and enrollees, illegal activities
and unethical behavior. While there is
no ‘‘one-size fits all’’ program for every
contracting organization, there are seven
core elements that must exist to have an
effective compliance program that is
tailored to the organization’s unique
operations, compliance risks, resources
and circumstances. These 7 core
elements are codified in current
regulations at §§ 422.503(b)(4)(vi)(A)
through (G) and 423.504(b)(4)(vi)(A)
through (G). One of the 7 core elements
is training and education. Compliance
programs for Part C and Part D
organizations must include training and
education between the compliance
officer and the sponsoring
organization’s employees, senior
administrators, governing body
members as well as their first-tier,
downstream and related entities (FDRs).
FDRs have long complained of the
burden of having to complete multiple
sponsoring organizations’ compliance
trainings and the amount of time it can
take away from providing care to
beneficiaries. We attempted to resolve
this burden by developing our own webbased standardized compliance program
training modules and establishing, in a
May 23, 2014 final rule (79 FR 29853
and 29855), which was effective January
1, 2016, that FDRs were required to
complete the CMS training to satisfy the
compliance training requirement. The
mandatory use of the CMS training by
FDRs was a means to ensure that FDRs
would only have to complete the
compliance training once on an annual
basis. The FDRs could then provide the
certificate of completion to all Part C
and Part D contracting organizations
they served, hence, eliminating the prior
duplication of effort that so many FDRs
stated was creating a huge burden on
their operation.
However, CMS continues to receive
hundreds of inquiries and concerns
from sponsors and FDRs regarding their
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difficulties with adopting CMS’
compliance training to satisfy the
compliance program training
requirement. While CMS’ previous
market research indicated that this
provision would mitigate the problems
raised by FDRs who held contracts with
multiple sponsors and who completed
repetitive trainings for each sponsor
with which they contract, in practice,
we learned that the problems persisted.
Many sponsors are unwilling to accept
completion of the CMS training as
fulfillment of the training requirement
and identify which critical positions
within the FDR are subject to the
training requirement. As a result, FDRs
are still being subjected to multiple
sponsors’ specific training programs.
FDRs have the additional burden of
taking CMS training and reporting
completion back to the sponsor or
sponsors with which they contract.
Furthermore, the industry has indicated
that the requirement has increased the
burden for various Part C and Part D
program stakeholders, including
hospitals, suppliers, health care
providers, pharmacists and physicians,
all of which may be considered FDRs.
Since the implementation of the
mandatory CMS-developed training has
not achieved the intended efficiencies
in the administration of the Part C and
Part D programs, we propose to delete
the provisions from the Part C and Part
D regulations that require use of the
CMS-developed training. Additionally
we propose to restructure
§ 422.503(b)(4)(vi)(C)(1) (with the
proposed revisions) into two paragraphs
(that is, paragraph (C)(1) and (C)(2)) to
separate the scope of the compliance
training from the frequency with which
the training must occur, as these are two
distinct requirements. With this
proposed revision, the organization of
§ 422.503(b)(4)(vi)(C) will mirror that of
§ 423.504(b)(4)(vi)(C). Further, we
propose to revise the text in
§ 423.504(b)(4)(vi)(C)(2) to track the
phrasing in § 422.503(b)(4)(vi)(C)(2), as
reorganized. The technical changes in
the text eliminate any potential
ambiguity created by different phrasing
in what we intend to be identical
requirements as to the timing
requirements for the training. We
believe these technical changes make
the requirements easier to understand.
Furthermore, we believe that the
broader requirement that plan sponsors
provide compliance training to their
FDRs no longer promotes the effective
and efficient administration of the
Medicare Advantage and Prescription
Drug programs. Part C and Part D
sponsoring organizations have evolved
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greatly and their compliance program
operations and systems are well
established. Many of these organizations
have developed effective training and
learning models to communicate
compliance expectations and ensure
that employees and FDRs are aware of
the Medicare program requirements.
Also, the attention focused on
compliance program effectiveness by
CMS’ Part C and Part D program audits
has further encouraged sponsors to
continually improve their compliance
operations.
CMS does not generally interfere in
private contractual matters between
sponsoring organizations and their
FDRs. Our contract is with the
sponsoring organization, and sponsoring
organizations are ultimately responsible
for compliance with all applicable
statutes, regulations and sub-regulatory
guidance, regardless who is performing
the work. Additionally, delegated
entities range in size, structure, risks,
staffing, functions, and contractual
arrangements which necessitates the
sponsoring organization have discretion
in its method of oversight to ensure
compliance with program requirements.
This may be accomplished through
routine monitoring and implementing
corrective action, which may include
training or retraining as appropriate,
when non-compliance or misconduct is
identified.
We will continue to hold MA
organizations and Part D sponsors
accountable for the failures of their
FDRs to comply with Medicare program
requirements, even with these proposed
changes. Existing regulations at
§ 422.503(b)(4)(vi) and
§ 423.504(b)(4)(vi) require that every
sponsor’s contract must specify that
FDRs must comply with all applicable
federal laws, regulations and CMS
instructions. Additionally, we audit
sponsors’ compliance programs when
we conduct routine program audits, and
our audit process includes evaluations
of sponsoring organizations’ monitoring
and auditing of their FDRs as well as
FDR oversight. Our audits also evaluate
formulary administration and
processing of coverage and appeal
requests in the Part C and Part D
programs. FDRs often perform some or
all of these functions for sponsors, so if
they are non-compliant, it will come to
light during the program audit and the
sponsoring organization is ultimately
held responsible for the FDRs’ failure to
comply with program requirements.
Given that compliance programs are
very well established and have grown
more sophisticated since their
inception, coupled with the industry’s
desire to perform well on audit, the
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CMS training requirement is not the
driver of performance improvement or
FDR compliance with key CMS
requirements. Given this accumulated
program experience and the growing
sophistication of the industry’s
compliance operations, as well as our
continuing requirements on sponsors for
oversight and monitoring of FDRs, we
are proposing to delete not just the
regulatory provision requiring
acceptance of CMS’ training as meeting
the compliance training requirements,
but also the reference to FDRs in the
compliance training requirements
codified at §§ 422.503(b)(4)(vi)(C) and
423.504(b)(4)(vi)(C). Specifically, we
propose to remove the phrases in
paragraphs (C)(1) and (C)(2) that refer to
first tier, downstream and related
entities and remove the paragraphs
specific to FDR training at
§§ 422.503(b)(4)(vi)(C)(2) and (3) and
423.504(b)(4)(vi)(C)(3) and (4); we are
also proposing technical revisions to
restructure § 422.503(b)(4)(vi)(C)(1) into
two paragraphs and ensure that the
remaining text is grammatically correct
and consistent with Office of the
Federal Register style. Compliance
training would still be required of MA
and Part D sponsors, their employees,
chief executives or senior
administrators, managers, and governing
body members. This change will allow
sponsoring organizations, and the FDRs
with which they contract, the maximum
flexibility in developing and meeting
training requirements associated with
effective compliance programs. We
invite comments concerning this
proposal and suggestions on other
options we can implement to
accomplish the desired outcome.
3. Medicare Advantage Plan Minimum
Enrollment Waiver (§ 422.514(b))
Under section 1857(b) of the Act,
CMS may not enter into a contract with
a MA organization unless the
organization complies with the
minimum enrollment requirement.
Under the basic rule at § 422.514(a), to
provide health care benefits under the
MA program, MA organizations must
demonstrate that they have the
capability to enroll at least 5,000
individuals, and provider sponsored
organizations (PSOs) must demonstrate
that they have the capability to enroll at
least 1,500 individuals. If an MA
organization intends to offer health care
benefits outside urbanized areas as
defined in § 422.62(f), then the
minimum enrollment level is reduced to
1,500 for MA organizations and to 500
for PSOs. The statute permits CMS to
waive this requirement in the first 3
years of the contract for an MA contract
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applicant. We have codified this
authority at § 422.514(b) and limited it
to circumstances where the MA contract
applicant is capable of administering
and managing an MA contract and is
able to manage the level of risk required
under the contract. We are proposing to
revise § 422.514 regarding the minimum
enrollment requirements to improve
program efficiencies.
Currently, MA organizations,
including PSOs, with an approved
minimum enrollment waiver for their
first contract year have the option to
resubmit the waiver request for CMS in
the second and third year of the
contract. In conjunction with the waiver
request, the MA organization must
continue to demonstrate the
organization’s ability to operate and
demonstrate that it has and uses an
effective marketing and enrollment
system, despite continued failure to
meet the minimum enrollment
requirement. In addition, the current
regulation limits our authority to grant
the waiver in the third year to situations
where the MA organization has at least
attained a projected number of enrollees
in the second year. Since 2012, we have
not received any waiver to the
minimum enrollment requirement
during the second and third year of the
contract. Rather, we only received
minimum enrollment waiver requests
through the initial application process.
We believe the current requirement to
resubmit the waiver in the second and
third year of the contract is unnecessary.
The statute does not require a
reevaluation of the minimum
enrollment standard each year and
plainly authorizes a waiver ‘‘during the
first 3 contract years with respect to an
organization.’’ The current minimum
enrollment waiver review in the initial
MA contract application provides CMS
the confidence to determine whether an
MA organization may operate for the
first 3 years of the contract without
meeting the minimum enrollment
requirement. CMS currently monitors
low enrollment at the plan benefit
package (PBP) level. We note that a
similar provision in current
§ 422.506(b)(1)(iv) permits CMS to
terminate an MA contract (or terminate
a specific plan benefit package) if the
MA plan fails to maintain a sufficient
number of enrollees to establish that it
is a viable independent plan option for
existing or new enrollees. In addition,
compliance with § 422.514 is required
under § 422.503(a)(13). If an
organization’s PBP does not achieve and
maintain enrollment levels in
accordance with the applicable low and
minimum enrollment policies in
existing regulations, CMS may move to
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56431
terminate the PBP absent an approved
waiver from CMS during the first 3
years of the contract pursuant to
§ 422.510(a).
Under our proposal, we would only
review and approve waivers through the
MA application process as opposed to
the current practice of reviewing annual
requests and, potentially, requests from
existing MA organizations that fail to
maintain enrollment in the second or
third year of operation.
We are proposing to revise the text in
§ 422.514(b) to provide that the waiver
of the minimum enrollment requirement
may be in effect for the first 3 years of
the contract. Further, we are proposing
to delete all references to ‘‘MA
organizations’’ in paragraph (b) to reflect
our proposal that we would only review
and approve waiver requests during the
contract application process. We also
propose to delete current paragraphs
(b)(2) and (b)(3) in their entirety to
remove the requirement for MA
organizations to submit an additional
minimum enrollment waiver annually
for the second and third years of the
contract. Finally, the proposed text also
includes technical changes to
redesignate paragraphs (b)(1)(i) through
(iii) as (b)(1) through (3), consistent with
regulation style requirements of the
Office of the Federal Register.
4. Revisions to Timing and Method of
Disclosure Requirements (§§ 422.111
and 423.128)
As provided in sections 1852(c)(1)
and 1860D–4(a)(1)(A) of the Act,
Medicare Advantage (MA) organizations
and Part D sponsors must disclose
detailed information about the plans
they offer to their enrollees ‘‘at the time
of enrollment and at least annually
thereafter.’’ This detailed information is
specified in section 1852(c)(1) of the
Act, with additional information
specific to the Part D benefit also
required under section 1860D–4(a)(1)(B)
of the Act. Under § 422.111(a)(3), CMS
requires MA plans to disclose this
information to each enrollee ‘‘at the
time of enrollment and at least annually
thereafter, 15 days before the annual
coordinated election period.’’ A similar
rule for Part D sponsors is found at
§ 423.128(a)(3). Additionally, § 417.427
directs 1876 cost plans to follow the
disclosure requirements in § 422.111
and § 423.128. In making the changes
proposed here, we will also affect 1876
cost plans, though it is not necessary to
change the regulatory text at § 417.427.
Sections 422.111(b) and 423.128(b) of
the Part C and Part D program
regulations, respectively, describe the
information plans must disclose. The
content listed in § 422.111(b) is found in
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an MA plan’s Evidence of Coverage
(EOC) and provider directory. The
content listed in § 423.128(b) is found in
a Part D Sponsor’s EOC, formulary, and
pharmacy directory. Section
422.111(h)(2)(i) requires that plans must
maintain an internet Web site that
contains the information listed in
§ 422.111(b) and also states that posting
the EOC, Summary of Benefits, and
provider network information on the
plan’s Web site ‘‘does not relieve the
MA organization of its responsibility
under § 422.111(a) to provide hard
copies to enrollees.’’
We propose two changes to the
disclosure requirements. First, we
propose to revise §§ 422.111(a)(3) and
423.128(a)(3) to require MA plans and
Part D Sponsors to provide the
information in paragraph (b) of the
respective regulations by the first day of
the annual enrollment period, rather
than 15 days before. In addition, we
propose to modify the sentence in
§ 422.111(h)(2)(ii) which states that
posting the EOC, Summary of Benefits,
and provider network information on
the plan’s Web site does not relieve the
plan of responsibility to provide hard
copies to enrollees. We propose to
revise the sentence slightly and add
‘‘upon request’’ to the existing
regulatory language to make it clear
when any document that is required to
be delivered under paragraph (a) in a
manner that includes provision of a
hard copy upon request, posting the
document on the Web site (whether that
document is the EOC, SB, directory
information or other materials) does not
relieve the MA organizations of a
responsibility to deliver hard copies
upon request. We intend these
proposals to provide CMS with the
flexibility to permit delivery other than
through mailing hard copies (which is
the requirement today for all materials
and information covered by
§ 422.111(a)), including through
electronic delivery or posting on the
Web site in conjunction with delivery of
a hard copy notice describing how the
information and materials are available.
We believe this proposal will ultimately
provide additional flexibility to plans to
take advantage of technological
developments and reduce the amount of
mail enrollees receive from plans.
Prior to the 2009 contract year,
§§ 422.111(a) and 423.128(a) required
the provision of the materials in their
respective paragraphs (b) at the time of
enrollment and at least annually
thereafter, but did not specify a
deadline. In the September 18, 2008,
final rule, CMS required MA
organizations to send this material to
current enrollees 15 days before the
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annual coordinated election period
(AEP) (73 FR 54216). The rationale for
this requirement was to provide
beneficiaries with comprehensive
information prior to the AEP so that
they could make informed enrollment
decisions.
However, we have found through
consumer testing that the large size of
these mailings overwhelmed enrollees.
In particular, the EOC is a long
document that enrollees found difficult
to navigate. Enrollees were more likely
to review the Annual Notice of Change
(ANOC), a shorter document
summarizing any changes to plan
benefits beginning on January 1 of the
upcoming year, if it was separate from
the EOC. Sections 422.111(d) and
423.128(g)(2) require MA organizations
and Part D sponsors to provide the
ANOC to all enrollees at least 15 days
before the AEP.
The ANOC is intended to convey all
of the information essential to an
enrollee’s decision to remain enrolled in
the same plan for the following year or
choose another plan during the AEP.
CMS’s research and experience have
indicated that the ANOC is particularly
useful to and used by enrollees.
Therefore, we are not proposing to
change the §§ 422.111(d) and 423.128(g)
requirements that the ANOC be received
15 days prior to AEP.
Unlike the ANOC, the EOC is a
document akin to a contract that
provides enrollees with exhaustive
information about their medical
coverage and rights and responsibilities
as members of a plan. The provider
directory, pharmacy directory, and
formulary also contain information
necessary to access care and benefits. As
such, CMS requires MA organizations
and Part D sponsors to make these
documents available at the start of the
AEP, so CMS proposes to amend
§§ 422.111(a)(3) and 423.128(a)(3) to
remove the current deadline and insert
‘‘by the first day of the annual
coordinated election period.’’ To the
extent that enrollees find the EOC,
provider directory, pharmacy directory,
and formulary useful in making
informed enrollment decisions, CMS
believes that receipt of these documents
by the first day of the AEP is sufficient.
Any changes in the plan rules reflected
in these documents for the next year
should be adequately described in the
ANOC, which will be provided earlier.
This change would also provide an
additional 2 weeks for MA organizations
and Part D plan sponsors to prepare,
review, and ensure the accuracy of the
EOC, provider directory, pharmacy
directory, and formulary documents.
CMS considers the additional time for
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the EOC important due to the high
number errors plans self-identify in the
document through errata sheets they
submit to CMS and mail to
beneficiaries. In 2017, plans submitted
166 ANOC/EOC errata, which identified
221 ANOC errors and 553 EOC errors.
Additional time to produce the EOC
will give plans more time to conduct
quality assurance and improve accuracy
and result in fewer errata sheets in the
future.
In addition to the proposed changes
in §§ 422.111(a)(3) and 423.128(a)(3), we
also propose to give plans more
flexibility to provide the materials
specified in § 422.111(b) electronically.
The language in § 422.111(h)(2)(ii)
requiring hard copies of the specified
documents first appeared in the January
28, 2005, final rule (70 FR 4587) in
§ 422.111(f)(12). At that time, MA plans
were not required to maintain a Web
site, but if they chose to they were
required to include the EOC, Summary
of Benefits, and provider network
information on the Web site. However,
plans were prohibited from posting
these documents online as a substitute
for providing hard copies to enrollees. A
subsequent final rule, published April
15, 2011, established that MA plans are
required to maintain an internet Web
site at § 422.111(h)(2) and moved the
requirement that posting documents on
the plan Web site did not substitute for
hard copies from § 422.111(f)(12) to
§ 422.111(h)(2)(ii) (76 FR 21502).
There is no parallel to
§ 422.111(h)(2)(ii) in § 423.128. Instead,
§ 423.128(a) states that Part D sponsors
must disclose the information in
paragraph (b) in the manner specified by
CMS. Section 423.128(d)(2)(i) requires
Part D sponsors to maintain an internet
Web site that includes information
listed in § 423.128(b). CMS subregulatory guidance has instructed plans
to provide the EOC in hard copy, but we
believe that the regulatory text would
permit delivery by notifying enrollees of
the internet posting of the documents,
subject to the right to request hard
copies.55 As explained previously
regarding the changes to § 422.111, we
intend for plans to have the flexibility
to provide documents such as the
Summary of Benefits, the EOC, and the
provider network information in
electronic format. We intend to change
the relevant sub-regulatory guidance to
coincide with this as well.
In the preamble to the 2005 final rule,
we noted that the prohibition on
55 Medicare Marketing Guidelines, section 60.6,
issued July 20, 2017, https://www.cms.gov/
Medicare/Health-Plans/ManagedCareMarketing/
Downloads/CY-2018-Medicare-MarketingGuidelines_Final072017.pdf.
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substituting electronic posting on the
MA plan’s internet site for delivery of
hardcopy documents was in response to
comments recommending this change
(70 FR 4623). At the time, we did not
think enough Medicare beneficiaries
used the internet to permit posting the
documents online in place of mailing
them.
In the 12 years since the rule was
finalized, research indicates that
internet use has increased significantly
among Medicare beneficiaries. Drawing
on nationally representative surveys, the
Pew Research Center found that 67
percent of American adults age 65 and
older use the internet. Half of seniors
have broadband available at home.
Internet use increases even more among
seniors age 65–69, of which 82 percent
use the internet and 66 percent have
broadband at home.56 Electronic
documents include advantages such as
word search tools, the ability to magnify
text, screen reader capabilities, and
bookmarks or embedded links, all of
which make documents easier to
navigate. Given that the younger range
of Medicare beneficiaries have a higher
rate of internet access, we believe the
number of beneficiaries who ‘‘use the
internet’’ will only continue to grow
with time. Posted electronic documents
can also be accessed from anywhere the
internet is available.
As mentioned previously, the EOC
sometimes contains errors. To correct
these, MA and Part D plans currently
have to mail errata sheets and post an
updated version online. The hardcopy
version of the EOC is then out-of-date.
Beneficiaries either have to refer to
errata sheets in addition to the hardcopy
EOC or go online to access a corrected
EOC. Increasing beneficiary use of the
electronic EOC ensures that
beneficiaries are using the most accurate
information. Under this proposal to
permit flexibility for us to approve nonhard-copy delivery in some cases, we
intend to continue requiring hardcopy
mailings of any ANOC or EOC errata.
Plans have also continued to request
CMS give plans the flexibility to provide
the EOC electronically. They have
frequently cited the expense of printing
and mailing large documents. Medicaid
managed care plans already have the
flexibility to provide directories,
formularies, and member handbooks
(similar to the EOC) electronically, per
§§ 438.10(h)(1), 438.10(h)4)(i), and
438.10(g)(3) respectively.
56 Pew
Research Center, May 2017, ‘‘Tech
Adoption Climbs Among Older Adults’’, https://
www.pewinternet.org/2017/05/17/tech-adoptionclimbs-among-older-adults/.
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To begin addressing this, in the
Medicare Marketing Guidelines released
July 2, 2015, CMS notified plans that
they could mail either a hardcopy
provider and/or pharmacy directory or a
hardcopy notice to enrollees instructing
them where to find the directories
online and how to request a hard copy.
That guidance has been moved to
Chapter 4, section 110.2.3, of the
Medicare Managed Care Manual. If
plans choose to mail a notice with the
location of the online directory rather
than a hard copy, the notice must
include: A direct link to the online
directory, the customer service number
to call and request a hard copy, and if
available the email address to request a
hard copy. The notice must be distinct,
separate, and mailed with the ANOC/
EOC.57 Section 60.4 of the Medicare
Marketing Guidelines released July 20,
2017, extends the same flexibility to
formularies, with the same required
content in the notice identifying the
location of the online formulary. As
CMS has received few complaints from
any source about this new process,
allowing plans the option to use a
similar strategy for additional materials
is appropriate.
Upon finalizing this rule, we would
issue sub-regulatory guidance to
identify permissible manners of
disclosure; we expect that guidance
would be similar to the current
guidance for the provider directory,
pharmacy directory, and formulary
regarding dissemination of the EOC.
Importantly, this provision does not
eliminate the requirement for plans to
provide accessible formats of required
documents. As recipients of federal
funding, plans are obligated to provide
materials in accessible formats upon
request, at no cost to the individual, to
individuals with disabilities, under
Section 504 of the Rehabilitation Act of
1973 and to take reasonable steps to
provide meaningful access, including
translation services, to individuals who
have limited English proficiency under
Title VI of the Civil Rights Act of 1964.
To create this flexibility, CMS
proposes modifying the sentence, ‘‘Such
posting does not relieve the MA
organization of its responsibility under
§ 422.111(a) to provide hard copies to
enrollees,’’ to include ‘‘upon request’’ in
§ 422.111(h)(2)(ii) and to revise
§ 422.111(a) by inserting ‘‘in the manner
specified by CMS.’’ These changes will
align §§ 422.111(a) and 423.128(a) to
authorize CMS to provide flexibility to
57 Medicare Managed Care Manual Chapter 4—
Benefits and Beneficiary Protections, Rev. 121,
issued April 22, 2016, https://www.cms.gov/
Regulations-and-Guidance/Guidance/Manuals/
downloads/mc86c04.pdf.
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MA plans and Part D sponsors to use
technology to provide beneficiaries with
information. CMS intends to use this
flexibility to provide sponsoring
organizations with the ability to
electronically deliver plan documents
(for example, the Summary of Benefits)
to enrollees while maintaining the
protection of a hard copy for any
enrollee who requests such hard copy.
As the current version of § 422.111(a)
and (h)(2) require hard copies, we
believe this proposal will ultimately
result in reducing burden and providing
more flexibility for sponsoring
organizations.
5. Revisions to §§ 422 and 423 Subpart
V, Communication/Marketing Materials
and Activities
Section 1851(h) of the Act prohibits
Medicare Advantage (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.
Further, in section 1851(j), the Secretary
is authorized to adopt standards
regarding marketing activities, and the
statute identifies certain prohibited
activities. 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 umbrella term
‘‘marketing.’’ Sections 1806D–
1(d)(3)(B)(iv) and 1860D–4(l) of the Act
provide similar restrictions on use of
marketing and enrollment materials and
activities to promote enrollment in Part
D plans.
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 plan
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. As
delegated this authority by the
Secretary, CMS reviews all such
material submitted and disapproves
such material upon determination that
the material is materially inaccurate or
misleading or otherwise makes a
material misrepresentation. Similar to
1851(h) of the Act, section 1876(c)(3)(C)
of the Act focuses more on the review
and approval of materials as opposed to
providing an exhaustive list of materials
that would qualify as marketing or
promotional information and materials.
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As part of the implementation of section
1876(c)(3)(C) of the Act, the regulation
governing cost plans at § 417.428(a)
refers to Subpart V of part 422 for
marketing guidance. Throughout this
proposal, the changes discussed for MA
organizations/MA plans and
prescription drug plan (PDP) sponsors/
Part D plans applies as well to cost
plans subject to the same requirements
as a result of this cross-reference.
Section 422.2260(1)–(4) of the Part C
program regulations currently identifies
marketing materials as any materials
that: (1) Promote the MA organization,
or any MA plan offered by the MA
organization; (2) inform Medicare
beneficiaries that they may enroll, or
remain enrolled in, an MA plan offered
by the MA organization; (3) explain the
benefits of enrollment in an MA plan, or
rules that apply to enrollees; and (4)
explain how Medicare services are
covered under an MA plan, including
conditions that apply to such coverage.
Section 423.2260(1)–(4) applies
identical regulatory provisions to the
Part D program.
Sections 422.2260(5) and 423.2260(5)
provide specific examples of materials
under the ‘‘marketing materials’’
definition, which include: General
audience materials such as general
circulation brochures, newspapers,
magazines, television, radio, billboards,
yellow pages, or the internet; marketing
representative materials such as scripts
or outlines for telemarketing or other
presentations; presentation materials
such as slides and charts; promotional
materials such as brochures or leaflets,
including materials for circulation by
third parties (for example, physicians or
other providers); membership
communication materials such as
membership rules, subscriber
agreements, member handbooks and
wallet card instructions to enrollees;
letters to members about contractual
changes; changes in providers,
premiums, benefits, plan procedures
etc.; and membership activities (for
example, materials on rules involving
non-payment of premiums,
confirmation of enrollment or
disenrollment, or no claim specific
notification information). Finally,
§§ 422.2260(6) and 423.2260(6) provide
a list of materials that are not
considered marketing materials,
including materials that are targeted to
current enrollees; are customized or
limited to a subset of enrollees or apply
to a specific situation; do not include
information about the plan’s benefit
structure; and apply to a specific
situation or cover claims processing or
other operational issues.
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We are proposing several changes to
Subpart V of the part 422 and 423
regulations. To better outline these
proposed changes, they are addressed in
four areas of focus: (1) Including
‘‘communication requirements’’ in the
scope of Subpart V or parts 422 and 423,
which will include new definitions for
‘‘communications’’ and
‘‘communication materials;’’ (2)
amending §§ 422.2260 and 423.2260 to
add (at a new paragraph (b)) a definition
of ‘‘marketing’’ in place of the current
definition of ‘‘marketing materials’’ and
to provide lists identifying marketing
materials and non-marketing materials;
(3) adding new regulation text to
prohibit marketing during the Open
Enrollment Period proposed in section
III.B.1 of this proposed rule; (4)
technical changes to other regulatory
provisions as a result of the changes to
Subpart V. To the extent necessary,
CMS relies on its authority to add
regulatory and contract requirements to
the cost plan, MA, and Part D programs
to propose and (ultimately) adopt these
changes. We note as well that sections
1851(h) and (j) of the Act (crossreferenced in sections 1860D–1 and
1860D–4(l)) of the Act address activities
and direct that the Secretary adopt
standards limiting marketing activities,
which CMS interprets as permitting
regulation of communications about the
plan that do not rise to the level of
activities and materials that specifically
promote enrollment.
a. Revising the Scope of Subpart V To
Include Communications and
Communications Materials
The current version of Subpart V of
parts 422 and 423 regulation focuses on
marketing materials, as opposed to other
materials currently referred to as ‘‘nonmarketing’’ in the sub-regulatory
Medicare Marketing Guidelines. This
leaves a regulatory void for the
requirements that pertain to those
materials that are not considered
marketing. Historically, the impact of
not having regulatory guidance for
materials other than marketing has been
muted because the current regulatory
definition of marketing is so broad,
resulting in most materials falling under
the definition. The overall effect of this
combination—no definition of materials
other than marketing and a broad
marketing definition—is that marketing
and communications with enrollees
became synonymous.
With this CMS proposal to narrow the
marketing definition, we believe there is
a need to continue to apply the current
standards to and develop guidance for
those materials that fall outside of the
proposed definition. We propose
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changing the title of each Subpart V by
replacing the term ‘‘Marketing’’ with
‘‘Communication.’’ We propose to
define in §§ 422.2260(a) and 423.2260(a)
definitions of ‘‘communications’’
(activities and use of materials to
provide information to current and
prospective enrollees) and
‘‘communications materials’’ (materials
that include all information provided to
current members and prospective
beneficiaries). We propose that
marketing materials (discussed later in
this section) would be a subset of
communications materials. In many
ways, the proposed definition of
communications materials is similar to
the current definition of marketing
materials; the proposed definition has a
broad scope and would include both
mandatory disclosures that are
primarily informative and materials that
are primarily geared to encourage
enrollment.
CMS also proposes, through revisions
to §§ 422.2268 and 423.2268, to apply
some of the current standards and
prohibitions related to marketing to all
communications and to apply others
only to marketing. Marketing and
marketing materials would be subject to
the more stringent requirements,
including the need for submission to
and review by CMS. Under this
proposal, those materials that are not
considered marketing, per the proposed
definition of marketing, would fall
under the less stringent communication
requirements.
In addition to these proposals related
to defined terms and revising the scope
of Subparts V in parts 422 and 423, we
are proposing changes to the current
regulations at §§ 422.2264 and 423.2264
and §§ 422.2268 and 423.2268 that are
related to our proposal to distinguish
between marketing and
communications.
With regard to §§ 422.2264 and
423.2264, we are proposing the
following changes:
• Deletion of paragraph (a)(3), which
currently provides for an adequate
written explanation of the grievance and
appeals process to be provided as part
of marketing materials. In our view
grievance and appeals communications
would not be within the scope of
marketing as proposed in this rule.
• Deletion of paragraph (a)(4), which
provides for CMS to determine that
marketing materials include any other
information necessary to enable
beneficiaries to make an informed
decision about enrollment. The intent of
this section was to ensure that materials
which include measuring or ranking
mechanisms such as Star Ratings were
a part of CMS’s marketing review. We
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propose deleting this section as the
exclusion list to be codified at
§ 422.2260(c)(2)(ii) ensures materials
that include measuring or ranking
standards will be considered marketing,
thus making §§ 422.2264(a)(4) and
§ 423.2264(a)(4) duplicative.
• Deletion of paragraph (e), which
requires sponsoring organizations to
provide translated materials in certain
areas where there is a significant nonEnglish speaking population. We
propose to recodify these requirement as
a general communication standard in
§§ 422.2268 and 423.2268, at new
paragraph (a)(7). As part of the
redesignation of this requirement as a
standard applicable to all
communications and communication
materials, we are also proposing
revisions. First, we are proposing to
revise the text so that it is stated as a
prohibition on sponsoring
organizations: For markets with a
significant non-English speaking
population, provide materials, as
defined by CMS, unless in the language
of these individuals. We propose adding
the statement of ‘‘as defined by CMS’’ to
the first sentence to allow the agency
the ability to define the significant
materials that would require translation.
We propose deleting the word
‘‘marketing’’ so the second sentence
now reads as ‘‘materials’’, to make it
clear that the updated section applies to
the broader term of communications
rather than the more narrow term of
marketing.
In addition, we are proposing to
revise §§ 422.2262(d) and 423.2262(d) to
delete the term ‘‘ad hoc’’ from the
heading and regulation text in favor of
referring to ‘‘communication materials’’
to conform to the addition of
communication materials under Subpart
V.
Current regulations at §§ 422.2268
and 423.2268 list prohibited marketing
activities. These activities include items
such as providing meals to potential
enrollees, soliciting door to door, and
marketing in provider settings. With the
proposal to distinguish between overall
communications and marketing
activities, we are proposing to break out
the prohibitions into categories: those
applicable to all communications
(activities and materials) and those that
are specific to marketing and marketing
materials. In reviewing the various
standards under the current regulations
to determine if they would apply to
communications or marketing, we
looked at the each standard as it applied
to the new definitions under Subpart V.
Prohibitions that offer broader
beneficiary protections and are
currently applicable to a wide variety of
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materials are proposed here to apply to
communications activities and
communication materials; this list of
prohibitions is proposed as paragraph
(a) Conversely, prohibitions that are
currently targeted to activities and
materials that are within the narrower
scope of marketing and marketing
materials are proposed at paragraph (b)
as prohibitions on marketing. We are
not proposing to expand the list of
prohibitions but are proposing to notate
which prohibitions are applicable to
which category. The only substantive
change is in connection with paragraph
(a)(7), which we discuss earlier in this
section. We welcome comment on our
proposed distinctions between these
types of prohibitions and whether
certain standards or prohibitions from
current §§ 422.2268 and 423.2268
should apply more narrowly or broadly
than we have proposed.
b. Amending the Regulatory Definition
of Marketing and Marketing Materials
In conjunction with adding new
proposed communication requirements,
we also propose a definition of
‘‘marketing’’ be codified in
§§ 422.2260(b) and 423.2260(b). Under
this proposal, we would delete the
current text in that section defining only
‘‘marketing materials’’ to add a new
definition of ‘‘marketing’’ and lists of
materials that are ‘‘marketing materials’’
and that are not. Specifically, the term
‘‘marketing’’ would be defined as the
use of materials or activities by the
sponsoring organization (that is, the MA
organization, Part D Sponsor, or cost
plan, depending on the specific part) or
downstream entities that are intended to
draw a beneficiary’s attention to the
plan or plans and influence a
beneficiary’s decision making process
when making a plan selection; this last
criterion would also be met when the
intent is to influence an enrollee’s
decision to remain in a plan (that is,
retention-based marketing).
The current regulations address both
prohibited marketing activities and
marketing materials. The prohibited
activities are directly related to
marketing activities, but the current
definition of ‘‘marketing materials’’ is
overly broad and has resulted in a
significant number of documents being
classified as marketing materials, such
as materials promoting the sponsoring
organization as a whole (that is, brand
awareness) rather than materials that
promote enrollment in a specific
Medicare plan. We believe that
Congress’ intent was to target those
materials that could mislead or confuse
beneficiaries into making an adverse
enrollment decision. Since the original
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adoption of §§ 422.2260 and 423.2260,
CMS has reviewed thousands of
marketing materials, tracked and
resolved thousands of beneficiary
complaints through the complaints
tracking module (CTM), conducted
secret shopping programs of MA plan
sales events, and investigated numerous
marketing complaints. These efforts
have provided CMS insight into the
types of plan materials that present the
greatest risk of misleading or confusing
beneficiaries. Based on this experience,
we believe that the current regulatory
definition of marketing materials is
overly broad. As a result, materials that
pose little to no threat of a detrimental
enrollment decision fall under the
current broad marketing definition. As
such, the materials are also required to
follow the associated marketing
requirements, including submission to
CMS for potential review under limited
statutory timeframes. CMS believes that
the level of scrutiny required on
numerous documents that are not
intended to influence an enrollment
decision, combined with associated
burden to sponsoring organizations and
CMS, is not justified. By narrowing the
materials that fall under the scope of
marketing, this proposal will allow us to
better focus its review on those
materials that present the greatest
likelihood for a negative beneficiary
experience.
We propose to more appropriately
implement the statute by narrowing the
definition of marketing to focus on
materials and activities that aim to
influence enrollment decisions. We
believe this is consistent with
Congress’s intent. Moreover, the new
definition differentiates between
factually providing information about
the plan or benefits (that is, the
Evidence of Coverage (EOC)) versus
persuasively conveying information in a
manner designed to prompt the
beneficiary to make a new plan decision
or to stay with their current plan (for
example, a flyer that touts a low
monthly premium). As discussed later,
the majority of member materials would
no longer fall within the definition of
marketing under this proposal. The
EOC, subscriber agreements, and wallet
card instructions are not developed nor
intended to influence enrollment
decisions. Rather, they are utilized for
current enrollees to understand the full
scope of and the rules associated with
their plan. We believe the proposed new
marketing definition appropriately
safeguards potential and current
enrollees while not placing an undue
burden on sponsoring organizations.
Moreover, those materials that would be
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excluded from the marketing definition
would fall under the proposed
definition of communication materials,
with what we believe are more
appropriate requirements. CMS notes
that enrollment and mandatory
disclosure materials continue to be
subject to requirements in §§ 422.60(c),
422.111, 423.32(b), and 423.128.
Second, we propose to revise the list
of marketing materials, currently
codified at §§ 422.2260(5) and
423.2260(5), and to include it in the
proposed new §§ 422.2260(c)(1) and
423.2260(c)(1). The current list of
examples includes: brochures;
advertisements in newspapers and
magazines, and on television,
billboards, radio, or the internet, and
billboards; social media content;
marketing representative materials, such
as scripts or outlines for telemarketing
or other presentations; and presentation
materials such as slides and charts. In
conjunction with the proposed new
definition of marketing, we are
proposing to remove from the list of
examples items such as membership
communication materials, subscriber
agreements, member handbooks, and
wallet card instructions to enrollees, as
they would no longer fall under the
proposed regulatory definition of
marketing. The proposed text
complements the new definition by
providing a concise non-exhaustive list
of example material types that would be
considered marketing.
Third, we propose to revise the list of
exclusions from marketing materials,
currently codified at §§ 422.2260(6) and
423.2260(6), and to include it in the
proposed new §§ 422.2260(c)(2) and
423.2260(c)(2) to identify the types of
materials that would not be considered
marketing. 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) will be excluded from
marketing. In addition, materials that do
mention benefits or cost sharing, but do
not meet the definition of marketing as
proposed here, would also be excluded
from marketing. We also propose that
required materials in § 422.111 and
§ 423.128 not be considered marketing,
unless otherwise specified. Lastly, we
are proposing to exclude materials
specifically designated by us as not
meeting the definition of the proposed
marketing definition based on their use
or purpose. The purpose of this
proposed revision of the list of
exclusions from marketing materials, as
with the proposed marketing definition
and proposed non-exhaustive list of
marketing materials, is to maintain the
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current beneficiary protections that
apply to marketing materials but to
narrow the scope to exclude materials
that are unlikely to lead to or influence
an enrollment decision.
In the proposed changes to the
exclusions from marketing materials, we
intend to exclude materials that do not
include information about the plan’s
benefit structure or cost-sharing. We
believe that materials that do not
mention benefit structure or cost sharing
would not be used to make an
enrollment decision in a specific
Medicare plan, rather they would be
used to drive beneficiaries to request
additional information that would fall
under the new definition of marketing.
Similarly, we want to be sure it is clear
that the use of measuring or ranking
standards, such as the CMS Star Ratings,
even when not accompanied by other
plan benefit structure or cost sharing
information, could lead a beneficiary to
make an enrollment decision. It should
be noted that our authority for similar
requirements can be found under the
current §§ 422.2264(a)(4) and
423.2264(a)(4). We believe this is clearer
and more appropriately housed under
the regulatory definition of marketing.
As such, together with the proposed
update to excluded materials, we will
make the technical change to remove
(a)(4) from §§ 422.2264 and 423.2264. In
addition, we propose to exclude
materials that mention benefits or cost
sharing but do not meet the proposed
definition of marketing. 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. An example is a
monthly newsletter to current enrollees
reminding them of preventive services
at $0 cost sharing.
In addition, we note the proposal
excludes those materials required under
§ 422.111 (for MA plans) and § 423.128
(for Part D sponsors), unless otherwise
specified by CMS because of their use
or purpose. This proposal is intended to
exclude post-enrollment materials that
we require be disclosed and distributed
to enrollees, such as the EOC. Such
materials convey important plan
information in a factual manner rather
than to entice a prospective enrollee to
choose a specific plan or an existing
enrollee to stay in a specific plan. In
addition, either these materials use
model formats and text developed by us
or are developed by plans based on
detailed instructions on the required
content from us; this high level of
standardization by us on the front-end
provides the necessary beneficiary
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protections and negates the need for our
review of these materials before
distribution to enrollees.
The proposed changes do not release
cost plans, MA organizations, or Part D
sponsors from the requirements in
sections 1876(c)(3)(C), 1851(h), and
1860D–1(b)(1)(B)(vi) of the Act to have
application forms reviewed by CMS as
well. To clarify this requirement, we are
proposing to revise § 417.430(a)(1) and
§ 423.32(b), which pertain to application
and enrollment processes, to add a cross
reference to §§ 422.2262 and 423.2262,
respectively. The cross references
directly link enrollment applications
back to requirements related to review
and distribution of marketing materials.
These proposed changes update an old
cross-reference, codify existing
practices, and are consistent with
language already in § 422.60(c).
c. Prohibition of Marketing During the
Open Enrollment Period
The 21st Century Cures Act (the Cures
Act) amended section 1851(e)(2) of the
Act by adding a new continuous open
enrollment and disenrollment period
(OEP) for MA and certain PDP members.
See section III.A.X for CMS’s other
proposal related to that provision. As
part of establishing this OEP, the Cures
Act prohibits unsolicited marketing and
mailing marketing materials to
individuals who are eligible for the new
OEP. We are proposing to add a new
paragraph (b)(9) to both proposed
§§ 422.2268 and 423.2268 to apply this
prohibition on marketing. However, we
request comment on how the agency
could implement this statutory
requirement. The new OEP is not
available for enrollees in Medicare cost
plans; therefore, these limitations would
apply to MA enrollees and to any PDP
enrollee who was enrolled in an MA
plan the prior year. CMS is concerned
that it may be difficult for a sponsoring
organization to limit marketing to only
those individuals who have not yet
enrolled in a plan during the OEP. One
mechanism could be to limit marketing
entirely during that period, but we are
concerned that such a prohibition
would be too broad We believe that
using a ‘‘knowing’’ standard will both
effectuate the statutory provision and
avoid against overly broad
implementation. We welcome comment
on how a sponsoring organization could
appropriately control who would or
should be marketed to during the new
OEP, such as through as mailing
campaigns aimed at a more general
audience.
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d. Technical Changes to Other
Regulatory Provisions as a Result of the
Changes to Subpart V
As previously stated, because of the
broad regulatory definition of
marketing, the term marketing and
communication became synonymous.
With the proposed updates to Subpart V
in both part 422 and part 423, a
definition of the broader term
communication would be added and the
definition of marketing, as well as the
materials that fall within the scope of
that definition, would be narrowed. As
a result, a number of technical changes
will be needed to update certain
sections of the regulation that use the
term marketing. Accordingly, we
propose the following technical changes
in Part C:
• In § 422.54, we propose to update
paragraphs (c)(1)(i) and (d)(4)(ii) to
replace ‘‘marketing materials’’ with
‘‘communication materials.’’
• In § 422.62, we propose to update
paragraph (b)(3)(B)(ii) by replacing ‘‘in
marketing the plans to the individual’’
with ‘‘in communication materials.’’
• In § 422.102(d), we propose to use
‘‘supplemental benefits packaging’’
instead of ‘‘marketing of supplemental
benefits.’’
• In § 422.206(b)(2)(i), we propose to
replace ‘‘§ 422.80 (concerning approval
of marketing materials and election
forms)’’ with ‘‘all applicable
requirements under subpart V’’.
• In § 422.503(b)(4)(ii), we propose to
replace the term ‘‘marketing’’ with the
term ‘‘communication.’’
• In § 422.510(a)(4)(iii), we propose to
remove the word ‘‘marketing’’ so that
the reference is to the broader Subpart
V.
CMS has had longstanding authority
to initiate ‘‘marketing sanctions’’ in
conjunction with enrollment sanctions
as a means of protecting beneficiaries
from the confusion that stems from
receiving information provided by a
plan that is—as a result of enrollment
sanctions—unable to accept
enrollments. In this rulemaking, CMS is
proposing to replace the term
‘‘marketing’’ with ‘‘communications’’ in
§ 422.750 and 422.752 to reflect its
proposal for Subpart V. The intent of
this proposal to change the terminology
is not to expand the scope of CMS’s
authority with respect to sanction
regulations. Rather, CMS intends to
preserve the existing reach of its
sanction authority it currently has—to
prohibit any communications under the
current broad definition of ‘‘marketing
materials’’ from being issued by a
sponsoring organization while that
entity is under sanction. For this reason,
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CMS is proposing the following changes
to §§ 422.750 and 422.752:
• In § 422.750, we propose to revise
paragraph (a)(3) to refer to suspension of
‘‘communication activities.’’
• In § 422.752, we propose to replace
the term ‘‘marketing’’ in paragraph
(a)(11) and the heading for paragraph (b)
with the term ‘‘communications.’’
We are not proposing any changes to
the use of the term ‘‘marketing’’ in
§§ 422.384, 422.504(a)(17),
422.504(d)(2)(vi), or 422.514, as those
regulations use the term in a way that
is consistent with the proposed
definition of the term ‘‘marketing,’’ and
the underlying requirements and
standards do not need to be extended to
all communications from an MA
organization.
We also propose the following
technical changes in Part D:
• In § 423.38(c)(8)(i)(C), we propose
to revise the paragraph to read: ‘‘The
organization (or its agent,
representative, or plan provider)
materially misrepresented the plan’s
provisions in communication
materials.’’
• In § 423.504(b)(4)(ii), we propose to
replace ‘‘marketing’’ with
‘‘communications’’ to reflect the change
to Subpart V.
For the reasons explained in
connection with our proposal to revise
the Part C sanction regulations, we also
propose the following changes:
• In § 423.505(b)(25), we propose to
replace ‘‘marketing’’ with
‘‘communications’’ to reflect the change
to Subpart V.
• In § 423.509(a)(4)(V)(A), we propose
to delete the word ‘‘marketing’’ and
instead simply refer to Subpart V.
We are not proposing any changes to
the use of the term ‘‘marketing’’ in
§§ 423.505(d)(2)(vi), 423.871(c), or
423.756(c)(3)(ii), as those regulations
use the term in a way that is consistent
with the proposed definition of the term
‘‘marketing,’’ and the underlying
requirements and standards do not need
to be extended to all communications
from a PDP sponsor.
We solicit comment on the proposed
technical changes, particularly whether
a proposed revision here would be more
expansive than anticipated or have
unintended consequences for
sponsoring organizations or for CMS’s
oversight and monitoring of the MA and
Part D programs.
In conclusion, we believe that our
proposal here—the proposed definitions
of ‘‘communications,’’
‘‘communications materials,’’
‘‘marketing,’’ and ‘‘marketing
materials;’’ and the various proposed
changes to Subpart V; to distinguish
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between prohibitions applicable to
communications and those applicable to
marketing; and to conform
§ 417.430(a)(1) and § 423.32(b) to
§ 422.60(c) and reflect the statutory
direction regarding enrollment
materials; all maintain the appropriate
level of beneficiary protection. These
proposals will facilitate and focus our
oversight of marketing materials, while
appropriately narrowing the scope of
what is considered marketing. We
believe beneficiary protections are
further enhanced by adding
communication materials and
associated standards under Subpart V.
These changes allow us to focus its
oversight efforts on plan marketing
materials that have the highest potential
for influencing a beneficiary to make an
enrollment decision that is not in the
beneficiary’s best interest. We solicit
comment on these proposals and
whether the appropriate balance is
achieved with the proposed regulation
text.
6. Lengthening Adjudication
Timeframes for Part D Payment
Redeterminations and IRE
Reconsiderations (§§ 423.590 and
423.636)
Sections 1860D–4(g) and (h) of the
Act require the Secretary to establish
processes for initial coverage
determinations and appeals similar to
those used in the Medicare Advantage
program. In accordance with section
1860D–4(g) of the Act, § 423.590
establishes Part D plan sponsors’
responsibilities for processing
redeterminations, including
adjudication timeframes. Pursuant to
section 1860D–4(h) of the Act, § 423.600
sets forth the requirements for an
independent review entity (IRE) for
processing reconsiderations.
We are proposing changes to the
adjudication timeframe for Part D
standard redetermination requests for
payment at § 423.590(b) and the related
effectuation provision § 423.636(a)(2).
Specifically, we are proposing to change
the timeframe for issuing decisions on
payment redeterminations from 7
calendar days from the date the plan
sponsor receives the request to 14
calendar days from the date the plan
sponsor receives the request. This
proposed 14-day timeframe for issuing a
decision related to a payment request
would also apply to the IRE
reconsideration pursuant to
§ 423.600(d). We are not proposing to
make changes to the existing
requirements for making payment.
When applicable, the Part D plan
sponsor must make payment no later
than 30 days from receipt of the request
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for redetermination, or the IRE
reconsideration notice, respectively.
Some of the feedback received from
the RFI published in the 2018 Call
Letter related to simplifying and
establishing greater consistency in Part
D coverage and appeals processes. The
proposed change to a 14 calendar day
adjudication timeframe for payment
redeterminations, which would also
apply to payment requests at the IRE
reconsideration level of appeal, will
establish consistency in the
adjudication timeframes for payment
requests throughout the plan level and
IRE processes, as § 423.568(c) requires a
plan sponsor to notify the enrollee of its
determination no later than 14 calendar
days after receipt of the request for
payment. We believe affording more
time to adjudicate payment
redetermination requests (including
obtaining necessary documentation to
support the request) will ease burden on
plan sponsors because it could reduce
the need to deny payment
redeterminations due to missing
information. We also expect the
proposed change to the payment
redetermination timeframe would
reduce the volume of untimely payment
redeterminations that must be autoforwarded to the IRE.
In addition, having more time to
gather information and process these
requests could be beneficial to enrollees
because decisions will be more fully
informed, potentially resulting in fewer
decisions having to undergo further
appeal. While we acknowledge that
some enrollees would have to wait
longer for a decision, we note that the
proposed changes are limited to
payment requests where the enrollee
has already received the drug, ensuring
any delay would not adversely affect the
enrollee’s health. As noted previously,
when coverage is approved, the plan
would remain obligated to remit
payment to affected enrollees within 30
days. Allowing plan sponsors and the
IRE additional time to process payment
appeal requests may assist these
adjudicators in allocating resources in a
manner that is most efficient and
enrollee friendly, for example, ensuring
adequate resources are directed to
processing more time-sensitive preservice requests where the enrollee has
not yet obtained the drug, particularly
during periods of increased case
volume.
7. Elimination of Medicare Advantage
Plan Notice for Cases Sent to the IRE
(§ 422.590)
Section 1852(g) of Act requires MA
organizations to have a procedure for
making timely determinations regarding
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whether an enrollee is entitled to
receive a health service and any amount
the enrollee is required to pay for such
service. Under this statutory provision,
the MA plan also is required to provide
for reconsideration of that
determination upon enrollee request.
In accordance with section 1852(g) of
the Act, our current regulations at
§§ 422.578, 422.582, and 422.584
provide MA enrollees with the right to
request reconsideration of a health
plan’s initial decision to deny Medicare
coverage. Pursuant to § 422.590, when
the MA plan upholds initial payment or
service denials, in whole or in part, it
must forward member case files to an
independent review entity (IRE) that
contracts with CMS to review plan-level
appeals decisions; that is, plans are
required to automatically forward to the
IRE any reconsidered decisions that are
adverse or partially adverse for an
enrollee without the enrollee taking any
action.
Currently, MA plans are required to
notify enrollees upon forwarding cases
to the IRE, as set forth at § 422.590(f).
CMS sub-regulatory guidance, set forth
in Chapter 13 of the Medicare Managed
Care Manual, specifically directs plans
to mail a notice to the enrollee
informing the individual that the plan
has upheld its decision to deny
coverage, in whole or in part, and thus
is forwarding the enrollee’s case file to
the IRE for review. We have made a
model notice available for plans to use
for this purpose. (See Medicare
Managed Care Manual, Chapter 13,
§ 10.3.3, 80.3, and Appendix 10.) In
addition, the Part C IRE is required,
under its contract with CMS, to notify
the enrollee when the IRE receives the
reconsidered decision for review. We
are proposing to revise § 422.590 to
remove paragraph (f) and redesignate
the existing paragraphs (g) and (h) as (f)
and (g), respectively. The Part C IRE is
contractually responsible for notifying
an enrollee that the IRE has received
and will be reviewing the enrollee’s
case; thus, we believe the plan notice is
duplicative and nonessential. Under
this proposal, the IRE would be
responsible for notifying enrollees upon
forwarding all cases—including both
standard and expedited cases. We will
continue to closely monitor the
performance of the IRE and beneficiary
complaints related to timely and
appropriate notification that the IRE has
received and will be reviewing the
enrollee’s case.
We received feedback in response to
the Request for Information included in
the 2018 Call Letter related to
simplifying and streamlining appeals
processes. To that end, we believe this
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proposed change will help further these
goals by easing burden on MA plans
without compromising informing the
beneficiary of the progress of his or her
appeal. If this proposal is finalized, and
plans are no longer required to notify an
enrollee that his or her case has been
sent to the IRE, we would expect plans
to redirect resources previously
allocated to issuing this notice to more
time-sensitive activities such as review
of pre-service and post-service coverage
requests, improved efficiency in appeals
processing, and provision of health
benefits in an optimal, effective, and
efficient manner.
8. E-Prescribing and the Part D
Prescription Drug Program; Updating
Part D E-Prescribing Standards
a. Legislative Background
Section 101 of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub.
L. 108–173) amended title XVIII of the
Act to establish a voluntary prescription
drug benefit program at section 1860D–
4(e) of the Act. Among other things,
these provisions required the adoption
of Part D e-prescribing standards.
Prescription Drug Plan (PDP) sponsors
and Medicare Advantage (MA)
organizations offering Medicare
Advantage-Prescription Drug Plans
(MA–PD) are required to establish
electronic prescription drug programs
that comply with the e-prescribing
standards that are adopted under this
authority. There is no requirement that
prescribers or dispensers implement eprescribing. However, prescribers and
dispensers who electronically transmit
prescription and certain other
information for covered drugs
prescribed for Medicare Part D eligible
beneficiaries, directly or through an
intermediary, are required to comply
with any applicable standards that are
in effect.
For a further discussion of the
statutory basis for this proposed rule
and the statutory requirements at
section 1860D–4(e) of the Act, please
refer to section I. (Background) of the EPrescribing and the Prescription Drug
Program proposed rule, published
February 4, 2005 (70 FR 6256).
b. Regulatory History
Transaction standards are periodically
updated to take new knowledge,
technology and other considerations
into account. As CMS adopted specific
versions of the standards when it
adopted the foundation and final eprescribing standards, there was a need
to establish a process by which the
standards could be updated or replaced
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over time to ensure that the standards
did not hold back progress in the
industry. We discussed these processes
in the November 7, 2005 final rule (70
FR 67579).
The discussion noted that the
rulemaking process will generally be
used to retire, replace or adopt a new eprescribing standard, but it also
provided for a simplified ‘‘updating
process’’ when a non-HIPAA standard
could be updated with a newer
‘‘backward-compatible’’ version of the
adopted standard. In instances in which
the user of the later version can
accommodate users of the earlier
version of the adopted non-HIPAA
standard without modification,
however, it noted that notice and
comment rulemaking could be waived,
in which case the use of either the new
or old version of the adopted standard
would be considered compliant upon
the effective date of the newer version’s
incorporation by reference in the
Federal Register. We utilized this
streamlined process when we published
an interim final rule with comment on
June 23, 2006 (71 FR 36020). That rule
recognized NCPDP SCRIPT 8.1 as a
backward compatible update to the
NCPDP SCRIPT 5.0 for the specified
transactions, thereby allowing for use of
either of the two versions in the Part D
program. Then, on April 7, 2008, we
used notice and comment rulemaking
(73 FR 18918) to finalize the
identification of the NCPDP SCRIPT 8.1
as a backward compatible update of the
NCPDP SCRIPT 5.0, and, effective April
1, 2009, retire NCPDP SCRIPT 5.0 and
adopt NCPDP SCRIPT 8.1 as the official
Part D e-prescribing standard for the
specified transactions. On July 1, 2010,
CMS utilized the streamlined process to
recognize NCPDP SCRIPT 10.6 as a
backward compatible update of NCPDP
SCRIPT 8.1 in an interim final rule (75
FR 38026).
We finalized the NCPDP SCRIPT 10.6
as a Backward Compatible Version of
NCPDP SCRIPT 8.1, and retired NCPDP
SCRIPT 8.1 and adopted the NCPDP
SCRIPT 10.6 as the official Part D ePrescribing Standard for the specified
transactions in the CY 2013 Physician
Fee Schedule, effective November 1,
2013. For a more detailed discussion,
see the CY 2013 PFS final rule (77 FR
69329 through 69333).
c. Proposed adoption of NCPDP
SCRIPT version 2017071 as the official
Part D E-Prescribing Standard for certain
specified transactions, retirement of
NCPDP SCRIPT 10.6, proposed
conforming changes elsewhere in
423.160, and correction of a historic
typographical error in the regulatory
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text which occurred when NCPDP
SCRIPT 10.6 was initially adopted.
The National Council for Prescription
Drug Programs (NCPDP) is a not-forprofit ANSI-Accredited Standards
Development Organization (SDO)
consisting of more than 1,600 members
who are interested in electronic
standardization within the pharmacy
services sector of the healthcare
industry. NCPDP provides a forum
wherein our diverse membership can
develop solutions, including ANSIaccredited standards, and guidance for
promoting information exchanges
related to medications, supplies, and
services within the healthcare system.
NCPDP has developed the NCPDP
SCRIPT standard for use by prescribers,
dispensers, pharmacy benefit managers
(PBMs), payers and other entities who
wish to electronically transmit
information about prescriptions and
prescription-related information.
NCPDP has periodically updated its
SCRIPT standard over time, and three
separate versions of the NCPDP SCRIPT
standard, versions 5.0, 8.1 and most
recently 10.6 have been adopted by
CMS for the part D e-prescribing
program through the notice and
comment rulemaking process. We
believe that our current proposal to
adopt the NCPDP SCRIPT 2017071 as
the official part D e-prescribing standard
for certain specified transactions, and to
retire the current standard for those
transactions would, among other things,
improve communications between the
prescriber and dispensers, and we
welcome public comment on these
proposals.
Our actions were, in part, precipitated
by a May 24, 2017, letter from the
NCPDP that requested our adoption of
NCPDP SCRIPT Standard Version
2017071. This version was balloted and
approved July 28, 2017. The letter noted
the considerable amount of time that
had passed since the last update to the
current adopted standard (NCPDP
SCRIPT 10.6), and that there were many
changes to the NCPDP SCRIPT Standard
version 2017071 that would benefit its
users.
CMS reviewed the specifications for
NCPDP SCRIPT Standard Version
2017071 and found that this version
would allow users substantial
improvements in efficiency. Version
2017071 supports communications
regarding multi-ingredient compounds,
thereby allowing compounded
medication to be prescribed
electronically. Previously prescriptions
for compounds were handwritten and
sent via fax to the dispenser, which
often required follow up
communications between the prescriber
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and pharmacy. The ability to process
prescriptions for compounds
electronically in lieu of relying on more
time intensive interpersonal interactions
would be expected to improve
efficiency.
While we do not propose mandating
its use at this time, one transaction
supported by the proposed version of
NCPDP SCRIPT would also provide
interested users with a Census
transaction functionality which is
designed to service beneficiaries
residing in long term care. The Census
feature would trigger timely notification
of a beneficiary’s absence from a long
term care facility, which would enable
discontinuation of daily medication
dispensing when a leave of absence
occurs, thereby preventing the
dispensing of unneeded medications.
Version 2017071 also contains an
enhanced Prescription Fill Status
Notification that allows the prescriber to
specify if/when they want to receive the
notifications from the dispenser. It now
supports data elements for diabetic
supply prescriptions and includes
elements which could be required for
the pharmacy during the dispensing
process which may be of value to
prescribers who need to closely monitor
medication adherence.
We therefore believe that the
functionalities offered by NCPDP
SCRPT 2017071 could offer efficiencies
to the industry, and believe that it
would be an appropriate e-prescribing
standard for the transactions currently
covered by the Medicare Part D
program. Furthermore, NCPDP SCRIPT
2017071 supports transactions new to
the part D e-prescribing program that we
believe would prove beneficial to the
industry. Therefore, in addition to the
transactions for which prior versions of
NCPDP SCRIPT were adopted (as
reflected in the current regulations at
423.160(b)), we propose to require use
of NCPDP SCRPT 2017071 for the
following transactions:
• Prescription drug administration
message,
• New prescription requests,
• New prescription response denials,
• Prescription transfer message,
• Prescription fill indicator change,
• Prescription recertification,
• Risk Evaluation and Mitigation
Strategy (REMS) initiation request,
• REMS initiation response, REMS
request, and
• REMS response.
We believe that transitioning to the
new 2017071 versions of the
transactions already covered by the
current part D e-prescribing standard
(version 10.6 of the NCPDP SCRIPT)
will impose deminimus cost on the
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industry as the burden in using the
updated standards is anticipated to be
the same as using the old standards for
the transactions currently covered by
the program. We are also proposing
adoption of version 2017071 of the
NCPDP SCRIPT standards for the nine
new transactions to replace manual
processes that currently occur. Reducing
the manual processes currently used to
support these transactions will improve
efficiency, accuracy, and user
satisfaction with the system. While
system implementation may result in
minimal expenses, we believe that these
minimal expenses will be more than
offset by rendering these manual
transactions obsolete. That is, we
believe that prescribers and dispensers
that are now e-prescribing largely
invested in the hardware, software, and
connectivity necessary to e-prescribe.
We do not anticipate that the retirement
of NCPDP SCRIPT 10.6 in favor of
NCPDP SCRIPT 2017071 will result in
significant costs.
As such, we are proposing to revise
§ 423.160(b)(1)(iv) so as to limit its
application to transactions before
January 1, 2019 and add a new
§ 423.160(b)(1)(v). The requirement at
§ 423.160(b)(1)(v) would identify the
standards that will be in effect on or
after January 1, 2019, for those that
conduct e-prescribing for part D covered
drugs for part D eligible beneficiaries. If
finalized, those individuals and entities
would be required to use NCPDP
SCRIPT 2017071 to convey
prescriptions and prescription-related
information for the following
transactions:
• Get message transaction.
• Status response transaction.
• Error response transaction.
• New prescription request
transaction.
• Prescription change request
transaction.
• Prescription change response
transaction.
• Refill/Resupply prescription
request transaction.
• Refill/Resupply prescription
response transaction.
• Verification transaction.
• Password change transaction.
• Cancel prescription request
transaction.
• Cancel prescription response
transaction.
• Fill status notification.
• Prescription drug administration
message.
• New prescription requests.
• New prescription response denials.
• Prescription transfer message.
• Prescription fill indicator change.
• Prescription recertification.
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• Risk Evaluation and Mitigation
Strategy (REMS) initiation request.
• REMS initiation response, REMS
request
• REMS initiation response.
• REMS request.
• REMS response.
We are also proposing to adopt
NCPDP SCRIPT 2017071 as the official
part D e-prescribing standard for the
medication history transaction at
§ 423.160(b)(4). As a result, we are also
proposing to retire NCPDP SCRIPT
versions 8.1 and 10.6 for medication
history transactions transmitted on or
after January 1, 2019.
Furthermore, we propose to amend
§ 423.160(b)(1) by modifying
§ 423.160(b)(1)(iv) to limit usage of
NCPDP SCRIPT version 10.6 to
transactions before January 1, 2019.
In addition, we propose to add
§ 423.160(b)(1)(v) to provide that
NCPDP Version 2017071 must be used
to conduct the covered transactions on
or after January 1, 2019. Furthermore,
we are proposing to amend
§ 423.160(b)(2) by adding
§ 423.160(b)(2)(iv) to name NCPDP
SCRIPT Version 2017071 for the
applicable transactions. Finally, we
propose to incorporate NCPDP SCRIPT
version 2017071 by reference in our
regulations. We seek comment regarding
our proposed retirement of NCPDP
SCRIPT version 10.6 on December 31,
2018 and adoption of NCPDP SCRIPT
Version 2017071 on January 1, 2019 as
the official Part D e-prescribing standard
for the e-prescribing functions outlined
in our proposed § 423.160(b)(1)(v) and
(b)(2)(v), and for medication history as
outlined in our proposed
§ 423.160(b)(4), effective January 1,
2019. We are also soliciting comments
regarding the impact of these proposed
effective dates on industry and other
interested stakeholders.
We are also proposing a technical
correction of a prior regulation. On July
30, 2012, we published regulation
(CMS–1590–P), which established
version 10.6 as the Part D e-prescribing
standard effective March 1, 2015 for
certain electronic transactions that
convey prescription or prescription
related information, as listed in
§ 423.160(b)(2)(iii). However, despite
the regulation clearly noting adoption of
NCPDP SCRIPT 10.6 as the part D eprescribing standard for the listed
transactions, due to a typographical
error, § 423.160(b)(1)(iv) references
(b)(2)(ii) (NCPDP SCRIPT 8.1), rather
than (b)(2)(iii) (NCPDP SCRIPT 10.6).
We propose a correction of this
typographical error by changing the
reference at § 423.160 (b)(1)(iv) to
reference (b)(2)(iii) instead of (b)(2)(ii).
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In proposing updates to the Part D EPrescribing Standards CMS has
reviewed specification documents
developed by the National Council for
Prescription Drug Programs (NCPDP).
The Office of the Federal Register (OFR)
has regulations concerning
incorporation by reference. 1 CFR part
51. For a proposed rule, agencies must
discuss in the preamble to the NPR
ways that the materials the agency
proposes to incorporate by reference are
reasonably available to interested
persons or how the agency worked to
make the materials reasonably available.
In addition, the preamble to the
proposed rule must summarize the
materials.
Consistent with those requirements
CMS has established procedures to
ensure that interested parties can review
and inspect relevant materials. The
proposed update to the Part D
prescribing standards has relied on the
NCPDP SCRIPT Implementation Guide
Version 2017071 approved July 28,
2017. Members of the NCPDP may
access these materials through the
member portal at www.ncpdp.org; nonNCPDP members may obtain these
materials for information purposes by
contacting the Centers for Medicare &
Medicaid Services (CMS), 7500 Security
Boulevard, Baltimore, Maryland 21244,
Mailstop C1–26–05, or by calling (410)
786– 3694.
9. Reduction of Past Performance
Review Period for Applications
Submitted by Current Medicare
Contracting Organizations (§§ 422.502
and 423.503)
In April 2010, we clarified our
authority to deny contract qualification
applications from organizations that
have failed to comply with the
requirements of a Medicare Advantage
or Part D plan sponsor contract they
currently hold, even if the submitted
application otherwise demonstrates that
the organization meets the relevant
program requirements. As part of that
rulemaking, we established, at
§ 422.502(b)(1) and § 423.503(b)(1), that
we would review an applicant’s prior
contract performance for the 14-month
period preceding the application
submission deadline (see 75 FR 19684
through 19686). We conduct that review
in accordance with a methodology we
publish each year 58 and use to score
each applicant’s performance by
assigning weights based on the severity
of its non-compliance in several
58 https://www.cms.gov/Medicare/Complianceand-Audits/Part-C-and-Part-D-Compliance-andAudits/Downloads/Final_2018_Application_Cycle_
Past_Performance_Methodology.pdf.
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performance categories. Under the
annual contract qualification
application submission and review
process we conduct, organizations must
submit their application by a date,
usually in mid-February, announced by
us. We now propose to reduce the past
performance review period from 14
months to 12 months.
We originally established the 14month review period because it covered
the time period from the start of the
preceding contract year through the date
on which CMS receives contract
applications for the upcoming contract
year. We believed at the time that the
combination of the most recent
complete contract year and the 2
months preceding the application
submission provided us with the most
complete picture of the most relevant
information about an applicant’s past
contract performance. Our application
of this authority since its publication
has prompted comments from
contracting organizations that the 14month period is too long and is unfair
as it is applied. In particular,
organizations have noted that noncompliance that occurs during January
and February of a given year is counted
against an organization in 2 consecutive
past performance review cycles while
non-compliance occurring in all other
months is counted in only one review
cycle. The result is that some noncompliance is ‘‘double counted’’ based
solely on the timing of the noncompliance and can, depending on the
severity of the non-compliance, prevent
an organization from receiving CMS
approval of their application for 2
consecutive years.
Rather than creating a gap in the lookback period, as we were concerned in
2010, 75 FR 19685, we now believe a
12-month look-back period provides a
more accurate period to consider. We
believe it is still important to capture in
each review cycle an applicant’s most
recent contract performance. Therefore,
we propose to revise § 422.502(b)(1) and
§ 423.503(b)(1) to reduce the review
period from 14 to 12 months. This
would effectively establish a new
review period for every application
review cycle of March 1 of the year
preceding the application submission
deadline through February 28 (February
29 in leap years) of the year in which
the application is submitted and would
eliminate the counting of instances of
non-compliance in January and
February of each year in 2 separate
application cycles. We also propose to
have this review period change reflected
consistently in the Part C and D
regulation by revising the provisions of
§ 422.502(b)(2) and § 423.503(b)(2) to
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state that CMS may deny an application
from an existing Medicare Advantage or
Part D plan sponsor in the absence of a
record of at least 12, rather than 14,
months of Medicare contract
performance by the applicant. We do
not intend to change any other aspect of
our consideration of past performance
in the application process.
10. Preclusion List—Part D Provisions
a. Background
(1) 2014 Final Rule
On May 23, 2014, we published a
final rule in the Federal Register titled
‘‘Medicare Program; Contract Year 2015
Policy and Technical Changes to the
Medicare Advantage and the Medicare
Prescription Drug Benefit Programs’’ (79
FR 29844). Among other things, this
final rule implemented section 6405(c)
of the Affordable Care Act, which
provides the Secretary with the
authority to require that prescriptions
for covered Part D drugs be prescribed
by a physician enrolled in Medicare
under section 1866(j) of the Act (42
U.S.C. 1395cc(j)) or an eligible
professional as defined at section
1848(k)(3)(B) of the Act (42 U.S.C.
1395w–4(k)(3)(B)). More specifically,
the final rule revised § 423.120(c)(5) and
added new § 423.120(c)(6), the latter of
which stated that for a prescription to be
eligible for coverage under the Part D
program, the prescriber must have (1) an
approved enrollment record in the
Medicare fee for service program (that
is, original Medicare); or (2) a valid opt
out affidavit on file with a Part A/Part
B Medicare Administrative Contractor
(A/B MAC).
The purpose of this change was to
help ensure that Part D drugs are
prescribed only by qualified prescribers.
In a June 2013 report titled ‘‘Medicare
Inappropriately Paid for Drugs Ordered
by Individuals Without Prescribing
Authority’’ (OEI–02–09–00608), the
Office of Inspector General (OIG) found
that the Part D program improperly paid
for drugs prescribed by persons who did
not appear to have the authority to
prescribe. We also noted in the final
rule the reports we received of
prescriptions written by physicians with
suspended licenses having been covered
by the Part D program. These reports
raised concerns within CMS about the
propriety of Part D payments and the
potential for Part D beneficiaries to be
prescribed dangerous or unnecessary
drugs by individuals who lack the
authority or qualifications to prescribe
medications. Given that the Medicare
FFS provider enrollment process, as
outlined in 42 CFR part 424, subpart P,
collects identifying information about
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providers and suppliers who wish to
enroll in Medicare, we believed that
forging a closer link between Medicare’s
coverage of Part D drugs and the
provider enrollment process would
enable CMS to confirm the
qualifications of the prescribers of such
drugs. That is, requiring Part D
prescribers to enroll in Medicare would
provide CMS with sufficient
information to determine whether a
physician or eligible professional is
qualified to prescribe Part D drugs.
We stated in the May 23, 2014 final
rule that the compliance date for our
revisions to new § 423.120(c)(6) would
be June 1, 2015. We believed that this
delayed date would give physicians and
eligible professionals who would be
affected by these provisions adequate
time to enroll in or opt-out of Medicare.
It would also allow CMS, A/B MACs,
Medicare beneficiaries, and other
impacted stakeholders sufficient
opportunity to prepare for these
requirements.
(2) 2015 Interim Final Rule
On May 6, 2015, we published in the
Federal Register an interim final rule
with comment period (IFC) titled
‘‘Medicare Program; Changes to the
Requirements for Part D Prescribers’’ (80
FR 25958). This IFC made changes to
certain requirements outlined in the
May 23, 2014 final rule related to
beneficiary access to covered Part D
drugs.
First, we changed the compliance date
of § 423.120(c)(6) from June 1, 2015 to
January 1, 2016. This was designed to
give all affected parties more time to
prepare for the additional provisions
included in the IFC before Part D drugs
prescribed by individuals who are
neither enrolled in nor opted-out of
Medicare are no longer covered.
Second, we revised paragraph
§ 423.120(c)(6)(ii) to address a gap in
§ 423.120(c)(6) regarding certain types of
prescribers; such prescribers included
pharmacists who may be authorized
under state law to prescribe medications
but are ineligible to enroll in Medicare
and thus, under § 423.120(c)(6), would
not have their prescriptions covered.
Revised paragraph (c)(6)(ii) stated that
pharmacy claims and beneficiary
requests for reimbursement for Part D
prescriptions written by prescribers
other than physicians and eligible
professionals who are nonetheless
permitted by state or other applicable
law to prescribe medications (defined in
§ 423.100 as ‘‘other authorized
prescribers’’) will not be rejected or
denied, as applicable, by the pharmacy
benefit manager (PBM) if all other
requirements are met. This meant that
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the enrollment requirement specified in
§ 423.120(c)(6) would not apply to other
authorized prescribers—that is, to
individuals who are ineligible to enroll
in or opt out of Medicare because they
do not meet the statutory definition of
‘‘physician’’ or ‘‘eligible professional’’
yet who are otherwise legally authorized
to prescribe drugs.
Third, and to help ensure that
beneficiaries would not experience a
sudden lapse in Part D prescription
coverage upon the January 1, 2016
effective date, we added a new
paragraph § 423.120(c)(6)(v). This
provision stated that a Part D sponsor or
its PBM must, beginning on January 1,
2016 and upon receipt of a pharmacy
claim or beneficiary request for
reimbursement for a Part D drug that a
Part D sponsor or PBM would otherwise
be required to reject or deny, as
applicable, under § 423.120(c)(6):
• Provide the beneficiary with:
++ A 3-month provisional supply of
the drug (as prescribed by the prescriber
and if allowed by applicable law); and
++ Written notice within 3 business
days after adjudication of the claim or
request in a form and manner specified
by CMS; and
• Ensure that reasonable efforts are
made to notify the prescriber of a
beneficiary who was sent the notice
referred to in the previous paragraph.
The 3-month provisional supply and
written notice were intended to (1)
notify beneficiaries that a future
prescription written by the same
prescriber would not be covered unless
the prescriber enrolled in or opted-out
of Medicare, and (2) give beneficiaries
time to make arrangements to continue
receiving the prescription if the
prescriber of the medication did not
intend to enroll in or opt-out of
Medicare.
(3) Preparations for Enforcement of Part
D Prescriber Enrollment Requirement
Immediately after the publication of
the previously mentioned May 23, 2014
final rule, we undertook major efforts to
educate affected stakeholders about the
forthcoming enrollment requirement.
Particular focus was placed on reaching
out to Part D prescribers with
information regarding (1) the overall
purpose of the enrollment process; (2)
the important program integrity
objectives behind § 423.120(c)(6); (3) the
mechanisms by which prescribers may
enroll in Medicare (for example, via the
Internet based Provider Enrollment,
Chain and Ownership System (PECOS);
and (4) how to complete an enrollment
application. Numerous prescribers have,
in preparation for the enforcement of
§ 423.120(c)(6), enrolled in or opted out
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of Medicare, and we are appreciative of
their cooperation in this effort.
However, based on internal CMS data,
as of July 2016 approximately 420,000
prescribers—or 35 percent of the total
1.2 million prescribers of Part D drugs—
whose prescriptions for Part D drugs
would be affected by the requirements
of § 423.120(c)(6) have yet to enroll or
opt out. Of these prescribers, 32 percent
are dentists, 11 percent are student
trainees, 7 percent are nurse
practitioners, 6 percent are pediatric
physicians, and 5 percent are internal
medicine physicians.
Several provider organizations,
moreover, have expressed concerns
about the enrollment requirements.
They have contended that (1) most
prescribers pose no risk to the Medicare
program; and (2) certain types of
physicians and eligible professionals
prescribe Part D drugs only very
infrequently. Their general position, in
short, is that the burden to the
prescriber community would outweigh
the payment safeguard benefits of
§ 423.120(c)(6). After the publication of
the IFC, and based on our desire to give
prescribers and other stakeholders more
time to prepare for the enrollment
requirements, we announced a phasedin enforcement of the enrollment
requirements and stated that full
enforcement would be delayed until
January 1, 2019. (Information was
posted at the following link: https://
www.cms.gov/Medicare/ProviderEnrollment-and-Certification/
MedicareProviderSupEnroll/PrescriberEnrollment-Information.html.) However,
the concerns of these provider
organizations remain.
We do recognize these concerns. We
wish to reduce as much burden as
possible for providers without
compromising our program integrity
objectives. In addition, over 400,000
prescribers remain unenrolled and, as a
consequence, approximately 4.2 million
Part D beneficiaries (based on analysis
performed on 2015 and 2016 PDE data)
could lose access to needed
prescriptions when full enforcement of
the enrollment requirement begins on
January 1, 2019 unless their prescriber
enrolls or opt outs or they change
prescribers. We believe that an
appropriate balance is possible between
burden reduction and the need to
protect Medicare beneficiaries and the
Trust Funds. To this end, we propose
several changes to § 423.120(c)(6).
b. Proposed Provisions
In accordance with section 1871 of
the Act, within 3 years of the
publication of the May 6, 2015 IFC, we
must either publish a final rule or
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publish a notice of a different timeline.
If we finalize the proposals described in
this notice of proposed rulemaking, we
would not finalize the provisions of the
IFC. Instead, the proposals described in
this publication would supersede our
earlier rulemaking.
The effective date of our proposed
provisions in § 423.120(c)(5) would be
60 days after the publication of a final
rule. The effective date of our proposed
revisions to § 423.120(c)(6) would be
January 1, 2019.
(1) Prescriber NPI Validation on Part D
Claims
(a) Provisions of § 423.120(c)(5)
Section 423.120(c)(5) states that
before January 1, 2016, the following are
applicable:
• In paragraph (c)(5)(i), we state that
a Part D sponsor must submit to CMS
only a prescription drug event (PDE)
record that contains an active and valid
individual prescriber NPI.
• In paragraph (c)(5)(ii), we state that
a Part D sponsor must ensure that the
lack of an active and valid individual
prescriber NPI on a network pharmacy
claim does not unreasonably delay a
beneficiary’s access to a covered Part D
drug, by taking the steps described in
paragraph (c)(5)(iii) of this section.
• In paragraph (c)(5)(iii), we state that
the sponsor must communicate at pointof-sale whether or not a submitted NPI
is active and valid in accordance with
this paragraph (c)(5)(iii).
++ In paragraph (c)(5)(iii)(A), we state
that if the sponsor communicates that
the NPI is not active and valid, the
sponsor must permit the pharmacy to
(1) confirm that the NPI is active and
valid; or (2) correct the NPI.
++ In paragraph (c)(5)(iii)(B), we state
that if the pharmacy:
++ Confirms that the NPI is active and
valid or corrects the NPI, the sponsor
must pay the claim if it is otherwise
payable; or
++ Cannot or does not correct or
confirm that the NPI is active and valid,
the sponsor must require the pharmacy
to resubmit the claim (when necessary),
which the sponsor must pay, if it is
otherwise payable, unless there is an
indication of fraud or the claim involves
a prescription written by a foreign
prescriber (where permitted by State
law).
• In paragraph (c)(5)(iv), we state that
a Part D sponsor must not later recoup
payment from a network pharmacy for
a claim that does not contain an active
and valid individual prescriber NPI on
the basis that it does not contain one,
unless the sponsor—
++ Has complied with paragraphs
(c)(5)(ii) and (iii) of this section;
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++ Has verified that a submitted NPI
was not in fact active and valid; and
++ The agreement between the parties
explicitly permits such recoupment.
• In paragraph (c)(5)(v), we state that
with respect to requests for
reimbursement submitted by Medicare
beneficiaries, a Part D sponsor may not
make payment to a beneficiary
dependent upon the sponsor’s
acquisition of an active and valid
individual prescriber NPI, unless there
is an indication of fraud. If the sponsor
is unable to retrospectively acquire an
active and valid individual prescriber
NPI, the sponsor may not seek recovery
of any payment to the beneficiary solely
on that basis.
These provisions, which focus on NPI
submission and validation, are no
longer effective because the January 1,
2016 end-date for their applicability has
passed. Since that time, however, and as
explained in detail in section (b)(1)(b)
below, congressional legislation requires
us to revisit some of the provisions in
former paragraph (c)(5) and, as
warranted, to re-propose them in what
would constitute a new paragraph (c)(5).
We believe that these new provisions
would not only effectively implement
the legislation in question but also
enhance Part D program integrity by
streamlining and strengthening
procedures for ensuring the identity of
prescribers of Part D drugs. This would
be particularly important in light of our
preclusion list proposals.
sradovich on DSK3GMQ082PROD with PROPOSALS2
(b) Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA)
MACRA was signed into law on April
16, 2015, just before the IFC was
finalized. Section 507 of MACRA
amends section 1860D–4(c) of the Act
(42 U.S.C. 1395w–104(6)) by requiring
that pharmacy claims for covered Part D
drugs include prescriber NPIs that are
determined to be valid under
procedures established by the Secretary
in consultation with appropriate
stakeholders, beginning with plan year
2016.
In light of the enactment of MACRA,
on June 1, 2015, we issued a guidance
memo, ‘‘Medicare Prescriber Enrollment
Requirement Update’’ (memo). The
memo noted that § 423.120(c)(5) would
no longer be applicable beginning
January 1, 2016 due to the IFC we had
just published, but that its provisions
reflected certain existing Part D claims
procedures established by the Secretary
in consultation with stakeholders
through the National Council for
Prescription Drug Programs (NCPDP)
that would comply with section 507 of
MACRA, except one.
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The provisions in § 423.120(c)(5) that
reflected the procedures that would
comply with section 507 of MACRA are
the following:
• Paragraph (c)(5)(iii).
• Paragraph (c)(5)(iii)(A).
• Paragraph (c)(5)(iii)(B)(1). (Note that
paragraph (c)(5)(iii)(B)(2) would not
comply with section 507 because the
sponsor has no evidence that the NPI is
active or valid.)
• Paragraph (c)(5)(iv).
• Paragraph (c)(5)(v).
Given this, we are proposing to
include these provisions in new
paragraph (c)(5). They would be
enumerated as, respectively, new
paragraphs (c)(5)(ii), (c)(5)(ii)(A),
(c)(5)(ii)(B), (c)(5)(iii), and (c)(5)(iv).
Current paragraphs (c)(5)(i), (c)(5)(ii),
and (c)(5)(iii)(B)(2) would not be
included in new paragraph (c)(5).
We also note that in the May 6, 2015
IFC, we revised § 423.120(c)(6)(i) to
require a Part D plan sponsor to reject,
or require its pharmaceutical benefit
manager (PBM) to reject, a pharmacy
claim for a Part D drug, unless the claim
contains the NPI of the prescriber who
prescribed the drug. This provision, too,
reflects existing Part D claims
procedures and policies that comply
with section 507 of MACRA. We thus
propose to retain this provision and
seek comment on associated burdens or
unintended consequences and
alternative approaches. However, we
wish to move it from paragraph (c)(6) to
paragraph (c)(5) so that most of the NPI
provisions in § 423.120 are included in
one subsection. We believe this would
improve clarity.
(2) Targeted Approach to Part D
Prescribers
We believe that the most effective
means of reducing the burden of the
Part D enrollment requirement on
prescribers, Part D plan sponsors, and
beneficiaries without compromising our
payment safeguard aims would be to
concentrate our efforts on preventing
Part D coverage of prescriptions written
by prescribers who pose an elevated risk
to Medicare beneficiaries and the Trust
Funds. In other words, rather than
require the enrollment of Part D
prescribers regardless of the possible
level of risk posed, we propose to focus
on preventing payment for Part D drugs
prescribed by demonstrably problematic
prescribers.
There is precedent for such a risk
based approach. For instance, consistent
with § 424.518, A/B MACs are required
to screen applications for enrollment in
accordance with a CMS assessment of
risk and assignment to a level of
‘‘limited,’’ ‘‘moderate,’’ or ‘‘high.’’
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Applications submitted by provider and
supplier types that have historically
posed higher risks to the Medicare
program are subjected to a more
rigorous screening and review process
than those that present limited risks.
Moreover, § 424.518 states that
providers and suppliers that have had
certain adverse actions imposed against
them, such as felony convictions or
revocations of enrollment, are placed
into the highest and most rigorous
screening level. We recognize that the
risk based approach in § 424.518 applies
to enrollment application screening
rather than payment denials. However,
we believe that using a risk-based
approach would enable CMS to focus on
prescribers who pose threats to the
Medicare program and its beneficiaries,
while minimizing the burden on those
who do not. The process we envision
and propose, which would replace the
prescriber enrollment requirement
outlined in § 423.120(c)(6) with a claims
payment-oriented approach, would
consist of the following components:
• Step 1: We would research our
internal systems and other relevant data
for prescribers who have engaged in
behavior for which CMS:
++ Has revoked the prescriber’s
enrollment and the prescriber is under
a reenrollment bar; or
++ Could have revoked the prescriber
(to the extent applicable) if he or she
had been enrolled in Medicare.
Concerning revocations, we have the
authority to revoke a provider’s or
supplier’s Medicare enrollment for any
of the applicable reasons listed in
§ 424.535(a). There are currently 14
such reasons. When revoked, the
provider or supplier is barred under
§ 424.535(c) from reenrolling in
Medicare for a period of 1 to 3 years,
depending upon the severity of the
underlying behavior. We have an
obligation to protect the Trust Funds
from providers and suppliers that
engage in activities that could threaten
the Medicare program, its beneficiaries,
and the taxpayers. In light of the
significance of behavior that could serve
as grounds for revocation, we believe
that prescribers who have engaged in
inappropriate activities should be the
focus of our Part D program integrity
efforts under § 423.120(c)(6).
• Step 2—We would review, on a
case-by-case basis, each prescriber
who—
++ Is currently revoked from
Medicare and is under a reenrollment
bar. We would examine the reason for
the prescriber’s revocation.
++ Has engaged in behavior for
which CMS could have revoked the
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prescriber to the extent applicable if he
or she had been enrolled in Medicare.
The prescribers to be reviewed would
be those who, according to PDE data
and CMS’ internal systems, are eligible
to prescribe drugs covered under the
Part D program. That is, our review
would not be limited to those persons
who are actually prescribing Part D
drug, but would include those that
potentially could prescribe drugs. We
believe that the inclusion of these
individuals in our review would help
further protect the integrity of the Part
D program.
We are also seeking comment on an
alternative by which we would first
identify, through PDE data, those
providers who are prescribing drugs to
Medicare beneficiaries. This would
significantly reduce the universe of
prescribers who are on the preclusion
list and reduce the government’s
surveillance of prescribers. We
anticipate that this could create delays
in our ability to screen providers due to
data lags and may introduce some
program integrity risks. We are
particularly interested in hearing from
the public on the potential risks this
could pose to beneficiaries, especially in
light of our efforts to address the opioids
epidemic.
• Step 3—Based on the results of
Steps 1 and 2, we would compile a
‘‘preclusion list’’ of prescribers who fall
within either of the following categories:
++ Are currently revoked from
Medicare, are under a reenrollment bar,
and CMS determines that the
underlying conduct that led to the
revocation is detrimental to the best
interests of the Medicare program.
++ Have engaged in behavior for
which CMS could have revoked the
prescriber to the extent applicable if he
or she had been enrolled in Medicare,
and CMS determines that the
underlying conduct that would have led
to the revocation is detrimental to the
best interests of the Medicare program.
We propose to adopt this preclusion
list approach as an alternative to
enrollment in part to reflect the more
indirect connection of prescribers in the
Medicare Part D program. We seek
comment on whether some of the bases
for revocation should not apply to the
preclusion list in whole or in part and
whether the final regulation (or future
guidance) should specify which bases
are or are not applicable and under what
circumstances.
(i) Preclusion List
Considering the program integrity risk
that the two previously mentioned sets
of prescribers present, we must be able
to accordingly protect Medicare
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beneficiaries and the Trust Funds. We
thus propose to revise § 423.120(c)(6), as
further specified in this proposed rule,
to require that a Part D plan sponsor
must reject, or must require its PBM to
reject, a pharmacy claim (or deny a
beneficiary request for reimbursement)
for a Part D drug prescribed by an
individual on the preclusion list. We
believe we have the legal authority for
such a provision because sections 1102
and 1871 of the Act provide general
authority for the Secretary to prescribe
regulations for the efficient
administration of the Medicare program;
also, section 1860D–12(b)(3)(D) of the
Act authorizes the Secretary to add
additional Part D contract terms as
necessary and appropriate, so long as
they are not inconsistent with the Part
D statute. We note also that our proposal
is of particular importance when
considering the current nationwide
opioid crisis. We believe that the
inclusion of problematic prescribers on
the preclusion list could reduce the
amount of opioids that are improperly
or unnecessarily prescribed by persons
who pose a heightened risk to the Part
D program and Medicare beneficiaries.
All grounds for revocation under
§ 424.535(a) reflect behavior or
circumstances that are of concern to us.
However, considering the variety of
factual scenarios that CMS may come
across, we believe it is necessary for
CMS to have the flexibility to take into
account the specific circumstances
involved when determining whether the
underlying conduct is detrimental to the
best interests of the Medicare program.
Accordingly, CMS would consider the
following factors in making this
determination:
• The seriousness of the conduct
involved;
• The degree to which the
prescriber’s conduct could affect the
integrity of the Part D program; and
• Any other evidence that CMS
deems relevant to its determination.
We emphasize that in situations
where the prescriber was enrolled and
then revoked, CMS’ determination
would not negate the revocation itself.
The prescriber would remain revoked
from Medicare.
We also recognize that unique
circumstances behind the potential or
actual inclusion of a particular
prescriber on the preclusion list could
exist. Of foremost importance would be
situations pertaining to beneficiary
access to Part D drugs. We believe that
we should have the discretion not to
include (or, if warranted, to remove) a
particular individual on the preclusion
list (who otherwise meets the standards
for said inclusion) should exceptional
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circumstances exist pertaining to
beneficiary access to prescriptions. This
could include circumstances similar to
those described in section 1128(c)(3)(B)
of the Act, whereby the Secretary may
waive an OIG exclusion under section
1128(a)(1), (a)(3), or (a)(4) of the in the
case of an individual or entity that is the
sole community physician or sole
source of essential specialized services
in a community. In making a
determination as to whether such
circumstances exist, we would take into
account— (1) the degree to which
beneficiary access to Part D drugs would
be impaired; and (2) any other evidence
that CMS deems relevant to its
determination.
With respect to the foregoing, we
solicit comment on the following issues:
++ Whether the actions referenced in
§ 424.535(a) are appropriate grounds for
inclusion on the preclusion list.
++ Whether actions other than those
referenced in § 424.535(a) should
constitute grounds for inclusion on the
preclusion and, if so, what those
specific grounds are.
++ Suggestions for means of
monitoring abusive prescribing
practices and appropriate processes for
including such prescribers on the
preclusion list.
(b) Replacement of Enrollment
Requirement With Preclusion List
Requirement
We are proposing to delete the current
regulations that require prescribers to
enroll in or opt out of Medicare for a
pharmacy claim (or beneficiary request
for reimbursement) for a Part D drug
prescribed by a physician or eligible
professional to be covered. We also
propose to generally streamline the
existing regulations because, given that
we would no longer be requiring certain
prescribers to enroll or opt out, we
would no longer need an exception for
‘‘other authorized providers,’’ as defined
in § 423.100, for there would be no
enrollment requirement from which to
exempt them. Instead, we would require
plan sponsors to reject claims for Part D
drugs prescribed by prescribers on the
preclusion list. We believe this latter
approach would better facilitate our
dual goals of reducing prescriber burden
and protecting the Medicare program
and its beneficiaries from prescribers
who could present risks.
(ii) Updates to Preclusion List
The preclusion list would be updated
on a monthly basis. Prescribers would
be added or removed from the list based
on CMS’ internal data that indicate, for
instance: (1) Prescribers who have
recently been convicted of a felony that,
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consistent with § 424.535(a)(33), CMS
determines to be detrimental to the best
interests of the Medicare program, and
(2) prescribers whose reenrollment bars
have expired. As a particular
prescriber’s status with respect to the
preclusion list changes, the applicable
provisions of § 423.120(c)(6) would
control. To illustrate, suppose a
prescriber in March 2020 is convicted of
a felony that CMS deems detrimental to
Medicare’s best interests. Pharmacy
claims for prescriptions written by the
individual would thus be rejected by
Part D sponsors or their PBMs upon the
prescriber being added to the preclusion
list. Conversely, a prescriber who was
revoked under § 424.535(a)(4) but whose
reenrollment bar has expired would be
removed from the preclusion list; claims
for prescriptions written by the
individual would therefore no longer be
rejected based solely on his or her
inclusion on the preclusion list. CMS
would regularly review the preclusion
list to determine whether certain
individuals should be added to or
removed therefrom based on changes to
their status.
Consistent with our application of a
reenrollment bar to providers and
suppliers that are enrolled in and then
revoked from Medicare, we propose to
keep an unenrolled prescriber on the
preclusion list for the same length of
time as the reenrollment bar that we
could have imposed on the prescriber
had he or she been enrolled and then
revoked. For example, suppose an
unenrolled prescriber engaged in
behavior that, had he or she been
enrolled, would have warranted a 2-year
reenrollment bar. The prescriber would
remain on the preclusion list for that
same period of time. We note that in
establishing such a time period, we
would use the same criteria that we do
in establishing reenrollment bars.
Prescribers who were revoked from
Medicare or, for unenrolled prescribers,
engaged in behavior that could serve as
a basis for an applicable revocation
prior to the effective date of this rule (if
finalized) could, if the requirements of
§ 423.120(c)(6) are met, be added to the
preclusion list upon said effective date
even though the underlying action (for
instance, felony conviction) occurred
prior to that date. However, the Part D
claim rejections by Part D sponsors and
their PBMs under § 423.120(c)(6) would
only apply to claims for Part D
prescriptions filled or refilled on or after
the date he or she was added to the
preclusion list; that is, sponsors and
PBMs would not be required to
retroactively reject claims based on the
effective date of the revocation or, for
unenrolled prescribers, the date of the
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behavior that could serve as a basis for
an applicable revocation regardless of
whether that date occurred before or
after the effective date of this rule.
We do seek comment on a reasonable
time period for Part D sponsors/PBMs to
incorporate the preclusion list into their
claims adjudication systems, and
whether and how our proposed
regulatory text needs to be modified to
accommodate such a time period. We
wish to avoid a situation where a Part
D sponsor/PBM pays for prescriptions
written by individuals on the preclusion
list before the sponsors/PBMs have
incorporated the list but later are unable
to submit their PDEs, which CMS
typically edits based on date of service.
(3) Provisional Coverage
The current text of § 423.120(c)(6)(v)
states that a Part D sponsor or its PBM
must, upon receipt of a pharmacy claim
or beneficiary request for
reimbursement for a Part D drug that a
Part D sponsor would otherwise be
required to deny in accordance with
§ 423.120(c)(6), furnish the beneficiary
with (a) a provisional supply of the drug
(as prescribed by the prescriber and if
allowed by applicable law); and (b)
written notice within 3 business days
after adjudication of the claim or request
in a form and manner specified by CMS.
The purpose of this provisional supply
requirement is to give beneficiaries
notice that there is an issue with respect
to future Part D coverage of a
prescription written by a particular
prescriber.
Although CMS’ proposed changes to
§ 423.120(c)(6) would significantly
reduce the number of affected
prescribers and, by extension, the
number of impacted beneficiaries, we
remain concerned that beneficiaries
who receive prescriptions written by
individuals on the preclusion list might
suddenly no longer have access to these
medications without provisional
coverage and without notice, which
gives beneficiaries time to find a new
prescriber. Therefore, we propose to
maintain the provisional coverage
requirement consistent with what was
finalized in the IFC, but with a
modification. Additionally, many
commercial plans are pursuing policies
to address the opioid epidemic, such as
limiting the amount of initial opioid
prescriptions. Given the opioid
epidemic, we are considering other
solutions for when a beneficiary tries to
fill an opioid prescription from a
provider on the preclusion list. We seek
comment as to what limits or other
guardrails CMS should set with respect
to number of doses, initial dosing, and
type of product for opioid prescriptions
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56445
for particular clinical presentations
(including acute pain, chronic pain,
hospice setting and so forth).
An alternative method of ensuring
beneficiaries have access to opioids as
necessary would be to require the
sponsor immediately provide a transfer
to a new provider when the first
provider is on the preclusion list. The
new provider should be able to make an
assessment and either provide
appropriate SUD treatment or continue
the opioid or pain management regimen,
as medically appropriate. We are
interested to hear from commenters how
to operationalize this and whether there
is a better method to ensure appropriate
medication is provided without
transferring the beneficiary to a new
provider. We are proposing a 90-day
provisional coverage period in lieu of a
3-month drug supply/90-day time
period established in existing
§ 423.120(c)(6), which was described on
page 6 in the Technical Guidance on
Implementation of the Part D Prescriber
Enrollment Requirement (Technical
Guidance) issued on December 29,
2015.59 Under the existing regulation
(which, as noted above, we have not
enforced), a sponsor or MA–PD must
track a separate 90-day consecutive time
period for each drug covered as a
provisional supply from the initial dateof-service; the sponsor or MA–PD must
not reject a claim or deny a beneficiary’s
request for reimbursement until the 90day time period has passed or a 3-month
supply has been dispensed, whichever
comes first. Under our proposal,
however, a beneficiary would have one
90-day provisional coverage period with
respect to an individual on the
preclusion list. Accordingly, a sponsor/
PBM would track one 90-day time
period from the date the first drug is
dispensed to the beneficiary pursuant to
a prescription written by the individual
on the preclusion list. This dispensing
event would trigger a written notice and
a 90-day time period for the beneficiary
to fill any prescriptions from that
particular precluded prescriber and to
find another prescriber during that 90day time period.
Our rationale for this change is that
individuals on the preclusion list are
demonstrably problematic. This has
negative implications not only for the
Trust Funds but also for beneficiary
safety. Thus, it is imperative that a
beneficiary switch to a new prescriber
who is not on the preclusion list as soon
as practicable. Under the current
59 See https://www.cms.gov/Medicare/
Prescription-Drug-Coverage/
PrescriptionDrugCovGenIn/Downloads/TechnicalGuidance-on-Implementation-of-the-Part-DPrescriber-Enrollment-Requirement.pdf.
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prescriber enrollment requirement, the
vast majority of prescribers who are not
enrolled in or opted-out of Medicare
likely do not pose a risk to the
beneficiary or the Trust Funds, and
therefore we can allow a 3-month
provisional supply/90-day time period
for each prescription written by such a
prescriber. In addition, our proposed
policy would eliminate the difficulty
sponsors and PBMs have under the
current ‘‘per drug’’ provisional supply
policy in determining whether the
beneficiary already received a
provisional supply of a drug. We seek
specific comment on the modifications
we are proposing as to the provisional
coverage and time period.
With respect to beneficiaries who
would also be entitled to a transition,
we are not proposing any change to the
current policy. If a Part D sponsor
determines when adjudicating a
pharmacy claim that a beneficiary is
entitled to provisional coverage because
the prescriber is on the preclusion list,
but the drug is off-formulary and the
transition requirements set forth in
§ 423.120(b)(3) are also triggered, the
beneficiary would not receive more than
the applicable transition supply of the
drug, unless a formulary exception is
approved. We note that we considered
proposing that the transition
requirements would not apply during
the provisional supply period in order
to simplify the policy for situations
when both apply to reduce beneficiary
confusion. We seek comment on this or
other alternatives for these situations.
We intend to allow the normal Part D
rules (for example, edits, prior
authorization, quantity limits) to apply
during the 90-day provisional coverage
period, but solicit comment on whether
different limits should apply when
opioids are involved, particularly when
the reason for precluding the provider/
prescriber relates to opioid prescribing.
(4) Appeals
In our revisions to § 423.120(c)(6), we
propose to permit prescribers who are
on the preclusion list to appeal their
inclusion on this list in accordance with
42 CFR part 498. We believe that given
the aforementioned pharmacy claim
rejections that would be associated with
a prescriber’s appearance on the
preclusion list, due process warrants
that the prescriber have the ability to
challenge this via appeal. Any appeal
under this proposed provision,
however, would be limited strictly to
the individual’s inclusion on the
preclusion list. The proposed appeals
process would neither include nor affect
appeals of payment denials or
enrollment revocations, for there are
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separate appeals processes for these
actions. In addition, wewould send
written notice to the prescriber of his or
her inclusion on the preclusion list. The
notice would contain the reason for the
inclusion and would inform the
prescriber of his or her appeal rights.
This is to ensure that the prescriber is
duly notified of the action, why it was
taken, and his or her ability to challenge
our determination.
Consistent with our proposed
provision in § 423.120(c)(6) regarding
appeal rights, we propose to update
several other regulatory provisions
regarding appeals:
• We propose to revise § 498.3(b) to
add a new paragraph (20) stating that a
CMS determination to include a
prescriber on the preclusion list
constitutes an initial determination.
This revision would help enable
prescribers to utilize the appeals
processes described in § 498.5.
• In § 498.5, we propose to add a new
paragraph (n) that would state as
follows:
++ In paragraph (n)(1), we propose
that any prescriber dissatisfied with an
initial determination or revised initial
determination that he or she is to be
included on the preclusion list may
request a reconsideration in accordance
with § 498.22(a).
++ In paragraph (n)(2), we propose
that if CMS or the prescriber under
paragraph (n)(1) is dissatisfied with a
reconsidered determination under
§ 498.5(n)(1), or a revised reconsidered
determination under § 498.30, CMS or
the prescriber is entitled to a hearing
before an administrative law judge
(ALJ).
++ In paragraph (n)(3), we propose
that if CMS or the prescriber under
paragraph (n)(2) is dissatisfied with a
hearing decision as described in
paragraph (n)(2), CMS or the prescriber
may request review by the Departmental
Appeals Board (DAB) and the prescriber
may seek judicial review of the DAB’s
decision.
These revisions are designed to
include preclusion list determinations
within the scope of appeal rights
described in § 498.5. However, we
solicit comment on whether a different
appeals process is warranted and, if so,
what its components should be.
In addition, given that a beneficiary’s
access to a drug may be denied because
of the application of the preclusion list
to his or her prescription, we believe the
beneficiary should be permitted to
appeal alleged errors in applying the
preclusion list.
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c. Specific Regulatory Changes
Given the foregoing discussion, we
propose the following regulatory
changes:
• In § 423.100, we propose to delete
the definition of ‘‘other authorized
prescriber’’ and add the following:
++ Preclusion List means a CMS
compiled list of prescribers who:
(1) Meet all of the following
requirements: (A) The prescriber is
currently revoked from the Medicare
program under § 424.535.
(B) The prescriber is currently under
a reenrollment bar under § 424.535(c).
(C) CMS determines that underlying
conduct that led to the revocation is
detrimental to the best interests of the
Medicare program. In making this
determination under this paragraph,
CMS considers the following factors:
(i) The seriousness of the conduct
underlying the prescriber’s revocation;
(ii) The degree to which the
prescriber’s conduct could affect the
integrity of the Part D program; and
(iii) Any other evidence that CMS
deems relevant to its determination; or
(2) Meet both of the following
requirements:
(i) The prescriber has engaged in
behavior for which CMS could have
revoked the prescriber to the extent
applicable if he or she had been
enrolled in Medicare.
(ii) CMS determines that the
underlying conduct that would have led
to the revocation is detrimental to the
best interests of the Medicare program.
In making this determination under this
paragraph, CMS considers the following
factors:
(i) The seriousness of the conduct
involved.
(ii) The degree to which the
prescriber’s conduct could affect the
integrity of the Part D program; and
(iii) Any other evidence that CMS
deems relevant to its determination
• In paragraph (c)(5)(i), we propose
that a Part D plan sponsor must reject,
or must require its pharmacy benefit
manager (PBM) to reject, a pharmacy
claim for a Part D drug unless the claim
contains the active and valid National
Provider Identifier (NPI) of the
prescriber who prescribed the drug.
This requirement is consistent with
existing policy.
• In paragraph (c)(5)(ii), we propose
that the sponsor must communicate at
point-of sale whether or not a submitted
NPI is active and valid in accordance
with this paragraph (c)(5)(ii).
• In paragraph (c)(5)(ii)(A), we
propose that if the sponsor
communicates that the NPI is not active
and valid, the sponsor must permit the
pharmacy to—
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++ Confirm that the NPI is active and
valid; or
++ Correct the NPI.
• In paragraph (c)(5)(ii)(B), we
propose that if the pharmacy confirms
that the NPI is active and valid or
corrects the NPI, the sponsor must pay
the claim if it is otherwise payable.
• In paragraph (iii), we propose that
a Part D sponsor must not later recoup
payment from a network pharmacy for
a claim that does not contain an active
and valid individual prescriber NPI on
the basis that it does not contain one,
unless the sponsor—
++ Has complied with paragraph (ii)
of this section;
++ Has verified that a submitted NPI
was not in fact active and valid; and
++ The agreement between the
parties explicitly permits such
recoupment.
• In paragraph (iv), we propose that
with respect to requests for
reimbursement submitted by Medicare
beneficiaries, a Part D sponsor may not
make payment to a beneficiary
dependent upon the sponsor’s
acquisition of an active and valid
individual prescriber NPI, unless there
is an indication of fraud. If the sponsor
is unable to retrospectively acquire an
active and valid individual prescriber
NPI, the sponsor may not seek recovery
of any payment to the beneficiary solely
on that basis.
• In paragraph (c)(6)(i), we propose to
state: ‘‘Except as provided in paragraph
(c)(6)(iv) of this section, a Part D
sponsor must reject, or must require its
PBM to reject, a pharmacy claim for a
Part D drug if the individual who
prescribed the drug is included on the
preclusion list, defined in § 423.100.’’
This would help ensure that Part D
sponsors comply with our proposed
requirement that claims involving
prescribers who are on the preclusion
list should not be paid.
• In paragraph (c)(6)(ii), we propose
to state as follows: ‘‘Except as provided
in paragraph (c)(6)(iv) of this section, a
Part D sponsor must deny, or must
require its PBM to deny, a request for
reimbursement from a Medicare
beneficiary if the request pertains to a
Part D drug that was prescribed by an
individual who is identified by name in
the request and who is included on the
preclusion list, defined in § 423.100.’’
As with paragraph (c)(6)(i), this would
help ensure that Part D sponsors comply
with our proposed requirement that
payments not be made for prescriptions
written by prescribers who are on the
preclusion list.
• In paragraph (c)(6)(iii), we propose
to state: ‘‘A Part D plan sponsor may not
submit a prescription drug event (PDE)
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record to CMS unless it includes on the
PDE record the active and valid
individual NPI of the prescriber of the
drug, and the prescriber is not included
on the preclusion list, defined in
§ 423.100, for the date of service.’’ This
is to help ensure that— (1) the
prescriber can be properly identified,
and (2) prescribers who are on the
preclusion list are not included in PDEs.
• In paragraph (c)(6)(iv), we propose
to address the provisional coverage
period and notice provisions as follows:
‘‘(iv)(A) A Part D sponsor or its PBM
must not reject a pharmacy claim for a
Part D drug under paragraph (c)(6)(i) of
this section or deny a request for
reimbursement under paragraph
(c)(6)(ii) of this section unless the
sponsor has provided the provisional
coverage of the drug and written notice
to the beneficiary required by paragraph
(c)(6)(iv)(B) of this section.
(B) Upon receipt of a pharmacy claim
or beneficiary request for
reimbursement for a Part D drug that a
Part D sponsor would otherwise be
required to reject or deny in accordance
with paragraphs (c)(6)(i) or (ii) of this
section, a Part D sponsor or its PBM
must do the following: (1) Provide the
beneficiary with the following, subject
to all other Part D rules and plan
coverage requirements:
(i) A 90-day provisional supply
coverage period during which the
sponsor must cover all drugs dispensed
to the beneficiary pursuant to
prescriptions written by the individual
on the preclusion list. The provisional
supply period begins on the date-ofservice the first drug is dispensed
pursuant to a prescription written by the
individual on the preclusion list.
(ii) Written notice within 3 business
days after adjudication of the first claim
or request for the drug in a form and
manner specified by CMS.
(2) Ensure that reasonable efforts are
made to notify the prescriber of a
beneficiary who was sent a notice under
paragraph (c)(6)(iv)(B)(1)(ii) of this
section.’’
• In new § 423.120(c)(6)(v), we
propose that CMS would send written
notice to the prescriber via letter of his
or her inclusion on the preclusion list.
The notice would contain the reason for
the inclusion on the preclusion list and
would inform the prescriber of his or
her appeal rights. A prescriber may
appeal his or her inclusion on the
preclusion list in accordance with 42
CFR part 498.
• In new § 423.120(c)(6)(vi), we
propose that CMS has the discretion not
to include a particular individual on (or,
if warranted, remove the individual
from) the preclusion list should it
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56447
determine that exceptional
circumstances exist regarding
beneficiary access to prescriptions. In
making a determination as to whether
such circumstances exist, CMS would
take into account—(1) the degree to
which beneficiary access to Part D drugs
would be impaired; and (2) any other
evidence that CMS deems relevant to its
determination.
• In § 498.3(b), we propose to add a
new paragraph (20) stating that a CMS
determination that a prescriber is to be
included on the preclusion list
constitutes an initial determination.
• In § 498.5, we propose to add a new
paragraph (n) that would state as
follows:
++ In paragraph (n)(1), we propose
that any prescriber dissatisfied with an
initial determination or revised initial
determination that he or she is to be
included on the preclusion list may
request a reconsideration in accordance
with § 498.22(a).
++ In paragraph (n)(2), we propose
that if CMS or the prescriber under
paragraph (n)(1) is dissatisfied with a
reconsidered determination under
§ 498.5(n)(1), or a revised reconsidered
determination under § 498.30, CMS or
the prescriber is entitled to a hearing
before an ALJ.
++ In paragraph (n)(3), we propose
that if CMS or the prescriber under
paragraph (n)(2) is dissatisfied with a
hearing decision as described in
paragraph (n)(2), CMS or the prescriber
may request review by the DAB and the
prescriber may seek judicial review of
the DAB’s decision.
11. Preclusion List—Part C/Medicare
Advantage Cost Plan and PACE
Provisions
a. Background
(1) 2016 Final Rule
On November 15, 2016, CMS
published a final rule in the Federal
Register 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 80169). This rule
contained a number of requirements
related to provider enrollment,
including, but not limited to, the
following:
• We added a new § 422.222 to
require providers and suppliers that
furnish health care items or services to
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a Medicare enrollee who receives his or
her Medicare benefit through an MA
organization to be enrolled in Medicare
and be in an approved status no later
than January 1, 2019. (The term ‘‘MA
organization’’ refers to both MA plans
and MA plans that provide drug
coverage, otherwise known as MA–PD
plans.) We also updated §§ 417.478,
460.70, and 460.71 to reflect this
requirement.
• We added a requirement in new
§ 422.204(b)(5) that required MA
organizations to comply with the
provider and supplier enrollment
requirements referenced in § 422.222. A
similar requirement was added to
§ 422.504.
• We revised §§ 422.510, 422.752,
460.40, and 460.50 to state that
organizations and programs that do not
ensure that providers and suppliers
comply with the provider and supplier
enrollment requirements may be subject
to sanctions and termination.
• We revised § 422.501 to require that
MA organization applications include
documentation demonstrating that all
applicable providers and suppliers are
enrolled in Medicare in an approved
status. We believed that these new
requirements, as they pertained to MA,
were necessary to help ensure that
Medicare enrollees receive items or
services from providers and suppliers
that are fully compliant with the
requirements for Medicare enrollment.
We also believed it would assist our
efforts to prevent fraud, waste, and
abuse, and to protect Medicare
enrollees, by allowing us to carefully
screen all providers and suppliers
(especially those that potentially pose
an elevated risk to Medicare) to confirm
that they are qualified to furnish
Medicare items and services. Indeed,
although § 422.204(a) requires MA
organizations to have written policies
and procedures for the selection and
evaluation of providers and suppliers
that conform with the credentialing and
recredentialing requirements in
§ 422.204(b), CMS has not historically
had direct oversight over all network
providers and suppliers under contract
with MA organizations. While there are
CMS regulations governing how and
when MA organizations can pay for
covered services, those are tied to
statutory provisions. We concluded that
requiring Medicare enrollment in
addition to the existing MA
credentialing requirements would
permit a closer review of MA providers
and suppliers, which could, as
warranted, involve rigorous screening
practices such as risk-based site visits
and, in some cases, fingerprint-based
background checks, an approach we
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already take in the Medicare Part A and
Part B provider and supplier enrollment
arenas. The fact that CMS also has
access to information and data not
available to MA organizations was also
relevant to our decision.
(2) Preparations for Part C Enrollment
As with our Part D enrollment
requirement, we promptly commenced
outreach efforts after the publication of
the November 15, 2016 final rule. We
communicated with Part C provider
associations and MA organizations
regarding, among other things, the
general purpose of the enrollment
process, the rationale for § 422.222, and
the mechanics of completing and
submitting an enrollment application.
According to recent CMS internal data,
approximately 933,000 MA providers
and suppliers are already enrolled in
Medicare and meeting the MA provider
enrollment requirements. However,
roughly 120,000 MA-only providers and
suppliers remain unenrolled in
Medicare, and concerns have been
raised by the MA community over the
enrollment requirement, principally
over the burden involved in enrolling in
Medicare while having to also undergo
credentialing by their respective health
plans.
We understand and share these
concerns. We believe that the Medicare
enrollment requirement could result in
a duplication of effort and,
consequently, impose a burden on MA
providers and suppliers as well as MA
organizations and beneficiaries in the
form of limiting access to providers.
While we maintain that Medicare
enrollment, in conjunction with MA
credentialing, is the most thorough
means of confirming a provider’s
compliance with Medicare requirements
and of verifying the provider’s
qualifications to furnish services and
items, we believe that an appropriate
balance can be achieved between this
program integrity objective and the
desire to reduce the burden on the
provider and supplier communities.
Given this, we propose to utilize the
same ‘‘preclusion list’’ concept in MA
that we are proposing for Part D
(described in section III.B.9.) and to
eliminate the current enrollment
requirement in § 422.222. We believe
this approach would allow us to
concentrate our efforts on preventing
MA payment for items and services
furnished by providers and suppliers
that could pose an elevated risk to
Medicare beneficiaries and the Trust
Funds, an approach, as previously
mentioned, similar to the risk-based
process in § 424.518. This would, we
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believe, minimize the burden on MA
providers and suppliers.
b. Proposed Provisions
(1) Process
The process we envision and propose
would, similar to the proposed Part D
process, consist of the following
components:
• Step 1: We would research our
internal systems and other relevant data
for individuals and entities that have
engaged in behavior for which CMS:
++ Has revoked the individual’s or
entity’s enrollment and the individual
or entity is under a reenrollment bar; or
++ Could have revoked the
individual or entity to the extent
applicable if they had been enrolled in
Medicare.
In light of the significance of any
activity that would result in a
revocation under § 424.535(a), we
believe that individual and entities that
have engaged in inappropriate behavior
should be the focus of our Part C
program integrity efforts.
• Step 2—CMS would review, on a
case-by-case basis, each individual and
entity that:
++ Is currently revoked from
Medicare and is under a reenrollment
bar. We would examine the reason for
the revocation.
++ Has engaged in behavior for
which CMS could have revoked the
individual or entity to the extent
applicable if he or she had been
enrolled in Medicare.
Similar to our approach with Part D
and for the same reason, the individuals
and entities to be reviewed would be
those that— according to CMS’ internal
systems MA organization data, state
board information, and other relevant
data for individuals and entities who are
or who could become eligible to furnish
health care services or items. To avoid
confusion, we refer to such parties in
our proposed Part C preclusion list
provisions as ‘‘individuals’’ and
‘‘entities’’ rather than ‘‘providers’’ and
‘‘suppliers.’’ This is because the latter
two terms could convey the impression
that the party in question must be
actively furnishing health care services
or items to be included on the
preclusion list.
Similar to the Part D approach, we are
also seeking comment on an alternative
by which CMS would first identify
through encounter data those providers
or suppliers furnishing services or items
to Medicare beneficiaries. This would
significantly reduce the universe of
prescribers who are on the preclusion
list and reduce the government’s
surveillance of prescribers. We
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anticipate that this could create delays
in CMS’ ability to screen providers or
suppliers due to data lags and may
introduce some program integrity risks.
We are particularly interested in hearing
from the public on the potential risks
this could pose to beneficiaries.
Based on the results of Steps 1 and 2,
we would compile a preclusion list of
individuals and entities that fall within
either of the following categories:
++ Are currently revoked from
Medicare, are under a reenrollment bar,
and CMS determines that the
underlying conduct that led to the
revocation is detrimental to the best
interests of the Medicare program.
++ Have engaged in behavior for
which CMS could have revoked the
individual or entity to the extent
applicable if they had been enrolled in
Medicare, and CMS determines that the
underlying conduct that would have led
to the revocation is detrimental to the
best interests of the Medicare program.
We propose to update § 422.2 to add
a definition of ‘‘preclusion list’’
consistent with both the foregoing
discussion as well as our proposed
definition of the same term for the Part
D program.
We propose to adopt this preclusion
list approach as an alternative to
enrollment in part to reflect the more
indirect connection of providers and
suppliers in Medicare Advantage. We
seek comment on whether some of the
bases for revocation should not apply to
the preclusion list in whole or in part
and whether the final regulation (or
future guidance) should specify which
bases are or are not applicable and
under what circumstances.
In addition, we note that while there
would be separate regulatory provisions
for Part C and Part D, there would not
be two separate preclusion lists: one for
Part C and one for Part D. Rather, there
would be a single preclusion list that
includes all affected individuals and
entities. Having one joint list, we
believe, would make the preclusion list
process easier to administer.
(2) Denial of Payment
Section 422.222(a) currently states
that providers or suppliers that are types
of individuals or entities that can enroll
in Medicare in accordance with section
1861 of the Act, must be enrolled in
Medicare and be in an approved status
in Medicare in order to provide health
care items or services to a Medicare
enrollee who receives his or her
Medicare benefit through an MA
organization. This requirement applies
to all of the following providers and
suppliers:
• Network providers and suppliers.
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• First-tier, downstream, and related
entities (FDR).
• Providers and suppliers in Cost
HMOs or CMPs, as defined in 42 CFR
part 417.
• Providers and suppliers
participating in demonstration
programs.
• Providers and suppliers in pilot
program.
• Locum tenens suppliers.
• Incident-to suppliers.
We propose to revise this requirement
to state than an MA organization shall
not make payment for an item or service
furnished by an individual or entity that
is on the preclusion list (as defined in
§ 422.2). We also propose to remove the
language beginning with ‘‘This
requirement applies to all of the
following providers and suppliers’’
along with the list of applicable
providers, suppliers, and FDRs. This is
consistent with our previously
mentioned intention to use the terms
‘‘individuals’’ and ‘‘entities’’ in lieu of
‘‘providers’’ and ‘‘suppliers.’’
We also propose that both basic and
supplemental benefits should be subject
to the payment prohibition that is tied
to the preclusion list. We believe that
restricting the payment prohibition to
only one of these two categories would
undercut the effectiveness of our
preclusion list proposal.
We solicit comment on the following
issues:
++ Whether the actions referenced in
§ 424.535(a) are appropriate grounds for
inclusion on the preclusion list.
++ Whether actions other than those
referenced in § 424.535(a) should
constitute grounds for inclusion on the
preclusion and, if so, what those
specific grounds are.
++ Suggestions for means of
monitoring potentially abusive MA
practices involving providers and
suppliers, and appropriate processes for
including such providers and suppliers
on the preclusion list.
As stated earlier in reference to
prescribers, the preclusion list would be
updated on a monthly basis. Individuals
and entities would be added or removed
from the list based on CMS’ internal
data or other informational sources that
indicate, for instance— (1) persons
eligible to provide medical services who
have recently been convicted of a felony
that CMS determines to be detrimental
to the best interests of the Medicare
program; and (2) entities whose
reenrollment bars have expired. As a
particular individual’s or entity’s status
with respect to the preclusion list
changes, the applicable provisions of
§ 422.222 would control.
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Individuals and entities that were
revoked from Medicare or, for
unenrolled individuals and entities, had
engaged in conduct that could serve as
a basis for an applicable revocation
prior to the effective date of this rule (if
finalized) could, if the requirements of
§ 422.222(a) are met, be added to the
preclusion list upon said effective date
even though the underlying action (for
instance, felony conviction) occurred
prior to that date. The proposed
payment denials under § 422.222(a),
however, would only apply to health
care items or services furnished on or
after the date the individual or entity
was added to the preclusion list; that is,
payment denials would not be made
retroactive to the date of the revocation
or, for unenrolled individuals and
entities, the conduct that could serve as
a basis for an applicable revocation
occurring before the effective date of the
final rule. Likewise, health care items
and services furnished by individuals
and entities revoked from Medicare or
engaging in conduct that could serve as
a basis for an applicable revocation after
the rule’s effective date and that are
subsequently added to the preclusion
list would not be subject to retroactive
payment denials under § 422.222(a);
only the date on which the affected
individual or entity is added to the
preclusion list would be used to
determine payment and the start date of
payment denials under this proposal.
We believe that this approach is the
most consistent with principles of due
process.
(3) MA Organization Compliance
Section 422.222 currently states that
MA organizations that do not ensure
that providers and suppliers comply
with paragraph (a) may be subject to
sanctions under § 422.750 and
termination under § 422.510. We
propose to revise this to state that MA
organizations that do not comply with
paragraph (a) may be subject to
sanctions under § 422.750 and
termination under § 422.510. This is to
help ensure that MA organizations do
not make improper payments for items
and services furnished by individuals
and entities on the preclusion list.
(4) Related Revisions
As discussed previously, in the
November 15, 2016 final rule, we added
or updated a number of other MA
regulatory provisions (for example,
§ 422.501 and 422.510) in order to fully
incorporate our new enrollment
requirements. Because we are proposing
to replace these enrollment
requirements with an approach centered
upon a preclusion list—and to help
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ensure that providers, suppliers, MA
organizations, PACE organizations, and
other applicable stakeholders comply
with our proposed requirements—we
believe that these other MA regulatory
provisions must also be revised to
reflect this change. To this end, we
propose the following revisions:
• Section 422.204(a) states that an
MA organization must have written
policies and procedures for the selection
and evaluation of providers and
suppliers. These policies must conform
with the credentialing and
recredentialing requirements in
§ 422.204(b). Under paragraph (b)(5), an
MA organization must follow a
documented process with respect to
providers and suppliers that have
signed contracts or participation
agreements that ensures compliance
with the provider and supplier
enrollment requirements in § 422.222.
To achieve consistency with our
preclusion list proposals and to help
facilitate MA organizations’ compliance
therewith, we propose to:
++ Establish a new § 422.204(c) that
would require MA organizations to
follow a documented process that
ensures compliance with the preclusion
list provisions in § 422.222.
++ Delete § 422.204(b)(5) because it
applies to the Part C enrollment process,
which we are proposing to eliminate.
Further, revising paragraph (b)(5) to
address the preclusion list requirements
could cause confusion, for paragraph (b)
references providers and suppliers. We
thus believe that creating a new
paragraph (c) would better clarify our
expectations.
• In 42 CFR part 417, subpart L, we
address certain contractual
requirements concerning health
maintenance organizations (HMOs) and
competitive medical plans (CMPs) that
contract with CMS to furnish covered
services to Medicare beneficiaries.
Under § 417.478(e), the contract
between CMS and the HMO or CMP
must, among other things, provide that
the HMO or CMP agrees to comply with
‘‘Sections 422.222 and 422.224, which
require all providers and suppliers that
are types of individuals or entities that
can enroll in Medicare in accordance
with section 1861 of the Act, to be
enrolled in Medicare in an approved
status and prohibits payment to
providers and suppliers that are
excluded or revoked.’’ Paragraph (e)
adds that this requirement includes
‘‘locum tenens suppliers and, if
applicable, incident-to suppliers.’’
Furthermore, § 417.484(b)(3) requires
that the contract must provide that the
HMO or CMP agrees to require all
related entities to agree that ‘‘All
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providers or suppliers that are types of
individuals or entities that can enroll in
Medicare in accordance with section
1861 of the Act, are enrolled in
Medicare in an approved status.’’ We
accordingly propose the following
revisions:
++ We propose to revise § 417.478(e)
to state as follows:
++ In new paragraph (e)(1), we
propose to state that the prohibitions,
procedures and requirements relating to
payment to individual and entities on
the preclusion list (defined in § 422.2 of
this part) apply to HMOs and CMPs that
contract with CMS under section 1876
of the Act.
++ In new paragraph (e)(2), we
propose to state that in applying the
provisions of §§ 422.2, 422.222, and
422.224 under paragraph (e)(1) of this
section, references to part 422 of this
chapter must be read as references to
this part, and references to MA
organizations as references to HMOs
and CMPs.
++ We propose to revise
§ 417.484(b)(3) to state: ‘‘That payments
must not be made to individuals and
entities that are included on the
preclusion list (as defined in § 422.2).’’
• In 42 CFR part 460, we address
requirements relating to Programs of
All-Inclusive Care for the Elderly
(PACE). The PACE program is a state
option under Medicaid to provide for
Medicaid payments to, and coverage of
benefits under, PACE. We propose to
make the following changes to Part 460:
++ Section 460.40 states that, in
addition to other remedies authorized
by law, CMS may impose any of the
sanctions specified in §§ 460.42 and
460.46 if CMS determines that a PACE
organization commits certain violations,
one of which is outlined in paragraph (j)
and reads: ‘‘Employs or contracts with
any provider or supplier that is a type
of individual or entity that can enroll in
Medicare in accordance with section
1861 of the Act, that is not enrolled in
Medicare in an approved status.’’ We
propose to revise paragraph (j) to state:
‘‘Makes payment to any individual or
entity that is included on the preclusion
list, defined in § 422.2 of this chapter.’’
++ Section 460.50(b) addresses
grounds for which CMS or the state
administering agency may terminate a
PACE program agreement if CMS or the
state administering agency determines
that the conditions of paragraphs (b)(1)
and (2) are met. In (b)(1), one of two
conditions, outlined in paragraphs
(b)(1)(i) and (ii), must be met. Paragraph
(b)(1)(ii) states: ‘‘The PACE organization
failed to comply substantially with
conditions for a PACE program or PACE
organization under this part, or with
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terms of its PACE program agreement,
including employing or contracting with
any provider or supplier that are types
of individuals or entities that can enroll
in Medicare in accordance with section
1861 of the Act, that is not enrolled in
Medicare in an approved status.’’ We
propose to revise paragraph (b)(1)(ii) by
changing the current language beginning
with ‘‘including’’ to read ‘‘including
making payment to an individual or
entity that is included on the preclusion
list, defined in § 422.2 of this chapter.’’
We note that this change would not
prohibit a PACE organization from
employing or contracting with an
individual or entity on the preclusion
list. As previously discussed, the focus
of our preclusion list proposals is on the
denial of payment.
++ Section 460.68(a) lists certain
categories of individuals who a PACE
organization may not employ, as well as
individuals and organizations with
whom a PACE organization may not
contract. Among these parties are those
listed in paragraph (a)(4); specifically,
those ‘‘that are not enrolled in Medicare
in an approved status, if the providers
or suppliers are of the types of
individuals or entities that can enroll in
Medicare in accordance with section
1861 of the Act.’’ We propose to delete
paragraph (a)(4), given our proposed
removal of the Part C enrollment
requirement.
++ Section 460.70(a) states that a
PACE organization must have a written
contract with each outside organization,
agency, or individual that furnishes
administrative or care-related services
not furnished directly by the PACE
organization, except for emergency
services as described in § 460.100;
various requirements that a contract
between a PACE organization and a
contractor must meet are listed in
§ 460.70(b). Paragraph (b)(1) states that
the PACE organization must contract
only with an entity that meets all
applicable Federal and State
requirements, including, but not limited
to, those listed in paragraphs (b)(1)(i)
through (iv). Paragraph (b)(1)(iv) reads:
‘‘Providers or suppliers that are types of
individuals or entities that can enroll in
Medicare in accordance with section
1861 of the Act, must be enrolled in
Medicare and be in an approved status
in Medicare in order to provide health
care items or services to a PACE
participant who receives his or her
Medicare benefit through a PACE
organization.’’ Consistent with our
proposed deletion of § 460.68(a)(4), we
propose to delete § 460.70(b)(1)(iv). We
note that we are not proposing to
prohibit individuals and entities on the
preclusion list from furnishing services
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and items to PACE participants; we are
merely proposing to prohibit payment
for such services and items if provided
by an individual or entity on the
preclusion list.
++ Section 460.71(b) states that a
PACE organization must develop a
program to ensure that all staff
furnishing direct participant care
services meets the requirements
outlined in paragraph (b). One of these
requirements, listed in paragraph (b)(7),
reads: ‘‘Providers or suppliers that are
types of individuals or entities that can
enroll in Medicare in accordance with
section 1861 of the Act, must be
enrolled in Medicare and be in an
approved status in Medicare in order to
provide health care items or services to
a PACE participant who receives his or
her Medicare benefit through a PACE
organization.’’ Similar to our proposed
deletion of § 460.68(a)(4), we propose to
delete paragraph (b)(7).
++ Section 460.86 addresses
payments to excluded or revoked
providers and suppliers as follows:
++ Paragraph (a) states that a PACE
organization may not pay, directly or
indirectly, on any basis, for items or
services (other than emergency or
urgently needed services as defined in
§ 460.100) furnished to a Medicare
enrollee by any individual or entity that
is excluded by the Office of the
Inspector General (OIG) or is revoked
from the Medicare program.
++ Paragraph (b) states: ‘‘If a PACE
organization receives a request for
payment by, or on behalf of, an
individual or entity that is excluded by
the OIG or is revoked from the Medicare
program, the PACE organization must
notify the enrollee and the excluded or
revoked individual or entity in writing,
as directed by contract or other
direction provided by CMS, that
payments will not be made. Payment
may not be made to, or on behalf of, an
individual or entity that is excluded by
the OIG or is revoked from the Medicare
program.’’
We propose to revise these paragraphs
as follows:
++ Paragraph (a) would state: ‘‘A
PACE organization may not pay,
directly or indirectly, on any basis, for
items or services (other than emergency
or urgently needed services as defined
in § 460.100) furnished to a Medicare
enrollee by any individual or entity that
is excluded by the Office of the
Inspector General (OIG) or is included
on the preclusion list, defined in § 422.2
of this chapter.’’ We are not proposing
to include the current regulatory
language ‘‘or revoked’’ in our revised
paragraph. This is because, as outlined
previously, there could be situations
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under revised § 422.222 where a
revoked individual or entity would not
be included on the preclusion list.
++ Paragraph (b) would state: ‘‘If a
PACE organization receives a request for
payment by, or on behalf of, an
individual or entity that is excluded by
the OIG or is included on the preclusion
list, defined in § 422.2 of this chapter,
the PACE organization must notify the
enrollee and the excluded individual or
entity or the individual or entity
included on the preclusion list in
writing, as directed by contract or other
direction provided by CMS, that
payments will not be made. Payment
may not be made to, or on behalf of, an
individual or entity that is excluded by
the OIG or is included on the preclusion
list.’’
• Section 422.501(c) states that in
order to obtain a determination on
whether it meets the requirements to
become an MA organization and is
qualified to provide a particular type of
MA plan, an entity (or an individual
authorized to act for the entity (the
applicant)), must fully complete all
parts of a certified application. As part
of the application, paragraph (c)(1)(iv)
requires ‘‘(d)ocumentation that all
providers or suppliers in the MA or
MA–PD plan that are types of
individuals or entities that can enroll in
Medicare in accordance with section
1861 of the Act, are enrolled in an
approved status.’’ Also, paragraph (c)(2)
requires the following: ‘‘The authorized
individual must thoroughly describe
how the entity and MA plan meet, or
will meet, all the requirements
described in this part, including
providing documentation that all
providers and suppliers referenced in
§ 422.222 are enrolled in Medicare in an
approved status.’’
We propose to:
++ Revise paragraph (c)(1)(iv) to read:
‘‘Documentation that payment for health
care services or items is not being and
will not be made to individuals and
entities included on the preclusion list,
defined in § 422.2.’’
++ Revise paragraph (c)(2) to replace
the language beginning with ‘‘including
providing documentation . . . ’’ with
‘‘including providing documentation
that payment for health care services or
items is not being and will not be made
to individuals and entities included on
the preclusion list, defined in § 422.2.’’
• Section 422.752(a) lists certain
violations for which CMS may impose
sanctions (as specified in § 422.750(a))
on any MA organization with a contract.
One violation, listed in paragraph
(a)(13), is that the MA organization
‘‘(f)ails to comply with § 422.222 and
422.224, that requires the MA
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56451
organization to ensure that providers
and suppliers are enrolled in Medicare
and not make payment to excluded or
revoked individuals or entities.’’ We
propose to revise paragraph (a)(13) to
read: ‘‘Fails to comply with §§ 422.222
and 422.224, that requires the MA
organization not to make payment to
excluded individuals or entities, nor to
individuals or entities on the preclusion
list, defined in § 422.2.’’
• Section 422.510(a)(4) lists various
grounds by which CMS may terminate
a contract with an MA organization.
Paragraph (a)(4)(xiii) refers to the MA
organization’s failure ‘‘to meet the
preclusion list requirements in
accordance with §§ 422.222 and
422.224.’’ We propose to revise this
paragraph to read: ‘‘Fails to meet the
preclusion list requirements in
accordance with §§ 422.222 and
422.224.’’
• Section 422.504 outlines provisions
that the contract between the MA
organization and CMS must contain.
Under paragraph (a)(6), the MA
organization must agree to adhere to,
among other things, ‘‘Medicare provider
and supplier enrollment requirements.’’
Pursuant to paragraph (i)(2)(v),
moreover, the MA organization agrees to
require all first tier, downstream, and
related entities to agree that ‘‘they will
require all of their providers and
suppliers to be enrolled in Medicare in
an approved status consistent with
§ 422.222.’’ We propose to revise these
two paragraphs as follows:
++ Paragraph (a)(6) would be revised
to replace the language ‘‘Medicare
provider and supplier enrollment
requirements’’ with ‘‘the preclusion list
requirements in 422.222.’’
++ Paragraph (i)(2)(v) would be
revised to replace the language
following ‘‘they will’’ with ‘‘ensure that
payments are not made to individuals
and entities included on the preclusion
list, defined in § 422.2.’’
• Section 422.224, which applies to
MA organizations and pertains to
payments to excluded or revoked
providers or suppliers, contains
provisions very similar to those in
§ 460.86:
++ Paragraph (a) states that an MA
organization ‘‘may not pay, directly or
indirectly, on any basis, for items or
services (other than emergency or
urgently needed services as defined in
§ 422.113) furnished to a Medicare
enrollee by any individual or entity that
is excluded by the Office of the
Inspector General (OIG) or is revoked
from the Medicare program except as
provided.’’
++ Paragraph (b) states: ‘‘If an MA
organization receives a request for
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payment by, or on behalf of, an
individual or entity that is excluded by
the OIG or is revoked from the Medicare
program, the MA organization must
notify the enrollee and the excluded or
revoked individual or entity in writing,
as directed by contract or other
direction provided by CMS, that
payments will not be made. Payment
may not be made to, or on behalf of, an
individual or entity that is excluded by
the OIG or is revoked in the Medicare
program.
We propose to revise these paragraphs
as follows:
++ Paragraph (a) would state: ‘‘An
MA organization may not pay, directly
or indirectly, on any basis, for items or
services (other than emergency or
urgently needed services as defined in
§ 422.113 of this chapter) furnished to a
Medicare enrollee by any individual or
entity that is excluded by the Office of
the Inspector General (OIG) or is
included on the preclusion list, defined
in § 422.2.
++ Paragraph (b) would state: ‘‘If an
MA organization receives a request for
payment by, or on behalf of, an
individual or entity that is excluded by
the OIG or an individual or entity that
is included on the preclusion list,
defined in § 422.2, the MA organization
must notify the enrollee and the
excluded individual or entity or the
individual or entity included on the
preclusion list in writing, as directed by
contract or other direction provided by
CMS, that payments will not be made.
Payment may not be made to, or on
behalf of, an individual or entity that is
excluded by the OIG or is included on
the preclusion list.’’
In addition to the aforementioned
proposals, CMS proposes to amend
existing data submission requirements
for risk adjustment to require MA
organizations to include provider NPIs
as part of encounter data submissions;
CMS intends to use the NPI data to
identify individuals and entities that,
depending on the results of CMS
investigation, may be included on the
preclusion list proposed in this section.
Pursuant to section 1853(a)(1)(C) and
(a)(3)(B) of the Act, CMS adjusts the
capitation rates paid to MA
organizations to account for such risk
factors as age, disability status, gender,
institutional status, and health status
and requires MA organizations to
submit data regarding the services
provided to MA enrollees.
Implementing regulations at 42 CFR
422.310 set forth the requirements for
the submission of risk adjustment data
that CMS uses to risk-adjust payments.
MA organizations must submit data, in
accordance with CMS instructions, to
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characterize the context and purposes of
items and services provided to their
enrollees by a provider, supplier,
physician, or other practitioner (OMB
Control No. 0938–1152). Currently, risk
adjustment data is submitted in two
formats: comprehensive data equivalent
to Medicare fee-for-service claims data
(often referred to as encounter data); and
data in abbreviated formats (often
referred to as RAPS data).
CMS requires that MA organizations
and other entities submit encounter data
using the X12 837 5010 format to fulfill
the reporting requirements at 42 CFR
422.310, where ‘‘X12’’ refers to
healthcare transactions, ‘‘837’’ refers to
an electronic format for institutional
(‘‘837–I’’) and professional (‘‘837–P’’)
encounters, and ‘‘5010’’ refers to the
most recent version of this national
standard. The X12 837 5010 is one of
the national standard HIPAA
transaction and code set formats for
electronic transmission of healthcare
transactions. Records that MA
organziations and other submitters send
to CMS in the X12 837 5010 format are
known as ‘‘encounter data records.’’
One of the required data elements on
the X12 837 5010 encounter data record
is the ‘‘Billing Provider.’’ The Billing
Provider is identified through several
data fields (for example, name field and
address field), but a key data field for
identifying the Billing Provider is the
National Provider Identifier (NPI). The
NPI was established as a national
standard for a unique health identifier
for health care providers, as part of
HIPAA Administrative Simplification
efforts for electronic transactions among
trading partners. CMS announced its
decision to implement the NPI for
Medicare, in the final rule 69 FR 3434,
published January 23, 2004. Billing
Provider NPIs are required for X12N 837
5010 transactions (both institutional and
professional), as established in the
national implementation guides (known
by the shorthand ‘‘TR3 guides’’):
Standards for Electronic Data
Interchange Technical Report Type 3,
Health Care Claim: Institutional (837)
and Standards for Electronic Data
Interchange Technical Report Type 3,
Health Care Claim: Professional (837).
However, CMS has not incorporated this
Billing Provider NPI requirement into
its Part C MA regulations for submission
of risk adjustment data. CMS has
incorporated the Part D program
requirement that plan sponsors submit
NPIs on the Prescription Drug Event
Record (77 FR 22072, published April
12, 2012).
We are proposing to amend § 422.310
by adding a new paragraph (d)(5) to
require that, for data described in
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paragraph (d)(1) as data equivalent to
Medicare fee-for-service data (which is
also known as MA encounter data), MA
organizations must submit a National
Provider Identifier in a Billing Provider
field on each MA encounter data record,
per CMS guidance. While the NPI is a
required data element for the X12 837
5010 format (as set forth in the TR3
guides cited in the Background), CMS
has not codified a regulatory
requirement that MA organizations
include the Billing Provider NPI in
encounter data records. The proposed
amendment would implement that
requirement.
We propose to include the phrase
‘‘per CMS guidance’’ to allow CMS to
take into account situations where there
is no bill (no claim for payment) in an
MA organization’s system. For example,
CMS allows submission of chart review
records (also submitted to CMS in the
X12 837 5010 format) only for the
purpose of submitting, correcting, and
deleting diagnoses from encounter data
records for the purposes of risk
adjustment payment, based on medical
record reviews (chart reviews). Thus,
chart review records and encounters
that are capitated (when there is no bill)
would have different guidance for
populating the Billing Provider NPI
field than encounters for which a bill
was received and adjudicated by the
MA organization.
(5) Appeals
We propose to add a provision to
§ 422.222(a) that would permit
individuals or entities that are on the
preclusion list to appeal their inclusion
on this list in accordance with 42 CFR
part 498. Given the aforementioned
payment denial that would ensue with
the individual’s or entity’s inclusion on
the preclusion list, due process warrants
that the individual or entity have the
ability to appeal this initial
determination. Any appeal under this
proposed provision, however, would be
limited strictly to the individual’s or
entity’s inclusion on the preclusion list.
It would neither include nor affect
appeals of payment denials or
enrollment revocations, for there are
separate appeals processes for these
actions. Individuals and entities that file
an appeal pursuant to § 422.222(a)
would be able to avail themselves of any
other appeals processes permitted by
law.
CMS would send written notice to the
individual or entity of their inclusion on
the preclusion list. The notice would
contain the reason for the inclusion and
would inform the individual or entity of
their appeal rights.
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We also propose to update the
following regulatory provisions
regarding appeals. Note that these
provisions would include references to
preclusion list inclusions under
§ 422.222 (MA) and, as previously
mentioned, § 423.120(c)(6).
• We propose to revise § 498.3(b) to
add a new paragraph (20) stating that a
CMS determination that an individual
or entity is to be included on the
preclusion list constitutes an initial
determination. This change would help
enable individuals and entities to utilize
the appeals processes described in
§ 498.5:
• In § 498.5, we propose to add a new
paragraph (n) that would state as
follows:
++ In paragraph (n)(1), we propose
that any individual or entity dissatisfied
with an initial determination or revised
initial determination that they are to be
included on the preclusion list may
request a reconsideration in accordance
with § 498.22(a).
++ In paragraph (n)(2), we propose
that if CMS or the individual or entity
under paragraph (n)(1) is dissatisfied
with a reconsidered determination
under § 498.5(n)(1), or a revised
reconsidered determination under
§ 498.30, CMS or the individual or
entity is entitled to a hearing before an
ALJ.
++ In paragraph (n)(3), we propose
that if CMS or the individual or entity
under paragraph (n)(2) is dissatisfied
with a hearing decision as described in
paragraph (n)(2), CMS or the individual
or entity may request review by the
Departmental Appeals Board (DAB) and
the individual or entity may seek
judicial review of the DAB’s decision.
These revisions are designed to
include preclusion list determinations
within the scope of appeal rights
described in § 498.5. However, we
solicit comment on whether a different
appeals process is warranted and, if so,
what its components should be.
In addition, given that a beneficiary’s
access to health care items or services
may be impaired because of the
application of the preclusion list to his
or her item or service, we believe the
beneficiary should be permitted to
appeal alleged errors in applying the
preclusion list. We solicit comment
whether additional beneficiary
protections, such as notices to enrollees
when an individual or entity that has
recently furnished services or items to
the enrollee is placed on the preclusion
list or a limited and temporary coverage
approval when an individual or entity is
first placed on the preclusion list but is
in the middle of a course of previously
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covered treatment, should also be
included these rules upon finalization.
(6) Technical Changes
The title of § 422.222 reads:
‘‘Enrollment of MA organization
network providers and suppliers; firsttier, downstream, and related entities
(FDRs); cost HMO or CMP, and
demonstration and pilot programs.’’ We
propose to change this to simply state
‘‘Preclusion list’’ so as to accord with
our previously mentioned proposed
changes. For this same reason, we
propose to:
++ Change the title of § 422.224 from
‘‘Payment to providers or suppliers
excluded or revoked’’ to ‘‘Payment to
individuals and entities excluded by the
OIG or included on the preclusion list.’’
++ Change the title of § 460.86 from
‘‘Payment to providers or suppliers
excluded or revoked’’ to ‘‘Payment to
individuals or entities excluded by the
OIG or included on the preclusion list.’’
c. Specific Regulatory Changes
Given the foregoing discussion, we
propose the following regulatory
changes:
• In § 417.478, we propose to revise
paragraph (e) as follows:
++ In new paragraph (e)(1), we
propose to state that the prohibitions,
procedures and requirements relating to
payment to individuals and entities on
the preclusion list (defined in § 422.2 of
this chapter) apply to HMOs and CMPs
that contract with CMS under section
1876 of the Act.
++ In new paragraph (e)(2), we
propose to state that in applying the
provisions of §§ 422.2, 422.222, and
422.224 under paragraph (e)(1) of this
section, references to part 422 of this
chapter must be read as references to
this part, and references to MA
organizations as references to HMOs
and CMPs.
• In § 417.484, we propose to revise
paragraph (b)(3) to state: ‘‘That
payments must not be made to
individuals and entities included on the
preclusion list, defined in § 422.2.’’
• In § 422.2, we propose to add a
definition of ‘‘preclusion list’’ that reads
as follows:
++ Preclusion list means a CMS
compiled list of individuals and entities
that:
(1) Meet all of the following
requirements:
(i) The individual or entity is
currently revoked from Medicare under
§ 424.535.
(ii) The individual or entity is
currently under a reenrollment bar
under § 424.535(c).
(iii) CMS determines that the
underlying conduct that led to the
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revocation is detrimental to the best
interests of the Medicare program. In
making this determination under this
paragraph, CMS would consider the
following factors:
(A) The seriousness of the conduct
underlying the individual’s or entity’s
revocation.
(B) The degree to which the
individual’s or entity’s conduct could
affect the integrity of the Medicare
program.
(C) Any other evidence that CMS
deems relevant to its determination; or
(2) Meet both of the following
requirements:
(i) The individual or entity has
engaged in behavior for which CMS
could have revoked the individual or
entity to the extent applicable had they
been enrolled in Medicare.
(ii) CMS determines that the
underlying conduct that would have led
to the revocation is detrimental to the
best interests of the Medicare program.
In making this determination under this
paragraph, CMS considers the following
factors:
(i) The seriousness of the conduct
involved.
(ii) The degree to which the
individual’s or entity’s conduct could
affect the integrity of the Medicare
program; and
(iii) Any other evidence that CMS
deems relevant to its determination
• We propose to delete
§ 422.204(b)(5).
• We propose to establish a new
§ 422.204(c) that would require MA
organizations to follow a documented
process that ensures compliance with
the preclusion list provisions in
§ 422.222.
• We propose to delete the existing
version of § 422.222(a) and replace it
with the following:
++ In § 422.222, we propose to
change the title thereof to ‘‘Preclusion
list’’.
++ In paragraph (a)(1), we propose to
state that an MA organization shall not
make payment for a health care item or
service furnished by an individual or
entity that is included on the preclusion
list, defined in § 422.2.
++ In paragraph (a)(2), we propose to
replace the existing language therein
with a provision stating that CMS would
send written notice to the individual or
entity via letter of their inclusion on the
preclusion list. The notice would
contain the reason for the inclusion and
would inform the individual or entity of
their appeal rights. An individual or
entity may appeal their inclusion on the
preclusion list, defined in § 422.2, in
accordance with Part 498.
++ In paragraph (b), we propose to
state that an MA organization that does
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not comply with paragraph (a) of
§ 422.222 may be subject to sanctions
under § 422.750 and termination under
§ 422.510.
• In § 422.224, we propose to:
++ Change the title thereof to
‘‘Payment to individuals and entities
excluded by the OIG or included on the
preclusion list.’’
++ Revise paragraph (a) to state: ‘‘An
MA organization may not pay, directly
or indirectly, on any basis, for items or
services (other than emergency or
urgently needed services as defined in
§ 422.113 of this chapter) furnished to a
Medicare enrollee by any individual or
entity that is excluded by the Office of
the Inspector General (OIG) or is
included on the preclusion list, defined
in § 422.2’’.
++ Revise paragraph (b) to state: ‘‘If
an MA organization receives a request
for payment by, or on behalf of, an
individual or entity that is excluded by
the OIG or an individual or entity that
is included on the preclusion list,
defined in § 422.2, the MA organization
must notify the enrollee and the
excluded individual or entity or the
individual or entity included on the
preclusion list in writing, as directed by
contract or other direction provided by
CMS, that payments will not be made.
Payment may not be made to, or on
behalf of, an individual or entity that is
excluded by the OIG or is included on
the preclusion list.’’
• We propose to revise § 422.310 to
add a new paragraph (d)(5) to require
that, for data described in paragraph
(d)(1) as data equivalent to Medicare
fee-for-service data (which is also
known as MA encounter data), MA
organizations must submit a National
Provider Identifier in a Billing Provider
field on each MA encounter data record,
per CMS guidance.
• In § 422.501(c), we propose to:
++ Revise paragraph (c)(1)(iv) to read:
‘‘Documentation that payment for health
care services or items is not being and
will not be made to individuals and
entities included on the preclusion list,
defined in § 422.2.’’
++ Revise paragraph (c)(2) to replace
the language beginning with ‘‘including
providing documentation . . .’’ with
‘‘including providing documentation
that payment for health care services or
items is not being and will not be made
to individuals and entities included on
the preclusion list, defined in § 422.2.’’
• In section 422.504, we propose to:
++ Replace the language in paragraph
(a)(6) that reads ‘‘Medicare provider and
supplier enrollment requirements’’ with
‘‘the preclusion list requirements in
§ 422.222 and § 422.224.’’
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++ Revise paragraph (i)(2)(v) to read,
‘‘they will ensure that payments are not
made to individuals and entities
included on the preclusion list, defined
in § 422.2.’’
• In § 422.510(a)(4), we propose to
revise paragraph (xiii) to read: ‘‘Fails to
meet the preclusion list requirements in
accordance with §§ 422.222 and
422.224.’’
• In § 422.752, we propose to revise
paragraph (a)(13) to read: ‘‘Fails to
comply with §§ 422.222 and 422.224,
that requires the MA organization not to
make payment to excluded individuals
and entities, nor to individuals and
entities included on the preclusion list,
defined in § 422.2.’’
• In § 460.40, we propose to revise
paragraph (j) to state: ‘‘Makes payment
to any individual or entity that is
included on the preclusion list, defined
in § 422.2 of this chapter.’’
• In § 460.50, we propose to revise
paragraph (b)(1)(ii) by changing the
current language following ‘‘including’’
to read ‘‘making payment to an
individual or entity that is included on
the preclusion list, defined in § 422.2 of
this chapter.’’ ’’
• We propose to delete § 460.68(a)(4).
• We propose to delete
§ 460.70(b)(1)(iv).
• We propose to delete § 460.71(b)(7).
• In § 460.86, we propose to revise
paragraphs (a) and (b) to state as
follows:
++ Paragraph (a) would state: ‘‘A
PACE organization may not pay,
directly or indirectly, on any basis, for
items or services (other than emergency
or urgently needed services as defined
in § 460.100) furnished to a Medicare
enrollee by any individual or entity that
is excluded by the OIG or is included on
the preclusion list, defined in § 422.2 of
this chapter.’’
++ Paragraph (b) would state: ‘‘If a
PACE organization receives a request for
payment by, or on behalf of, an
individual or entity that is excluded by
the OIG or is included on the preclusion
list, defined in § 422.2 of this chapter,
the PACE organization must notify the
enrollee and the excluded individual or
entity or the individual or entity that is
included on the preclusion list in
writing, as directed by contract or other
direction provided by CMS, that
payments will not be made. Payment
may not be made to, or on behalf of, an
individual or entity that is excluded by
the OIG or is included on the preclusion
list.’’
++ We also propose to change the
title of § 460.86 to ‘‘Payment to
individuals and entities that are
excluded by the OIG or are included on
the preclusion list.’’
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• In § 498.3(b), we propose to add a
new paragraph (20) stating that a CMS
determination that an individual or
entity is to be included on the
preclusion list constitutes an initial
determination.
• In § 498.5, we propose to add a new
paragraph (n) that would state as
follows:
++ In paragraph (n)(1), we propose
that any individual or entity dissatisfied
with an initial determination or revised
initial determination that they are to be
included on the preclusion list may
request a reconsideration in accordance
with § 498.22(a).
+ In paragraph (n)(2), we propose that
if CMS or the individual or entity under
paragraph (n)(1) is dissatisfied with a
reconsidered determination under
(n)(1), or a revised reconsidered
determination under § 498.30, CMS or
the individual or entity is entitled to a
hearing before an ALJ.
++ In paragraph (n)(3), we propose
that if CMS or the individual or entity
under paragraph (n)(2) is dissatisfied
with a hearing decision as described in
paragraph (n)(2), CMS or the individual
or entity may request review by the DAB
and the individual or entity may seek
judicial review of the DAB’s decision.
12. Removal of Quality Improvement
Project for Medicare Advantage
Organizations (§ 422.152)
Section 1852(e) of the Act requires
that Medicare Advantage (MA)
organizations have an ongoing Quality
Improvement (QI) Program for the
purpose of improving the quality of care
provided to enrollees in the
organization’s MA plans. The statute
requires that the MA organization
include a Chronic Care Improvement
Program (CCIP) as part of the overall QI
Program
Our regulations at § 422.152 outline
the QI Program requirements for MA
organizations, which include the
development and implementation of
both Quality Improvement Projects
(QIPs), at paragraphs (a)(3) and (d), and
a CCIP, at paragraphs (a)(2) and (c). Both
provisions require that the MA
organization’s QIP and CCIP address
areas or populations identified by CMS.
The January 2005 final rule (70 FR
4587) addressed the QI provisions
added to section 1852(e) of the Act by
the Medicare Modernization Act of 2003
(MMA). In the final rule, we specified
in § 422.152 that MA organizations must
have ongoing QI Programs, which
include chronic care programs. In
addition, CMS provided MA
organizations the flexibility to shape
their QI efforts to the needs of their
enrollees.
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In the April 2010 final rule (75 FR
19677), CMS indicated concern that MA
organizations were choosing QIPs and
CCIPs that did not address QI areas that
best reflected enrollee needs.
Additionally, there were concerns that
some projects focused more on
improving processes rather than
improving clinical outcomes. Therefore,
we modified the regulation to provide
for CMS to identify focus areas for QIPs
and population areas for CCIPs. MA
organizations retained the flexibility to
identify topics for development of QIPs
and CCIPs based on the needs of their
population, but also had to implement
QIPs and CCIPs as directed by CMS,
which could identify general areas of
focus that supported CMS quality
strategies and initiatives.
During this time, CMS was also
concerned that MA organizations were
employing inconsistent methods in
developing criteria for QIPs and CCIPs.
As a result, CMS further modified the
regulation to require MA organizations
to report progress in a manner identified
by CMS. This allowed CMS to review
results and extrapolate lessons learned
and best practices consistently across
the MA program.
After making these regulation
modifications, CMS issued a number
sub-regulatory QIP and CCIP guidance
documents to ensure that MA
organizations measured progress in a
consistent and meaningful way. For
example, the new Plan-Do-Study-Act QI
model required MA organizations to
place some structure and parameters
around their QIPs and CCIPs, ultimately
leading to more consistency.
Over time, CMS found its
implementation of the QIP and CCIP
requirements had become burdensome
and complex, rather than streamlining
and conforming MA organizations’
implementation of QIPs and CCIPs. For
example, the complex sub-regulatory
guidance led to a wide range of MA
organization interpretations, resulting in
extraneous, irrelevant, voluminous, and
redundant information being reported to
CMS. We gained little value from this
information. As a result, we scaled
down our sub-regulatory guidance in
order to gain more concise and useful
information with which to evaluate the
outcomes and show any sort of
attribution. However, we also found that
the complex guidance did not
necessarily produce better outcomes in
the review of annual updates.
Continued evaluation through annual
review of plan reported updates of the
QIPs and CCIPs has led CMS to believe
that the QIPs in particular do not add
significant value. Through annual
review of plan-reported updates, CMS
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has found that a number of QIPs
implemented are duplicative of
activities MA organizations are already
doing to meet other plan needs and
requirements, such as the CCIP and
internal organizational focus on STAR
Rating metrics. For example, we
designated ‘‘Reducing All-Cause
Hospital Readmissions’’ as the 2012 QIP
topic. The QIPs for this topic often
duplicated other CMS and MA
organization care coordination
initiatives aimed to improve transition
of care across health care settings and
reduce hospital readmissions. We found
that many plans were already engaged
in activities to reduce hospital
readmissions because they are annually
scored on their performance in this area
(and many other areas) through
Healthcare Effectiveness Data and
Information Set (HEDIS). HEDIS are a
set of plan performance and quality
measures. Each year, MA organizations
are required to report HEDIS data and
are evaluated annually based on these
measures. High performance on these
measures also plays a large role in
achieving high Star Ratings, which has
beneficial payment consequences for
MA organizations. This suggests that
CMS direction and detailed regulation
of QIPs is unnecessary as the Star
Ratings program use of HEDIS measures
(and other measures) incentivizes MA
organizations sufficiently to focus on
desired improvements and outcomes.
Therefore, we believe the removal of
the QIP and the continued CMS
direction of populations for required
CCIPs would allow MA organizations to
focus on one project that supports
improving the management of chronic
conditions, a CMS priority, while
reducing the duplication of other QI
initiatives. We propose to delete
§§ 422.152(a)(3) and 422.152(d), which
outline the QIP requirements. In
addition, in order to ensure that
remaining cross references for other
provisions in this section remain
accurate, we will reserve paragraphs
(a)(3) and (d). The removal of these
requirements would reduce burden on
both MA organizations and CMS.
Even with this proposed removal of
the QIP requirements, the MA
requirements for QI Programs would
remain in place and be robust and
sufficient to ensure that the
requirements of section 1852(e) of the
Act are met. As a part of the QI Program,
each MA organization would still be
required to develop and maintain a
health information system; encourage
providers to participate in CMS and
HHS QI initiatives; implement a
program review process for formal
evaluation of the impact and
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effectiveness of the QI Program at least
annually; correct all problems that come
to its attention through internal,
surveillance, complaints, or other
mechanisms; contract with an approved
Medicare Consumer Assessment of
Health Providers and Systems
(CAHPS®) survey vendor to conduct the
Medicare CAHPS® satisfaction survey of
Medicare plan enrollees; measure
performance under the plan using
standard measures required by CMS and
report its performance to CMS; develop,
compile, evaluate, and report certain
measures and other information to CMS,
its enrollees, and the general public; and
develop and implement a CCIP. Further,
CMS emphasizes here that MA
organizations must have QI Programs
that go beyond only performance of
CCIPs that focus on populations
identified by CMS. The CCIP is only one
component of the QI Program, which
has the purpose of improving care and
provides for the collection, analysis, and
reporting of data that permits the
measurement of health outcomes and
other indices of quality under section
1852(e) of the Act.
We believe this proposed change will
allow MA organizations to maintain
existing health improvement initiatives
and take steps to reduce the risk of
redundancies or duplication. The
remaining elements of the QI Program,
including the CCIP, will still maintain
the intended purpose of the QI Program:
That plans have the necessary
infrastructure to coordinate care and
promote quality, performance, and
efficiency on an ongoing basis.
This proposal does not eliminate the
CCIP requirements that MA
organizations address populations
identified by CMS and report project
status to CMS as requested. Per the
April 2010 rule (75 FR 19677), we still
believe that these requirements are
necessary to ensure that MA
organizations are developing projects
that positively impact populations
identified by CMS and that progress is
documented and reported in a way that
is consistent with our requirements.
In conclusion, we are proposing to
amend § 422.152 by:
• Deleting and reserving paragraphs
(a)(3) and (d).
We solicit comments on this proposal,
including whether additional revision to
§ 422.152 is necessary to eliminate
redundancies CMS has identified in this
preamble.
13. Reducing Provider Burden—
Comment Solicitation
Health care providers are key partners
in the delivery of Medicare benefits, and
we are exploring ways to reduce burden
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on providers (meaning institutions,
physicians, and other practitioners)
arising from requests for medical record
documentation by MA organizations,
particularly in connection with MA
program requirements. We are
interested in stakeholder feedback on
the nature and extent of this burden of
producing medical record
documentation and on ideas to address
the burden. We are particularly
interested in burden experienced by
solo providers. Please note that this is
a solicitation for comment only and
does not commit CMS to adopt any
ideas submitted nor to making any
changes to CMS audits or activities,
including risk adjustment data
validation (RADV) processes.
By law, CMS is required to adjust
payments to MA organizations for their
enrollees’ risk factors, such as age,
disability status, gender, institutional
status, and health status. To this end,
MA organizations are required in
regulation (§ 422.310) to submit risk
adjustment data to CMS—including
diagnosis codes—to characterize the
context and purposes of items and
services provided to MA organization
plan enrollees. Risk adjustment data
refers to data submitted in two formats:
Comprehensive data equivalent to
Medicare fee-for-service claims data
(often referred to as encounter data) and
data in abbreviated formats (often
referred to as RAPS data). Under
§ 422.310, risk adjustment data that is
submitted must be documented in the
medical record and MA organizations
will be required to submit medical
records to validate the risk adjustment
data. Finally, at § 422.310(d)(4), MA
organizations may include in their
contracts with providers, suppliers,
physicians, and other practitioners,
provisions that require submission of
complete and accurate risk adjustment
data as required by CMS. These
provisions may include financial
penalties for failure to submit complete
data.
To address concerns from providers
about burdensome requests from MA
organizations for their patients’ medical
record documentation, we are soliciting
comment from stakeholders to more
fully understand the issue and for ideas
to accomplish reductions in provider
burden. Specifically, we seek comment
on the following:
• The nature and extent of medical
record requests, including the following:
++ Reasoning behind the request sent
by the MA organization to the provider.
++ Amount of time afforded to
providers to respond to such requests.
++ Frequency of requests for
providers to submit medical records.
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++ Volume of medical records in a
given request.
++ Method of collection and
submission of medical records.
++ How narrowly or broadly the
requests are framed (for example,
whether the request is for a single visit,
a specific condition, and for what
timeframe).
++ Extent to which requests are made
pursuant to a CMS-conducted RADV
audit, other CMS activities, or for other
purposes (please specify what the other
purposes are).
++ Considerations that may be
unique to solo providers.
++ Impact on burden due to
increased adoption of electronic health
record systems.
++ Specific examples of medical
record requests (for example, anecdotes
and/or the requests themselves,
appropriately redacted of confidential
information and PII/PHI).
• The nature and extent of requests
related to medical record attestations,
including the following:
++ Reasoning behind the attestation
request.
++ Amount of time afforded to
providers to respond to such requests.
++ Frequency of requests for
providers to sign attestations.
++ Volume of requests.
++ Level and duration for which
attestations are requested (for example,
for each medical record, for all medical
records for a beneficiary for a particular
date of service or for a particular year).
++ Whether there is reduced burden
associated with electronic signatures.
++ Specific examples of medical
record attestations and attestation
requests.
• Ideas for improving the process
around MA organizations requesting
medical records and/or attestations that
are not directly pursuant to CMSconducted RADV audits. Specify the
type of change the idea would
necessitate: a statutory, regulatory,
subregulatory, operational, or CMSissued guidance such as best practices
for MA organizations when requesting
medical records and/or attestations, and
how such a change may interact with
other provisions, such as state law or
Joint Commission requirements. If the
ideas involve novel legal questions,
analysis regarding our authority is
welcome for our consideration. For each
idea, describe the extent of provider
burden reduction, quantitatively where
possible, and any other consequences
that implementing the idea may have on
beneficiaries, providers, MA
organizations, or CMS. Further, we
encourage all relevant parties to respond
to this request: MA organizations,
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providers, associations for these entities,
and companies assisting MA
organizations, providers, and hospitals
with handling medical record requests.
C. Implementing Other Changes
1. Reducing the Burden of the Medicare
Part C and Part D Medical Loss Ratio
Requirements
a. Background
Section 1103 of Title I, Subpart B of
the Health Care and Education
Reconciliation Act (Pub. L. 111–152)
amends section 1857(e) of the Act to
add medical loss ratio (MLR)
requirements 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 (78 FR
31284), we published a final rule that
codified the MLR requirements for Part
C MA organizations, and Part D
sponsors (including organizations
offering cost plans that provide the Part
D benefit) in the regulations at 42 CFR
part 422, subpart X and part 423,
subpart X.
For contract year 2014 and
subsequent contract years, MA
organizations and Part D sponsors are
required to report their MLRs and are
subject to financial and other penalties
for a failure to meet the statutory
requirement that they have an MLR of
at least 85 percent (see §§ 422.2410 and
423.2410). The statute imposes several
levels of sanctions for failure to meet the
85 percent minimum MLR requirement,
including remittance of funds to CMS,
a prohibition on enrolling new
members, and ultimately contract
termination. The minimum MLR
requirement in section 1857(e)(4) of the
Act creates incentives for MA
organizations and Part D sponsors to
reduce administrative costs, such as
marketing costs, profits, and other uses
of the funds earned by plan sponsors,
and helps to ensure that taxpayers and
enrolled beneficiaries receive value
from Medicare health and drug plans.
Section 1001(5) of the Patient
Protection and Affordable Care Act
(Pub. L. 111–148), as amended by
section 10101(f) of the Health Care
Reconciliation Act, also established a
new MLR requirement under section
2718 of the Public Health Service Act
(PHSA) that applies to issuers of
employer group and individual market
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private insurance. We will refer to the
MLR requirements that apply to issuers
of private insurance as the ‘‘commercial
MLR rules.’’ Regulations implementing
the commercial MLR rules are
published at 45 CFR part 158.
This proposed rule sets forth our
proposed modifications to certain MLR
requirements in the Medicare Part C and
Part D programs.
b. Proposed Regulatory Changes to the
Calculation of the Medical Loss Ratio
(§§ 422.2420, 422.2430, 423.2420, and
423.2430)
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(1) Fraud Reduction Activities
As explained in the February 22, 2013
proposed rule (78 FR 12428), we used
the commercial MLR rules as a reference
point for developing the Medicare MLR
rules. We sought to align the
commercial and Medicare MLR rules in
order to limit the burden on
organizations that participate in both
markets, and to make commercial and
Medicare MLRs as comparable as
possible for comparison and evaluation
purposes, including by Medicare
beneficiaries. Although we believe it is
important to maintain consistency
between the commercial and Medicare
MLR requirements, we also recognized
that some areas of the commercial MLR
rules would need to be revised to fit the
unique characteristics of the MA and
Part D programs.
One area of alignment between the
commercial and Medicare MLR rules is
the treatment of expenditures related to
fraud reduction efforts, which we
defined to include both fraud
prevention and fraud recovery in both
rules (see 78 FR 12433). The Medicare
MLR regulations adopted the same
definitions of activities that improve
healthcare quality (also referred to as
quality improvement activities, or QIA),
as had been adopted in the commercial
MLR regulations at 45 CFR 158.150 and
158.151, in order to facilitate uniform
accounting for the costs of these
activities across lines of business (see 78
FR 12435). Consistent with this policy
of alignment, the Medicare MLR
regulations at §§ 422.2430(b)(8) and
423.2430(b)(8) adopted the commercial
MLR rules’ exclusion of fraud
prevention activities from QIA. The
Medicare MLR regulations
(§§ 422.2420(b)(2)(ix) and
423.2420(b)(2)(viii)) further aligned with
the commercial MLR rules’ treatment of
fraud-related expenditures by allowing
the amount of claim payments
recovered through fraud reduction
efforts, not to exceed the amount of
fraud reduction expenses, to be
included in the MLR numerator as an
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adjustment to incurred claims. The
Medicare MLR proposed rule (78 FR
12433) explained that we considered
this approach to be appropriate because
without such an adjustment, the
recovery of paid fraudulent claims
would reduce an MLR and could create
a disincentive to engage in fraud
reduction efforts. Allowing an
adjustment to incurred claims to reflect
claims payments recoveries up to the
limit of fraud reduction expenses would
help mitigate whatever disincentive
might occur if fraud reduction expenses
were treated solely as nonclaims and
nonquality improving expenses. The
Medicare MLR proposed rule echoed
the December 7, 2011 commercial MLR
final rule with comment period (76 FR
76577), where we had earlier expressed
the view that allowing an unlimited
adjustment for fraud reduction expenses
would undermine the purpose of
requiring issuers to meet the MLR
standard.
We have reconsidered this position
based on the specific characteristics of
the MA and Part D programs, and are
now proposing certain changes to the
treatment of expenses for fraud
reduction activities in the Medicare
MLR calculation. First, we are
proposing to revise the MA and Part D
regulations by removing the current
exclusion of fraud prevention activities
from QIA at §§ 422.2430(b)(8) and
423.2430(b)(8). Second, we are
proposing to expand the definition of
QIA in §§ 422.2430 and 423.2430 to
include all fraud reduction activities,
including fraud prevention, fraud
detection, and fraud recovery. Third, we
are proposing to no longer include in
incurred claims the amount of claims
payments recovered through fraud
reduction efforts, up to the amount of
fraud reduction expenses, in
§§ 422.2420(b)(2)(ix) and
423.2420(b)(2)(viii). We note that the
commercial MLR rules and the
Medicaid MLR rules are outside the
scope of this proposed rule.
We are proposing these changes to the
Medicare MLR rules because we believe
that limiting or excluding amounts
invested in fraud reduction undermines
the federal government’s efforts to
combat fraud in the Medicare program,
and reduces the potential savings to the
government, taxpayers, and
beneficiaries that robust fraud
prevention efforts in the MA and Part D
programs can provide. Fraud prevention
activities can improve patient safety,
deter the use of medically unnecessary
services, and can lead to higher levels
of health care quality, which is part of
the reason why we require such
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activities as a condition of participation
in the MA and Part D programs.
MA organizations and Part D sponsors
are required at §§ 422.503(b)(4)(vi) and
423.504(b)(4)(vi), respectively, to adopt
an effective compliance program which
includes measures that prevent, detect,
and correct fraud. We believe that the
proposed change to include all
expenditures in connection with fraud
reduction activities as QIA-related
expenditures in the MLR numerator best
aligns with this Medicare contracting
requirement. We are concerned that the
current rules could create a disincentive
to invest in fraud reduction activities,
which is only partly mitigated by the
current adjustment to incurred claims
for amounts recovered as a result of
fraud reduction activities, up to the
amount of fraud reduction expenses. We
believe that it is particularly important
that MA organizations and Part D
sponsors invest in fraud reduction
activities as the Medicare trust funds are
used to finance the MA and Part D
programs. We believe that including the
full amount of expenses for fraud
reduction activities as QIA will provide
additional incentive to encourage MA
organizations and Part D sponsors to
develop innovative and more effective
ways to detect and deter fraud.
We continue to believe that the
minimum MLR requirement in section
1857(e)(4) of the Act is intended to
create an incentive to reduce
administrative costs, marketing, profits,
and other such uses of the funds that
plan sponsors receive, and to ensure
that taxpayers and enrolled beneficiaries
receive value from Medicare health
plans. However, we also believe that
MA organizations’ and Part D sponsors’
fraud reduction activities can
potentially provide significant value to
the government and taxpayers by
reducing trust fund expenditures. When
MA organizations and Part D sponsors
prevent fraud and recover amounts paid
for fraudulent claims, this lowers the
overall cost of providing coverage to MA
and Part D enrollees. Because MA
organizations’ and Part D sponsors’
monthly payments are based in part on
their claims experience in prior years, if
MA organizations and Part D sponsors
pay fewer fraudulent claims, this should
be reflected in their subsequent cost
projections, which would ultimately
result in lower payments to MA
organizations and Part D sponsors out of
the Medicare trust funds, and could also
result in lower premiums or additional
supplemental benefits for beneficiaries.
Given the proposed change to include
expenditures for fraud reduction
activities in the QIA portion of the MLR
numerator, we no longer believe that it
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would be necessary or appropriate to
include in incurred claims the amount
of claim payments recovered through
fraud reduction efforts, up to the
amount of fraud reduction expenses. As
noted previously, we originally
included an adjustment to incurred
claims for claims payments recovered
through fraud reduction efforts based on
the rationale that, because the recovery
of paid fraudulent claims reduces the
amount of incurred claims in the MLR
numerator, if expenditures for fraud
reduction efforts were treated solely as
nonclaims and nonquality improvement
activities, this could create a
disincentive to engage in fraud
reduction activities. The adjustments to
incurred claims under current
§§ 422.2420(b)(2)(ix) and
423.2420(b)(2)(viii) mitigate the
potential disincentive to invest in fraud
reduction activities insofar as MA
organizations’ and Part D sponsors’
recoveries of paid fraudulent claims do
not result in a reduction to incurred
claims. Because this adjustment to
incurred claims is only available to the
extent that an MA organization or Part
D sponsor recovers paid fraudulent
claims, it encourages MA organizations
and Part D sponsors to invest in tracking
down and recouping amounts that have
already been paid, rather than in
preventing payment of fraudulent
claims. Under our proposal, claim
payments recovered through fraud
reduction efforts, up to the amount of
fraud reduction expenses, would no
longer be included in the MLR
numerator as an adjustment to incurred
claims. Instead, all expenditures for
fraud reduction activities would be
included in the MLR numerator as QIA,
even if such expenditures exceed the
amount recovered through fraud
reduction efforts. As a result, MA
organizations and Part D sponsors will
no longer have an incentive to use
contract revenue to pursue recovery of
paid fraudulent claims instead of
investing in fraud prevention. We
believe that effective fraud reduction
strategies will include efforts to prevent
payment of fraudulent claims, and we
believe that the proposed inclusion of
all fraud reduction activities as QIA in
the MLR numerator will strengthen the
incentive to engage in these vital
activities.
In summary, we are proposing the
following regulatory revisions:
• Remove and reserve
§§ 422.2420(b)(2)(ix) and
423.2420(b)(2)(viii).
• In §§ 422.2430 and 423.2430,
redesignate existing paragraphs (a)(1)
and (a)(2) as (a)(2) and (a)(3),
respectively.
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• In §§ 422.2430 and 423.2430, add
new paragraph (a)(4) that lists activities
that are automatically included in QIA.
• Designate the introductory text of
§§ 422.2430(a) and 423.2430(a) as
paragraph (a)(1), and revise newly
designated paragraph (a)(1) to specify
that, for an activity to be included in
QIA, it must either fall into one of the
categories listed in newly redesignated
(a)(2) and meet all of the requirements
in newly redesignated (a)(3), or be listed
in paragraph (a)(4).
• Remove and reserve
§§ 422.2430(b)(8) and 423.2430(b)(8).
We solicit comment on these
proposed changes, particularly whether
our proposal is based on the best
understanding of the motives and
incentives applicable to MA
organizations and Part D sponsors to
engage in fraud reduction activities. We
also solicit comment on the types of
activities that should be included in, or
excluded from, fraud reduction
activities. In addition, we solicit
comment on alternative approaches to
accounting for fraud reduction activities
in the MLR calculation. In particular,
we are interested in receiving input on:
• Whether fraud reduction activities
should be included in quality
improvement activities as proposed, or
whether we should create a separate
MLR numerator category for fraud
reduction activities;
• Whether fraud reduction activities
should be subject to any or all of the
exclusions at §§ 422.2430(b) and
422.2430(b). Although our proposal
removes the exclusion of fraud
prevention activities from QIA at
§§ 422.2430(b)(8) and 423.2430(b)(8), it
is possible that fraud reduction
activities would be subject to one of the
other exclusions under §§ 422.2430(b)
and 423.2430(b), such as the exclusion
that applies to activities that are
designed primarily to control or contain
costs (§§ 422.2430(b)(1) and
423.2430(b)(1)) or the exclusion of
activities that were paid for with grant
money or other funding separate from
premium revenue (§§ 422.2430(b)(1) and
423.2430(b)(3).)
(2) Medication Therapy Management
(MTM) (§§ 422.2430 and 423.2430)
In the May 23, 2013 final rule (78 FR
31294), we stated that Medication
Therapy Management (MTM) activities
(defined at § 423.153(d)) qualify as QIA,
provided they meet the requirements set
forth in §§ 422.2430 and 423.2430. To
meet these requirements, the activity
must fall into one of the categories listed
in current paragraph (a)(1) of those
regulations, which means the activity
must: (1) Improve health quality; (2)
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increase the likelihood of desired health
outcomes in ways that are capable of
being objectively measured and of
producing verifiable results; (3) be
directed toward individual enrollees,
specific groups of enrollees, or other
populations as long as enrollees do not
incur additional costs for populationbased activities; and (4) 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 our
prior MLR rulemaking, we did not
attempt to determine whether all MTM
programs that comply with § 423.153(d)
would necessarily meet the QIA
requirements at § 422.2430 (for MA–PD
contracts) and § 423.2430 (for standalone Part D contracts). Subsequent to
publication of the May 23, 2013 final
rule, we have received numerous
inquiries seeking clarification regarding
whether MTM programs are QIA. To
address those questions and resolve any
ambiguities or uncertainties, we are now
proposing to specifically address MTM
programs in the MLR regulations.
We propose to modify our regulations
at §§ 422.2430 and 423.2430 by adding
new paragraph (a)(4)(i), which specifies
that all MTM programs that comply
with § 423.153(d) and are offered by Part
D sponsors (including MA organizations
that offer MA–PD plans (described in
§ 422.2420(a)(2)) are QIA. Each Part D
sponsor is required to incorporate an
MTM program into its plans’ benefit
structure, and the MTM Program
Completion Rate for Comprehensive
Medication Reviews (CMR) measure has
been included in the Star Ratings as a
metric of plan quality since 2016. We
believe that the MTM programs that we
require improve quality and care
coordination for Medicare beneficiaries.
We also believe that allowing Part D
sponsors to include compliant MTM
programs as QIA in the calculation of
the Medicare MLR would encourage
sponsors to ensure that MTM is better
utilized, particularly among standalone
PDPs that may currently lack strong
incentives to promote MTM.
Furthermore, we have expressed
concern that Part D sponsors may be
restricting MTM eligibility criteria to
limit the number of qualified enrollees,
and we believe that explicitly including
MTM program expenditures in the MLR
numerator as QIA-related expenditures
could provide an incentive to reduce
any such restrictions. This is
particularly important in providing
individualized disease management in
conjunction with the ongoing opioid
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crisis evolving within the Medicare
population. We hope that, by removing
any restrictions or uncertainty about
whether compliant MTM programs will
qualify for inclusion in the MLR
numerator as QIA, the proposed changes
will encourage Part D sponsors to
strengthen their MTM programs by
implementing innovative strategies for
this potentially vulnerable population.
We believe that beneficiaries with
higher rates of medication adherence
have better health outcomes, and that
medication adherence can also produce
medical spending offsets, which could
lead to government and taxpayer
savings in the trust fund, as well as
beneficiary savings in the form of
reduced premiums. We solicit comment
on these proposed changes.
(3) Additional Technical Changes to
Calculation of the Medical Loss Ratio
(§§ 422.2420 and 423.2420)
We are also proposing technical
changes to the MLR provisions at
§§ 422.2420 and 423.2420. In
§ 422.2420(d)(2)(i), we are replacing the
phrase ‘‘in § 422.2420(b) or (c)’’ with the
phrase ‘‘in paragraph (b) or (c) of this
section’’. In § 423.2430, the regulatory
text includes two paragraphs designated
as (d)(2)(ii). We propose to resolve this
error by amending § 423.2420 as
follows:
• Revise paragraph (d)(2)(i) by adding
at the end the text of the first paragraph
designated as (d)(2)(ii).
• Remove the first paragraph
designated as (d)(2)(ii).
c. Proposed Regulatory Changes to
Medicare MLR Reporting Requirements
(§§ 422.2460 and 423.2460)
Our general approach when
developing the current Medicare MLR
regulations was to align the Medicare
MLR requirements with the commercial
MLR requirements. Consistent with this
policy, 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. However, as noted previously,
we also recognized that there are some
areas where the unique characteristics
of the MA and Part D programs make it
appropriate for the Medicare MLR
reporting requirements to deviate from
the rules that apply to commercial MLR
reporting. Most beneficiaries are
enrolled in plans offered by MA
organizations and Part D sponsors that
also participate in the commercial
market, and these entities are familiar
with the commercial MLR forms that
they have had to submit since 2012 for
the 2011 benefit year. In practice,
however, these forms and reports have
not been identical. We have become
concerned, after having received two
annual Medicare MLR reports at the
time that this proposed rule is being
published, that requiring health
insurance issuers to complete a
substantially different set of forms for
Medicare MLR purposes has created an
unnecessary additional burden. Our
proposal to reduce the burden of the
current Medicare requirement for MLR
reporting aligns with the directive in the
January 30, 2017 Presidential Executive
Order on Reducing Regulation and
Controlling Regulatory Costs to manage
the costs associated with the
governmental imposition of private
expenditures required to comply with
Federal regulations.
It is with these concerns in mind that
we are proposing to reduce the current
reporting burden to require the
minimum amount of information
needed for MLR reporting by
organizations with contracts to offer
Medicare benefits. Specifically, we are
proposing that the Medicare MLR
reporting requirements would be
limited to the following data fields, as
shown in Table 12: Organization name,
contract number, adjusted MLR (which
would be populated as ‘‘Not
Applicable’’ or ‘‘N/A’’ for non-credible
contracts as determined in accordance
with §§ 422.2440(d) and 423.2440(d)),
and remittance amount. We solicit
comment on these proposed changes.
TABLE 12—MLR REPORTING FOR FULLY CREDIBLE, PARTIALLY CREDIBLE, AND NON-CREDIBLE CONTRACTS
Organization
Contract No.
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ABC, Inc .......................................................................................................................................
XYZ, LLC .....................................................................................................................................
MAO1, LLC ..................................................................................................................................
We believe that it is important to note
that although we are proposing a
significant reduction in the amount of
data that MA organizations and Part D
sponsors must report to us, we are not
proposing to change our authority under
§ 422.2480 or § 423.2480 to conduct
selected audit reviews of the data
reported under §§ 422.2460 and
423.2460 to determine that remittance
amounts under §§ 422.2410(b) and
423.2410(b) and sanctions under
§§ 422.2410(c), 422.2410(d),
423.2410(c), and 423.2410(d) were
accurately calculated, reported, and
applied. Moreover, MA organizations
and Part D sponsors would continue to
be required to retain documentation
supporting the MLR figure reported and
to make available to CMS, HHS, the
Comptroller General, or their designees
any information needed to determine
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whether the data and amounts
submitted with respect to the Medicare
MLR are accurate and valid, in
accordance with §§ 422.504 and
423.505.
In addition, we have realized that the
MLR Reporting Requirements at
§ 422.2460 do not include provisions
that correspond to the provisions
currently codified at § 423.2460(b) and
(c). In the February 22, 2013 proposed
rule (78 FR 12435), we proposed that
the total revenue reported by MA
organizations and Part D sponsors for
MLR purposes would be net of all
projected reconciliations, and that each
MA and Part D contract’s MLR would
only be reported once and would not be
reopened as a result of any payment
reconciliation processes. In the May 23,
2013 final rule (78 FR 31293), we
finalized these proposals without
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H1234
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H4321
Adjusted MLR
(%)
90.1
84.8
N/A
Remittance
amount
$0
17,420
N/A
change. Although we explicitly
proposed that both MA organizations
and Part D sponsors would be required
to report their revenues net of all
projected reconciliations (78 FR 12435),
and we did not indicate that only Part
D sponsors would be affected by our
proposal for each contract’s MLR to be
reported once and not reopened as a
result of any payment reconciliation
process (our discussion of this proposal
in the final rule addressed how this
policy would apply to both MA
organizations and Part D sponsors (78
FR 31293)), regulatory provisions
implementing the finalized proposals
were only included in the Part D
regulations, where they currently appear
at § 423.2460(b) and (c); corresponding
regulatory text was not added to the MA
regulations. We are proposing to make
a technical change to § 422.2460 by
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incorporating provisions which parallel
the language of current paragraphs (b)
and (c) of § 423.2460 for purposes of the
reporting requirements for contract year
2014 and subsequent contract years.
This proposed technical change does
not establish any new rules or
requirements for MA organizations; it
merely updates regulatory references
that were overlooked in previous
rulemaking.
In summary, we are proposing to
revise the regulations at §§ 422.2460 and
423.2460 as follows:
• In § 422.2460, redesignate the
existing regulation text as paragraph (a).
• Revise newly designated
§§ 422.2460(a) and 423.2460(a) by
adding ‘‘from 2014 through 2017’’ after
the phrase ‘‘For each contract year’’ in
the first sentence to limit the more
detailed MLR reporting requirement to
that period, making minor grammatical
changes to clarify the text, and by
adding ‘‘under this part’’ to modify the
phrase ‘‘for each contract’’.
• In § 423.2460, redesignate existing
paragraphs (b) and (c) as paragraphs (c)
and (d), respectively.
• In §§ 422.2460 and 423.2460, add a
new paragraph (b) to require MA
organizations and Part D plan sponsors
with—
++ Fully credible and partially
credible experience to report the MLR
for each contract for the contract year
along with the amount of any owed
remittance; and
++ Non-credible experience, to report
that such experience was non-credible.
For each, the proposed text crossreferences the applicable regulations for
the determination of credibility, and for
the general remittance requirement.
• In newly redesignated
§ 423.2460(c), revise the text to refer to
total revenue included in the MLR
calculation rather than reports of that
information.
• Add new paragraphs (c) and (d) to
§ 422.2460 that mirror the text in
§ 423.2460(c) and (d), as redesignated
and revised.
d. Proposed Technical Changes to
Medicare MLR Review and NonCompliance and the Release of MLR
Data (§§ 422.2410, 422.2480, 422.2490,
423.2410, 423.2480, and 423.2490)
We are proposing technical changes to
the General Requirements, MLR review
and non-compliance, and Release of
MLR data provisions at §§ 422.2410,
422.2480, 422.2490, 423.2410, 423.2480,
and 423.2490. These changes are being
proposed in conformity with the more
substantive regulatory text changes
being proposed herein. These proposed
technical changes do not establish any
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new rules or requirements for MA
organizations or Part D sponsors. The
proposed technical changes revise
references to MLR reports in conformity
with our proposal to scale back
Medicare MLR reporting so that we only
require the submission of a limited
number of data points, as opposed to a
full report.
2. Medicare Advantage Contract
Provisions (§ 422.504)
Under the authority of section 1857(b)
of the Act, CMS may enter into a
contract with a Medicare Advantage
(MA) organization, through which the
organization agrees to comply with
applicable requirements and standards.
CMS has established and codified
provisions of contracts between the MA
organization and CMS at § 422.504. This
proposed rule seeks to correct an
inconsistency in the text that identifies
the contract provisions deemed material
to the performance of an MA contract.
Section 422.504(a) sets forth
regulations and instructions at
paragraphs (1) through (15) that are
material to the performance of the MA
contract in accordance to
§ 422.504(a)(16). This is inconsistent
with the introductory regulatory text at
§ 422.504(a), which provides, ‘‘An MA
organization’s compliance with
paragraphs (a)(1) through (a)(13) of this
section is material to performance of the
contract.’’ Further, both paragraphs (a)
and (a)(15) fail to mention paragraphs
(a)(17) and (a)(18).
We propose to correct the inconsistent
language by revising the language in the
introductory text in § 422.504(a) and
deleting paragraph § 422.504(a)(16).
With this revision, We will renumber
current paragraphs §§ 422.504(a)(17)
and (a)(18). The proposed revision to
the paragraph (a) introductory text
would provide that compliance with all
contract terms listed in paragraph (a) is
material.
3. Late Contract Non-Renewal
Notifications (§§ 422.506, 422.508, and
423.508)
Pursuant to section 1857(c)(1) of the
Act, CMS enters into contracts with MA
organizations for a period of 1 year. As
implemented by CMS pursuant to that
provision, these contracts automatically
renew absent notification by either CMS
or the MA organization to terminate the
contract at the end of the year. Section
1860D–12(b)(3)(B) of the Act makes this
same process applicable to CMS
contracts with Part D plan sponsors.
CMS has implemented these provisions
in regulations that permit MA
organizations and Part D plan sponsors
to non-renew their contracts, with CMS
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approval and consent necessary
depending on the timeframe of the
sponsoring organization’s notice to CMS
that a non-renewal is desired. We are
proposing to clarify its operational
policy that any request to terminate a
contract after the first Monday in June
is considered a request for termination
by mutual consent.
Under § 422.506(a)(2)(i) and
§ 423.507(a)(2)(i), contract non-renewals
effective at the end of the 1-year
contract term must be submitted to CMS
in writing by the first Monday in June.
There may be instances where CMS
accepts a late non-renewal notice after
the first Monday in June for an MA
contract if the non-renewal is consistent
with the effective and efficient
administration of the contract under
§ 422.506(a)(3). There is no
corresponding regulatory provision
affording CMS such discretion for Part
D contracts.
We have seen that many MA
organizations do not understand that
CMS treats non-renewals requested after
the first Monday in June as an
organization’s request for a mutual
termination pursuant to § 422.508 when
determining whether it is in the best
interest of the Medicare program to
permit non-renewals in applying
§ 422.506(a)(3). Organizations that
request a non-renewal of their contract
after the first Monday in June, must
receive written confirmation from CMS
of the termination by mutual consent
pursuant to § 422.508(a) (and
§ 423.508(a) if an MA–PD plan) to be
effectively relieved of their obligation to
participate in the MA or Part D
programs during the upcoming contract
year. CMS has received a number of late
non-renewal requests and has received
questions from MA organizations
inquiring why their request was not
treated as a contract non-renewal, but
rather as a termination by mutual
consent.
We propose to modify § 422.506(a)(3)
to remove language that indicates late
non-renewals may be permitted by CMS
so that there would only be one
process—mutual termination under
§§ 422.508—that is applicable if CMS is
not taking action under § 422.506(b) or
§ 422.510. Also, we propose to amend
§§ 422.508 and 423.508 to clarify that
organizations that request to non-renew
a contract after the first Monday in June
are in effect requesting that CMS agree
to mutually terminate their contract.
4. Contract Request for a Hearing
(§§ 422.664(b) and 423.652(b))
Under the authority of section 1857(a)
of the Act, CMS enters into contracts
with MA organizations which authorize
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them to offer MA plans to Medicare
beneficiaries. Similarly, CMS contracts
with Part D plan sponsors according to
section 1860D–12(a) of the Act. CMS
determines that an organization is
qualified to hold an MA contract
through the application process
established at 42 CFR 422, Subpart K.
CMS evaluates the qualifications of
potential Part D plan sponsors according
to Subpart K of 42 CFR, part 423. If CMS
denies an application, organizations
have the right to appeal CMS’s decision
(under § 422.502(c)(3)(iii) and
§ 423.503(c)(3)(iii) using the procedures
in subparts N of part 422 and part 423).
This proposed rule seeks to correct an
inconsistency in the text that identifies
CMS’s deadline for rendering its
determination on appeals of application
denials.
According to § 422.660(c) and
§ 423.650(c), CMS must issue a
determination on appealed application
denials by September 1 in order to enter
into an MA contract for coverage
starting January 1 of the following year.
We codified this September 1 deadline
in the April 15, 2010, final rule (45 FR
19699). As stated in the in the 2009
proposed rule (74 FR 54650 and 54651),
we proposed to modify § 422.660(c) and
§ 423.660(c), which then specified that
the notice of any decision favorable to
a Part C or D applicant must be issued
by July 15 for the contract in question
to be effective on January 1 of the
following year. However, in that
rulemaking, we inadvertently
overlooked other regulatory provisions
that address the date by which a
favorable decision must be made on an
appeal of a CMS determination that an
entity is not qualified for a Part C or Part
D contract.
There is an inconsistency in
regulations regarding the date by which
an MA organization must receive a
decision from CMS on an appeal.
Section 422.660(c) specifies that a
notice of any decision favorable to the
MA organization appealing a
determination that it is not qualified to
enter into a contract with CMS must be
issued by September 1 for the contract
to be effective on January 1. However,
§ 422.664(b)(1) specifies that if a final
decision is not reached by July 15, CMS
will not enter into a contract with the
applicant for the following year.
Similarly, there is an inconsistency in
regulations regarding the date by which
a Part D sponsor must receive a CMS
decision on an appeal. Section
423.650(c) specifies that a notice of any
decision favorable to the MA
organization appealing a determination
that it is not qualified to enter into a
contract with CMS must be issued by
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September 1 to be effective on January
1. However, § 423.652(b)(1) specifies
that if a final decision is not reached on
CMS’s determination for an initial
contract by July 15, CMS will not enter
into a contract with the applicant for the
following year.
We propose to modify § 422.664(b)(1)
and § 423.652(b)(1) to align with the
September 1 date codified in
§ 422.660(c) and § 423.650(c), which
was codified on April 15, 2010.
5. Physician Incentive Plans—Update
Stop-Loss Protection Requirements
(§ 422.208)
Pursuant to section 1852(j)(4), MA
organizations that operate physician
incentive plans must meet certain
requirements, which CMS has
implemented in § 422.208. MA
organizations must provide adequate
and appropriate stop-loss insurance to
all physicians or physician groups that
are at substantial financial risk under
the MA organization’s physician
incentive plan (PIP). The current stoploss insurance deductible limits are
identified in a table codified at
§ 422.208(f)(2)(iii).
Under the current regulation, an MA
organization that operates a PIP must
provide stop-loss protection for 90
percenter of actual costs of referral
services that exceed the per patient
deductible limit to all physicians and
physician groups at financial risk under
the PIP. The stop-loss protection may be
per patient or aggregate. The current
regulation contains a chart that
identifies per-patient stop-loss
deductible limits for single combined;
separate institutional; and separate
professional insurance. The current
regulation establishes requirements for
stop-loss attachment points
(deductibles) based on the patient panel
size and does not distinguish between
at-risk or non-at-risk patients in that
panel. There is no requirement for an
MA organization to provide stop-loss
protection when the physician or
physician group has a panel of risk
patients of more than 25,000; we are not
proposing to change to this requirement.
In recent years, CMS has received a
number of requests to update the stoploss insurance limits associated with
PIP arrangements to better account for
medical costs and utilization changes
that have occurred since the final rule
was published in the June 29, 2000
Federal Register (65 FR 40325) on.
We are not proposing to change the
requirements that the MAO (in
connection with the PIP) must provide
aggregate stop-loss protection for 90
percentage of actual costs of referral
services that are greater than 25 percent
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56461
of potential income to all physicians
and physician groups at financial risk
under the PIP and that no stop-loss
protection is required when the panel
size of the physician or physician group
is above 25,000. We are proposing three
changes to update the existing
regulation:
• Update the stop-loss deductible
limits at § 422.208(f)(2)(iii) and codify
the methodology that CMS would use to
update the stop-loss deductible limits in
the future to account for changes in
medical cost and utilization;
• Authorize, at paragraph
§ 422.208(f)(3), MA organizations to use
actuarially equivalent arrangements to
protect against substantial financial loss
under the PIP due to the risks associated
with serving particular groups of
patients.
• Modify paragraph 422.208(f)(2) to
allow non-risk patient equivalents
(NPEs), such as Medicare Fee-ForService patients (FFS), who obtain some
services from the physician or physician
group to be included when determining
the deductible.
We do not believe that other
substantive requirements set forth in the
PIP regulation, such as the
determination of substantial financial
risk based on a risk threshold of 25
percent of potential payments (see
§ 422.208(d)(2)), need to be updated
regularly or have been rendered obsolete
in the years since the regulation was
initially adopted. Although we are not
proposing a change to the determination
of ‘‘substantial financial risk,’’ we
appreciate that the regulatory standard
(25% of potential payments) in
§ 422.208(d)(2) was adopted many years
ago. Therefore, we seek comment on
whether the definitions of ‘‘substantial
financial risk’’ and ‘‘risk threshold’’
contained in the current regulation
should be revisited, including whether
the current identification of 25 percent
of potential payments codified in
paragraph (d)(2) remains appropriate as
the standard in light of changes in
medical cost.
b. Update Deductible Limits and Codify
Methodology
Because of increases in medical costs
and changes in utilization since the
current regulatory standards for PIP
stop-loss insurance were adopted, we
are concerned that the current
regulation requires stop-loss insurance
on more generous and more expensive
terms than is necessary. Our goal in
developing this proposal was to identify
the point at which most, if not all,
physicians and physician groups would
be subject to the substantial loss so that
the requirement for the provision of
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stop-loss protection and the parameters
of that protection would be tailored to
address that risk. We intend to avoid
regulatory requirements that require
protection that is broader than the
minimum required under the statute. In
developing the new minimum
attachment points for the stop-loss
protection that is required under the
statute, one goal is to provide flexibility
to MA organizations and the physicians
and physician groups that participate in
PIPs in selecting between combined
stop-loss insurance and separate
professional services and institutional
services stop loss insurance.
In order to develop the specific
attachment points, we engaged in a
data-driven analysis using Part A and
Part B claims data from 340,000
randomly selected beneficiaries from
2016. We assumed a multi-specialty
practice and we estimated medical
group income based on FFS claims,
including payments for all Part A and
Part B services. We used the central
limit theorem to calculate the
distribution of claim means for a multispecialty group of any given panel size.
This distribution was used to obtain,
with 98% confidence, the point at
which a multi-specialty group of a given
panel size would, through referral
services, lose more than 25% of its
income derived from services that the
physician or physician group personally
rendered. We used projections of total
income based on services provided
personally by individual physicians and
directly by physician groups because
that is how we interpret ‘‘potential
payments’’ as defined in the existing
regulation. The point at which loss
would exceed 25% of potential
payments was set as the single
combined per patient deductible in
Table 13, which we describe in our
proposed text at § 422.208(f)(2)(iii); we
are not proposing to codify the table, but
to codify the methodology for creating it
so that the table itself may be updated
by CMS as necessary. Nonetheless,
Table 13 would be the table applicable
for contract years beginning on or after
January 1, 2019 until CMS reapplied the
methodology and published an updated
table under our proposal. We performed
the analysis for multiple panel sizes,
which are listed on Table 13. Table 13
also includes a ‘net benefit premium’
(NBP) column, which is used under our
proposal to identify the attachment
points for separate stop-loss insurance
for institutional services and
professional services. This NBP column
is not needed for identification of the
minimum attachment point (maximum
deductible) for combined aggregate
insurance. The NBP is computed by
dividing the total amount of stop-loss
claims (90 percent of claims above the
deductible) for that panel size by the
panel size.
TABLE 13—COMBINED STOP-LOSS INSURANCE DEDUCTIBLES
Single
combined
deductible
400 ...................................................................................................................................................................
800 ...................................................................................................................................................................
1400 .................................................................................................................................................................
2,000 ................................................................................................................................................................
3,300 ................................................................................................................................................................
4,600 ................................................................................................................................................................
5,800 ................................................................................................................................................................
6,900 ................................................................................................................................................................
7,900 ................................................................................................................................................................
10,100 ..............................................................................................................................................................
12,300 ..............................................................................................................................................................
13,500 ..............................................................................................................................................................
14,800 ..............................................................................................................................................................
16,100 ..............................................................................................................................................................
16,800 ..............................................................................................................................................................
17,400–25,000 .................................................................................................................................................
>25,000 ............................................................................................................................................................
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Panel size
$5,000 ................
10,000 ................
15,000 ................
20,000 ................
30,000 ................
40,000 ................
50,000 ................
60,000 ................
70,000 ................
100,000 ..............
150,000 ..............
200,000 ..............
300,000 ..............
500,000 ..............
1,000,000 ...........
2,000,000 ...........
No Stop Loss .....
We propose, at paragraph § 422.208
(f)(2)(iii), other significant provisions.
Proposed paragraph § 422.208
(f)(2)(iii)(A) provides that the table
(published by CMS using the
methodology proposed in paragraph
§ 422.208(f)(2)(iv)) identifies the
maximum attachment point/maximum
deductible for per-patient-combined
insurance coverage that must be
provided for 90% of the costs above the
deductible or an actuarial equivalent
amount. For panel sizes and deductible
amounts not shown in the tables, we
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propose that linear interpolation may be
used to identify the required deductible
for panel sizes between the table values.
In addition, proposed paragraph
§ 422.208(f)(2)(iii)(B) provides that the
table applies only for capitated risk.
In order to provide the attachment
points for separate per patient insurance
for institutional services and
professional services, we propose to use
the NBP from Table 13. This second
table provides separate deductibles for
physician and institutional services.
Table 14 was calculated using a
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Net benefit
premium
(NBP)
PMPY
$5,922
4,891
4,122
3,514
2,612
1,984
1,539
1,216
977
553
267
159
79
428
12
4
0
methodology similar to the calculation
of Table 13. The source for our estimate
of medical group income and
institutional income is derived from
CMS claims files which includes
payments for all Part A and Part B
services. The central limit theorem was
used to obtain the distribution of claim
means, and deductibles were obtained
at the 98 percent confidence level. We
propose to codify the methodology and
assumptions for Table 14 in § 422.208
(f)(2)(vi) and (f)(2)(vii).
BILLING CODE 4120–01–P
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28NOP2
5
1
2
3
Prof{'ssional
Dodnctibk
(in thousands)
5
8
10
12
15
20
25
35
50
75
100
200
No stop loss
'<,899
5,705
5.593
5,468
5.375
5.338
5311
5.28!
5.248
5.227
5,20!
5,181
5.166
5,i 59
5,15!
147
10
5,022
4.829
4,717
4.591
4,499
4,462
4,434
4.404
4.371
4.350
4,32•1
4,30•1
4,289
4,283
4,27~
15
4351
4J57
4,045
3.920
3,828
3. 7 90
3,7(,3
1:733
JJOO
3,679
3,653
J,6:l3
3,61 g
:1,61!
3.603
20
J,g17
:1,624
30
3,021
40
2.471
2.~28
2,277
~U12
2,71G
3.38(,
3.294
3,257
2.590
2,498
2.•161
2A3l
2.403
2.370
2.349
2,323
2,303
2,288
2,282
2.274
2.165
2.1)40
L948
1.910
:u:10
3.!99
3.!67
3.145
3,!19
3,099
3,084
3,078
3.070
3,060
J,gg}
l.R53
1.820
!.799
L77J
L75.l
L738
L73l
L723
50
2.083
1,890
L778
LG5J
],560
1.523
1.496
!466
1,433
!.412
U85
UG6
U'il
L344
1,)36
60
1,804
70
1598
t6H1
1,404
1.498
1,292
U67
I 373
[,281
1.243
1,216
1 )g6
1,153
LLJ2
1.106
1.086
1,()7!
1,064
1.056
]J)75
L037
l,(liO
980
947
926
900
880
86'
858
850
100
1,2B
!,039
927
150
987
794
802
556
464
127
400
710
672
645
615
582
5(;l
535
5!5
500
493
485
682
200
894
700
588
4GJ
300
824
500
778
()jQ
'\84
472
347
254
217
190
!60
127
518
393
301
263
:no
J7J
:;33
306
276
337
243
!73
31()
222
]96
!52
126
106
'Jl
84
76
lOG
72
26
289
269
254
248
240
2J6
176
161
154
146
23()
2:16
80
60
45
38
:JO
1,000
762
2,000
757
No Stop
Loss
752
558
569
563
457
J.ll
239
451
.w;
32G
321
234
1%
229
202
175
144
112
90
M
169
139
lOG
29
23
15
85
59
39
24
17
9
11
5
'14
191
104
134
10!
80
5•1
3,1
l9
!2
4
0
56463
in the second column of Table 13 and
select the corresponding NBP in the
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The physician or physician group
would look up the combined deductible
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third column. If necessary, linear
interpolation would be used. Finally,
the physician or physician group would
select any cell in the table in Table 14
whose numerical entry is greater than or
equal to that NBP. The row and column
labels for this cell are the corresponding
professional and institutional
deductibles for that selection. Any such
selection would meet the requirement of
the basic rule stated in paragraph
(f)(2)(i). We are proposing to codify the
use of this table of deductibles for
separate stop-loss insurance
professional services and institutional
services based on the NBP in paragraph
(f)(2)(v).
We solicit comment on our proposal,
specifically the following:
• Whether our proposed regulation
text at paragraphs (f)(2)(iv), (vi) and (vii)
details the methodology for developing
Tables 13 and 14 in sufficient detail.
• Whether our proposed regulation
text clearly identifies how the tables
would be used.
• Whether we should finalize a
specific schedule, such as annually or
every 3 years for updating the tables
using the proposed methodologies in
order to ensure that the maximum
deductibles are consistent with medical
cost and utilization trends.
d. Actuarially Equivalent Arrangements
Over the past several years, MA
organizations, have requested an update
to the tables as well as additional
flexibilities around protection
arrangements other than combined and
separate per-patient stop-loss insurance.
CMS believes that providing the
flexibility to MA organizations to use
actuarially equivalent arrangements is
appropriate as the nature of the PIP
negotiated between the MA organization
and physicians or physician groups
might necessitate other arrangements to
properly and adequately protect
physicians from substantial financial
risk. Examples where actuarially
equivalent modifications might be
necessary, include: Global capitation
arrangements that include some, but not
all Parts A and B services; stop-loss
policies with different coinsurances;
stop-loss policies that use medical loss
ratios (MLR), which generally pay
specific stop-loss amounts only to the
extent that the overall aggregate MLR for
the physician group exceeds a certain
amount; stop-loss policies for
exclusively primary care physicians;
and risk arrangements on a quota share
basis, which occurs when less than full
capitation risk is transferred from a plan
to a physician or physician group.
Therefore, we propose to add
§ 422.208(f)(3) to permit MA
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organizations to use other stop-loss
protection arrangements; the proposal
would allow actuaries to develop
actuarially equivalent special
insurances that are: Appropriately
developed for the population and
services furnished; in accordance with
generally accepted actuarial principles
and practices; and certified as meeting
these requirements by actuaries who
meet the qualification standards
established by the American Academy
of Actuaries and follow the practice
standards established by the Actuarial
Standards Board. Under this proposal,
CMS would review the attestation of the
actuary certifying the special insurance
arrangement. We solicit comment
whether these proposed standards
provide sufficient flexibility to MA
organizations and physicians.
c. Non-Risk Patient Equivalents
Included in Panel Size
We believe that the number of a
physician group’s non-risk patients
should be taken into account when
setting stop loss deductibles for risk
patients. For example a group with
50,000 non-risk patients and 5,000 risk
patients needs less protection than a
group with only 3,000 non-risk patients
and 5,000 risk patients. We propose, at
§ 422.208(f)(2)(iii) and (v), to allow nonrisk patient equivalents (NPEs), such as
Medicare Fee-For-Service patients, who
obtain some services from the physician
or physician group to be included in the
panel size when determining the
deductible. Under our proposal, NPEs
are equal to the projected annual
aggregate payments to a physician or
physician group for non-global risk
patients, divided by an estimate of the
average capitation per member per year
(PMPY) for all non-global risk patients,
whether or not they are capitated. Both
the numerator and denominator are for
physician services that are rendered by
the physician or physician group. We
propose that the deductible for the stoploss insurance that is required under
this regulation would be the lesser of:
(1) The deductible for globally capitated
patients plus up to $100,000 or (2) the
deductible calculated for globally
capitated patients plus NPEs. The
deductible for these groups would be
separately calculated using the tables
and requirements in our proposed
regulation at paragraph (f)(2)(iii) and (v)
and treating the two groups (globally
capitated patients and globally capitated
patients plus NPEs) separately as the
panel size. We propose the same
flexibility for combined per-patient
stop-loss insurance and the separate
stop-loss insurances. We solicit
comment on this proposal.
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6. Changes to the Agent/Broker
Compensation Requirements
(§§ 422.2274 and 423.2274)
Sections 103(b)(1)(B) and 103(b)(2) of
the Medicare Improvements for Patients
and Providers Act (MIPPA) revised
section 1851(j)(2)(D) of the Act to charge
the Secretary with establishing
guidelines to ‘‘ensure that the use of
compensation creates incentives for
agents/brokers to enroll individuals in
the MA plan that is intended to best
meet their health care needs.’’ Section
103(b)(2) of MIPPA revised section
1860D–4(l)(2) of the Act to apply these
same guidelines to Part D sponsors. We
believe agents/brokers play a significant
role in providing guidance and are, as
such, in a unique position to influence
beneficiary choice. CMS implemented
these MIPPA-related changes in a May
23, 2014 final rule (79 FR 29960). The
2014 final rule revised the provisions
previously established in the interim
final rule (IFR) adopted on September
18, 2008 (73 FR 554226).
The IFR had established the previous
compensation structure for agents/
brokers as it applied to the MA and Part
D programs. In particular, the IFR
limited compensation for renewal
enrollments to no greater than 50
percent of the rate paid for the initial
enrollment on a 6-year cycle. This
structure had proven to be complicated
to implement and monitor, as it
required the MA organization or Part D
sponsor to track the compensation paid
for every enrollee’s initial enrollment
and calculate the renewal rate based on
that initial payment. To the extent that
there was confusion about the required
levels of compensation or the timing of
compensation, it seemed that there was
an uneven playing field for MA
organizations and Part D sponsors
operating in the same geographic area.
In addition to the many inquiries from
MA organizations and Part D sponsors
regarding the correct calculation of
agent/broker compensation, CMS found
it necessary to take compliance actions
against MA organizations and Part D
sponsors for failure to comply with the
compensation requirements. CMS’s
audit findings and monitoring efforts
performed after implementation of the
IFR showed that MA organizations and
Part D sponsors were having difficulty
correctly administering the
compensation requirements.
Also, we were concerned that the
structure as it existed before the 2014
revisions created an incentive for
agents/brokers to move enrollees from a
plan of one parent organization to a plan
of another parent organization, even for
like plan-type changes. That
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compensation structure resulted in
different payments when a beneficiary
moved from one plan to another like
plan in a different organization. In such
situations, the new parent organization
would pay the agent 50 percent of the
current initial rate of the new parent
organization; not 50 percent of the
initial rate paid by the prior parent
organization. Thus, in cases where the
fair market value (FMV) for
compensation had increased, or the
other parent organization paid a higher
commission, an incentive existed for the
agent to move beneficiaries from one
parent organization to another, rather
than supporting the beneficiary’s
continued enrollment in the prior
parent organization.
In a 2014 proposed rule (79 FR 1918),
we proposed to simplify agent/broker
compensation rules to help ensure that
plan payments were correct and
establish a level playing field that
further limited the incentive for agents/
brokers to move enrollees for financial
gain rather than for the beneficiary’s
best interest. In the final rule published
on May 23, 2014, we codified technical
changes to the language established by
the IFR relating to agent/broker
compensation, choosing instead to link
payment rates for renewal enrollments
to current FMV rates rather than the rate
paid for the original (that is, initial)
enrollment. These changes also
effectively removed the 6-year cycle
from the payment structure. We codified
these changes in §§ 422.2274(a), (b), and
(h) for MA organizations and
§§ 423.2274(a), (b), and (h) for Part D
sponsors.
At that time, we should have also
proposed to remove the language at
§ 422.2274(b)(2)(i), § 422.2274(b)(2)(ii),
§ 423.2274(b)(2)(i), and
§ 423.2274(b)(2)(ii), but we failed to do
so. Since then, this language is no
longer relevant, as the current
compensation structure is not based on
the initial payment. However, it has
created confusion among plan staff and
brokers.
We propose to make a technical
correction to the existing regulatory
language at § 422.2274(b) and
§ 423.2274(b). We propose to remove the
language at §§ 422.2274(b)(2)(i),
422.2274(b)(2)(ii), 423.2274(b)(2)(i), and
423.2274(b)(2)(ii). Additionally, we
would renumber the existing provisions
under § 422.2274(b) and § 423.2274(b)
for clarity.
7. Changes to the Agent/Broker
Requirements (§§ 422.2272(e) and
423.2272(e))
Section 1851(h)(7) of the Act directs
CMS to act in collaboration with the
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states to address fraudulent or
inappropriate marketing practices. In
particular, section 1851(h)(7)(A)(i) of the
Act requires that MA organizations only
use agents/brokers who have been
licensed under state law to sell MA
plans offered by those organizations.
Section 1860D–4(l)(4) of the Act
references the requirements in section
1851(h)(7) of the Act and applies them
to Part D sponsors. We have codified the
requirement in §§ 422.2272(c) and
423.2272(c).
In the April 15, 2011, final rule (76 FR
21503 and 21504), we codified a
provision in §§ 422.2272(e) and
423.2272(e) that required MA
organizations and Part D sponsors to
terminate any employed agent/broker
who became unlicensed. The provision
also required MA organizations and Part
D sponsors to notify any beneficiaries
enrolled by the unqualified agent/broker
of that agent/broker’s status. Finally, the
provision specified that the MA
organization or Part D sponsor must
comply with any request from the
beneficiary regarding the beneficiary’s
options to confirm enrollment or make
a plan change if the beneficiary requests
such upon notification of the agent/
broker’s status.
Since implementation of the
provision in §§ 422.2272(e) and
423.2272(e), we have become aware that
the regulation does not allow latitude
for punitive action in situations when a
license lapses. The MA organization or
Part D sponsor may terminate the agent/
broker and immediately rehire the
individual thereafter if licensure has
been already reinstated or prohibit the
agent/broker from ever selling the MA
organization’s or Part D sponsor’s
products again. Discussions with the
industry indicate that these two options
are impractical due to their narrow
limits. We believe agents/brokers play a
significant role in providing guidance to
beneficiaries and are in a unique
position to positively influence
beneficiary choice. However, the statute
directs CMS to require MA
organizations and Part D sponsors to
only use agents/brokers who are
licensed under state law. We do not
intend to change the regulation, at
§§ 422.2272(c) and 423.2272(c),
requiring agent/broker licensure as a
condition of being hired by a plan, and
will continue to review the licensure
status of agents/brokers during those
monitoring activities that focus on MA
organizations’ and Part D sponsors’
marketing activities. CMS believes MA
organizations and Part D sponsors
should determine the level of
disciplinary action to take against
agents/brokers who fail to maintain
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56465
their license and have sold MA/Part D
products while unlicensed, so long as
the MA organization or Part D plan
complies with the remaining statutory
and regulatory requirements.
We propose to delete §§ 422.2272(e)
and 423.2272(e), the provisions that
limit what MA organizations and Part D
sponsors can do when they have
discovered that a previously licensed
agent/broker has become unlicensed.
Nonetheless, CMS may pursue
compliance actions upon discovery of
MA organizations and Part D sponsors
who allow unlicensed agents/brokers to
continue selling their products in
violation of §§ 422.2272(c) and
423.2272(c).
Note that deleting paragraph (e) from
§§ 422.2272 and 423.2272 removes
language describing the opportunity
beneficiaries have to select a different
MA or Part D plan when the broker who
enrolled them was unlicensed at the
time the beneficiaries enrolled.
Removing paragraph (e) from
§§ 422.2272 and 423.2272 does not
eliminate the special enrollment period
(SEP) that enrollees receive when it is
later discovered that their agent/broker
was not licensed at the time of the
enrollment as that SEP exists under the
authority of § 422.62(b)(4).
8. Codification of Certain Medicare
Premium Adjustments as Initial
Determinations (§ 405.924)
Current regulations at § 405.924(a) set
forth Social Security Administration
(SSA) actions that constitute initial
determinations under section 1869(a)(1)
of the Act. These actions at § 405.924(a)
include determinations with respect to
entitlement to Medicare hospital (Part
A) or supplementary medical insurance
(Part B), disallowance of an application
for entitlement; a denial of a request for
withdrawal of an application for
Medicare Part A or Part B, or denial of
a request for cancellation of a request for
withdrawal; or a determination as to
whether an individual, previously
determined as entitled to Part A or Part
B, is no longer entitled to these benefits,
including a determination based on
nonpayment of premiums.
In addition to the actions set forth at
§ 405.924(a), SSA, the Office of
Medicare Hearings and Appeals
(OMHA), and the Departmental Appeals
Board (DAB) also treat certain Medicare
premium adjustments as initial
determinations under section 1869(a)(1)
of the Act. These Medicare premium
adjustments include Medicare Part A
and Part B late enrollment and
reenrollment premium increases made
in accordance with sections 1818,
1839(b) of the Act, §§ 406.32(d),
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sradovich on DSK3GMQ082PROD with PROPOSALS2
408.20(e), and 408.22 of this chapter,
and 20 CFR 418.1301. Due to the effect
that these premium adjustments have on
individuals’ entitlement to Medicare
benefits, they constitute initial
determinations under section 1869(a)(1)
of the Act.
Accordingly, we are proposing to add
a new paragraph (5) to § 405.924(a) to
clarify that these premium adjustments,
made in accordance with sections 1818
and 1839(b) of the Act, §§ 406.32(d) and
408.22 of this chapter, and 20 CFR
418.1301, constitute initial
determinations under section 1869(a)(1)
of the Act. Because this proposed
change seeks only to codify existing
processes related to premium
adjustments, and not to alter existing
processes or procedures, it applies only
to Part A and Part B late enrollment and
reenrollment penalties. Based on
1860D–13(b)(6)(C) of the Act, CMS does
not consider Part D late enrollment and
reenrollment penalties to be initial
determinations. As a result, their appeal
rights stop at the reconsideration level.
9. Eliminate Use of the Term ‘‘NonRenewal’’ To Refer to a CMS-Initiated
Termination (§§ 422.506, 422.510,
423.507 and 423.509)
Section 1857(c)(2) of the Act provides
the bases upon which CMS may make
a decision to terminate a contract with
an MA organization. Under section
1860D 12(b)(3) of the Act, these same
bases are available for a CMS
termination of a Part D sponsor contract,
as section 1860D–12(b)(3) of the Act
incorporates into the Part D program the
Part C bases by reference to section
1857(c)(2). Also, sections 1857(h) and
1860D 12(b)(3)(F) of the Act provide the
procedures CMS must follow in carrying
out MA organization or Part D sponsor
contract terminations.
Although the Act only expressly
refers to terminations, through
rulemaking and subregulatory guidance,
we have created two different processes
relating to severing the contractual
agreement between CMS and an MA
organization or Part D sponsor. In
accordance with sections 1857(h) and
1860D–12(b)(3)(F) of the Act, we have
adopted regulations providing for
distinct contract termination and bases
and procedures for nonrenewal if
contracts. Our regulations at §§ 422.506
and 422.510 provide for the nonrenewal
and termination, respectively, of CMS
contracts with MA organizations. The
Part D regulations provide for similar
procedures with respect to Part D
sponsor contracts at §§ 423.507 and
423.509.
Each nonrenewal provision is divided
into two parts, one governing
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nonrenewals initiated by a sponsoring
organization and another governing
nonrenewals initiated by CMS. Two
features of the nonrenewal provisions
have created multiple meanings for the
term ‘‘nonrenewal’’ in the operation of
the Part C and D programs, contributing,
in some instances, to confusion within
CMS and among contracting
organizations surrounding the use of the
term. The first feature is the difference
between non renewals initiated by
sponsoring organizations and those
initiated by CMS with respect to the
need to establish cause for such an
action. The second is the partial overlap
between CMS’ termination authority
and our nonrenewal authority. We
propose to revise our use of terminology
such that that the term ‘‘nonrenewal’’
only refers to elections by contracting
organizations to discontinue their
contracts at the end of a given year. We
propose to remove the CMS initiated
nonrenewal authority stated at
paragraph (b) from both §§ 422.506 and
423.507 and modify the existing CMS
initiated termination authority at
§§ 422.510 and 423.509 to reflect this
change.
MA organizations and Part D plan
sponsors may elect to end the automatic
renewal provision in Part C or Part D
contracts and discontinue those
contracts with CMS without cause,
simply by providing notice in the
manner and within the timeframes
stated at § 422.506(a) and § 423.507(a).
Thus, organizations are free to make a
business decision to end their Medicare
contract at the end of a given year and
need not provide CMS with a rationale
for their decision. By contrast, CMS may
not end an MA organization or Part D
plan sponsor’s contract through
nonrenewal without establishing that
the contracting organization’s
performance has met the criteria for at
least one of the stated bases for a CMS
initiated contract nonrenewal in
paragraphs (b) of those sections.
Contracting organizations often
respond to changes in the Medicare
markets or changes in their own
business objectives by making decisions
to end or modify their participation in
the Part C and D programs. Thus, these
organizations exercise their nonrenewal
rights under § 422.506(a) and
§ 423.507(a) much more frequently than
CMS conducts contract non renewals
under § 422.506(b) and § 423.507(b). As
a result, within CMS and among
industry stakeholders, the term
‘‘nonrenewal’’ has effectively come to
refer almost exclusively to MA
organization and Part D plan sponsor
initiated contract non renewals.
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The termination authority allows us
to provide notice of such an action at
any time and make it effective at least
30 days after providing such notice to
the contracting organization. By
contrast, CMS may issue a nonrenewal
notice of a contract no later than August
1, and the nonrenewal takes effect at the
end of the current contract year. Yet, the
result of both actions taken by CMS is
the discontinuation, for cause (although
the basis of that cause might be
different), of an organization’s MA or
Part D contract.
The similarities between nonrenewal
and termination are demonstrated by
the extensive but not complete overlap
in bases for CMS action under both
processes. For example, both
nonrenewal authorities incorporate by
reference the bases for CMS initiated
terminations stated in § 422.510 and
§ 423.509. The remaining CMS initiated
nonrenewal bases (any of the bases that
support the imposition of intermediate
sanctions or civil money penalties
(§§ 422.506(b)(iii) and
§ 423.507(b)(1)(ii)), low enrollment in an
individual MA plan or PDP
(§§ 422.506(b)(iv) and 423.507(b)(1)(iii)),
or failure to fully implement or make
significant progress on quality
improvement projects (§ 422.506(b)(i)))
were all promulgated in accordance
with our statutory termination authority
at sections 1857(c)(2) and 1860D–
12(b)(3) of the Act and are all more
specific examples of an organization’s
substantial failure to carry out the terms
of its MA or Part D contract or its
carrying out the contract in an
inefficient or ineffective manner.
Therefore, we propose striking these
provisions from the nonrenewal portion
of the regulation and adding them to the
list of bases for CMS initiated contract
terminations.
Finally, there are aspects of the notice
requirements related to the CMS
initiated nonrenewal authority that are
useful in the administration of the Part
C and D programs and which we
propose preserving in the revised
termination provision. Specifically,
§ 422.506(b)(2)(ii) requires notice to be
provided by mail to a contracting
organization’s enrollees at least 90 days
prior to the effective date of the
nonrenewal, while § 422.510(b)(1)(ii)
requires affected plan enrollees to be
notified within 30 days of the effective
date of the termination. We see a
continuing benefit to the administration
of the Part C and D programs in
retaining the authority to ensure that,
when possible, enrollees can be made
aware of their plan’s discontinuation at
least by October 1 of a given year so that
they can make the necessary plan choice
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during the annual election period.
Therefore, we propose adding
provisions at §§ 422.510(b)(2)(v) and
423.509(b)(2)(v) to require that enrollees
receive notice no later than 90 days
prior to the December 31 effective date
of a contract termination when we make
such determination on or before August
1 of the same year.
III. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.), we are
required to provide 60-day notice in the
Federal Register and solicit public
comment before a collection of
information requirement is submitted to
the Office of Management and Budget
(OMB) for review and approval. In order
to fairly evaluate whether an
information collection should be
approved by OMB, section 3506(c)(2)(A)
of the Paperwork Reduction Act of 1995
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.
56467
In this proposed rule, we are
soliciting public comment on each of
these issues for the following sections of
this document that contain information
collection requirements (ICRs).
A. Wage Data
To derive average costs, we used data
from the U.S. Bureau of Labor Statistics’
(BLS’) May 2016 National Occupational
Employment and Wage Estimates for all
salary estimates (https://www.bls.gov/
oes/current/oes_nat.htm). In this regard,
the following table presents the mean
hourly wage, the cost of fringe benefits
and overhead (calculated at 100 percent
of salary), and the adjusted hourly wage.
TABLE 15—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES
Occupation
code
BLS occupation title
Business Operations Specialist .......................................................................
Compliance Officers ........................................................................................
Computer and Information Systems Managers ...............................................
Computer Programmer ....................................................................................
Health Diagnostic and Treating Practitioners ..................................................
Insurance Claim and Policy Processing Clerk ................................................
Lawyers ............................................................................................................
Medical and Health Service Manager .............................................................
Medical Secretary ............................................................................................
Office and Administrative Support Workers, All Other ....................................
Physicians and Surgeons ................................................................................
Physicians and Surgeons, all other .................................................................
Software Developers and Programmers .........................................................
Word Processors and Typists ..........................................................................
As indicated, we are adjusting our
employee hourly wage estimates by a
factor of 100 percent. This is necessarily
a rough adjustment, both because fringe
benefits and overhead costs vary
significantly from employer to
employer, and because methods of
estimating these costs vary widely from
study to study. Nonetheless, there is no
practical alternative and we believe that
doubling the hourly wage to estimate
total cost is a reasonably accurate
estimation method.
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B. Proposed Information Collection
Requirements (ICRs)
1. ICRs Regarding Passive Enrollment
Flexibilities To Protect Continuity of
Integrated Care for Dually Eligible
Beneficiaries (§ 422.60(g))
In section II.A.9 of this proposed rule,
we are proposing a limited expansion of
passive enrollment authority. More
specifically, the new provisions at
§ 422.60(g) would allow CMS, in
consultation with a state Medicaid
agency, to implement passive
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13–1000
13–1041
11–3021
15–1131
29–1199
43–9041
23–1011
11–9111
43–6013
43–9199
29–1060
29–1069
15–1130
43–9022
enrollment procedures in situations
where criteria identified in the
regulation text are met. We propose the
criteria based on our policy
determination that passive enrollment is
appropriate in those cases to promote
integrated care and continuity of care
for full-benefit dual eligible
beneficiaries who are currently enrolled
in an integrated D–SNP.
Under passive enrollment procedures,
a beneficiary who is offered a passive
enrollment is deemed to have elected
enrollment in a plan if he or she does
not affirmatively elect to receive
Medicare coverage in another way.
Plans to which individuals are passively
enrolled under the proposed provision
would be required to comply with the
existing requirement under § 422.60(g)
to provide a notification. The notice
must explain the beneficiaries’ right to
choose another plan, describe the costs
and benefits of the new plan, how to
access care under the plan, and the
beneficiary’s ability to decline the
enrollment or choose another plan.
Providing notification would include
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Sfmt 4702
Mean hourly
wage
($/hr)
34.54
33.77
70.07
40.95
40.77
19.61
67.25
52.58
16.85
17.33
101.04
98.83
48.11
19.22
Fringe
benefits and
overhead
($hr)
34.54
33.77
70.07
40.95
40.77
19.61
67.25
52.58
16.85
17.33
101.04
98.83
48.11
19.22
Adjusted
hourly wage
($/hr)
69.08
67.54
140.14
81.90
81.54
39.22
134.50
105.16
33.70
34.66
202.08
197.66
96.22
38.44
mailing notices and responding to any
beneficiary questions regarding
enrollment.
We anticipate that there will be
relatively few instances each year in
which passive enrollment occurs under
the new provisions at § 422.60(g). This
is informed by our experience in
implementing passive enrollments
under the existing regulations at
§ 422.60(g), where in recent years there
have been only one to two contract
terminations annually where CMS
allows passive enrollment. We estimate
that approximately one percent of the
373 active D–SNPs would meet the
criteria identified in the regulation text,
and operate in a market where all of the
conditions of passive enrollment are
met and where CMS, in consultation
with a state Medicaid agency,
implements passive enrollment.
Therefore, under the new provisions at
§ 422.60(g), we anticipate only four
additional instances in which CMS
allows passive enrollment each year.
We estimate it would take 10 hours at
$69.08/hr for a business operations
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sradovich on DSK3GMQ082PROD with PROPOSALS2
specialist to develop the initial notice.
We also estimate it would take 1 minute
for a business operations specialist to
electronically generate and submit a
notice for each beneficiary that is
offered passive enrollment. We estimate
that approximately 5,520 full-benefit
dual eligible beneficiaries would be sent
a notice in each instance in which
passive enrollment occurs, which
reflects the average enrollment of
currently active D–SNP plans. Four
instances of passive enrollment
annually would result in 22,080
beneficiaries being sent the notice
(5,520 × 4 organizations) each year.
To develop the initial notice, we
estimate a one-time burden of 40 hours
(4 organizations × 10 hr) at a cost of
$2,763.20 (40 hr × $69.08/hr) or $690.80
per organization ($2,763.20/4
organizations). To electronically
generate and submit a notice to each
beneficiary, we estimate a total burden
of 368 hours (22,080 beneficiaries × 1
min/60) at a cost of $25,421.44 (368 hr
× $69.08/hr) or $6,355.36 per
organization ($25,421.44/4
organizations) annually.
Since we estimate fewer than 10
respondents, the information collection
requirements are exempt (5 CFR
1320.3(c)) from the requirements of the
Paperwork Reduction Act of 1995.
However, we seek comment on our
estimates for the overall number of
respondents and the associated burden.
For 2010, the final year the OEP existed
before the MADP took effect, we found
that approximately 3 percent of
individuals used the OEP. While the
parameters of the old OEP and new OEP
differ slightly, we believe that this
percentage is the best approximation to
determine the burden associated with
this change. In January 2017, there were
approximately 18,600,000 individuals
enrolled in MA plans. Using the 3
percent adjustment, we expect that
558,000 individuals (18.6 million MA
beneficiaries × 0.03), would use the OEP
to make an enrollment change.
2. ICRs Regarding the Restoration of the
MA Open Enrollment Period (§§ 422.60,
422.62, 422.68, 423.38, and 423.40)
In section II.B.1. of this rule, we are
proposing to codify the requirements for
open enrollment and disenrollment
opportunities at §§ 422.60, 422.62,
422.68, 423.38, and 423.40 that would
eliminate the existing MADP and
establish a MA Open Enrollment Period
(OEP). This new OEP revises a previous
OEP which would allow MA-enrolled
individuals the opportunity to make a
one-time election during the first 3
months of the calendar year to switch
MA plans, or disenroll from an MA plan
and obtain coverage through Original
Medicare. Although no new data would
be collected, the burden associated with
this requirement would be the time and
effort that it takes an MA organization
to process an increased number of
enrollment and disenrollment requests
by individuals using this OEP, which is
first available in 2019.
To estimate the potential increase in
the number of enrollments and
disenrollments from the new OEP, we
considered the percentage of MAenrollees who used the old OEP that
was available from 2007 through 2010.
b. MA Organization Estimate (Current
OMB Ctrl# 0938–0753 (CMS–R–267))
There are currently 468 MA
organizations in 2017. Not all MA
organizations are required to be open for
enrollment during the OEP. However,
for those that are, we estimate that this
enrollment period would result in
approximately 1,192 enrollments per
organization (558,000 individuals/468
organizations) during the OEP each
year.
We estimate it would take
approximately 5 minutes at $69.08/hour
for a business operations specialist to
determine eligibility and effectuate the
changes for open enrollment. The
burden for all organizations is estimated
at 46,500 hours (558,000 beneficiaries ×
5 min/60) at a cost of $3,212,220 (46,500
hour × $69.08/hour) or $6,864 per
organization ($3,212,220/468 MA
organizations).
Once the enrollment change is
completed, we estimate that it will take
1 minute at $69.08/hour for a business
operations specialist to electronically
generate and submit a notice to convey
the enrollment or disenrollment
decision for each of the 558,000
beneficiaries. The total burden to
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a. Beneficiary Estimate (Current OMB
Control Number 0938–0753 (CMS–R–
267))
We estimate it would take a
beneficiary approximately 30 minutes
(0.5 hours) at $7.25/hour to complete an
enrollment request. While there may be
some cost to the respondents, there are
individuals completing this form who
are working currently, may not be
working currently or never worked.
Therefore, we used the current federal
minimum wage outlined by the U.S.
Department of Labor (https://
www.dol.gov/whd/minimumwage.htm)
to calculate costs. The burden for all
beneficiaries is estimated at 279,000
hours (558,000 beneficiaries × 0.5 hour)
at a cost of $2,022,750 (279,000 hour ×
$7.25/hour) or $3.63 per beneficiary
($2,022,750/558,000 beneficiaries).
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Sfmt 4702
complete the notices is 9,300 hours
(558,000 notices × 1 min/60) at a cost of
$642,444 (9,300 hour × $69.08/hour) or
$1.15 per notice ($642,444/558,000
notices) or $1,372.74 per organization
($642,444/468 MA organizations).
The burden associated with electronic
submission of enrollment information to
CMS is estimated at 1 minute at $69.08/
hour for a business operations specialist
to submit the enrollment information to
CMS during the open enrollment
period. The total burden is estimated at
9,300 hours (558,000 notices × 1 min/
60) at a cost of $642,444 (9,300 hour ×
$69.08/hour) or $1.15 per notice
($642,444/558,000 notices) or $1,372.74
per organization ($642,444/468 MA
organizations).
Additionally, MA organizations will
have to retain a copy of the notice in the
beneficiary’s records. The burden
associated with this task is estimated at
5 minutes at $34.66/hour for an office
and administrative support worker to
perform record retention for the open
enrollment period. In aggregate we
estimate an annual burden of 46,500
hours (558,000 beneficiaries × 5 min/60)
at a cost of $1,606,110 (46,500 hour ×
$34.66/hour) or $3,431.86 per
organization ($1,606,110/468 MA
organizations).
We estimate a total annual burden for
all MA organizations resulting from this
proposed provision to be 111,600 hours
(46,500 hour + 9,300 hour + 9,300 hour
+ 46,500 hour) at a cost of $6,103,218
($3,212,220 + $642,444 + $642,444 +
$1,606,110). Per organization, we
estimate an annual burden of 238 hours
(111,600 hour/468 MA organizations) at
a cost of $13,041 ($6,103,218/468
organizations). For beneficiaries we
estimate a total annual burden of
279,000 hours at a cost of $2,022,750
and a per beneficiary burden of 30
minutes at $3.63.
The proposed requirements and
burden will be submitted to OMB for
approval under control number 0938–
0753 (CMS–R–267).
3. ICRs Regarding Coordination of
Enrollment and Disenrollment Through
MA Organizations and Effective Dates of
Coverage and Change of Coverage
(§§ 422.66 and 422.68) OMB Control
Number 0938–0753 (CMS–R–267)
In section II.A.8. of this rule we
propose to revise § 422.66 and 422.68
by: Codifying the requirements for
default enrollment that are currently set
out in subregulatory guidance,60
60 Chapter 2 of the Medicare Managed Care
Manual found at https://www.cms.gov/Medicare/
Eligibility-and-Enrollment/MedicareMangCare
EligEnrol/?redirect=/MedicareMangCare
EligEnrol/.
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revising current practice to limit the use
of this type of enrollment mechanism,
and clarifying the effective date for ICEP
elections. This would provide an MA
organization the option to enroll its
Medicaid managed care enrollees who
are newly eligible for Medicare into an
integrated D–SNP administered by the
same MA organization that operates the
Medicaid managed care plan. While our
proposal restricts its use to individuals
in the organization’s Medicaid managed
care plan that can be enrolled into an
integrated D–SNP, the estimated burden
for an organization that desires to use
default enrollment and obtain CMS
approval would not change. For those
MA organizations that want to use this
enrollment mechanism and request and
obtain CMS approval, the administrative
requirements would remain unchanged
from the current practice. Enrollment
requirements and burden are currently
approved by OMB under control
number 0938–0753 (CMS–R–267). Since
this proposed rule would not impose
any new or revised requirements/
burden, we are not making any changes
to that control number.
4. ICRs Regarding Timing and Method
of Disclosure Requirements
(§§ 422.111(a)(3) and (h)(2)(ii) and
423.128(a)(3) and 423.128(d)(2)) (OMB
Control Number 0938–1051)
sradovich on DSK3GMQ082PROD with PROPOSALS2
a. Timing of Disclosure (§§ 422.111(a)(3)
and 423.128(a)(3))
In section II.B.4. of this rule, we
propose to revise the timing and method
of disclosing the information as required
under § 422.111(a) and (b) and the
timing of such disclosures under
§ 423.128(a) and (b). These regulations
provide for disclosure of plan content
information to beneficiaries. We would
revise §§ 422.111(a)(3) and 423.128(a)(3)
by requiring MA plans and Part D
sponsors to provide the information in
§§ 422.111(b) and 423.128(b) by the first
day of the annual enrollment period,
rather than 15 days before that period.
Plans must still distribute the ANOC 15
days prior to the AEP. In other words,
the proposed provision would provide
the option of either submitting the EOC
with the ANOC or waiting until the first
day of the AEP, or sooner, for
distribution. The provision simply gives
plans that may need some flexibility the
ability to rearrange schedules and defer
a deadline. Consequently, there is no
change in burden.
b. Method of Disclosure
(§§ 422.111(h)(2) and 423.128(d)(2))
(OMB Control Number 0938–1051)
Sections 422.111(h)(2)(i) and
423.128(d)(2)(i) require that plans
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maintain a Web site which contains the
information listed in §§ 422.111(b) and
423.128(b). Section 422.111(h)(2)(ii)
states that the posting of the EOC,
Summary of Benefits, and provider
network information on the plan’s Web
site ‘‘does not relieve the MA
organization of its responsibility under
§ 422.111(a) to provide hard copies to
enrollees.’’ There is no parallel to
§ 422.111(h)(2)(ii) in § 423.128 for Part D
sponsors. Further, § 423.128(a) includes
language providing that disclosures
required under that section be ‘‘in the
manner specified by CMS.’’
In § 422.111(h)(2)(ii), we propose to
modify the sentence which states that
posting the EOC, Summary of Benefits,
and provider network information on
the plan’s Web site does not relieve the
plan of its responsibility to provide hard
copies of these documents to
beneficiaries ‘‘upon request.’’ In
addition, we propose to add the phrase
‘‘in the manner specified by CMS’’ in
paragraph (a). These proposed revisions
would give CMS the authority to permit
MA plans the flexibility to provide the
information in § 422.111(b)
electronically when specified by CMS as
a permissible delivery option, and better
aligns with the provisions under
§ 423.128. We intend to continue to
specify hardcopy mailing, as opposed to
electronic delivery, for most documents
that convey the type of information
described in paragraph (b). CMS intends
that provider and pharmacy directories,
the plan’s Summary of Benefits, and
EOC documents would be those for
which electronic posting and delivery of
a hard copy upon request are
permissible. Electronic delivery would
reduce plan burden by reducing
printing and mailing costs.
Additionally, the IT systems of the
plans are already set up to format and
print these documents. Also, plans must
provide hard copies upon request. To
estimate the cost of printing these
documents, we note that the CMS
Trustee’s report, accessible at https://
www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/ReportsTrustFunds/, lists 47.8
million beneficiaries in MA, Section
1876 cost,61 and Prescription Drug
contracts for contract year 2019.
Based on reports from the
InternetSociety.org and Pew Research
Center,62 we estimate that 33 percent of
61 Per 42 CFR 417.427, cost plans must comply
with § 422.111 and § 423.128.
62 Global Internet Report, 2017, Internet Society,
https://www.internetsociety.org/globalinternetreport/
2016/?gclid=EAIaIQobChMI-tz1nN_W1QIVgoKzCh1
EVggBEAAYASAAEgLpj_D_BwE and ‘‘Tech
Adoption Climbs Among Older Adults,’’ Pew
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56469
these beneficiaries who are in MA and
Prescription Drug contracts would
prefer to opt in to receiving hard copies
to receiving electronic copies. Thus, the
savings comes from the 67 percent of
beneficiaries who are in MA and
Prescription Drug contracts that will not
opt in to having printed copies mailed
to them, namely 67 percent × 47.8 =
32,026,000 individuals.
The major expenses in printing an
EOC include paper, toner, and mailing
costs. The typical EOC has 150 pages.
Typical wholesale costs of paper are
between $2.50 and $5.00 for a ream of
500 sheets. We assume $2.50 per ream
of 500 sheets. Since each EOC has 150
pages, we are estimating a cost of $0.75
per EOC [$2.50/(150 pages per EOC/500
sheets per ream)]. Thus, we estimate
that the total savings from paper is
$24,019,500 (32,026,000 EOCs × $0.75
per EOC).
Toner costs can range from $50 to
$200 and each toner can last 4,000 to
10,000 pages. We conservatively
assumes a cost of $50 for 10,000 pages.
Each toner would print 66.67 EOCs
(10,000 pages per toner/150 pages per
EOC) at a cost of $0.005 per page ($50/
10,000 pages) or $0.75 per EOC ($0.005
per page × 150 pages). Thus, we
estimate that the total savings on toner
is $24,019,500 ($0.75 per EOC ×
32,026,000 EOCs).
Regarding mailing costs, since a ream
of paper with 2,000 8.5 inches by 11
inches pages weighs 20 pounds or 320
ounces it then follows that 1 sheet of
paper weighs 0.16 ounces (320 ounces/
2,000 pages). Therefore, a typical EOC of
150 pages weighs 24 ounces (0.016
ounces/page × 150 pages) or 1.5 pounds.
Since commercial mailing rates are 13.8
cents per pound, the total savings in
mailings is $6,629,382 ($0.138/pounds ×
1.5 pound × 32,026,000 EOCs).
In aggregate, we estimate a savings (to
plans for not producing and mailing
hardcopy EOCs) of $54,668,382
($24,019,500 + $24,019,500 +
$6,629,382). We will submit the
proposed requirements and burden to
OMB for approval under OMB control
number 0938–1051 (CMS–10260).
5. ICRs Regarding the Removal of
Quality Improvement Project for
Medicare Advantage Organizations
(§ 422.152) (OMB Control Number
0938–1023)
In section II.B.12. of this rule, we are
proposing the removal of the Quality
Improvement Project (QIP) requirements
(and CMS-direction of QIPs) from the
Quality Improvement (QI) Program
Research Center, https://www.pewinternet.org/2017/
05/17/tech-adoption-climbs-among-older-adults/.
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requirements, which would result in an
annual savings of $12,663.75 to MA
organizations. The driver of the
anticipated savings is the removal of
requirements to attest having a QIP
annually.
To derive our savings, we estimate
that it takes 1 MA organization staff
member (BLS: Compliance Officer) 15
minutes (0.25 hour) at $67.54/hour to
submit a QIP attestation. Currently,
there are 750 MA contracts, and each
contract is required to submit a QIP
attestation. Therefore, we anticipate that
there will be 750 QIP attestations
annually.
Using these assumptions, we estimate
that the removal of the QIP provision
will result in a total savings of 187.5
hours (750 contracts × 0.25 hour) at
$12,663.75 (187.5 hour × $67.54/hour)
or $16.89 per contact ($12,663.75/750
contracts).
The proposed requirements and
burden will be submitted to OMB for
approval under control number 0938–
1023 (CMS–10209).
6. ICRs Regarding Medicare Advantage
Quality Rating System (§§ 422.162,
422.164, 422.166, 422.182, 422.184, and
422.186)
sradovich on DSK3GMQ082PROD with PROPOSALS2
In section II.A.11. of this rule, we are
proposing to codify the existing
measures and methodology for the Part
C and D Star Ratings program. The
proposed provisions would not change
any respondent requirements or burden
pertaining to any of CMS’ Star Ratingsrelated PRA packages including: OMB
control number 0938–0701 for CAHPS
(CMS–10203), OMB control number
0938–0732 for HOS (CMS–R–246), OMB
control number 0938–1028 for HEDIS
(CMS–10219), OMB control number
0938–1054 for Part C Reporting
Requirements (CMS–10261), and OMB
control number 0938–0992 for Part D
Reporting Requirements (CMS–10185).
Since this rule would not impose any
new or revised requirements/burden, we
are not making changes to any of the
aforementioned control numbers.
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7. ICRs Regarding Medicare Advantage
Plan Minimum Enrollment Waiver
(§ 422.514(b))
CMS regulations provide Medicare
Advantage (MA) organizations,
including provider sponsored
organizations, with the opportunity to
request a waiver of CMS’s minimum
enrollment requirements at § 422.514(a)
during the first 3 years of the contract.
Regulations also require that MA
organizations reapply for the minimum
enrollment waiver in the second and
third years of their contract. However,
since CMS has not received or approved
any waivers outside of the application
process, CMS proposes to remove the
requirement for MA organizations to
reapply for the minimum enrollment
waiver during years 2 and 3 of the
contract under § 422.514(b)(2) and (3).
CMS also proposes to modify
§ 422.514(b)(2) to clarify that CMS will
only accept a waiver through the
application process and allow the
minimum enrollment waiver, if
approved by CMS, to remain effective
for the first 3 years of the contract. The
requirement and burden associated with
the submission of the minimum
enrollment waiver in the application is
currently approved by OMB under
control number 0938–0935 (CMS–
10237) which does not need to be
revised.
8. ICRs Regarding Revisions to §§ 422
and 423 Subpart V, Communication/
Marketing Materials and Activities
In section II.B.5. of this rule, we are
proposing to narrow the definition of
‘‘marketing materials’’ under
§§ 422.2260 and 423.2260 to only
include materials and activities that aim
to influence enrollment decisions. We
believe the proposed definitions
appropriately safeguard potential and
current MA/PDP enrollees from
inappropriate steering of beneficiary
choice, while not including materials
that pose little risk to current or
potential enrollees and are not
traditionally considered ‘‘marketing.’’
Revisions to §§ 422.2260 and 423.2260
PO 00000
Frm 00136
Fmt 4701
Sfmt 4702
would provide a narrower definition
than is currently provided for
‘‘marketing materials.’’ Consequently,
this change decreases the number of
marketing materials that must be
reviewed by CMS before use.
Additionally, the proposal would more
specifically outline the materials that
are and are not considered marketing
materials.
We believe the net effects of the
proposed changes would reduce the
burden to MA organizations and Part D
sponsors by reducing the number of
materials required to be submitted to us
for review.
To estimate the savings, we reviewed
the most recent 12-month period of
marketing material submissions from
the Health Plan Management System,
July 2016 through and including June
2017. As documented in the currently
approved PRA package, we also
estimates that it takes a plan 30 minutes
at $69.08/hour for a business operations
specialist to submit the marketing
materials. To complete the savings
analysis, we also must estimate the
number of marketing materials that
would have been submitted to and
reviewed by CMS under the current
regulatory marketing definition (note
that while all materials that meet the
regulatory definition of marketing must
be submitted to CMS, not all marketing
materials are prospectively reviewed by
CMS). Certain marketing materials
qualify for ‘‘File and Use’’ status, which
means the material can be submitted to
CMS and used 5 days after submission,
without being prospectively reviewed
by CMS. We estimates 90 percent of
marketing materials are exempt from
our prospective review because of the
file and use process. Thus, we only
prospectively review about 10 percent
of the marketing materials submitted.
Marketing materials are coded using
4- or 5-digit numbers, based on
marketing material type. The relevant
codes and counts are summarized in
Table 16.
BILLING CODE 4120–01–P
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28NOP2
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Jkt 244001
Frm 00137
Fmt 4701
Sfmt 4702
28NOP2
4000
5000
6000
xooo
Description
Enrollment and related documents
ANOC!I·:OCILIS Rider
Dis enrollment
Grievances
Advertisements
Formulary Drug
Presentations/Scripts/Surveys
Creditable Coverage/I.E!'
Medicare Medicaid Plans
PACE
43965
1429
2836
559
16000, 17000
30000
80,110
Total
*Excluded materials arc materials that still will rcqmrc rcvrcw.
Description ofExclnded Material(s)*
Enrollment forms
nla
n/a
General advertising that includes benefits
information
n/a
Enrollment scripts
n/a
n/a
Number
of
Excluded
Materials
981
5,162
0
0
32,974
1,169
0
0
40,28G
Number of
Materials that
would no
longer be
Submitted
15,514
1,612
5942
1564
Honrs
per
Response
0.5
0.5
0.5
0.5
Total
Hours
Saved
7,757
X16
2,971
782
Wage Rate
(Per Honr)
$69.08
$69.0X
$69.08
$69.08
Cost Saved
(in$)
535,853.56
56,169.2X
205,236.68
54,020.56
10,991
L429
L407
559
0
0
39,824
0.5
0.5
0.5
0.5
0.5
0.5
0.5
5,495.5
714.5
703.5
279.5
0
0
19,912
$69.08
$69.08
$69.08
$69.0X
$69.08
$69.08
$G9.08
379,629
49,397.66
48,597.78
19107.X6
0
0
$1,348,372.52
56471
documents (80,110 current¥40,286
excluded) we estimate a savings of
E:\FR\FM\28NOP2.SGM
By reducing the number of marketing
materials submitted to CMS by 39,824
PO 00000
Marketing
Code
1000
1100
2000
3000
Total Number of
Materials
Submitted Under
Marl2014
EP28NO17.014
TABLE 16: MARKETING MATERIAL SUBMISSION BURDEN ANALYSIS
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19,912 hours (39,824 materials * 0.5
hours per material) at a cost savings of
$1,348,372.52 (19,912 hours * 69.08 per
hour). Some key points in the
calculations are as follows:
• There were a total of 80,110
marketing materials submitted to CMS
during the 12-month period sampled.
These materials already exclude PACE
program marketing materials (30000
Code) which are governed by a different
authority and not affected by the
proposed provision. The 80,110 figure
also excludes codes 16000 and 1700
Medicare-Medicaid Plan (MMP)
materials. The MMP materials are not
being counted as the decision for review
rests with the states and CMS.
• The statute is clear that
‘‘applications,’’ which CMS also refers
to as enrollment or election forms, must
be reviewed. Thus the 981 materials
submitted under marketing code 1070,
enrollment forms, must be subtracted
from the 80,110.
• Marketing code 1100 includes the
combined ANOC/EOC as well as the D–
SNP standalone ANOC. CMS intends to
split the ANOC and EOC and will still
require the ANOC be submitted as a
marketing material, whereas the EOC
will no longer be considered marketing
and not require submission. To account
for the ANOC submission, CMS
estimates that 5,162 ANOCs will still
require submission.
• We do not expect any disenrollment
or grievance forms (the 2000 and 3000
codes) to be required submissions under
this proposal.
• Marketing code 4000 covers all
advertisements which constitute 55
percent (43,965) of the 80,110 materials.
The majority of these advertisements
deal with benefits and enrollment. We
estimate 25 percent of the 43,965 code
4000 documents (that is, 10,991
documents) would fall outside of the
new regulatory definition of marketing
and no longer require submission. Thus,
we must subtract these 32,974 (43,965
¥ 10,991) from the 80,110.
• Marketing code 5000 covers
formulary drugs. Although, as is
currently the case, formularies will
continue to be submitted to us for
review in capacities outside of
marketing, they will no longer fall under
the new regulatory definition of
marketing and hence would not be
submitted separately for review as
marketing materials.
• Marketing code 6000 includes sales
scripts which are predominantly used to
encourage enrollment, and would likely
still fall under the scope of the new
marketing definition. As such, we must
subtract 1,169 documents (code 6013)
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from the 80,110 total marketing
materials.
• Marketing code 8000 includes
creditable coverage and late enrollment
penalty (LEP) notices that will fall
outside of the new regulatory definition
of marketing and no longer require
submission. Over the 12-month period
sampled, this represents 559 material
submissions.
The proposed requirements and
burden will be submitted to OMB under
control number 0938–1051 (CMS–
10260).
9. ICRs Regarding Medical Loss Ratio
Reporting Requirements (§§ 422.2460
and 423.2460)
In section II.C.1. of this rule, we note
that under current §§ 422.2460 and
423.2460, for each contract year, MA
organizations and Part D sponsors must
report to CMS the information needed to
verify the MLR and remittance amount,
if any, for each contract, such as:
Incurred claims, total revenue,
expenditures on quality improving
activities, non-claims costs, taxes,
licensing and regulatory fees, and any
remittance owed to CMS under
§ 422.2410 or § 423.2410. Our proposed
amendments to §§ 422.2460 and
423.2460 would reduce the MLR
reporting burden by requiring that MA
organizations and Part D sponsors
report, for each contract year, only the
MLR and the amount of any remittance
owed to us for each contract with
credible or partially credible experience.
For each non-credible contract, MA
organizations and Part D sponsors
would be required to report only that
the contract is non-credible.
Our analysis of the estimated
administrative costs related to the MLR
reporting requirements is based on the
average number of MA and Part D
contracts subject to the reporting
requirements for each contract year. The
average number of MA and Part D
contracts subject to the annual MLR
reporting requirements for contract
years 2014 to 2018 is 587. The total
number of MA and Part D contracts is
relatively stable year over year. To
calculate the estimated administrative
costs of MLR reporting under the
proposed amendments to §§ 422.2460
and 423.2460, we assume that 587 MA
and Part D contracts would be subject to
the MLR reporting requirements in each
contract year.
Our estimate for the amount of time
that MAOs and Part D sponsors would
spend on administrative tasks related to
the MLR reporting requirements under
this proposed rule is based on our
current burden estimates that are
approved by OMB under control
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number 0938–1232 (CMS–10476),
where we estimated that, on average,
MA organizations and Part D sponsors
would spend approximately 47 hours
per contract on administrative work
related to Medicare MLR reporting,
including: Collecting data, populating
the MLR reporting forms, conducting a
final internal review, submitting the
reports to the Secretary, and conducting
internal audits. Inadvertently, our
currently approved estimate did not
specify (or break out) the portion of the
overall reporting burden that could be
attributed solely to the tasks of
preparing and submitting the MLR
report. We are correcting that oversight
by estimating that the burden for
preparing and submitting the MLR
report is approximately 11.5 hours (or
24.4 percent of the estimated 47 total
hours spent on all administrative work
related to the MLR reporting
requirements) per contact.
We arrived at the 11.5-hour estimate
by considering the amount of time it
would take an MA organization or Part
D sponsor to perform each of the
following tasks: (1) Review the MLR
report filing instructions and external
materials referenced therein and to
input all figures and plan-level data in
accordance with the instructions; (2)
draft narrative descriptions of
methodologies used to allocate
expenses; (3) perform an internal review
of the MLR report form prior to
submission; (4) upload and submit the
MLR report and attestation; and (5)
correct or provide explanations for any
suspected errors or omissions
discovered by CMS or our contractor
during initial review of the submitted
MLR report.
We estimate that our proposal to scale
back the MLR reporting requirements
would reduce the amount of time spent
on administrative work by 11 hours,
from 47 hours to 36 hours.
Table 17 compares the estimated
administrative costs related to the MLR
reporting requirements under the
current regulation and under this
proposed rule. As indicated, this
proposed rule estimates that MA
organizations and Part D sponsors will
spend on average 36 hours per MA or
Part D contract on administrative work,
compared to 47 hours per contract
under the current rule. We estimate the
average cost per hour of MLR reporting
using wage data for computer and
information systems managers, as we
believe that the tasks associated with
MLR reporting generally fall within the
fields of data processing, computer
programming, information systems, and
systems analysis. Based on computer
and information systems managers wage
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data from BLS, we estimate that MA
organizations and Part D sponsors
would incur annual MLR reporting costs
of approximately $5,045 per contract on
average under our proposal, as opposed
to $6,587 per contract under the current
regulations. Consequently, the proposed
changes would, on average, reduce the
annual administrative costs by $1,542
per contract. Across all MA and Part D
56473
contracts, we estimate that the proposed
changes would reduce the annual
administrative burden related to MLR
reporting by 6,457 hours, resulting in a
savings of $904,884.
TABLE 17—ESTIMATED ADMINISTRATIVE BURDEN RELATED TO MEDICAL LOSS RATIO (MLR) REPORTING REQUIREMENTS
Total number
of contracts/
reports
Ongoing Costs (current regulations) .......
Ongoing Costs (proposed regulation
changes).
Change ....................................................
Estimated
average cost
per hour
Estimated
average cost
per contract/
report
Estimated
average hours
per report
Estimated total
hours
587 .................
587 .................
47
36
27,589
21,132
$140.14 ..........
140.14 ............
$3,866,322
2,961,438
$6,587
5,045
No change .....
11
6,457
No change .....
904,884
1,542
Type of burden
Estimated total
cost
Notes: The source data has been modified to reflect estimated costs for MA organizations and Part D sponsors. Values may not be exact due
to rounding.
sradovich on DSK3GMQ082PROD with PROPOSALS2
The proposed requirements and
burden will be submitted to OMB for
approval under control number 0938–
1232 (CMS–10476).
10. ICRs Regarding Establishing
Limitations for the Part D Special
Enrollment Period for Dual Eligible
Beneficiaries (§ 423.38(c)(4)) OMB
Under Control Number 0938–0964
In section II.A.11. of this rule, we
propose to revise § 423.38(c)(4) to limit
the SEP for dual- and LIS-eligible
individuals. The provision would make
the SEP for FBDE or other subsidyeligible individuals available only in the
following circumstances:
• For beneficiaries who are making an
allowable onetime-per-calendar-year
election.
• For beneficiaries who have been
assigned to a plan by CMS or a state
(that is, through auto enrollment,
facilitated enrollment, passive
enrollment, or reassignment) and decide
to change plans following notification of
the change or within 2 months of the
election effective date.
• For beneficiaries who have a change
in their dual or LIS-eligible status.
In instances where an individual is
not able to utilize the dual SEP because
of the proposed limitations, we
anticipate that there will be no change
in burden. Under current requirements,
if a beneficiary uses the dual SEP to
disenroll from their plan, the plan
would send a notice to the beneficiary
to acknowledge the voluntary
disenrollment request. If the beneficiary
is subject to the dual SEP limitation, the
plan would send a notice to deny their
voluntary disenrollment request. The
requirement to acknowledge the
beneficiary request and address the
resolution would be the same in both
scenarios, but the content of the notice
would be different. Enrollment
processing and notification
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requirements are codified at § 423.32(c)
and (d) and are not being revised as part
of this rulemaking. Therefore, no new or
additional information collection
requirements are being imposed.
Moreover, the requirements and burden
are currently approved by OMB under
control number 0938–0964 (CMS–
10141). Since this rule would not
impose any new or revised
requirements/burden, we are not
making any changes to that control
number.
11. ICRs Related to Expedited
Substitutions of Certain Generics and
Other Midyear Formulary Changes
(§§ 423.100, 423.120, and 423.128) OMB
Under Control Number 0938–0964
In section II.A.15 of this rule, we
propose to expedite certain generic
substitutions and other midyear
formulary changes and except
applicable generic substitutions from
the transition process. Excepting generic
substitutions that would otherwise
require transition fills from the
transition process would lessen the
burden for Part D sponsors because they
would no longer need to provide such
fills. Permitting Part D sponsors to
immediately substitute newly approved
generic drugs or to make other
formulary changes sooner than has been
required would allow Part D sponsors to
take action sooner, but would not
increase nor decrease paperwork.
While the proposed provisions would
additionally require general notice that
certain generic substitutions could take
place immediately, Part D sponsors are
already creating the documents in
which that notice would appear such as
formularies and EOCs. Similarly,
§ 423.128(d)(2)(ii) already requires Web
sites to include information about drug
removals and changes to cost-sharing. In
other words, the proposed general
notice requirement would not require
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efforts in addition to routine updates to
beneficiary communications materials
and Web sites. In theory, if Part D
sponsors that would have been denied
requests to make generic changes could
do so under the proposed provision,
they would have somewhat more of a
burden since the proposed provision
does require notice including direct
notice to affected enrollees. However,
our practice has been to approve all or
virtually all generic substitutions that
would meet the requirements of this
proposed provision—which again
means that the proposed provisions
would just permit those substitutions to
take place sooner.
The general notice requirements and
burden are currently approved by OMB
under control number 0938–0964
(CMS–10141). Since this rule would not
impose any new or revised
requirements/burden, we are not
making any changes to that control
number.
12. ICRs Related to Preclusion List
Requirements for Prescribers in Part D
and Individuals and Entities in
Medicare Advantage, Cost Plans, and
PACE
a. Preclusion List Requirements for Part
D Sponsors
(1) Burden and Costs
In sections II.D.10 and 11. of this
proposed rule, we are proposing in
§ 423.120(c)(6) to require that Part D
sponsors cover a provisional supply of
a drug before they reject a claim based
on a prescriber’s inclusion on the
preclusion list. The proposed provision
would also require that Part D sponsors
provide written notice to the beneficiary
of the prescriber’s presence on the
preclusion list and take reasonable
efforts to furnish written notice to the
prescriber. The burden associated with
these provisions would be the time and
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effort necessary for Part D adjudication
systems to be programmed and for
model notices to be created, generated,
and disseminated.
(a) Part D System Programming
We estimate that it would take all 30
sponsors and PBMs with Part D
adjudication systems a total of
approximately 93,600 hours in 2019 for
software developers and programmers to
program their systems to comply with
the requirements of § 423.120(c)(6). In
2020 and 2021, we do not anticipate any
system costs. The sponsors and PBMs
would need approximately 6 to 12
months to perform system changes and
testing. The total hour figures are based
on a 6-month preparation and testing
period. There are roughly 1,040 fulltime working hours in a 6-month
period. Using an estimate of 3 full-time
software developers and programmers at
$96.22/hour resulted in the
aforementioned 93,600 hour figure (3
workers × 1,040 hour × 30 sponsors/
PBMs) at a cost of $9,006,192 (93,600 ×
$96.22/hour) for 2019. There would be
no burden associated with 2020 and
2021.
(b) Creation of Template Notices to
Beneficiaries and Prescribers
As stated in the May 6, 2015 IFC, we
estimate that 212 parent organizations
would need to create two template
notices to notify beneficiaries and
prescribers under proposed
§ 423.120(c)(6). We project that it would
take each organization 3 hours at
$69.08/hour for a business operations
specialist to create the two model
notices. For 2019, we estimate a onetime total burden of 636 hours (212
organizations × 3 hours) at a cost of
$43,935 (636 hour × $69.08/hour) or
$207.24 per organization ($43,935/212
organizations). There would be no
burden associated with 2020 and 2021.
The proposed system programing and
notice development requirements and
burden will be submitted to OMB for
approval under control number 0938–
0964 (CMS–10141).
(c) Preparation and Issuance of the
Notices
We estimate that it would take an
average of 5 minutes (0.083 hour) at
$39.22/hour for an insurance claim and
policy processing clerk to prepare and
distribute the notices. We estimate that
an average of approximately 800
prescribers would be on the preclusion
list in early 2019 with roughly 80,000
Part D beneficiaries affected; that is,
80,000 beneficiaries would have been
receiving prescriptions written by these
prescribers and would therefore receive
the notice referenced in § 423.120(c)(6).
In 2019 we estimate a total burden of
6,640 hours (0.083 hour × 80,000
responses) at a cost of $260,421 (6,640
hour × $39.22/hour) or $1,228.40 per
organization ($260,421/212
organizations).
In 2020 and 2021, we estimate that
roughly 150 prescribers each year would
be added to the preclusion list, though
this would be largely offset by the same
number of prescribers being removed
from the list (for example, based on
reenrollment after the expiration of a
reenrollment bar or decision to remove
them from the preclusion list) with
15,000 affected beneficiaries. In
aggregate, we estimate an annual burden
of 1,245 hours (15,000 beneficiaries ×
0.083 hours) at a cost of $48,829 (1,245
hour × $39.22/hour) or $325.53 per
prescriber ($48,829/150 prescribers).
The proposed notice preparation and
distribution requirements and burden
will be submitted to OMB for approval
under control number 0938–0964
(CMS–10141).
TABLE 18—ESTIMATED BURDEN OF PART D—NOTICE PREPARATION AND DISTRIBUTION
[In hours]
2019
2020
2021
3-year
average
Provisional Supply—Programming ..................................................................
Provisional Supply—Template Creation ..........................................................
Provisional Supply—Letter Preparation ...........................................................
93,600
636
6,640
0
0
1,245
0
0
1,245
31,200
212
3,043
Total ..........................................................................................................
100,876
1,245
1,245
34,455
TABLE 19—ESTIMATED BURDEN OF PART D—NOTICE PREPARATION AND DISTRIBUTION
[In $]
2019
2020
2021
3-year
average
Provisional Supply—Programming ..................................................................
Provisional Supply—Template Creation ..........................................................
Provisional Supply—Notice Preparation ..........................................................
$9,006,192
43,935
260,421
$0
0
48,829
$0
0
48,829
$3,002,064
14,645
119,360
Total ..........................................................................................................
9,310,548
48,829
48,829
3,136,069
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(2) Savings
We believe that savings would accrue
for the prescriber community from our
proposed elimination of the requirement
that prescribers enroll in Medicare in
order to prescribe Part D drugs.
As previously explained in this
proposed rule, approximately 420,000
prescribers have yet to enroll in
Medicare via the CMS–855O application
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(OMB 0938–1135). We estimate that it
would take 0.5 hours for a prescriber to
complete a CMS–855O application. This
is based on the following assumptions:
• A medical secretary would take
0.42 hours to prepare the application.
• A physician would take 0.08 hours
to review and sign the application.
This would result in a per application
cost of $30.32 ((0.42 hours × $33.70) +
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(0.08 hours × $202.08). Multiplying this
figure by 420,000 applications results in
a total savings of $12,734,400. We
believe that these savings would accrue
in 2019.
(3) Net Costs and Savings
We believe that a result of our
proposed elimination of the Part D
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56475
enrollment requirement, the following
net savings for prescribers would ensue:
TABLE 20—NET COSTS/SAVINGS
[In $]
2019
Costs ................................................................................................................
Savings ............................................................................................................
Net * .................................................................................................................
2020
$9,310,548
12,734,400
3,423,852
3-year
average
2021
$48,829
0
(48,829)
$48,829
0
(48,829)
$3,136,069
4,244,800
1,108,731
* Net costs denoted in parentheses.
b. Preclusion List Requirements for
Part C
As previously explained in this
proposed rule, approximately 120,000
MA providers and suppliers have yet to
enroll in Medicare via the CMS–855
application. Of these providers and
suppliers, and based on internal CMS
statistics, we estimate that 90,000 would
complete the CMS–855I (OMB No.
0938–0685), which is completed by
physicians and non-physician
practitioners; 24,000 would complete
the CMS–855B (OMB control number
0938–0685), which is completed by
certain Part B organizational suppliers;
and 6,000 would complete the CMS–
855A (OMB No. 0938–0685), which is
completed by Part A providers and
certain Part B certified suppliers.
Therefore, we believe that savings
would accrue for providers and
suppliers from our proposed
elimination of our MA/Part C
enrollment. Table 21 estimates the
burden hours associated with the
completion of each form.
TABLE 21—CMS–855 APPLICATION BURDEN
Number of
respondents
no longer
required
to enroll
Submission type
sradovich on DSK3GMQ082PROD with PROPOSALS2
CMS–855I ............................................................................
CMS–855B ...........................................................................
CMS–855A ...........................................................................
In projecting the savings involved, we
assume a medical and health services
manager would serve as the provider’s
or supplier’s ‘‘authorized official’’ and
would sign the CMS–855A or CMS–
855B application on the provider’s or
supplier’s behalf.
Therefore, we project the following
total hour and cost burdens:
• CMS–855I: We estimate a total
reduction in hour burden of 270,000
hours (90,000 applicants × 3 hours).
With the cost of each application
processed by a medical secretary and
physician as being $185.29 (($33.70 ×
2.5 hours) + ($202.08 × 0.5 hours)), we
estimate a savings of $16,676,100
(90,000 applications × $185.29).
• CMS–855B: We estimate a total
reduction in hour burden of 120,000
hours (24,000 applicants × 5 hours).
With the cost of each application
processed by a medical secretary and
signed off by a medical and health
services manager as being $239.96
(($33.70 × 4 hours) + ($105.16 × 1
hour)), we estimate a total savings of
$5,759,040 (24,000 applications ×
$105.16).
• CMS–855A: We estimate a total
reduction in hour burden of 36,000
hours (6,000 applicants × 6 hours). With
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Hours for
completion by
office
personnel
90,000
24,000
6,000
2.5
4
5
the cost of each application processed
by a medical secretary and signed off by
a medical and health services manager
as being $273.66 (($33.70 × 5 hours) +
($105.16 × 1 hour)), we estimate a total
savings of $6,567,840 (24,000
applications × $273.66).
Given the foregoing, we estimate that
providers and suppliers would
experience a total reduction in hour
burden of 426,000 hours (270,000 +
120,000 + 36,000) and a total cost
savings of $32,102,980 ($9,667,660 +
$5,759,040 + $16,676,100). We expect
these reductions and savings to accrue
in 2019 and not in 2020 or 2021.
Nonetheless, over the OMB 3-year
approval period of 2019–2021, we
expect an annual reduction in hour
burden of 142,000 hours and an annual
savings of $10,700,933 ($32,102,800/3)
under OMB Control No. 0938–0685.
We also propose to revise § 422.310 to
add a new paragraph (d)(5) to require
that, for data described in paragraph
(d)(1) as data equivalent to Medicare
fee-for-service data (which is also
known as MA encounter data), MA
organizations must submit a National
Provider Identifier in a Billing Provider
field on each MA encounter data record,
per CMS guidance. We do not expect
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Hours for a
physician to
review and
sign
0.5
n/a
n/a
Hours for an
authorized
official to
review
and sign
Total hours for
completion
n/a
1
1
3
5
6
any additional burden from this
particular proposal, for this activity is
consistent with existing policy.
13. ICRs Regarding the Part D Tiering
Exceptions ((§§ 423.560 and § 423.578(a)
and (c))
In section II.A.9. of this rule, we are
proposing various changes to
§ 423.578(a) and (c) related to the
requirements for tiering exceptions
criteria that Part D plan sponsors are
required to establish. These changes
include establishing a revised
framework for treatment of tiering
exception requests based on whether the
requested drug is a brand name or
generic drug or biological product, and
where the same type of drug alternatives
are located on the plan’s formulary. The
proposed changes also include
clarification of appropriate cost-sharing
assigned to approved tiering exception
requests when preferred alternative
drugs are on multiple lower-cost tiers.
At the coverage determination level, if
a plan issues a decision that is partially
or fully adverse to the enrollee, it is
already required to send written notice
of that decision. The existing
requirement to send written notice of an
adverse coverage determination would
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not change under the proposed changes
related to tiering exceptions. We do not
expect the proposed changes to
significantly impact the overall volume
or the approval rate of tiering exceptions
requests, which represent a consistently
low percentage of total request volume.
While the requirement to send a
written denial notice is subject to the
PRA, the requirement and burden are
currently approved by OMB under
control number 0938–0976 (CMS–
10146). Since this rule would not
impose any new or revised
requirements/burden, we are not
making any changes to that control
number.
14. ICRs Regarding the Implementation
of the Comprehensive Addiction and
Recovery Act of 2016 (CARA)
Provisions (§ 423.153(f))
As discussed in section of this rule,
proposed § 423.153(f) would implement
provisions of section 704 of CARA,
which allows Part D plan sponsors to
establish a drug management program
that includes ‘‘lock-in’’ as a tool to
manage an at-risk beneficiary’s access to
coverage of frequently abused drugs.
Part D plan sponsors would be required
to notify at-risk beneficiaries about their
plan’s drug management program. Part
D plan sponsors are already expected to
send a notice to some beneficiaries
when the sponsor decides to implement
a beneficiary-specific POS claim edit for
opioids (OMB under control number
0938–0964 (CMS–10141)). However, the
OMB control number 0938–0964 only
accounts for the notices that are
currently sent to beneficiaries who have
a POS edit put in place to monitor
opioid access (which would count as
the initial notice described in the
preamble and defined in § 423.153(f)(4))
and would not capture the second
notice that at-risk beneficiaries would
receive confirming their determination
as such or the alternate second notice
that potentially at-risk beneficiaries
would receive to inform them that they
were not determined to be at risk.
Since 2013, there have been 4,617
POS edits submitted into MARx by plan
sponsors for 3,961 unique beneficiaries
as a result of the drug utilization review
policy. Given that there has not been a
steady increase or decrease in edits, we
have used the average, 923 edits
annually, to assess burden under this
rule. If we assume that the number of
edits or access to coverage limitations
will double due to the addition of
pharmacy and prescriber ‘‘lock-in’’ to
OMS, to approximately 1,846 such
limitations, we estimate 3,693 initial,
and second notices (number of
limitations (1,846) multiplied by the
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number of notices (2)) total
corresponding to such edits/limitations.
We estimate it would take an average of
5 minutes (0.083 hours) at $39.22/hour
for an insurance claim and policy
processing clerk to prepare each notice.
We estimate an annual burden of 307
hours (3,693 notices × 0.083 hour) at a
cost of $12,040.54 (307 hour × $39.22/
hour).
Part D plan sponsors are required to
upload these new notice templates into
their internal claims systems. We
estimate that 219 Part D plan sponsors
(31 PDP parent organizations and 188
MA–PD parent organizations, based on
plan year 2017 plan participation)
would be subject to this requirement.
We estimate that it will take on average
5 hours at $81.90/hour for a computer
programmer to upload all of the notices
into their claims systems (note, this is
an estimate to upload all of the
documents in total; not per document).
This would result in a total burden of
1,095 hours (5 hours × 219 sponsors) at
a cost of $89,680.50 (1,095 hour ×
$81.90/hour).
In aggregate, the burden to upload and
prepare these additional notices is 1,402
hours (307 hours + 1,095 hours) at a cost
of $101,721 ($12,040 + $89,681).
Proposed revisions to § 423.38(c)(4)
would limit the SEP for dual- or other
LIS-eligible individuals who are
identified as a potential at-risk
beneficiary subject to the requirements
of a drug management program, as
outlined in § 423.153(f). As already
codified in § 423.38(c)(4), this proposed
SEP limitation would be extended to
‘‘other subsidy-eligible individuals’’ so
that both full and partial subsidy
individuals are treated uniformly. Once
an individual is identified as a potential
at-risk beneficiary, that individual will
not be permitted to use this election
period to make a change in enrollment.
Contingent with a Part D sponsor
opting to implement a drug management
program, Part D sponsors will identify,
and submit to CMS, an individual’s
‘‘potential’’ at-risk status and, if
applicable, confirmed at-risk status. The
Part D sponsor will include notification
of the limitation of the duals’ SEP in the
required notice to the beneficiary that
he or she has been identified as a
potential at-risk beneficiary.
Therefore, the burden associated with
the notification of the inability to use
the duals’ SEP is covered under the
previous statement of burden.
Furthermore, we are proposing to
codify that an at-risk beneficiary will
have an election opportunity if their
dual- or LIS-eligible status changes, that
is, if they gain, lose or have a change in
the level of the subsidy assistance. Also,
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if a beneficiary is eligible for another
election period (for example, AEP, OEP,
or other SEP), this SEP limitation would
not prohibit the individual from making
an election. This proposed provision, by
creating a limitation for dually- and
other LIS-eligible at-risk beneficiaries
after the initial notification, would
decrease sponsor burden in processing
disenrollment and enrollment requests
for dual- and LIS-eligible beneficiaries
who wish to change plans.
We estimate that 1,846 beneficiaries
would meet the criteria proposed to be
identified as an at-risk beneficiary and
have a limitation implemented. About
76 percent of the 1,846 beneficiaries are
estimated to be LIS. Approximately 10
percent of LIS-eligible enrollees use the
duals’ SEP to make changes annually.
Thus we estimate, at most, 140 changes
per year (1,846 beneficiaries × 0.76 ×
0.1) will no longer take place because of
the proposed duals’ SEP limitation.
There are currently 219 Part D sponsors.
This amounts to an average of 0.6
changes per sponsor per year (140
changes/219 sponsors). In 2016, there
were more than 3.5888 Part D plan
switches, and as such, a difference of
0.6 enrollments or disenrollments per
sponsor will not impact the
administrative processing infrastructure
or human resources needed to process
enrollments and disenrollments.
Therefore, there is no change in burden
for sponsors to implement this
component of the provision.
We are proposing that reviews of atrisk determinations made under the
processes at § 423.153(f) be adjudicated
under the existing Part D benefit appeals
process and timeframes set forth in part
423 Subparts M and U. Consistent with
existing rules for redeterminations, an
enrollee who wishes to dispute an atrisk determination would have 60 days
from the date of the notice of the
determination to make such request,
must affirmatively request IRE review of
an adverse plan level appeal decision
made under a plan sponsor’s drug
management program, and would have
rights to an expedited redetermination.
Revisions to regulations in part 423
Subparts M (§§ 423.558, 423.560,
423.562, 423.564, 423.580, 423.582,
423.584, 423.590, 423.602, 423.636, and
423.638) and U (§§ 423.1970, 423.2018,
423.2020, 423.2022, 423.2032, 423.2036,
423.2038, 423.2046, 423.2056, 423.2062,
423.2122 and 423.2126) are being
proposed to account for reviews of atrisk determinations. The filing of an
appeal is an information collection
requirement that is associated with an
administrative action pertaining to
specific individuals or entities (5 CFR
1320.4(a)(2) and (c)). Consequently, the
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burden for preparing and filing the
appeal is exempt from the requirements
and collection burden estimates of the
PRA; however, the burden estimate for
appeals is included in the regulatory
impact analysis.
In aggregate, these components of this
provision would result in an annual net
cost of $101,012.
The aforementioned requirements and
burden, excluding beneficiary appeals,
will be submitted to OMB for approval
under control number 0938–0964
(CMS–10141).
TABLE 22—ESTIMATED BURDEN FOR THE CARA PROVISIONS
[In hours]
2019
2020
3-year
average
2021
Preparation and Upload Notices .....................................................................
SEP Limitation .................................................................................................
Appeals ............................................................................................................
1,402
0
N/A
0
0
N/A
0
0
N/A
467.3
0
N/A
Total ..........................................................................................................
1,402
0
0
467.3
TABLE 23—ESTIMATED BURDEN FOR THE CARA PROVISIONS
(In $)
2019
2020
3-Year
average
2021
Preparation and Upload Notices .....................................................................
SEP Limitation .................................................................................................
Appeals ............................................................................................................
$101,012
0
N/A
$0
0
N/A
$0
0
N/A
$33,670.7
0
N/A
Total ..........................................................................................................
101,012
0
0
33,670.7
C. Summary of Proposed Information
Collection Requirements and Burden
TABLE 24—PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
sradovich on DSK3GMQ082PROD with PROPOSALS2
Regulatory section(s) in
title 42 of the CFR
OMB control
No. *
422.60, 422.62, 422.68, 423.38,
and 423.40 eligibility determination.
422.60, 422.62, 422.68, 423.38,
and 423.40 notification.
422.60, 422.62, 422.68, 423.38,
and 423.40 report to CMS.
422.60, 422.62, 422.68, 423.38,
and 423.40 record keeping.
422.152 QIP .................................
422.2260 and 423.2260 marketing materials.
422.2460 and 423.2460 MLR reporting.
423.120(c)(6) create model notices.
423.120(c)(6) 2019 prepare and
distribute the notices.
423.120(c)(6) 2020 and 2021
prepare and distribute the notices.
423.153(f) notice preparation ......
423.153(f) notice upload ..............
423.153(f) contract: Part D plan
sponsors.
423.153(f) contract: MA–PDs ......
Respondents
Responses
Burden
per
response
Total
annual
burden
(hours)
Labor cost
of reporting
(hours)
Total cost
($)
0938–0753
468
558,000
5 min ......
46,500
$69.08
$3,212,220
0938–0753
468
558,000
1 min ......
9,300
69.08
642,444
0938–0753
468
558,000
1 min ......
9,300
69.08
642,444
0938–0753
468
558,000
5 min ......
46,500
34.66
1,606,110
0938–1023
0938–1051
468
805
(750)
(67,061)
(15 min)
(30 min)
(188)
(26,959)
67.54
69.08
(12,664)
(1,862,397)
0938–1232
587
(587)
(11 hr) ....
(6,457)
140.14
(904,884)
0938–0964
212
212
3 hr ........
636
69.08
43,935
0938–0964
212
80,000
0.083 hr
6,640
39.22
260,421
0938–0964
212
15,000
0.083 hr
1,245
39.22
48,829
0938–0964
0938–0964
0938–0964
219
219
31
3,693
3,693
31
0.083 hr
5 hr ........
10 hr ......
307
1,095
310
39.22
81.90
134.50
12,041
89,681
41,695
0938–0964
188
188
20 hr ......
3,760
134.50
505,720
Subtotal: Private Sector Burden.
....................
805
2,266,419
varies .....
91,989
varies
4,325,595
422.62, 423.38, and 423.40 complete enrollment.
0938–0753
18,600,000
558,000
30 min ....
279,000
7.25
2,022,750
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TABLE 24—PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS—Continued
Regulatory section(s) in
title 42 of the CFR
Subtotal:
Burden
Beneficaries.
OMB control
No. *
Respondents
Responses
Burden
per
response
Total
annual
burden
(hours)
Labor cost
of reporting
(hours)
Total cost
($)
on
....................
18,600,000
558,000
30 min ....
279,000
7.25
2,022,750
422.111(a)(3) and (h)(2)(ii) and
423.128(a)(3) EOC paper.
422.111(a)(3) and (h)(2)(ii) and
423.128(a)(3) EOC toner.
422.111(a)(3) and (h)(2)(ii) and
423.128(a)(3) EOC mailing.
0938–1051
n/a
(32,026,000)
n/a ..........
n/a
n/a
(24,019,500)
0938–1051
n/a
(32,026,000)
n/a ..........
n/a
n/a
(24,019,500)
0938–1051
n/a
(32,026,000)
n/a ..........
n/a
n/a
(6,629,382)
....................
n/a
(32,026,000)
n/a ..........
n/a
n/a
(54,668,382)
....................
18,600,805
(29,201,581)
varies .....
370,989
varies
(48,320,037)
Subtotal: Non-Labor Burden
Total ...............................
* OMB control numbers and corresponding CMS ID numbers: 0938–0753 (CMS–R–267), 0938–1023 (CMS–10209), 0938–1051 (CMS–10260),
0938–1232 (CMS–10476), and 0938–0964 (CMS–10141).
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 and
recordkeeping requirements. These
requirements are not effective until they
have been approved by the OMB.
To obtain copies of the supporting
statement and any related forms for the
proposed collections previously
discussed, please visit CMS’ Web site at
Web site address at https://
www.cms.gov/RegulationsandGuidance/Legislation/Paperwork
ReductionActof1995/PRAListing.html,
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
ADDRESSES section of this proposed rule
and identify the rule (CMS–4182–P) and
where applicable the ICR’s CFR citation,
CMS ID number, and OMB control
number.
See the DATES and ADDRESSES sections
of this proposed rule for further
information.
sradovich on DSK3GMQ082PROD with PROPOSALS2
V. Regulatory Impact Analysis
A. Statement of Need
This proposed rule approaches to
improve the quality, accessibility and
affordability of the Medicare Part C and
Part D programs and to improve the
CMS customer experience. While
satisfaction with these programs remain
high, these proposals are responsive to
input we received from stakeholders
while administering the program, as
well as through a Request for
Information process earlier this year.
Additionally, this regulation includes a
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number of provisions that will help
address the opioid epidemic and
mitigate the impact of increasing drug
prices in the Part D program.
B. Overall Impact
We examined the impact of this final
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), Section 1102(b) of the Social
Security Act, Section 202 of the
Unfunded Mandates Reform Act of 1995
(March 22, 1995; Pub. L. 104–4),
Executive Order 13132 on Federalism
(August 4, 1999), the Congressional
Review Act (5 U.S.C. 804(2)), and
Executive Order 13771 on Reducing
Regulation and Controlling Regulatory
Costs (January 30, 2017).
The Regulatory Flexibility Analysis
(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.
The health insurance industry was
examined in depth in the RIA prepared
for the proposed rule on establishment
of the MA program (69 FR 46866,
August 3, 2004). It was determined, in
that analysis, that there were few, if any,
‘‘insurance firms,’’ including HMOs that
fell below the size thresholds for
‘‘small’’ business established by the
Small Business Administration (SBA).
We assume that the ‘‘insurance firms’’
are synonymous with health plans that
conduct standard transactions with
other covered entities and are, therefore,
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the entities that will have costs
associated with the new requirements
finalized in this rule. At the time the
analysis for the MA program was
conducted, the market for health
insurance was and remains, dominated
by a handful of firms with substantial
market share.
However, we estimate that the costs of
this rule on ‘‘small’’ health plans do not
approach the amounts necessary to be a
‘‘significant economic impact’’ on firms
with revenues of tens of millions of
dollars. Therefore, this rule would not
have a significant economic impact on
a substantial number of small entities.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
analysis for any rule or regulation
proposed under Title XVIII, Title XIX,
or Part B of the Act that may have
significant impact on the operations of
a substantial number of small rural
hospitals. We are not preparing an
analysis for section 1102(b) of the Act
because the Secretary certifies that this
rule will not have a significant impact
on the operations of a substantial
number of small rural hospitals.
Section 202 of the Unfunded
Mandates Reform Act of 1995 (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 2017, that
threshold is approximately $148
million. This proposed rule is not
anticipated to have an effect on State,
local, or tribal governments, in the
aggregate, or on the private sector of
$148 million or more.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
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rule) that imposes substantial direct
requirement costs on state and local
governments, preempts state law, or
otherwise has federalism implications.
Since this rule does not impose any
substantial costs on state or local
governments, the requirements of
Executive Order 13132 are not
applicable.
If regulations impose administrative
costs on MA Plans and Part D Sponsors,
such as the time needed to read and
interpret this proposed rule, we should
estimate the cost associated with
regulatory review. There are currently
468 MA plans and Part D Sponsors.
We assume each plan will have one
designated staff member who will read
the entire rule.
Using the wage information from the
BLS for medical and health service
managers (Code 11–9111), we estimate
that the cost of reviewing this rule is
$105.16 per hour, including overhead
and fringe benefits (https://www.bls.gov/
oes/2016/may/naics4_621100.htm).
Assuming an average reading speed, we
estimate that it would take
approximately 15.6 hours for each
person to review this proposed rule. For
each MA plan that reviews the rule, the
estimated cost is therefore, $1,640 (15.6
hours × $105.16). Therefore, we estimate
that the total cost of reviewing this
regulation is $767,520 ($1,640 × 468
reviewers).
In accordance with the provisions of
Executive Order 12866, this rule was
reviewed by the Office of Management
and Budget.
C. Anticipated Effects
1. CARA Provisions
Proposed § 423.153(f) would
implement provisions of section 704 of
CARA, which allows Part D plan
sponsors to establish a drug
management program that includes
‘‘lock-in’’ as a tool to manage an at-risk
beneficiary’s access to coverage of
frequently abused drugs.
Under CARA, potentially at-risk
beneficiaries are to be identified under
guidelines developed by CMS with
stakeholder input. Also, the Secretary
must ensure that the population of atrisk beneficiaries can be effectively
managed by Part D plans. CMS
considered a variety of options as to
how to define the clinical guidelines.
We provide the estimated population of
potential at-risk beneficiaries under
different guidelines that take into
account that the beneficiaries may be
overutilizing opioids, coupled with use
of multiple prescribers and/or
pharmacies to obtain them, based on
retrospective review, which makes the
population appropriate to consider for
‘‘lock-in’’ and a description of the
various options. We note that the
measurement year for the estimates was
2015.
56479
For background, the current Part D
Opioid Overutilization policy and
Overutilization Monitoring System
(OMS) has been successful at reducing
high risk opioid overutilization. Under
this policy, plans retrospectively
identify beneficiaries at high risk of an
adverse event due to opioids and use of
multiple prescribers and pharmacies.
CMS created the OMS to monitor plans’
effectiveness in complying with the
policy. The OMS criteria incorporate the
CDC Guideline for Prescribing Opioids
for Chronic Pain (March 2016) (CDC
Guideline) to identify beneficiaries who
are possibly overutilizing opioids and
are at high risk but the CDC Guideline
is not a prescribing limit. CDC identifies
50 Morphine Milligram (MME) as a
threshold for increased risk of opioid
overdose, and to generally avoid
increasing the daily dosage to 90 MME.
Plans are expected to perform case
management for each beneficiary
identified in OMS and respond using
standardized responses. If viewed as
helpful by a prescriber, plans may
implement a beneficiary-specific claim
edit at the point-of-sale to prevent
coverage of opioids outside of the
amount deemed medically necessary by
the prescriber. Plans may also
implement an edit in the absence of
prescriber response to case
management.
TABLE 25—GUIDELINES TO IDENTIFY AT-RISK BENEFICIARIES
Option
Average MME
1 .............................................................
2 .............................................................
3 .............................................................
4 .............................................................
5 .............................................................
>=90
>=90
>=90
>=90
>=90
>=90
>=90
>=90
>=90
>=90
Number of opioid prescribers and
opioid dispensing pharmacies
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
Average MME
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5+
7+
abused drugs as all and only opioids for
the treatment of pain. The guidelines to
identify at-risk beneficiaries would be
the current Part D OMS criteria finalized
for 2018 after stakeholder input. Plans
that adopt a drug management program
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4+
1+
4+
1+
3+
1+
3+
1+
3+
1+
Number of opioid prescribers or opioid
dispensing pharmacies
>=50 ......................................................
Any MME level ......................................
Under Option 1, CMS would propose
to integrate the CARA lock-in provisions
with our current Part D Opioid
Overutilization Policy/Overutilization
Monitoring System (OMS). We will
propose to initially define frequently
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4+
6+
4+
5+
3+
5+
3+
4+
3+
3+
Estimated number
of potentially
at-risk Part D
beneficiaries
Sfmt 4702
5+
7+
33,053
52,998
103,832
152,652
319,133
Estimated number
of potentially
at-risk Part D
beneficiaries
153,880
would have to engage in case
management of the opioid use of all
enrollees who meet these criteria, which
would be reported through OMS and
plans must provide a response for each
case. The estimated number of potential
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at-risk beneficiaries in 2019 using
Option 1 is 33,053. Option 1 would
allow plans to use pharmacy/prescriber
lock in as an additional tool to address
the opioid overutilization of identified
at-risk beneficiaries.
Option 2, 3, 4, and 5 are operationally
the same as Option 1, including 90
MME, but would identify approximately
52,998 to 319,133 beneficiaries in 2019
due to different clinical guidelines
related to the number of opioid
prescribers and opioid dispensing
pharmacies. These options would result
in up to 10 times the program size
compared to Option 1.
Finally, under Option 6, the
guidelines to identify potentially at-risk
beneficiaries would not be fully
integrated into our current OMS criteria.
This option would identify beneficiaries
whose opioid use is at the 50 MME level
instead of 90, and the estimated number
of potentially at-risk beneficiaries in
2019 is 153,880. Of these,
approximately 29,000 would meet these
criteria and the current OMS criteria.
We seek comment on proposed Option
1 or if any of the alternative options may
be currently viewed as manageable for
Part D sponsors to implement.
In addition, while these criteria
would identify far more potentially atrisk beneficiaries, we may have to
implement these options in a way that
plans that adopt a drug management
program would not have to review the
opioid use of all enrollees who meet
these criteria. This would mean a
change in the structure of the successful
OMS or a separate administrative
structure for prescription drug
management programs.
As noted in section II. of this rule, we
have chosen to propose Option 1. This
approach is a cautious approach for the
initial implementation year of the CARA
‘‘lock-in’’ provisions. We believe these
provisions will result in the following
savings to the program.
We estimate that the CARA provisions
would result in a net savings of $10
million (the estimated savings of $13
million less the total estimated costs of
$2,836,651 = $10,163,349, rounded to
the nearest million) in 2019. The
following are details on each of these
savings.
We assume, based on past experience
with OMS, that about 61 percent of atrisk beneficiaries may reduce
prescriptions for frequently abused
drugs and will no longer meet the
clinical criteria. This means that
prescriber and pharmacy lock-in would
impact the remaining 39 percent of atrisk beneficiaries or 39 percent × 33,000
at-risk beneficiaries = 12,870 at-risk
beneficiaries. We estimate that the
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average number of scripts per year on
frequently abused drugs for those at-risk
beneficiaries is about 48 and the average
cost per script is about $106 in 2016.
Our data show that those beneficiaries
who would meet the proposed criteria
for identification as an at-risk
beneficiary and have a limitation placed
on their access to opioids, have 4
opioids scripts per month on average.
OACT anticipates between 10 and 30
percent reduction in prescriptions for
frequently abused drugs would be
possible through drug management
programs and picked the average, 20
percent. Therefore, we believe there
could be a 20 percent reduction in the
prescriptions for frequently abused
drugs for those 12,870 beneficiaries,
resulting in a projected savings of about
$13 million to Medicare in 2019.
Part D plan sponsors would also be
required to send at-risk beneficiaries
multiple notices to notify them of about
their plan’s drug management program.
Part D plan sponsors are already
expected to send a notice to some
beneficiaries when the Part D plan
sponsors decide to implement a
beneficiary-specific POS claim edit for
opioids. Therefore, we anticipate
limited additional burden for Part D
plan sponsors to send certain at-risk
beneficiaries an additional notice to
indicate their lock-in status.
Since 2013, there have been 4,617
POS edits submitted into MARx by plan
sponsors for 3,961 unique beneficiaries
as a result of the drug utilization review
policy. That results in approximately
923 edits annually. If we assume that
the number of edits or access to
coverage limitations will double due to
the addition of pharmacy and prescriber
‘‘lock-in’’ to OMS, to approximately
1,846 such limitations, we estimate
3,692 initial and second notices
(number of limitations (1,846)
multiplied by the number of notices (2))
total corresponding to such edits/
limitations. For purposes of this
estimate, we assume that all
beneficiaries who receive initial notices
will be placed on an access limitation.
We estimate it would take an average of
5 minutes (0.083 hours) at $39.22/hour
for an insurance claim and policy
processing clerk to prepare each notice.
The burden of 307 hours (3,692 notices
× 0.083 hour) at a cost of $12,040.54
(307 hour × $39.22/hr) in 2019 was
estimated in section III of this rule.
Part D plan sponsors are required to
upload these new notice templates into
their internal claims systems. We
estimate that 219 Part D plan sponsors
(31 PDP parent organizations and 188
MA–PD parent organizations) will be
subject to this requirement. We estimate
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that it will take on average 5 hours at
$81.90/hour for a computer programmer
to upload the notices into their claims
systems. This would result in a total
burden of 1,095 hours (5 hours × 219
sponsors) at a cost of $89,680.50 (1,095
hour × $81.90/hr). In aggregate, the
burden to prepare and upload these
additional notices was estimated as
1,402 hours (307 hours + 1,095 hours)
at a cost of $101,721 ($12,040 + $89,681)
in 2019 in section III. of this proposed
rule.
Part D plan sponsors may also
renegotiate the contracts with network
pharmacies and network prescribers in
the case of MA–PDs. For Part D plan
sponsors that contract with pharmacies
only, we estimate it would take 10 hours
at $134.50/hour for lawyers to conduct
the PDP contract negotiations with
network pharmacies. Considering 31
sponsors we estimate a total burden of
310 hours at a cost of $41,695 (310 hour
× $134.50/hour). For MA–PDs who also
contract with prescribers, we estimate
that the annual burden for negotiating a
contract with network providers who
can prescribe controlled substances to
be 3,760 hours (188 MA–PDs × 20 hours
per sponsor) at a cost of $505,720 (3,760
hour × $134.50/hour). The total
estimated burden associated with the
contract negotiations from both PDP and
MA–PD sources in 2019 was estimated
as 4,070 hours (310 hours + 3,760 hours)
at a cost of $547,415 ($41,695 +
$505,720).
We estimate that, in order to
implement pharmacy or prescriber lockin, Part D plan sponsors would have to
program edits into their pharmacy
claims systems so that once they restrict
an at-risk beneficiaries’ access to
coverage for frequently abused drugs
through applying pharmacy or
prescriber lock-in, claims at a nonselected pharmacies or associated with
prescriptions for frequently abused
drugs from non-selected prescribers
would be rejected. We believe that most
Part D plan sponsors with Medicaid or
private lines of business will have
existing lock-in programs in those lines
of business to pull efficiencies from. We
estimate it would take a total number of
26,280 labor hours across all 219 Part D
plan sponsors (31 PDP parent
organizations and 188 MA–PD parent
organizations) at a wage of $81.90 an
hour for computer programmers to
program these edits into their existing
systems. Thus, the total cost to program
these edits is 26,280 hours × $81.90 =
$2,152,332.
The right of an enrollee to appeal an
at-risk determination will also have an
associated cost. As explained, we
estimate a total hourly burden of 178
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sradovich on DSK3GMQ082PROD with PROPOSALS2
hours at an annual estimated cost of
$35,183 in 2019. As previously
discussed, we estimate that 1,846
beneficiaries would meet the criteria for
being identified as an at-risk
beneficiary. Based on validated program
data for 2015, 24 percent of all adverse
coverage determinations were appealed
to level 1. Given the nature of drug
management programs, the extensive
level of case management conducted by
plans prior to making the at-risk
determination, and the opportunity for
an at-risk beneficiary to submit
preferences to the plan prior to lock-in
implementation, we believe it is
reasonable to assume that this rate of
appeal will be reduced by at least 50
percent for at-risk determinations made
under a drug management program.
Therefore, this estimate is based on an
assumption that about 12 percent of the
beneficiaries estimated to be subject to
an at-risk determination (1,846) will
appeal the determination. Hence, we
estimate that there will be 222 level 1
appeals (1,846 × 12 percent). We
estimate it takes 48 minutes (0.8 hours)
to process a level 1 appeal. There is a
statutory requirement that a physician
with appropriate expertise make the
determination for an appeal of an
adverse initial determination based on
medical necessity. Thus, we estimate an
hourly burden of 178 hours (222 appeals
× 0.8) at a cost of $197.66 per hour for
physicians to perform these appeals.
Thus the total cost in 2019 is estimated
as $35,183 = 178 hours × $197.66.
In aggregate, this provision would
result in a net savings of $13 million ¥
($101,721 + $547,415 + $2,152,332 +
$35,183) = $13 million ¥ $2,836,651 =
$10,163,349 (or $10,000,000 if rounded
to nearest million) in 2019.
2. Reducing the Burden of the
Compliance Program Training
Requirements (§§ 422.503 and 423.504)
The proposed provision would amend
the regulation so that first-tier,
downstream and related entities (FDR)
no longer are required to take the CMS
compliance training, which lasts 1 hour,
and so that MA organizations and Part
D sponsors no longer have a
requirement to ensure that FDRs have
compliance training. However, it is still
the sponsoring organization’s
responsibility to manage relationships
with its FDRs and ensure compliance
with all applicable laws, rules and
regulations. Furthermore, we would
continue to hold sponsoring
organizations accountable for the
failures of its FDRs to comply with
Medicare program requirements.
We believe that by deleting this
provision we will reduce burden for
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sponsoring organizations and their
FDRs. We estimate that the burden
reduction will be roughly 1 hour for
each FDR employee who would be
required to complete the CMS training
on an annual basis, under the current
regulation at §§ 422.503(b)(4)(vi)(C) and
423.504(b)(4)(vi)(C). We do not know
how many employees were required to
take the CMS training, nor do we know
the exact numbers of FDRs that were
subject to the requirement. Sponsoring
organizations have discretion in not
only which of their contracted
organizations meet the definition of an
FDR, but also discretion in which
employees of that FDR are subject to the
training. But we know from public
comments that PBMs, hospitals,
pharmacies, labs, physician practice
groups and even some billing offices
were routinely subjected to the training.
Unfortunately, the Medicare Learning
Network (MLN) Matters® Web site is not
able to track the number of people that
took CMS’ training, so we cannot use
that as a data source. CMS has reviewed
the Organization for Economic Cooperation and Development’s (OECD)
2015 statistics which show a total of
20,076,000 people employed in the
health and social services fields in the
United States, although certainly not all
of them were subject to CMS’ training
requirement (See https://stats.oecd.org/
index.aspx?DataSetCode=HEALTH_
STAT). Hospitals are one sector of the
health industry that has been
particularly vocal about the burden the
current training requirement has placed
on them and their staff. If we use
hospitals as an example to estimate
potential burden reduction, the OECD
Web site states that there are 5,627
hospitals in the United States,
employing 6,210,602 people. That is an
average of 1,103 people per hospital.
There are approximately 4,800 hospitals
registered with Original Medicare. If we
assume that each one of those hospitals
holds at least one contract with a M A
health plan and all of their employees
were subjected to the training (4,800 ×
1,103 × 1 hour) that is 5,294,400 hours
of burden that would be eliminated by
this proposal. If we add pharmacists,
pharmacy technicians, billing offices,
physician practice groups, we would
expect further burden reduction. OECD
has data for a few more sectors of the
industry, including 295,620
pharmacists, 3,626,060 nurses and
820,251 physicians in the United States.
Many of the physicians and nurses are
likely represented in the 6 million
employed by hospitals. Unfortunately
we don’t have data sources for all
sectors of the industry. However, using
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hospital staff as a starting point and
OECD’s total figure of 20 million
working in the health and social service
fields, we estimate the burden reduction
is likely 6 to 8 million hours each year.
Again, we have no way to determine
exactly how many FDRs there are or
exactly how many staff would be
expected to take the training under the
current regulation, but we hope this
example demonstrates the reduction in
burden this proposal would mean for
the industry. We request comment that
would allow for more complete
monetization of cost savings in the
analysis of the final rule.
Although sponsors must still monitor
FDRs and implement corrective actions
when mistakes are found, we believe
that they are currently already doing
this. Therefore no additional burden
complementing the reduction in burden
is anticipated from this proposal to
eliminate the CMS training.
3. Meaningful Differences in Medicare
Advantage Bid Submissions and Bid
Review (§§ 422.254 and 422.256)
For CY 2018 bids, 2,743 non-D–SNP
non-employer plans (that is, HMO,
HMO–POS, Local PPO, PFFS, and
RPPO) used in house and/or consulting
actuaries to address the meaningful
difference requirement based on CY
2018 bid information. The most recent
Bureau of Labor Statistics report states
that actuaries made an average of $54.87
an hour in 2016, and we estimate that
2 hours per plan are required to fully
address the meaningful difference
requirement. The estimated hours are
based on assumptions developed in
consultation with our Office of the
Actuary. We additionally allow 100
percent for benefits and overhead costs
of actuaries, resulting in an hourly wage
of $54.87 × 2 = $109.74. Therefore, we
estimate a savings of 2 hours per plan
× 2,743 plans = 5,486 hours reduction in
hourly burden with a savings in cost of
5,486 hours × $109.74 = $602,033.64,
rounded down to $0.6 million to be
saved annually under this proposal.
The number of plan bids received by
CMS may increase because of a variety
of factors, such as payments, bidding
and service area strategies, serving
unique populations, and in response to
other program constraints or
flexibilities. However, CMS expects that
eliminating the meaningful difference
requirement will improve the plan
options available for beneficiaries, but
do not believe the number of similar
plan options offered by the same MA
organization in each county will
necessarily increase significantly or
create more confusion in beneficiary
decision-making related specifically to
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the number of plan options. New
flexibilities in benefit design and more
sophisticated approaches to consumer
engagement and decision-making
should help beneficiaries, caregivers,
and family members make informed
plan choices.
CMS does not believe this proposed
change will have a significant impact on
health care providers. The number of
plans offered by organizations in each
county are not expected to increase
significantly as a result of this change
and health care provider contracts with
MA organizations typically include all
of the organization’s plans rather than
having separate contracts for each plan.
In addition, CMS does not expect a
significant increase in time spent in bid
review as a direct result of eliminating
meaningful difference nor increased
provider burden.
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4. Physician Incentive Plans—Update
Stop-Loss Protection Requirements
(§ 422.208)
Some physician contracts with MA
organizations provide that the MA
organization pay the physician a
capitated amount to assume financial
responsibility for services (for example,
hospital costs) that they do not
personally render. CMS refers to
capitations to physicians that include
services the physicians do not render as
‘‘global capitation.’’ When physicians
are globally capitated to the extent that
they can lose more than 25 percent of
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their income, they are required to be
covered by stop-loss insurance. We
propose to replace the current insurance
schedule in the regulation with updated
stop-loss insurance requirements that
would allow insurance with higher
deductibles. The new schedule would
result in a significant reduction to the
cost of obtaining stop-loss insurance.
The higher deductibles are consistent
with the increase in medical costs due
to inflation.
To determine the cost of different
stop-loss insurance policies, we used
claim distributions from original
Medicare enrollees. Then, we assumed
an average loading for administrative
and profit of 20 percent. Using these
assumptions, we estimate that plans and
physicians would save an average of
$100 per globally capitated member per
year in total costs. The derivation of this
$100 figure is as follows:
Under the current regulation at
§ 422.208(f)(2)(iii), stop-loss insurance
for the provider (at the MA
organization’s expense) is needed only
if the number of members in the
physician’s group at global risk under
the MA plan is less than 25,000. The
average number of members in the
under 25,000 group estimated under the
current regulation is 6,000 members.
Ideally, to obtain an average, we should
weight the panel sizes in the chart at
§ 422.208(f)(2)(iii) by the number of
physician practices and the number of
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capitated patients per practice per plan.
However, this information is not
available. Therefore, we used the
median of the panel sizes listed in the
chart at § 422.208(f)(2)(iii), which is
about 8,000. Since the per member per
year (PMPY) stop-loss premiums are
greater for a smaller number of patients,
we lowered this 8,000 to 6,000 to reflect
the fact that the distribution of capitated
patients is skewed to the left. We use
this rough estimate of 6,000 for its
estimates.
For these 6,000 members, the current
regulation at § 422.208(f)(2)(iii) (the
chart) shows the physician needs stoploss insurance for $37,000 in a
combined attachment point
(deductible). The $37,000 is obtained by
using linear interpolation on the chart at
§ 422.208(f)(2)(iii), replacing panel sizes
with midpoints of ranges and rounding
to the nearest 1,000. To find the
premium for a stop-loss insurance with
a deductible of $37,000, we use Table
26, which reflects current insurance
rates, that is, what would be charged
today. By using linear interpolations on
the columns with $30,000 and $40,000
and rounding to the nearest $1,000, we
see that the PMPY premium for
insurance with $37,000 combined
attachment points is $2,000 PMPY. This
$2,000 premium reflects the baseline
charge today for a combined deductible
of $37,000.
BILLING CODE 4120–01–P
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BILLING CODE 4120–01–C
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TABLE 26: COMBINED ATTACHMENT POINTS BEFORE INCLUDING NPEs
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Next, we compute the premium under
the proposed rule. We still assume an
average of 6,000 capitated members.
However, the proposed rule allows
higher deductibles corresponding to
medical inflation. By using linear
interpolation on the columns headed
with 50,000 and 60,000 combined
attachment points and rounding. We see
that a deductible (combined attachment
point) of $57,000 corresponds to 6,000
capitated members and a premium of
$1,500 PMPY.
The savings in premium between
using § 422.208(f)(iii) to calculate
deductibles (combined attachment
point) and using Table A to calculate
deductibles is $2000 ¥ $1500 = $500
PMPY. We assume that the average
loading for profit and administrative
costs is roughly 20 percent. So our
PMPY savings is 20 percent × 500 =
$100 PMPY. The remaining $500 ¥
$100 = $400 in savings is on net
benefits. That reduction does not
produce any savings since the plans and
physicians are simply trading claims for
premiums.
In 2007, we estimated that 7 percent
of enrollees were receiving services
under capitated arrangements. Although
we do not have more current data, based
on CMS observation of managed care
industry trends, we believe that the
percentage is now higher, and we
assume that 11 percent of enrollees are
now paid under global capitation. There
are currently 18.6 million MA
beneficiaries. We estimate that about
18.6 million × 11 percent = 2,046,000
MA members are paid under some
degree of global capitation. Thus, the
total aggregate projected annual savings
under this proposal is roughly $100
PMPY × 2,046,000 million beneficiaries
paid under global capitation = $204.6
million.
The $204.6 million savings is
removed from the plan bid, but not the
CMS benchmark. If the benchmark
exceeds the bid, Medicare pays the MA
organization the bid (capitation rate and
risk adjustment) plus a percentage of the
difference between the benchmark and
the bid, called the rebate. The rebate is
based on quality ratings and allows
Medicare to share in the savings to the
plans; our experience with rebates
shows that the average rebate is on the
order of 2/3. We assumed that of the
$204.6 million in annual savings,
Medicare would save 35 percent ×
$204.6 million = $71,610,000, and the
remaining 65 percent × $204.6 million
= $132,990,000 would be paid to the
plans. The plan portion of the savings
we project for this proposal would fund
extra benefits or possibly reduce cost
sharing for plan members.
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The figures for 2019 were updated for
2020 to 2023 using enrollment and
inflation factors found in the CMS
trustees report, accessible at: https://
www.cms.gov/reportstrustfunds.
5. Changes to the Agent/Broker
Requirements (§§ 422.2272(e) and
423.2272(e))
We propose to delete the limitation
placed on MA organizations and Part D
sponsors as to how they can respond to
an agent/broker who has become
unlicensed. We propose to delete a
requirement that the MA plan or Part D
plan terminate an unlicensed agent or
broker and contact beneficiaries to
notify them if they had been enrolled by
the unlicensed agent or broker. We
already require MA organizations and
Part D sponsors to use only licensed
agents/brokers. We have established the
requirement to have a licensed agent or
broker in a 2008 final rule (73 FR
54219). That burden assessment is not
changing due to the proposal to remove
paragraph (e) from these sections. The
impact analysis for the specific
provision at paragraph (e) of
§§ 422.2272 and 423.2272 was
established in rule-making in April 2011
(76 FR 21534). As for the impact of
review and compliance activities that
remain to plans after removing the
narrow scope of compliance actions
available to MA organizations and Part
D sponsors, we do not believe this
change would have a significant
increase in burden or financial impact.
Removing this requirement allows state
Department of Insurance (DOI)
requirements to take precedence in this
situation. While some MA organizations
and Part D sponsors may choose to
make operational changes to ensure
compliance, these changes are not based
on this rule, but are required to meet
existing requirements.
6. Coordination of Enrollment and
Disenrollment Through MA
Organizations and Effective Dates of
Coverage and Change of Coverage
We propose to revise our regulations
at § 422.66 to permit default enrollment
of Medicaid managed care plan
members into an MA special needs plan
for dual eligible beneficiaries. Upon a
Medicaid managed care plan member
becoming eligible for Medicare,
qualification for enrollment into the MA
special needs plan for dual eligibles is
contingent on the following:
• State support for the default
enrollment process, and
• The organization’s ability to
identify such individuals at least 90
days in advance of their Medicare
eligibility; and
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• To issue written notification of the
enrollment a minimum of 60 days in
advance.
Our proposal represents the partial
codification of existing policy on
seamless conversion enrollment that has
been specified in subregulatory
guidance for contract years 2006 and
subsequent years, but with additional
parameters and limits. Among the new
limits proposed for seamless conversion
default enrollments are allowing such
enrollments only from the
organization’s Medicaid managed care
plan into an integrated D–SNP and
requiring facilitation from applicable
state (in the form of a contract term and
provision of data). This will result in the
discontinuation of the use of the
seamless conversion enrollment
mechanism by some of the approved
MA organizations. However, as this
enrollment mechanism is voluntary and
not required for participation in the MA
program, we do not believe the
proposed changes would have any
impact to the Medicare Trust Funds. We
invite comments on the potential impact
of the proposed changes on MA
organizations, Medicaid managed care
plans and beneficiaries.
7. Restoration of the MA Open
Enrollment Period (§§ 422.60, 422.62,
422.68, 423.38 & 423.40)
We expect that increasing the amount
of time that MA-enrolled individuals are
given to switch plans will result in
slightly more beneficiaries selecting
plans that receive Quality-Bonus
Payments (QBP). This assessment
reflects our observation that
beneficiaries tend to choose plans with
higher quality ratings when given the
opportunity. The projected costs to the
Government by extending the open
enrollment period for the first 3 months
of the calendar year are $9 million for
CY 2019, $10 million in 2020, $10
million in 2021, $11 million in 2022,
and $12 million in 2023.
In order to estimate the additional
costs for the projection window 2019–
2023, we first made an assumption that
approximately 24,600 MA-enrolled
individuals will switch health plans
from one without a QBP to one with a
QBP during the extended open
enrollment period. The 24,600 enrollee
assumption was determined by using a
combination of published research and
by observing historical enrollment
information. Published research1 shows
that 10 percent of MA enrollees
voluntarily switch MA plans and that
MA enrollees who voluntarily switch
plans change to plans with slightly
higher star ratings than their original
plan, with a modest improvement of
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0.11 stars, on average. The Office of the
Actuary confirmed these findings by
analyzing CMS enrollment data and
provided further detail. We estimate
that of the 10 percent of MA plan
enrollees who switch plans, 15 percent
move to a higher rated plan. Of those
who go to a higher rated plan, we
estimate 40 percent move from a nonQBP plan to a QBP plan. We also
estimate that one-fifth of these enrollees
would take advantage of the new open
enrollment period.
We apply these assumptions to the
estimated MA enrollment for 2019,
20,512,000, which can be obtained from
the CMS Trustee’s Report available at
https://www.cms.gov/reportstrustfunds/.
We find that 24,600 (20,512,000 × 10
percent × 15 percent × 40 percent × 20
percent) people are expected to enroll in
the proposed open enrollment period.
The $9 million in additional costs for
2019 was calculated by multiplying the
24,600 impacted enrollment by the
expected 2019 bonus amount ($637.20).
The Office of the Actuary experiences
an average rebate percentage of 66
percent and an 86 percent backing out
of the projected Part B premium. Hence,
the net savings to the trust funds is
estimated as $9 million = 24,600
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enrollees × $637.20 (Bonus payment) ×
66 percent (rebate percentage) × 86
percent (Reduction in Part B premium),
rounding to $9 million.
Then, we applied trends from the
Trustees Report to the 2019 estimate in
order to project the costs for years 2020
to 2023. The data from the Medicare
Payments to Private Health Plans, by
Trust Fund (Table IV.C.2. of the 2017
Medicare Trustees Report) was used as
the basis for the trends. The trend
estimates are presented in the Table 27
that demonstrates the calculations and
displays the cost estimates for each year
2019–2023.
TABLE 27—CALCULATION OF NET COSTS TO THE MEDICARE TRUST FUNDS
FOR THE EXTENDED OPEN ENROLLMENT PERIOD
2019
Base
year
(million)
Year
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2019
2020
2021
2022
2023
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
9
9
9
9
9
8. Lengthening Adjudication
Timeframes for Part D Payment
Redeterminations and IRE
Reconsiderations
We believe the proposed changes will
result in a reduction of burden to Part
D plan sponsors since they will have
additional time to adjudicate requests
for payment. We also expect a reduction
in burden for the independent review
entity (IRE) since the additional time for
Part D plan sponsors to process these
requests will result in fewer untimely
payment redeterminations that must be
auto-forwarded to the IRE. Based on
recent program data, about 2,000
retrospective payment redetermination
cases are auto-forwarded to the Part D
IRE each plan year. If the proposed 14day timeframe for payment
redeterminations is implemented, we
estimate that about 75 percent of the
payment redetermination cases that are
currently auto-forwarded to the Part D
IRE due to the plan not being able to
meet the adjudication timeframe will
not be auto-forwarded under the 14 day
timeframe; the longer timeframe will
afford Part D plan sponsors an
additional 7 days to process a payment
request, including obtaining necessary
supporting documentation, and to notify
the enrollee of its decision. As a result,
overall plan sponsor burden will be
reduced by not having to auto-forward
about 1,500 payment redetermination
cases to the Part D IRE in a given plan
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Trend
factor
2020
Trend
factor
2021
Trend
factor
2022
Trend
factor
2023
........................
1.078
1.078
1.078
1.078
........................
........................
1.084
1.084
1.084
........................
........................
........................
1.089
1.089
........................
........................
........................
........................
1.086
Net costs
(rounded to
nearest
million)
9
10
10
11
12
year and the Part D IRE’s workload will
be reduced by the same number of
cases. We estimate that it takes Part D
plan sponsors an average of 15 minutes
(0.25 hours) to assemble and forward a
case file to the IRE, for an estimated
savings of 375 hours (1500 cases × 0.25
hours). Using an adjusted hourly wage
of $34.66 based on the Bureau of Labor
Statistics May 2016 Web site for
occupation code 43–9199, ‘‘All other
office and administrative support
workers,’’ (based on a mean hourly
salary of $17.33, which when multiplied
by a factor of two to include overhead,
and fringe benefits, resulting in $34.66
an hour) the total estimated savings to
plans is $12,998 (375 hours × $34.66).
Since the proposed changes involve
requests for payment where the enrollee
has already received the drug, we do not
believe the proposed changes will
impose undue burden on enrollees.
will take 5 minutes (0.083 hours) to
complete this notice. We used an
adjusted hourly wage of $34.66 based on
the Bureau of Labor Statistics May 2016
Web site for occupation code 43–9199,
‘‘All other office and administrative
support workers,’’ which gives a mean
hourly salary of $17.33, which when
multiplied by a factor of two to include
overhead, and fringe benefits, resulting
in $34.66 an hour. Thus, the reduction
in administrative time spent would be
0.083 hours × 47,108 cases = 3,926
hours with a consequent savings of
3,926 hours × $34.66 per hour =
$136,064.
We do not believe the proposed
change will adversely impact health
plan enrollees. The notice we are
proposing to eliminate is duplicative
and enrollees will be notified by the IRE
that their case was received by the IRE
for review.
9. Elimination of Medicare Advantage
Plan Notice for Cases Sent to the IRE
10. Revisions to §§ 422 and 423 Subpart
V, Communication/Marketing Materials
and Activities
The proposed changes at § 422.590(f)
would result in a slight reduction of
burden to Part C plans by no longer
requiring a Notice of Appeal Status for
each case file forwarded to the IRE. The
estimated savings of this proposed
change is based on reduced plan
administration costs. Using the number
of partially and fully adverse cases, we
estimate Part C plans forwarded 47,108
cases to the IRE in 2015. We estimate it
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CMS is proposing to narrow the
definition of ‘‘marketing materials’’
under §§ 422.2260 and 423.2260 to only
include materials and activities that aim
to influence enrollment decisions. CMS
believes the proposed definitions
appropriately safeguard potential and
current MA/PDP enrollees from
inappropriate steering of beneficiary
choice, while not including materials
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that pose little risk to current or
potential enrollees and are not
traditionally considered ‘‘marketing.’’
The proposed change would add text to
§§ 422.2260 and 423.2260 and provide a
narrower definition than is currently
provided for ‘‘marketing materials.’’
Consequently, this definition decreases
the number of marketing materials that
must be reviewed by CMS before use.
Additionally, the proposal would more
specifically outline the materials that
are and are not considered marketing
materials.
We believe the net effects of the
proposed changes would reduce the
burden to MA organizations and Part D
Sponsors by reducing the number of
materials required to be submitted to
CMS for review.
In section IV.F. of this proposed rule,
we estimated the reduced burden to
industry at $1.3 million. There is also a
reduced burden to the federal
government since CMS staff are no
longer obligated to review these
materials. Although all marketing
materials are submitted for potential
review by the MA plans to CMS, not all
materials are reviewed, since some MA
plans, because of a history of
compliance, have a ‘‘file and use’’ status
which exempts their materials from
routine reviews. We estimate that only
10 percent of submitted marketing
materials are reviewed by CMS staff.
Consequently, the savings to the federal
government is 10 percent × 1.3 million
= 0.13 million.
11. Part C & D Star Ratings
There has been a recent trend in the
number of enrollees that have moved
from lower Star Ratings contracts that
do not receive a Quality Bonus Payment
(QBP) to higher rated contracts that do
receive a QBP as part of contract
consolidations. The proposal is to
codify the methodology of the assigned
Star Ratings and to add requirements
addressing when contracts have
consolidated. The methodology and
measures being proposed here are
generally from recent practice and
policies finalized under the section
1853(b) of the Act Rate Announcement.
With regard to consolidations, the Star
Ratings assigned would be based on the
enrollment weighted average of the
measure scores of the surviving and
consumed contract(s) so that the ratings
reflect the performance of all contracts
(surviving and consumed) involved in
the consolidation. We believe that the
proposal would dissuade many plans
from consolidating contracts since it
would be possible for some plans to lose
QBPs under certain scenarios. If less
contracts consolidate to higher Star
Ratings, less QBPs would be paid to
plans and this would result in Trust
Fund savings.
In order to estimate the savings
amounts for the projection window
2019–2023, we first observed the
number of enrollees that have been
impacted by contract consolidations for
the prior 3 contract years (2016 through
2018) using a combination of bid and
CMS enrollment/crosswalk data. The
number of enrollees observed are those
that have moved from a non-QBP
contract to a QBP contract and were
found to be approximately 830,000 in
2016, 530,000 in 2017, and 160,000 in
2018. We assumed that the number of
enrollees moving from a non-QBP
contract to a QBP contract would be
200,000 starting in 2019 and increasing
by 3 percent per year throughout the
projection period. The 200,000 starting
figure was chosen by observing the
decreasing trend in the historical data as
well as placing the greatest weight on
the most recent data point. The 3
percent growth rate is approximately the
projected growth in the MA eligible
population during the 2019–2023
period.
Similarly, we calculated the net per
member per month (PMPM) dollar
impact of the QBP for those enrollees in
contracts that consolidated to be $44.73
in 2018. Again, the PMPM impact was
projected for the 2019–2023 period
using the projected annual trend of 5
percent per year which is similar to the
projected growth rate for MA
expenditures and can be found in the
2017 Trustees Report. We also made an
assumption that even under the
proposed Star Rating methodology
changes, there would still be 50 percent
of the projected impacted enrollees that
would consolidate or individually move
from a non-QBP contract to a QBP
contract when advantageous to the
health plan (lessening the overall
savings impact). Combining the
assumptions previously described, as
well as accounting for the average rebate
percentage of 66 percent and backing
out the projected Part B premium, the
net savings to the trust funds were
calculated to be $32 million for 2019,
$35 million in 2020, $37 million in
2021, $40 million in 2022, and $44
million in 2023. The calculations for the
five annual estimates are presented in
Table 28.
TABLE 28—CALCULATIONS OF NET SAVINGS PER YEAR FOR STAR RATINGS
Year
sradovich on DSK3GMQ082PROD with PROPOSALS2
2019
2020
2021
2022
2023
........
........
........
........
........
Enrollment
(3% annual
trend)
200,000
200,000
200,000
200,000
200,000
PMPM cost
(5% annual
trend)
....................
× 1.03 .........
× 1.03 2 .......
× 1.03 3 .......
× 1.03 4 .......
44.73
44.73
44.73
44.73
44.73
×
×
×
×
×
1.05 .............
1.05 2 ...........
1.05 3 ...........
1.05 4 ...........
1.05 5 ...........
12. Any Willing Pharmacy Standard
Terms and Conditions and Better Define
Pharmacy Types
a. Anticipated Effects
In considering the cost implications of
this proposal, we received varied
perspectives from stakeholders. Part D
plan sponsors, PBMs, and
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Number
months
per year
Percent not
consolidating
(%)
12
12
12
12
12
50
50
50
50
50
manufacturers contend limited
dispensing networks with accreditation
requirements generate cost savings and
add value. Specialty pharmacies
contend the added value avoids
additional costs. Independent
community pharmacies, and
beneficiaries contend broader
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Average
rebate
percentage
(%)
66
66
66
66
66
Backing
out of
Part B
premium
(%)
Net Savings
($ in millions)
86
86
86
86
86
competition and transparency will
generate savings.
Because this provision clarifies
existing any willing pharmacy
requirements, consistent with OACT
estimates, we do not anticipate
additional government or beneficiary
cost impacts from this provision.
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37
40
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TABLE 29—ESTIMATED AGGREGATE COSTS AND SAVINGS TO THE HEALTH CARE SECTOR BY PROVISION
FOR CALENDAR YEARS 2019 THROUGH 2023
Calendar year
($ in millions)
Regulation
section(s)
Provision
2019
2020
2021
2022
Total CYs
2019–2023
($ in millions)
2023
Federal Government (Medicare) Impacts
Any Willing Pharmacy Standard Terms and Conditions and
Better Define Pharmacy Types.
b. Benefits
Proposed clarification of Any Willing
Pharmacy rules, and clarification of the
definition of retail pharmacy would
account for recent changes in the
pharmacy practice landscape and
ensure that existing statutorily-required
Any Willing Pharmacy provisions are
extended to innovative pharmacy
business and care delivery models.
Rural areas are predominantly served
by independent community pharmacies.
The National Community Pharmacist’s
Association (NCPA) estimates that
‘‘independent pharmacies represent 52
percent of all rural retail pharmacies
and there are over 1800 independent
community pharmacies operating as the
only retail pharmacy within their rural
communities 63 64.’’ Additionally, these
pharmacies are increasingly interested
to diversify their business models to
dispense specialty drugs. Consequently,
we believe this proposal may support
small businesses in rural areas and may
help maintain beneficiary access to
specialty drugs from community
pharmacies.
sradovich on DSK3GMQ082PROD with PROPOSALS2
13. Eliminating the Requirement to
Provide PDP Enhanced Alternative (EA)
to EA Plan Offerings With Meaningful
Differences (§ 423.265)
The proposed revision of 423.265
eliminates the requirement for two
enhanced benefit plans offered by a PDP
organization in a service area to be
‘‘substantially different’’. If finalized
this will result in increased plan
flexibilities and a potential increase in
beneficiary plan choice. We expect this
provision to reduce plan burden and
could provide a very modest savings to
plans sponsors of approximately
$60,000. The savings represent an
estimate of the time not spent by
certifying actuaries to ensure that a
63 National Community Pharmacist’s Association
letter to CMS Administrator, Seema Verma, June 7,
2017. Available at https://www.ncpa.co/pdf/ncpamedicaid-recommend-cms-june-2017.pdf).
64 National Community Pharmacist’s Association
comment letter to CMS–4159–P, March 2014.
Available at //www.ncpa.co/pdf/NCPA-Commentsto-CMS-Proposed-Rule-2015FINAL-3.7.14.pdf.
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0
meaningful difference threshold is met
between two PDP EA offerings. Based
on the preliminary CY 2018 landscape,
if all PDP organizations that submitted
an EA benefit design had also submitted
the maximum of two EA plans, the
result would be approximately 275 EA
to EA plan pairings that would have
required actuary time spent in
evaluation of the meaningful difference
requirement. We further estimate that it
would take an actuary 2 hours to write
a meaningful difference requirement.
Based on the Bureau of Labor Statistics
(BLS) latest wage estimates, https://
www.bls.gov/oes/current/
oes152011.htm, the mean hourly wage
for actuaries, occupation code 15–2011
is $54.87 which when multiplied by 2
to allow 100 percent for overhead and
fringe benefits is $109.74 an hour. Thus
our total estimated burden is 275 EAs ×
2 Hours per EA = 550 hours at a cost
of 550 × $109.74 = $60357. While there
is potential savings for PDP plan
sponsors under this proposal, these
savings could be offset for organizations
who make the business decision to
prepare and submit additional bids if
this proposal is finalized. If the EA to
EA threshold was the sole barrier to a
PDP sponsor offering a second EA plan,
(that is, the sponsor currently only
offers one enhanced plan), based on the
CY2018 PDP landscape, we could
anticipate a modest increase of
approximately 125 additional enhanced
plans (15 percent increase). Although
we believe it unlikely that all PDP
sponsors would opt to add an additional
plan.
14. Preclusion List Requirements for
Prescribers in Part D and Individuals
and Entities in MA, Cost Plans and
PACE
The costs and savings, as reflected in
the total net savings, associated with our
preclusion list proposals would be those
identified in the collection of
information section of this rule:
Specifically, (1) the system costs
associated with the Part D preclusion
list; (2) costs associated with the
preparation and sending of written
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0
0
0
0
0
notices to affected Part D prescribers
and beneficiaries; and (3) the savings
that would accrue from individuals and
entities no longer being required to
enroll in or opt-out of Medicare to
prescribe Part D drugs or furnish Part C
services and items. Specifically, we
project a total net savings, as described
in detail in the collection of information
portion of this rule, over the first 3 years
of this rule of $35,526,652 ($3,423,852
for Part D + $32,102,800 for Part C), or
a 3-year annual average of $11,842,217).
Costs associated with an alternative
approach are found in the Alternatives
Considered portion of this section. We
would be responsible for the
development and monitoring of the
preclusion list using its own resources.
This would be funded as part of our
screening activities. We do not
anticipate a change in the number of
individuals or entities billing for
service, for we would only be denying
payment to those parties that meet the
conditions of the preclusion list. Costs
associated with an alternative approach
are found in the Alternatives
Considered section of this rule.
We welcome public comment on
these estimates, for stakeholder
feedback could assist us in developing
more concrete projections.
15. Removal of Quality Improvement
Project for Medicare Advantage
Organizations (§ 422.152)
This provision would result in a total
savings of $19,305 to the federal
government. The driver of the savings is
the removal of burden for federal
employees to review Quality
Improvement Project (QIP) attestations.
MA organizations are required to
annually attest that they have an
ongoing QIP in progress and the Central
Office reviews these attestation
submissions. To estimate amounts, we
considered how many QIP attestations
are performed annually.
We estimate that—
• Central Office staff will require one
person reviewing for 0.25 hours to
review a single QIP attestation. The
Central Office staff typically have higher
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GS levels. We assume a GS grade 13,
step 5, with a mean wage of $51.48,
which with an allowance of 100 percent
for overhead and fringe benefits
becomes $102.96. This is based on the
2017 publicly available wages found on
the Office of Personnel Management
Web site at https://www.opm.gov/
policy-data-oversight/pay-leave/
salaries-wages/2017/general-schedule/.
• We calculate the savings to the
federal government by multiplying the
number of anticipated QIP attestation
submissions (750) times the number of
CMS staff it takes to complete a
review— (1) times the adjusted wage for
that staff ($102.96) (750 × 1 × $102.96
× 0.25 hour), which equals $19,305.
Thus, the total savings of this
provision are $31,968, of which
$12,663.75 are savings to the industry,
as indicated in section III. of this
proposed rule, and $19,305 are savings
to the federal government.
16. Reducing the Burden of the Medical
Loss Ratio Reporting Requirements
Our proposal to significantly reduce
the amount of MLR data submitted to
CMS would eliminate the need for CMS
to continue to pay a contractor,
approximately $390,000 a year for the
following:
• To perform initial analyses, or desk
reviews, of the detailed MLR reports
submitted by MA organizations.
• Part D sponsors in order to identify
omissions and suspected inaccuracies
and to communicate their findings to
MA organizations and Part D sponsors
in order to resolve potential compliance
issues.
In addition, because we would be
receiving only the minimum amount of
data from MAOs and Part D sponsors,
we expect that we would reduce the
amount we pay to contractors for
software development, data
management, and technical support
related to MLR reporting. We currently
pays a contractor $300,000 each year for
these services. Although we expect that
MAOs and Part D sponsors would
continue to use the HPMS or a similar
system to submit and attest to their
simplified MLR submissions, we would
no longer need to maintain and update
MLR reporting software with validation
features, to receive certain data extract
files, or to provide support for desk
review functionality. We estimate, by
eliminating these services, we would
reduce our payments to contractors by
approximately $100,000 a year.
In total, we estimate that the proposed
changes to the MLR reporting
requirements will save the government
$490,000 a year. As noted in the
Collection of Information section of this
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proposed rule, the proposed changes to
the MLR reporting requirement will
save MA organizations and Part D
sponsors $904,884 a year. Thus, the
total annual savings of this proposal are
$1,446,417: $490,000 to the government
and $904,884 to MA organizations and
Part D sponsors.
We do not anticipate that our
proposal to modify the regulations at
§§ 422.2430 and 423.2430 to specify that
Medication Therapy Management
(MTM) programs that comply with
§ 423.153(d) are quality improvement
activities (QIA) will significantly reduce
stakeholder burden. As explained in
section II.C.1.b.(2). of this proposed
rule, we stated in the May 23, 2013 final
rule (78 FR 31294) that MTM activities
qualify as QIA, provided they meet the
requirements set forth in §§ 422.2430
and 423.2430. We expect that most if
not all MTM programs that comply with
§ 423.153(d) would already satisfy the
QIA requirements set forth in current
§§ 422.2430 and 423.2430. Therefore,
we do not anticipate that the proposal
to explicitly include MTM programs in
QIA will have a significant impact on
burden.
17. Expedited Substitutions of Certain
Generics and Other Midyear Formulary
Changes (§§ 423.100, 423.120, and
423.128)
The proposed provisions would
specifically permit Part D sponsors that
meet our requirements to remove brand
name drugs (or change their cost-sharing
status) when replacing them with (or
adding) newly approved generics
without providing advance notice or
submitting formulary change requests.
We would also permit Part D sponsors
to make such changes at any time of the
year rather than waiting for them to take
effect 2 months after the start of the plan
year. A related proposal would except
from our transition policy applicable
generic substitutions and additions with
cost-sharing changes. Lastly, we are
proposing to decrease the days of
enrollee notice and refill required in
cases in which (aside from generic
substitutions and drugs deemed unsafe
or removed from the market) drug
removal or changes in cost-sharing will
affect enrollees.
The FDA has noted that generics are
typically sold at substantial discounts
from the branded price. (‘‘Generic
Drugs: Questions and Answers,’’ see
FDA Web site, https://www.fda.gov/
drugs/resourcesforyou/consumers/
questionsanswers/ucm100100.htm,
accessed June 22, 2017.) However, we
do not believe that significant savings
will necessarily result from these
proposed provisions, because
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historically Part D sponsors have been
able to anticipate the generic launches
well and migrate the brand scripts to
generics smoothly once the generic
drugs become available. The proposal
could provide some administrative
relief for Part D sponsors, although the
savings won’t be very significant.
In addition regardless of any first year
effect, we do not believe there could be
any significant effect for subsequent
years. Our proposed changes would
permit immediate specified generic
substitutions throughout the plan year
or a 30 rather than a 60 day notice
period for certain substitutions. Part D
sponsors submit for review each year an
entirely new formulary and presumably
the timing of substitutions would
overlap across plan years a minimal
amount of times.
18. Treatment of Follow-On Biological
Products as Generics for Non-LIS
Catastrophic and LIS Cost Sharing
a. Savings
Proposed codification of follow-on
biological products as generics for the
purposes of LIS cost sharing and nonLIS catastrophic cost sharing will
reduce marketplace confusion about
what level of cost-sharing Part D
enrollees should be charged for followon biological products. By establishing
cost sharing at the lower level, this
provision would also improve Part D
enrollee incentives to use follow-on
biological products instead of reference
biological products. As discussed
previously, this would reduce costs to
Part D enrollees and generate savings for
the Part D program.
In addition, we believe that reducing
confusion in the marketplace
surrounding this issue will improve
beneficiary protections while improving
enrollee incentives to choose follow-on
biological products over reference
biological products. (This proposed
provision to classify follow-on
biological products as generic drugs are
for the purposes of cost sharing for nonLIS cost sharing in the catastrophic
portion of the benefit and LIS enrollees
in any phase of the benefit.) Improved
incentives to choose lower cost
alternatives will reduce costs to Part D
enrollees and the Part D program. OACT
estimates this proposal will provide a
modest savings of $10 million in 2019,
with savings increasing by
approximately $1 million each year
through 2028.
OACT anticipates some natural shift
from reference biological products to
follow-on biological products, but
follow-on biological products’ price
differential and market share are lower
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OACT estimates this proposal will
result in a minor shift of an additional
5 percent of prescriptions to follow-on
biological products by LIS enrollees
under this proposal. Consequently,
savings are not estimated to be
significant at this time.
with OACT’s anticipation and OACT
expects other follow-on biological
products to follow the similar pattern.
Based on 2017 year-to-date data on the
per script price difference between
Neupogen® and Zarxio®, OACT
estimated follow-on biological products
to be 16 percent less expensive than
their reference biological product.
than that observed for small molecule
generic drugs. Currently, Zarxio® data
provide the only meaningful
comparison available to date, as very
limited data exist on the other six
approved (as of September 14, 2017)
follow-on biological products. The
market dynamic between Neupogen®
and Zarxio® has behaved consistent
TABLE 30—ESTIMATED AGGREGATE COSTS AND SAVINGS TO THE HEALTH CARE SECTOR BY PROVISION
FOR CALENDAR YEARS 2019 THROUGH 2023
Regulation
section(s)
Provision
Calendar year ($ in millions)
2019
2020
2021
2022
2023
Total CYs
2019–2023
($ in millions)
Federal Government (Medicare) Impacts
Treatment of Follow-On Biological Products as Generics for
LIS Cost Sharing and Non-LIS Catastrophic Cost Sharing.
423.4 ..............
10
11
sradovich on DSK3GMQ082PROD with PROPOSALS2
b. Benefits of Treatment of Follow-On
Biological Products as Generics for NonLIS Catastrophic and LIS Cost Sharing
Proposed codification of follow-on
biological products as generics for the
purposes of LIS cost sharing and nonLIS catastrophic cost sharing will
reduce marketplace confusion about
what level of cost-sharing Part D
enrollees should be charged for followon biological products. By establishing
cost sharing at the lower level, this
provision would also improve Part D
enrollee incentives to use follow-on
biological products instead of reference
biological products. As discussed
previously, this would reducing costs to
Part D enrollees and generate savings for
the Part D program.
patients that we now believe they do not
need to effectuate the transition.
We believe this provision will
produce cost-savings to the Medicare
Part D program because it requires fewer
drugs to be dispensed under transition,
particularly in the LTC setting.
However, we are unable to estimate the
cost-savings, because it largely depends
upon which and how many drugs are
dispensed as transition drugs to Part D
beneficiaries in the LTC setting in the
future. Also, we are unable to determine
which PDEs involve transition supplies
in LTC in order to provide an estimate
of future savings based on past
experience with transition supplies in
LTC in the Part D program.
19. Changes to the Days’ Supply
Required by the Part D Transition
Process
We do not believe our proposal in this
section would impose any new burden
on any stakeholder. Since Part D
sponsors and their PBMs already have
prescription drug pharmacy claims
systems programmed to provide
transition to plan enrollees in the
outpatient setting, they would only have
to make a technical change to these
systems that consists of changing the
required number of days’ supply if it is
not already 30 days. In addition, Part D
sponsors and their PBMs would have to
cease treating these enrollees in the LTC
setting separately from enrollees in the
outpatient setting for purposes of
transition. We also do not believe this
proposal would impose any new burden
on LTC facilities and the pharmacies
that serve them. If finalized, we believe
this regulation would eliminate the
additional time that LTC facilities and
pharmacies have to transition Part D
G. Alternatives Considered
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1. Follow-On Biological Products as
Generics for Non-LIS Catastrophic and
LIS Cost Sharing
The critical policy decision was how
broadly or narrowly to classify followon biological products as generics.
Overly broad classification might easily
overstep the distinctions between
generic drugs and follow-on biologics in
statute and those drawn by the United
States Food and Drug Administration
(FDA), leading to confusion in the
marketplace, and potentially
jeopardizing Part D enrollee safety.
Inappropriate utilization of biological
products and increased need for
additional medical services, in turn,
increase costs to the Part D program. A
narrow classification can appropriately
resolve marketplace confusion while
also improving Part D enrollee
incentives to choose lower cost
alternatives.
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12
13
14
60
2. Any Willing Pharmacy Standard
Terms and Conditions and Better Define
Pharmacy Types
The critical policy decision was how
to strike the right balance to clarify
confusion in the marketplace, afford
Part D plan sponsor flexibility, and
incorporate recent innovations in
pharmacy business and care delivery
models without prematurely and
inappropriately interfering with highly
volatile market forces.
3. Preclusion List
We considered a preclusion list that
would embody preventive provisions
that would place on the preclusion list
not just those providers and suppliers
who are prescribing Part D drugs or who
are providing services to Medicare
beneficiaries who are receiving their
Medicare benefit from a MA plan. The
savings and cost estimates associated
with that alternative are based on the
following. Prescription drug event (PDE)
and encounter data identifies providers
who furnish Part C services and items
and prescribe Part D drugs to Medicare
beneficiaries. Given the frequency with
which MA organizations and Part D
sponsors typically submit data to CMS,
we estimate a delay of approximately 1
month in obtaining this data. Delays in
the availability of this data and the
screening and evaluation of the
providers and prescribers will result in
delays in the identification and
inclusion of providers or prescribers on
the preclusion list, which would occur
after the service, item or drug was
provided to the Medicare beneficiary.
We estimate that it will cost the Trust
Fund approximately $44.7 million if we
do not proactively screen providers and
prescribers and delay screening until
after the PDE and encounter data is
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available. We estimate an additional 1.4
million providers or prescribers would
not be screened if we only rely on PDE
and encounter data. The current
Medicare provider population consists
of approximately 2 million providers
and historically we has revoked 0.4
percent of its existing Medicare enrolled
providers., However this percentage
could be higher or lower for the
population of prescribers solely enrolled
for prescribing. There are approximately
480,000 part C and D unenrolled
providers and prescribers, 120,000 of
which are billing Part C. Using the
percentage of historical revocations, we
estimate approximately 1,920 new
revocations. Based on the approximate
1-month delay in the availability of the
PDE and encounter data, three months
for screening and an additional 3
months to evaluate the offenses, we
anticipate approximately a 7-month
delay in the provider or prescriber’s
inclusion on the preclusion list
following the service, item or drug being
provided to the beneficiary, if we do not
perform proactive screening. The 7month timeframe is dependent on
whether the PDE and encounter data is
timely. Using a cost avoidance of $3,324
per month average per provider and
applying it to the estimated 1,920 new
revocations, a delay in screening would
cost the Trust Fund approximately
$44.7 million (3,324 × 7 × 1,920). The
$3,324 estimate is based on Medicare
fee-for-service revocation data and may
be higher or lower depending on
whether the provider is an individual or
organization and their provider type.
H. Accounting Statement
As required by OMB Circular A–4
(available at https://obamawhitehouse.
archives.gov/omb/circulars_a004_a-4/),
in Table 31 we have prepared an
accounting statement showing the
savings and transfers associated with
the provisions of this final rule for CYs
2019 through 2023. Table 31 is based on
Table 32 which lists savings, costs, and
transfers by provision.
TABLE 31—ACCOUNTING STATEMENT: CLASSIFICATIONS OF ESTIMATED SAVINGS, COSTS, AND TRANSFERS FROM
CALENDAR YEARS 2019 TO 2023
[$ in millions]
Savings
Category
Discount rate
Whom to whom
Period covered
7%
3%
Net Annualized Monetized Savings ................
82.34
82.02
CYs 2019–2023 ....
Annualized Monetized Savings .......................
87.26
86.79
CYs 2019–2023 ....
Annualized Monetized Cost ............................
¥4.92
¥4.77
CYs 2019–2023 ....
Net Annualized Monetized Savings ................
Annualized Monetized Savings .......................
Annualized Monetized Cost ............................
Net Annualized Monetized Savings ................
Annualized Monetized Savings .......................
Annualized Monetized Cost ............................
Transfers .........................................................
13.80
13.80
0.00
68.54
73.46
¥4.92
155.90
13.82
13.82
0.00
68.20
72.98
¥4.77
154.95
CYs
CYs
CYs
CYs
CYs
CYs
CYs
2019–2023
2019–2023
2019–2023
2019–2023
2019–2023
2019–2023
2019–2023
....
....
....
....
....
....
....
Federal government,
Part D Sponsors.
Federal government,
Part D Sponsors.
Federal government,
Part D Sponsors.
Trust Fund.
Trust Fund.
Trust Fund.
Industry.
Industry.
Industry.
Federal Government,
Sponsors.
MA organizations and
MA organizations and
MA organizations and
MA plans and Part D
Note: Monetized figures in 2018 dollars. Positive numbers indicate aggregate annual savings at the giving percentage. Transfers are a separate line item. Savings and cost have been broken out separately for industry, the trust fund and aggregate. For example, the industry provisions
with positive amounts had a level monetized amount of 72.32 at the 3 percent level but a cost of 11.87 at the 3 percent level resulting in an aggregate of 72.32 ¥11.87 = 60.45. Minor (cent) errors are due to rounding.
The following Table 32 summarizes
savings, costs, and transfers by
provision and formed a basis for the
accounting table.
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90.3
102.4
-12.1
2019
Trust
Fund
13.6
13.6
0
-2.8
13
0.9
54.7
1.3
0.6
0.1
0.5
2019
Industry
Totals
Tot savings
Tot costs
Total Transfers
CARA
OEP
MLR
Disclosure
2019
Transfers
2020
Industry
231.5
57.7
60.5
-2.8
2020
Trust
Fund
13.63
13.63
0
-2.8
13
0.9
57.6
1.3
0.6
0.1
0.5
-15.1
231.5
0
-15.1
0
2020
Transfers
2021
Industry
250.5
60.8
63.6
-2.8
2021
Trust
Fund
13.63
13.63
0
-2.8
13
0.9
60.7
1.3
0.6
0.1
0.5
-16.1
250.5
0
-16.1
0
2021
Transfers
2022
Industry
271.8
63.9
66.7
-2.8
2022
Trust
Fund
13.6
13.6
0
-2.8
13
0.9
6U
1.3
0.6
0.1
0.5
-16.1
271.8
0
-16.1
0
2022
Transfers
2023
Industry
295.0
67.1
69.9
-3
2023
Trust
Fund
14.6
14.6
0
-2.8
14
0.9
67
1.3
0.6
0.1
0.5
-17
295
0
-17.1
0
E:\FR\FM\28NOP2.SGM
Marketing
0.13
0
0.13
0
0.13
0
0.13
0
0.13
Meaningful Difference (Part C)
Meaningful Difference (Pt D)
Stop I ,oss (PIP)
259.1
204.6
220.6
23K9
Part C/D Preclusion
44.8
0
0
0
0
-9.3
0
0
0
0
Part C/D Preclusion
11
12
13
Follow on Biologics
10
Star Ratings
32
35
37
40
Note: This tables summarizes cost and savings by provision. Provisions not in the table are scored as 0. Numbers indicate millions of dollars. Positive numbers indicate savings while negative
numbers indicate cost.
2023
Transfers
321.6
0
-18.1
0
0
2R1.7
14
44
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I. Conclusion
This proposed rule has a net savings
of between $80 to $100 million for each
of the next 5 years. The savings are
equivalent to a level amount of about
$80 million per year for both 7 percent
and 3 percent interest rates. These
aggregate savings are to industry ($68.20
million at the 3 percent level = $72.98
million savings—$4.77 million cost),
and the Federal government and the
Trust Fund ($13.82 million at the 3
percent level which reflects savings to
the trust fund without any cost).
Transfers between the Federal
Government and Industry are between
$230 and $320 million and are
equivalent to a monetized level amount
of about $270 million per year at the 3percent and 7-percent levels. Both
industry and the Federal government
save from program efficiencies and
reduced work.
J. Reducing Regulation and Controlling
Regulatory Costs
This rule, if finalized as proposed, is
expected to be an E.O. 13771 regulatory
action. Details on the estimated costs
and cost savings can be found in the
preceding analysis.
IV. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and, when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document.
List of Subjects
Administrative practice and
procedure, Health facilities, Health
professions, Kidney diseases, Medical
devices, Medicare, Reporting and
recordkeeping requirements, Rural
areas, X-rays.
sradovich on DSK3GMQ082PROD with PROPOSALS2
42 CFR Part 417
Administrative practice and
procedure, Grant programs-health,
Health care, Health insurance, Health
maintenance organizations (HMO), Loan
programs-health, Medicare, Reporting
and recordkeeping requirements.
Administrative practice and
procedure, Health facilities, Health
maintenance organizations (HMO),
Medicare, Penalties, Privacy, and
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20:14 Nov 27, 2017
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42 CFR Part 423
Administrative practice and
procedure, Emergency medical services,
Health facilities, Health maintenance
organizations (HMO), Health
professionals, Medicare, Penalties,
Incorporation by Reference, Privacy,
and Reporting and recordkeeping
requirements.
42 CFR Part 460
Aged, Health care, Health records,
Medicaid, Medicare, and Reporting and
recordkeeping requirements
42 CFR Part 498
Administrative practice and
procedure, Health facilities, Health
professions, Medicare, and Reporting
and recordkeeping requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services proposes to amend
42 CFR chapter IV as set forth below:
PART 405—FEDERAL HEALTH
INSURANCE FOR THE AGED AND
DISABLED
1. The authority citation for part 405
continues to read as follows:
■
Authority: Secs. 205(a), 1102, 1861,
1862(a), 1869, 1871, 1874, 1881, and 1886(k)
of the Social Security Act (42 U.S.C. 405(a),
1302, 1395x, 1395y(a), 1395ff, 1395hh,
1395kk, 1395rr and 1395ww(k)), and sec. 353
of the Public Health Service Act (42 U.S.C.
263a).
2. Section § 405.924 is amended by
adding paragraph (a)(5) to read as
follows:
■
§ 405.924 Actions that are initial
determinations.
(a) * * *
(5) An adjustment of premium for
hospital or supplementary medical
insurance as outlined in §§ 406.32(d),
408.20(e), and 408.22 of this chapter,
and 20 CFR 418.1301.
*
*
*
*
*
42 CFR Part 405
42 CFR Part 422
§ 417.430
Reporting and recordkeeping
requirements.
PART 417—HEALTH MAINTENANCE
ORGANIZATIONS, COMPETITIVE
MEDICAL PLANS, AND HEALTH CARE
PREPAYMENT PLANS
3. The authority citation for part 417
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh), secs. 1301, 1306, and 1310 of the
Public Health Service Act (42 U.S.C. 300e,
300e–5, and 300e–9), and 31 U.S.C. 9701.
4. Section 417.430 is amended by
revising paragraph (a)(1) to read as
follows:
■
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Fmt 4701
Sfmt 4702
Application procedures.
(a) * * *
(1) The application form must comply
with CMS instructions regarding
content and format and be approved by
CMS as described in § 422.2262 of this
chapter. The application must be
completed by an HMO or CMP eligible
(or soon to become eligible) individual
and include authorization for disclosure
between HHS and its designees and the
HMO or CMP.
*
*
*
*
*
■ 5. Section 417.472 is amended by
adding paragraph (k) to read as follows:
§ 417.472
Basic contract requirements.
*
*
*
*
*
(k) All cost contracts under section
1876 of the Act must agree to be rated
under the quality rating system
specified at subpart D of part 422, and
for cost plans that provide the Part D
prescription benefit, under the quality
rating system specified at part 423
subpart D, of this chapter. Cost contacts
are not required to submit data on or be
rated on specific measures determined
by CMS to be inapplicable to their
contract or for which data are not
available, including hospital
readmission and call center measures.
■ 6. Section 417.478 is amended by
revising paragraph (e) to read as follows:
§ 417.478 Requirements of other laws and
regulations.
*
*
*
*
*
(e)(1) The prohibitions, procedures
and requirements relating to payment to
individuals and entities on the
preclusion list, defined in § 422.2 of this
chapter, apply to HMOs and CMPs that
contract with CMS under section 1876
of the Act.
(2) In applying the provisions of
§§ 422.2, 422.222, and 422.224 of this
chapter under paragraph (e)(1) of this
section, references to part 422 of this
chapter must be read as references to
this part, and references to MA
organizations as references to HMOs
and CMPs.
■ 7. Section 417.484 is amended by
revising paragraph (b)(3) to read as
follows:
§ 417.484 Requirement applicable to
related entities.
*
*
*
*
*
(b) * * *
(3) That payments must not be made
to individuals and entities included on
the preclusion list, defined in § 422.2 of
this chapter.
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PART 422—MEDICARE ADVANTAGE
PROGRAM
*
8. The authority citation for part 422
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
9. Section 422.2 is amended by adding
the definition of ‘‘Preclusion list’’ in
alphabetical order to read as follows:
■
§ 422.2
Definitions.
sradovich on DSK3GMQ082PROD with PROPOSALS2
*
*
*
*
*
Preclusion list means a CMScompiled list of individuals and entities
that—
(1) Meet all of the following
requirements:
(i) The individual or entity is
currently revoked from Medicare under
§ 424.535.
(ii) The individual or entity is
currently under a reenrollment bar
under § 424.535(c).
(iii) CMS determines that the
underlying conduct that led to the
revocation is detrimental to the best
interests of the Medicare program. In
making this determination under this
paragraph, CMS considers the following
factors:
(A) The seriousness of the conduct
underlying the individual’s or entity’s
revocation.
(B) The degree to which the
individual’s or entity’s conduct could
affect the integrity of the Medicare
program.
(C) Any other evidence that CMS
deems relevant to its determination; or
(2) Meet both of the following
requirements:
(i) The individual or entity has
engaged in behavior for which CMS
could have revoked the individual or
entity to the extent applicable had they
been enrolled in Medicare.
(ii) CMS determines that the
underlying conduct that would have led
to the revocation is detrimental to the
best interests of the Medicare program.
In making this determination under this
paragraph, CMS considers the following
factors:
(A) The seriousness of the conduct
involved.
(B) The degree to which the
individual’s or entity’s conduct could
affect the integrity of the Medicare
program; and
(C) Any other evidence that CMS
deems relevant to its determination.
*
*
*
*
*
■ 10. Section 422.54 is amended by
revising paragraphs (c)(1)(i) and
(d)(4)(ii) to read as follows:
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§ 422.54 Continuation of enrollment for MA
local plans.
*
*
*
*
(c) * * *
(1) * * *
(i) Obtain CMS’s approval of the
continuation area, the communication
materials that describe the option, and
the MA organization’s assurances of
access to services.
*
*
*
*
*
(d) * * *
(4) * * *
(ii) Organizations that require
enrollees to give advance notice of
intent to use the continuation of
enrollment option, must stipulate the
notification process in the
communication materials.
*
*
*
*
*
■ 11. Section 422.60 is amended—
■ a. In paragraph (a)(2) by removing the
reference ‘‘§ 422.62(a)(3), (a)(4), and
(a)(5) if’’ and adding in its place the
reference ‘‘§ 422.62(a)(3) and (4) if’’; and
■ b. Revising paragraph (g).
The revision reads as follows:
§ 422.60
Election process.
*
*
*
*
*
(g) Passive enrollment by CMS—(1)
Circumstances in which CMS may
implement passive enrollment. CMS
may implement passive enrollment
procedures in any of the following
situations:
(i) Immediate terminations as
provided in § 422.510(b)(2)(i)(B).
(ii) CMS determines that remaining
enrolled in a plan poses potential harm
to the members.
(iii) CMS determines, after consulting
with the State Medicaid agency that
contracts with the dual eligible special
needs plan described in paragraph
(g)(2)(i) of this section, and that meets
the requirements of paragraph (g)(2) of
this section, that the passive enrollment
will promote integrated care and
continuity of care for a full-benefit dual
eligible beneficiary (as defined in
§ 423.772 of this chapter and entitled to
Medicare Part A and enrolled in Part B
under title XVIII) who is currently
enrolled in an integrated dual eligible
special needs plan.
(2) MA plans that may receive passive
enrollments. CMS may implement
passive enrollment described in
paragraph (g)(1)(iii) only into MA–PD
plans that meet all the following
requirements:
(i) Operate as a fully integrated dual
eligible special needs plan as defined in
§ 422.2, or a specialized MA plan for
special needs individuals that meets a
high standard of integration, as
described in § 422.102(e).
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56493
(ii) Have substantially similar
provider and facility networks and
Medicare- and Medicaid-covered
benefits as the plan (or plans) from
which the beneficiaries are passively
enrolled.
(iii) Have an overall quality rating of
at least 3 stars under the rating system
described in § 422.160 through
§ 422.166 for the year prior to the plan
year passive enrollments take effect or is
a low enrollment contract or new MA
plan as defined in § 422.252.
(iv) Not have any prohibition on new
enrollment imposed by CMS.
(v) Have limits on premiums and costsharing appropriate to full-benefit dual
eligible beneficiaries.
(vi) Have the operational capacity to
passively enroll beneficiaries and agree
to receive the enrollments.
(3) Passive enrollment procedures.
Individuals will be considered to have
elected the plan selected by CMS unless
they—
(i) Decline the plan selected by CMS,
in a form and manner determined by
CMS, or
(ii) Request enrollment in another
plan.
(4) Beneficiary notification. The MA
organization that receives the passive
enrollment must provide to the enrollee
a notice that describes the costs and
benefits of the plan and the process for
accessing care under the plan and
clearly explains the beneficiary’s ability
to decline the enrollment or choose
another plan. Such notice must be
provided to all potential passively
enrolled enrollees prior to the
enrollment effective date (or as soon as
possible after the effective date if prior
notice is not practical), in a form and
manner determined by CMS.
(5) Special election period.
Individuals not otherwise eligible for a
special election period at the time of
passive enrollment will be provided
with a special election period, in
accordance with § 422.62(b)(4).
■ 12. Section § 422.62 is amended by—
■ a. Revising paragraphs (a)(3) through
(5);
■ b. Removing paragraphs (a)(6) and (7);
and
■ c. Revising paragraph (b)(3)(ii).
The revisions read as follows:
§ 422.62
plan.
Election of coverage under an MA
(a) * * *
(3) Open enrollment period for
individuals enrolled in MA—(i) For
2019 and subsequent years. Except as
provided in paragraphs (a)(3)(ii) and (iii)
and (a)(4) of this section, an individual
who is enrolled in an MA plan may
make an election once during the first
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3 months of the year to enroll in another
MA plan or disenroll to obtain Original
Medicare. An individual who chooses to
exercise this election may also make a
coordinating election to enroll in or
disenroll from Part D, as specified in
§ 423.38(e).
(ii) Newly eligible MA individual. For
2019 and subsequent years, a newly MA
eligible individual who is enrolled in a
MA plan may change his or her election
once during the period that begins the
month the individual is entitled to both
Part A and Part B and ends on the last
day of the third month of the
entitlement. An individual who chooses
to exercise this election may also make
a coordinating election to enroll in or
disenroll from Part D, as specified in
§ 423.38(e).
(iii) Single election limitation. The
limitation to one election or change in
paragraphs (a)(3)(i) and (ii) of this
section does not apply to elections or
changes made during the annual
coordinated election period specified in
paragraph (a)(2) of this section, or
during a special election period
specified in paragraph (b) of this
section.
(4) Open enrollment period for
institutionalized individuals. After
2005, an individual who is eligible to
elect an MA plan and who is
institutionalized, as defined in § 422.2,
is not limited (except as provided for in
paragraph (d) of this section for MA
MSA plans) in the number of elections
or changes he or she may make. Subject
to the MA plan being open to enrollees
as provided under § 422.60(a)(2), an MA
eligible institutionalized individual may
at any time elect an MA plan or change
his or her election from an MA plan to
Original Medicare, to a different MA
plan, or from original Medicare to an
MA plan.
(5) Annual 45-day period for
disenrollment from MA plans to
Original Medicare. Through 2018, at any
time from January 1 through February
14, an individual who is enrolled in an
MA plan may elect Original Medicare
once during this 45-day period. An
individual who chooses to exercise this
election may also make a coordinating
election to enroll in a PDP as specified
in § 423.38(d) of this chapter.
(b) * * *
(3) * * *
(ii) The organization (or its agent,
representative, or plan provider)
materially misrepresented the plan’s
provisions in communication materials
as outlined in subpart V of this part.
*
*
*
*
*
■ 13. Section 422.66 is amended by
revising paragraphs (c) and (d)(1) and
(5) to read as follows:
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§ 422.66 Coordination of enrollment and
disenrollment through MA organizations.
*
*
*
*
*
(c) Election by default: Initial
coverage election period—(1) Basic rule.
Subject to paragraph (c)(2) of this
section, an individual who fails to make
an election during the initial coverage
election period is deemed to have
elected original Medicare.
(2) Default enrollment into MA
special needs plan—(i) Conditions for
default enrollment. During an
individual’s initial coverage election
period, an individual may be deemed to
have elected a MA special needs plan
for individuals entitled to medical
assistance under a State plan under
Title XIX offered by the organization
provided all the following conditions
are met:
(A) At the time of the deemed
election, the individual remains
enrolled in an affiliated Medicaid
managed care plan. For purposes of this
section, an affiliated Medicaid managed
care plan is one that is offered by the
MA organization that offers the MA
special needs plan for individuals
entitled to medical assistance under
Title XIX or is offered by an entity that
shares a parent organization with such
MA organization;
(B) The state has approved the use of
the default enrollment process in the
contract described in § 422.107 and
provides the information that is
necessary for the MA organization to
identify individuals who are in their
initial coverage election period;
(C) The MA organization offering the
MA special needs plan has issued the
notice described in paragraph (c)(2)(iv)
of this section to the individual;
(D) Prior to the effective date
described in paragraph (c)(2)(iii) of this
section, the individual does not decline
the default enrollment and does not
elect to receive coverage other than
through the MA organization; and
(E) CMS has approved the MA
organization to use default enrollment
under paragraph (c)(2)(ii) of this section.
(ii) CMS approval of default
enrollment. An MA organization must
obtain approval from CMS before
implementing any default enrollment as
described in this section. CMS may
suspend or rescind approval when CMS
determines the MA organization is not
in compliance with the requirements of
this section.
(iii) Effective date of default
enrollment. Default enrollment in the
MA special needs plan for individuals
entitled to medical assistance under a
State plan under Title XIX is effective
the month in which the individual is
first entitled to both Part A and Part B.
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(iv) Notice requirement for default
enrollments. The MA organization must
provide notification that describes the
costs and benefits of the MA plan and
the process for accessing care under the
plan and clearly explains the
individual’s ability to decline the
enrollment, up to and including the day
prior to the enrollment effective date,
and either enroll in Original Medicare
or choose another plan. Such
notification must be provided to all
individuals who qualify for default
enrollment under paragraph (c)(2) of
this section no fewer than 60 calendar
days prior to the enrollment effective
date described in paragraph (c)(2)(iii) of
this section.
(d) * * *
(1) Basic rule. An MA plan offered by
an MA organization must accept any
individual (regardless of whether the
individual has end-stage renal disease)
who requests enrollment during his or
her Initial Coverage Election Period and
is enrolled in a health plan offered by
the MA organization during the month
immediately preceding the MA plan
enrollment effective date, and who
meets the eligibility requirements at
§ 422.50.
*
*
*
*
*
(5) Election. An individual who
requests seamless continuation of
coverage as described in paragraph
(d)(1) of this section may complete a
simplified election, in a form and
manner approved by CMS that meets
the requirements in § 422.60(c)(1).
*
*
*
*
*
■ 14. Section 422.68 is amended by
revising paragraphs (a), (c), and (f) to
read as follows:
§ 422.68 Effective dates of coverage and
change of coverage.
*
*
*
*
*
(a) Initial coverage election period. An
election made during an initial coverage
election period as described in
§ 422.62(a)(1) is effective as follows:
(1) If made prior to the month of
entitlement to both Part A and Part B,
it is effective as of the first day of the
month of entitlement to both Part A and
Part B.
(2) If made during or after the month
of entitlement to both Part A and Part
B, it is effective the first day of the
calendar month following the month in
which the election is made.
*
*
*
*
*
(c) Open enrollment periods. For an
election, or change in election, made
during an open enrollment period, as
described in § 422.62(a)(3) through (5),
coverage is effective as of the first day
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of the first calendar month following the
month in which the election is made.
*
*
*
*
*
(f) Annual 45-day period for
disenrollment from MA plans to
Original Medicare. Through 2018, an
election made from January 1 through
February 14 to disenroll from an MA
plan to Original Medicare, as described
in § 422.62(a)(5), is effective the first day
of the first month following the month
in which the election is made.
■ 15. Section 422.100 is amended—
■ a. In paragraph (f)(2), by removing the
phrase ‘‘to services. and’’ and adding in
its place the phrase ‘‘to services.’’; and
■ b. By revising paragraphs (f)(4), (f)(5)
introductory text, (f)(5)(ii), and (f)(6).
The revisions read as follows:
§ 422.100
General requirements.
sradovich on DSK3GMQ082PROD with PROPOSALS2
*
*
*
*
*
(f) * * *
(4) Except as provided in paragraph
(f)(5) of this section, MA local plans (as
defined in § 422.2) must have an out-of
pocket maximum for Medicare Parts A
and B services that is no greater than the
annual limit set by CMS using Medicare
Fee-for-Service data. CMS sets the
annual limit to strike a balance between
limiting maximum beneficiary out of
pocket costs and potential changes in
premium, benefits, and cost sharing,
with the goal of ensuring beneficiary
access to affordable and sustainable
benefit packages.
(5) With respect to a local PPO plan,
the limit specified under paragraph
(f)(4) of this section applies only to use
of network providers. Such local PPO
plans must include a total catastrophic
limit annually determined by CMS
using Medicare Fee-for-Service and to
establish appropriate beneficiary out-ofpocket expenditures for both in-network
and out-of-network Parts A and B
services that is—
*
*
*
*
*
(ii) Not greater than the annual limit
set by CMS using Medicare Fee-forService data to establish appropriate
beneficiary out-of-pocket expenditures.
CMS will set the annual limit to strike
a balance between limiting maximum
beneficiary out of pocket costs and
potential changes in premium, benefits,
and cost sharing, with the goal of
ensuring beneficiary access to affordable
and sustainable benefit packages.
(6) Cost sharing for Medicare Part A
and B services specified by CMS does
not exceed levels annually determined
by CMS to be discriminatory for such
services. CMS may use Medicare Feefor-Service data to evaluate the
possibility of discrimination and to
establish non-discriminatory out-of-
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pocket limits and also use MA
encounter data to inform patient
utilization scenarios used to help
identify MA plan cost sharing standards
and thresholds that are not
discriminatory.
*
*
*
*
*
■ 16. Section 422.101 is amended by
revising paragraphs (d)(2) and (3) to
read as follows:
§ 422.101
benefits.
Requirements relating to basic
*
*
*
*
*
(d) * * *
(2) Catastrophic limit. MA regional
plans are required to establish a
catastrophic limit on beneficiary out-ofpocket expenditures for in-network
benefits under the Medicare Fee-forService program (Part A and Part B
benefits) that is no greater than the
annual limit set by CMS using Medicare
Fee-for-Service data to establish
appropriate out-of-pocket limits. CMS
sets the annual limit to strike a balance
between limiting maximum beneficiary
out of pocket costs and potential
changes in premium, benefits, and cost
sharing, with the goal of ensuring
beneficiary access to affordable and
sustainable benefit packages.
(3) Total catastrophic limit. MA
regional plans are required to establish
a total catastrophic limit on beneficiary
out-of-pocket expenditures for innetwork and out-of-network benefits
under the Medicare Fee-for-Service
program (Part A and Part B benefits).
(i) This total out-of-pocket
catastrophic limit, which would apply
to both in-network and out-of-network
benefits under Medicare Fee-for-Service,
may be higher than the in-network
catastrophic limit in paragraph (d)(2) of
this section, but may not increase the
limit described in paragraph (d)(2) of
this section and may be no greater than
the annual limit set by CMS using
Medicare Fee-for-Service data.
(ii) CMS sets the annual limit to strike
a balance between limiting maximum
beneficiary out of pocket costs and
potential changes in premium, benefits,
and cost sharing, with the goal of
ensuring beneficiary access to affordable
and sustainable benefit packages.
*
*
*
*
*
■ 17. Section 422.102 is amended by
revising paragraph (d) to read as
follows:
§ 422.102
Supplemental benefits.
*
*
*
*
*
(d) Supplemental benefits packaging.
MA organizations may offer enrollees a
group of services as one optional
supplemental benefit, offer services
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individually, or offer a combination of
groups and individual services.
*
*
*
*
*
■ 18. Section 422.111 is amended by
revising paragraphs (a) introductory
text, (a)(3), and (h)(2)(ii) to read as
follows:
§ 422.111
Disclosure requirements.
(a) Detailed description. An MA
organization must disclose the
information specified in paragraph (b) of
this section in the manner specified by
CMS—
*
*
*
*
*
(3) At the time of enrollment and at
least annually thereafter, by the first day
of the annual coordinated election
period.
*
*
*
*
*
(h) * * *
(2) * * *
(ii) Copies of its evidence of coverage,
summary of benefits, and information
(names, addresses, phone numbers, and
specialty) on the network of contracted
providers. Posting does not relieve the
MA organization of its responsibility
under paragraph (a) of this section to
provide hard copies to enrollees upon
request.
*
*
*
*
*
§ 422.152
[Amended]
19. Section 422.152 is amended by
removing and reserving paragraphs
(a)(3) and (d).
■ 20. Sections 422.160, 422.162,
422.164 and 422.166 are added to
Subpart D to read as follows:
■
Subpart D–Quality Improvement
*
*
*
*
*
Sec.
422.160 Basis and scope of the Medicare
Advantage Quality Rating System.
422.162 Medicare Advantage Quality Rating
System.
422.164 Adding, updating, and removing
measures.
422.166 Calculation of Star Ratings.
§ 422.160 Basis and scope of the Medicare
Advantage Quality Rating System.
(a) Basis. This subpart is based on
sections 1851(d), 1852(e), 1853(o) and
1854(b)(3)(iii), (v), and (vi) of the Act
and the general authority under section
1856(b) of the Act requiring the
establishment of standards consistent
with and to carry out Part C.
(b) Purpose. Ratings calculated and
assigned under this subpart will be used
by CMS for the following purposes:
(1) To provide comparative
information on plan quality and
performance to beneficiaries for their
use in making knowledgeable
enrollment and coverage decisions in
the Medicare program.
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(2) To provide quality ratings on a 5star rating system to be used in
determining quality bonus payment
(QBP) status and in determining rebate
retention allowances.
(3) To provide a means to evaluate
and oversee overall and specific
compliance with certain regulatory and
contract requirements by MA plans,
where appropriate and possible to use
data of the type described in
§ 422.162(c).
(c) Applicability. The regulations in
this subpart will be applicable
beginning with the 2019 measurement
period and the associated 2021 Star
Ratings that are released prior to the
annual coordinated election period for
the 2021 contract year and used to
assign QBP ratings for the 2022 payment
year.
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§ 422.162 Medicare Advantage Quality
Rating System.
(a) Definitions. In this subpart the
following terms have the meanings:
CAHPS refers to a comprehensive and
evolving family of surveys that ask
consumers and patients to evaluate the
interpersonal aspects of health care.
CAHPS surveys probe those aspects of
care for which consumers and patients
are the best or only source of
information, as well as those that
consumers and patients have identified
as being important. CAHPS initially
stood for the Consumer Assessment of
Health Plans Study, but as the products
have evolved beyond health plans the
acronym now stands for Consumer
Assessment of Healthcare Providers and
Systems.
Case-mix adjustment means an
adjustment to the measure score made
prior to the score being converted into
a Star Rating to take into account certain
enrollee characteristics that are not
under the control of the plan. For
example age, education, chronic
medical conditions, and functional
health status that may be related to the
enrollee’s survey responses.
Categorical Adjustment Index (CAI)
means the factor that is added to or
subtracted from an overall or summary
Star Rating (or both) to adjust for the
average within-contract (or within-plan
as applicable) disparity in performance
associated with the percentages of
beneficiaries who are dually eligible for
Medicare and enrolled in Medicaid,
beneficiaries who receive a Low Income
Subsidy, or have disability status in that
contract (or plan as applicable).
Clustering refers to a variety of
techniques used to partition data into
distinct groups such that the
observations within a group are as
similar as possible to each other, and as
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dissimilar as possible to observations in
any other group. Clustering of the
measure-specific scores means that gaps
that exist within the distribution of the
scores are identified to create groups
(clusters) that are then used to identify
the four cut points resulting in the
creation of five levels (one for each Star
Rating), such that scores in the same
Star Rating level are as similar as
possible and scores in different Star
Rating levels are as different as possible.
Technically, the variance in measure
scores is separated into within-cluster
and between-cluster sum of squares
components. The clusters reflect the
groupings of numeric value scores that
minimize the variance of scores within
the clusters. The Star Ratings levels are
assigned to the clusters that minimize
the within-cluster sum of squares. The
cut points for star assignments are
derived from the range of measure
scores per cluster, and the star levels
associated with each cluster are
determined by ordering the means of the
clusters.
Consolidation means when an MA
organization that has at least two
contracts for health and/or drug services
of the same plan type under the same
parent organization in a year combines
multiple contracts into a single contract
for the start of the subsequent contract
year.
Consumed contract means a contract
that will no longer exist after a contract
year’s end as a result of a consolidation.
Display page means the CMS Web site
on which certain measures and scores
are publicly available for informational
purposes; the measures that are
presented on the display page are not
used in assigning Part C and D Star
Ratings.
Domain rating means the rating that
groups measures together by dimensions
of care.
Dual-eligible (DE) means a beneficiary
who is enrolled in both Medicare and
Medicaid.
HEDIS is the Healthcare Effectiveness
Data and Information Set which is a
widely used set of performance
measures in the managed care industry,
developed and maintained by the
National Committee for Quality
Assurance (NCQA). HEDIS data include
clinical measures assessing the
effectiveness of care, access/availability
measures, and service use measures.
Highest rating means the overall
rating for MA–PDs, the Part C summary
rating for MA-only contracts, and the
Part D summary rating for PDPs.
Highly-rated contract means a
contract that has 4 or more stars for its
highest rating when calculated without
the improvement measures and with all
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applicable adjustments (CAI and the
reward factor).
HOS means the Medicare Health
Outcomes Survey which is the first
patient reported outcomes measure that
was used in Medicare managed care.
The goal of the Medicare HOS program
is to gather valid, reliable, and clinically
meaningful health status data in the
Medicare Advantage (MA) program for
use in quality improvement activities,
pay for performance, program oversight,
public reporting, and improving health.
All managed care organizations with
MA contracts must participate.
Low income subsidy (LIS) means the
subsidy that a beneficiary receives to
help pay for prescription drug coverage
(see § 423.34 of this chapter for
definition of a low-income subsidy
eligible individual).
Measurement period means the
period for which data are collected for
a measure or the performance period
that a measures covers.
Measure score means the numeric
value of the measure or an assigned
‘missing data’ message.
Measure star means the measure’s
numeric value is converted to a Star
Rating. It is displayed to the nearest
whole star, using a 1–5 star scale.
Overall rating means a global rating
that summarizes the quality and
performance for the types of services
offered across all unique Part C and Part
D measures.
Part C summary rating means a global
rating that summarizes the health plan
quality and performance on Part C
measures.
Part D summary rating means a global
rating that summarizes prescription
drug plan quality and performance on
Part D measures.
Plan benefit package (PBP) means a
set of benefits for a defined MA or PDP
service area. The PBP is submitted by
Part D plan sponsors and MA
organizations to CMS for benefit
analysis, bidding, marketing, and
beneficiary communication purposes.
Reliability means a measure of the
fraction of the variation among the
observed measure values that is due to
real differences in quality (‘‘signal’’)
rather than random variation (‘‘noise’’);
it is reflected on a scale from 0 (all
differences in plan performance
measure scores are due to measurement
error) to 1 (the difference in plan
performance scores is attributable to real
differences in performance).
Reward factor means a rating-specific
factor added to the contract’s summary
or overall ratings (or both) if a contract
has both high and stable relative
performance.
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Statistical significance assesses how
likely differences observed in
performance are due to random chance
alone under the assumption that plans
are actually performing the same.
Surviving contract means the contact
that will still exist under a
consolidation, and all of the
beneficiaries enrolled in the consumed
contract(s) are moved to the surviving
contracts.
Traditional rounding rules mean that
the last digit in a value will be rounded.
If rounding to a whole number, look at
the digit in the first decimal place. If the
digit in the first decimal place is 0, 1,
2, 3, or 4, then the value should be
rounded down by deleting the digit in
the first decimal place. If the digit in the
first decimal place is 5 or greater, then
the value should be rounded up by 1
and the digit in the first decimal place
deleted.
(b) Contract ratings—(1) General.
CMS calculates an overall Star Rating,
Part C summary rating, and Part D
summary rating for each MA–PD
contract, and a Part C summary rating
for each MA-only contract using the 5star rating system described in this
subpart. Measures are assigned stars at
the contract level and weighted in
accordance with § 422.166(a). Domain
ratings are the unweighted mean of the
individual measure ratings under the
topic area in accordance with
§ 422.166(b). Summary ratings are the
weighted mean of the individual
measure ratings for Part C or Part D in
accordance with § 422.166(c). Overall
Star Ratings are calculated by using the
weighted mean of the individual
measure ratings in accordance with
§ 422.166(d) with both the reward factor
and CAI applied as applicable, as
described in § 422.166(f).
(2) Plan benefit packages. All plan
benefit packages (PBPs) offered under
an MA contract have the same overall
and/or summary Star Ratings as the
contract under which the PBP is offered
by the MA organization. Data from all
the PBPs offered under a contract are
used to calculate the measure and
domain ratings for the contract except
for Special Needs Plan (SNP)-specific
measures collected at the PBP level. A
contract level score is calculated using
an enrollment-weighted mean of the
PBP scores and enrollment reported as
part of the measure specification in each
PBP.
(3) Contract consolidations. (i) In the
case of contract consolidations
involving two or more contracts for
health or drug services of the same plan
type under the same parent
organization, CMS assigns Star Ratings
for the first and second years following
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the consolidation based on the
enrollment-weighted mean of the
measure scores of the surviving and
consumed contract(s) as provided in
paragraph (b)(3)(iv) of this section.
Paragraph (b)(3)(iii) of this section is
applied to subsequent years that are not
addressed in paragraph (b)(3)(ii) of this
section for assigning the QBP rating.
(ii) For the first year after a
consolidation, CMS will determine the
QBP status of a contract using the
enrollment-weighted means (using
traditional rounding rules) of what
would have been the QBP Ratings of the
surviving and consumed contracts based
on the contract enrollment in November
of the year the preliminary QBP ratings
were released in the Health Plan
Management System (HPMS).
(iii) In subsequent years following the
first year after the consolidation, CMS
will determine QBP status based on the
consolidated entity’s Star Ratings
displayed on Medicare Plan Finder.
(iv) The Star Ratings posted on
Medicare Plan Finder for contracts that
consolidate are as follows:
(A) For the first year after
consolidation, CMS will use enrollmentweighted measure scores using the July
enrollment of the measurement period
of the consumed and surviving contracts
for all measures, except the surveybased and call center measures. The
survey-based measures would use
enrollment of the surviving and
consumed contracts at the time the
sample is pulled for the rating year. The
call center measures would use average
enrollment during the study period.
(B) For the second year after
consolidation, CMS will use the
enrollment-weighted measure scores
using the July enrollment of the
measurement year of the consumed and
surviving contracts for all measures
except those from the following data
sources: HEDIS, CAHPS, and HOS.
HEDIS and HOS measure data will be
scored as reported. CMS will ensure that
the CAHPS survey sample will include
enrollees in the sample frame from both
the surviving and consumed contracts.
(c) Data sources. (1) CMS bases Part
C Star Ratings on the type of data
specified in section 1852(e) of the Act
and on CMS administrative data. Part C
Star Ratings measures reflect structure,
process, and outcome indices of quality.
This includes information of the
following types: Clinical data,
beneficiary experiences, changes in
physical and mental health, benefit
administration information and CMS
administrative data. Data underlying
Star Ratings measures may include
survey data, data separately collected
and used in oversight of MA plans’
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compliance with MA requirements and
data submitted by plans.
(2) MA organizations are required to
collect, analyze, and report data that
permit measurement of health outcomes
and other indices of quality. MA
organizations must provide unbiased,
accurate, and complete quality data
described in paragraph (c)(1) of this
section to CMS on a timely basis as
requested by CMS.
§ 422.164 Adding, updating, and removing
measures.
(a) General. CMS adds, updates, and
removes measures used to calculate the
Star Ratings as provided in this section.
CMS lists the measures used for a
particular Star Rating each year in the
Technical Notes or similar guidance
document with publication of the Star
Ratings.
(b) Review of data quality. CMS
reviews the quality of the data on which
performance, scoring and rating of a
measure is based before using the data
to score and rate performance or in
calculating a Star Rating. This includes
review of variation in scores among MA
organizations and Part D plan sponsors,
and the accuracy, reliability, and
validity of measures and performance
data before making a final determination
about inclusion of measures in each
year’s Star Ratings.
(c) Adding measures. (1) CMS will
continue to review measures that are in
alignment with the private sector, such
as measures developed by NCQA and
the Pharmacy Quality Alliance (PQA),
or endorsed by the National Quality
Forum for adoption and use in the Part
C and Part D Quality Ratings System.
CMS may develop its own measures as
well when appropriate to measure and
reflect performance specific to the
Medicare program.
(2) In advance of the measurement
period, CMS will announce potential
new measures and solicit feedback
through the process described for
changes in and adoption of payment
and risk adjustment policies in section
1853(b) of the Act and then
subsequently will propose and finalize
new measures through rulemaking.
(3) New measures added to the Part C
Star Ratings program will be on the
display page on www.cms.gov for a
minimum of 2 years prior to becoming
a Star Ratings measure.
(4) A measure will remain on the
display page for longer than 2 years if
CMS finds reliability or validity issues
with the measure specification.
(d) Updating measures—(1) Nonsubstantive updates. For measures that
are already used for Star Ratings, CMS
will update measures so long as the
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changes in a measure are not
substantive. CMS will announce nonsubstantive updates to measures that
occur (or are announced by the measure
steward) during or in advance of the
measurement period through the
process described for changes in and
adoption of payment and risk
adjustment policies in section 1853(b) of
the Act. Non-substantive measure
specification updates include those
that—
(i) Narrow the denominator or
population covered by the measure;
(ii) Do not meaningfully impact the
numerator or denominator of the
measure;
(iii) Update the clinical codes with no
change in the target population or the
intent of the measure;
(iv) Provide additional clarifications:
(A) Adding additional tests that
would meet the numerator
requirements;
(B) Clarifying documentation
requirements;
(C) Adding additional instructions to
identify services or procedures; or
(v) Add alternative data sources.
(2) Substantive updates. For measures
that are already used for Star Ratings, in
the case of measure specification
updates that are substantive updates not
subject to paragraph (d)(1) of this
section, CMS will propose and finalize
these measures through rulemaking
similar to the process for adding new
measures. CMS will initially solicit
feedback on whether to make
substantive measure updates through
the process described for changes in and
adoption of payment and risk
adjustment policies in section 1853(b) of
the Act. Once the update has been made
to the measure specification by the
measure steward, CMS may continue
collection of performance data for the
legacy measure and include it in Star
Ratings until the updated measure has
been on display for 2 years. CMS will
place the updated measure on the
display page for at least 2 years prior to
using the updated measure to calculate
and assign Star Ratings as specified in
paragraph (c) of this section.
(e) Removing measures. (1) CMS will
remove a measure from the Star Ratings
program as follows:
(i) When the clinical guidelines
associated with the specifications of the
measure change such that the
specifications are no longer believed to
align with positive health outcomes; or
(ii) A measure shows low statistical
reliability.
(2) CMS will announce in advance of
the measurement period the removal of
a measure based upon its application of
this paragraph through the process
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described for changes in and adoption
of payment and risk adjustment policies
in section 1853(b) of the Act in advance
of the measurement period.
(f) Improvement measure. CMS will
calculate improvement measure scores
based on a comparison of the measure
scores for the current year to the
immediately preceding year as provided
in this paragraph; the improvement
measure score would be calculated for
Parts C and D separately by taking a
weighted sum of net improvement
divided by the weighted sum of the
number of eligible measures.
(1) Identifying eligible measures.
Annually, the subset of measures to be
included in the Part C and Part D
improvement measures will be
announced through the process
described for changes in and adoption
of payment and risk adjustment policies
in section 1853(b) of the Act. CMS
identifies measures to be used in the
improvement measures if the measures
meet all of the following:
(i) CMS will include only measures
available for the current and previous
year in the improvement measures and
that have numeric value scores in both
the current and prior year.
(ii) CMS will exclude any measure for
which there was a substantive
specification change from the previous
year.
(iii) CMS will exclude any measures
that are already focused on
improvement in MA organization
performance from year to year.
(iv) The Part C improvement measure
will include only Part C measure scores;
the Part D improvement measure will
include only Part D measure scores.
(2) Determining eligible contracts.
CMS will calculate an improvement
score only for contracts that have
numeric measure scores for both years
in at least half of the measures
identified for use applying the standards
in paragraphs (f)(1)(i) through (iv) of this
section.
(3) Special rules for calculation of the
improvement score. For any measure
used for the improvement measure for
which a contract received 5 stars in each
of the years examined, but for which the
measure score demonstrates a
statistically significant decline based on
the results of the significance testing (at
a level of significance of 0.05) on the
change score, the measure will be
categorized as having no significant
change and included in the count of
measures used to determine eligibility
for the measure (that is, for the
denominator of the improvement
measure score).
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(4) Calculation of the improvement
score. The improvement measure will
be calculated as follows:
(i) The improvement change score
(the difference in the measure scores in
the two year period) will be determined
for each measure that has been
designated an improvement measure
and for which a contract has a numeric
score for each of the 2 years examined.
(ii) Each contract’s improvement
change score per measure will be
categorized as a significant change or
not a significant change by employing a
two-tailed t-test with a level of
significance of 0.05.
(iii) The net improvement per
measure category (outcome, access,
patient experience, process) would be
calculated by finding the difference
between the weighted number of
significantly improved measures and
significantly declined measures, using
the measure weights associated with
each measure category.
(iv) The improvement measure score
will then be determined by calculating
the weighted sum of the net
improvement per measure category
divided by the weighted sum of the
number of eligible measures.
(v) The improvement measure score
will be converted to a measure-level
Star Rating using hierarchical clustering
algorithms.
(vi) The Part D improvement measure
scores for MA–PDs and PDPs will be
determined using cluster algorithms in
accordance with §§ 422.166(a)(2)(ii)
through (iv) and 423.186(a)(2)(ii)
through (iv) of this chapter. The Part D
improvement measure thresholds for
MA–PDs and PDPs would be reported
separately.
(g) Data integrity. (1) CMS will reduce
a contract’s measure rating when CMS
determines that a contract’s measure
data are inaccurate, incomplete, or
biased; such determinations may be
based on a number of reasons, including
mishandling of data, inappropriate
processing, or implementation of
incorrect practices that have an impact
on the accuracy, impartiality, or
completeness of the data used for one or
more specific measure(s).
(i) CMS will reduce HEDIS measures
to 1 star when audited data are
submitted to NCQA with a designation
of ‘‘biased rate’’ or BR based on an
auditor’s review of the data or a
designation of ‘‘nonreport’’ or NR.
(ii) CMS will reduce measures based
on data that an MA organization must
submit to CMS under § 422.516 to 1 star
when a contract did not score at least 95
percent on data validation for the
applicable reporting section or was not
compliant with CMS data validation
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standards for data directly used to
calculate the associated measure.
(iii) For the appeals measures, CMS
will use statistical criteria to estimate
the percentage of missing data for each
contract using data from multiple
sources such as a timeliness monitoring
study or audit information to scale the
star reductions to determine whether
the data at the independent review
entity (IRE) are complete. The criteria
would allow CMS to use scaled
reductions for the Star Ratings for the
applicable appeals measures to account
for the degree to which the IRE data are
missing.
(A) The data submitted for the
Timeliness Monitoring Project (TMP) or
audit that aligns with the Star Ratings
year measurement period will be used
to determine the scaled reduction.
(B) The determination of the Part C
appeals measure IRE data reduction is
done independently of the Part D
appeals measure IRE data reduction.
(C) The reductions range from a onestar reduction to a four-star reduction;
the most severe reduction for the degree
of missing IRE data would be a four-star
reduction.
(D) The thresholds used for
determining the reduction and the
associated appeals measure reduction
are as follows:
(1) 20 percent, 1 star reduction.
(2) 40 percent, 2 star reduction.
(3) 60 percent, 3 star reduction.
(4) 80 percent, 4 star reduction.
(E) If a contract receives a reduction
due to missing Part C IRE data, the
reduction is applied to both of the
contract’s Part C appeals measures.
(F) If a contract receives a reduction
due to missing Part D IRE data, the
reduction is applied to both of the
contract’s Part D appeals measures.
(G) The scaled reduction is applied
after the calculation for the appeals
measure-level Star Ratings. If the
application of the scaled reduction
results in a measure-level star rating less
than 1 star, the contract will be assigned
1 star for the appeals measure.
(H) The Part C Calculated Error is
determined using the quotient of
number of cases not forwarded to the
IRE and the total number of cases that
should have been forwarded to the IRE.
(The number of cases that should have
been forwarded to the IRE is the sum of
the number of cases in the IRE during
the data collection or data sample
period and the number of cases not
forwarded to the IRE during the same
period.)
(I) The Part D Calculated Error is
determined by the quotient of the
number of untimely cases not auto-
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forwarded to the IRE and the total
number of untimely cases.
(J) The projected number of cases not
forwarded to the IRE in a 3-month
period is calculated by multiplying the
number of cases found not to be
forwarded to the IRE based on the TMP
or audit data by a constant determined
by the data collection or data sample
time period. The value of the constant
will be 1.0 for contracts that submitted
3 months of data; 1.5 for contracts that
submitted 2 months of data; and 3.0 for
contracts that submitted 1 month of
data.
(K) Contracts would be subject to a
possible reduction due to lack of IRE
data completeness if both of the
following conditions are met:
(1) The calculated error rate is 20
percent or more.
(2) The projected number of cases not
forwarded to the IRE is at least 10 in a
3-month period.
(L) A confidence interval estimate for
the true error rate for the contract is
calculated using a Score Interval
(Wilson Score Interval) at a confidence
level of 95 percent and an associated z
of 1.959964 for a contract that is subject
to a possible reduction.
(M) A contract’s lower bound is
compared to the thresholds of the scaled
reductions to determine the IRE data
completeness reduction.
(N) The reduction is identified by the
highest threshold that a contract’s lower
bound exceeds.
(2) CMS will reduce a measure rating
to 1 star for additional concerns that
data inaccuracy, incompleteness, or bias
have an impact on measure scores and
are not specified in paragraphs (g)(1)(i)
through (iii) of this section, including a
contract’s failure to adhere to HEDIS,
HOS, or CAHPS reporting requirements.
§ 422.166
Calculation of Star Ratings.
(a) Measure Star Ratings—(1) Cut
points. CMS will determine cut points
for the assignment of a Star Rating for
each numeric measure score by
applying either a clustering or a relative
distribution and significance testing
methodology. For the Part D measures,
CMS will determine MA–PD and PDP
cut points separately.
(2) Clustering algorithm for all
measures except CAHPS measures. (i)
The method minimizes differences
within star categories and maximizes
differences across star categories using
the hierarchical clustering method.
(ii) In cases where multiple clusters
have the same measure score value
range, those clusters would be
combined, leading to fewer than 5
clusters.
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(iii) The clustering algorithm for the
improvement measure scores is done in
two steps to determine the cut points for
the measure-level Star Ratings.
Clustering is conducted separately for
improvement measure scores greater
than or equal to zero and those with
improvement measure scores less than
zero.
(A) Improvement scores of zero or
greater would be assigned at least 3 stars
for the improvement Star Rating.
(B) Improvement scores less than zero
would be assigned either 1 or 2 stars for
the improvement Star Rating.
(3) Relative distribution and
significance testing for CAHPS
measures. The method combines
evaluating the relative percentile
distribution with significance testing
and accounts for the reliability of scores
produced from survey data; no measure
Star Rating is produced if the reliability
of a CAHPS measure is less than 0.60.
Low reliability scores are defined as
those with at least 11 respondents and
reliability greater than or equal to 0.60
but less than 0.75 and also in the lowest
12 percent of contracts ordered by
reliability. The following rules apply:
(i) A contract is assigned 1 star if both
of the following criteria in paragraphs
(a)(3)(i)(A) and (B) of this section are
met and the criterion in paragraph
(a)(3)(i)(C) or (D) of this section is met:
(A) Its average CAHPS measure score
is lower than the 15th percentile; and
(B) Its average CAHPS measure score
is statistically significantly lower than
the national average CAHPS measure
score;
(C) The reliability is not low; or
(D) Its average CAHPS measure score
is more than one standard error below
the 15th percentile.
(ii) A contract is assigned 2 stars if it
does not meet the 1 star criteria and
meets at least one of the following
criteria:
(A) Its average CAHPS measure score
is lower than the 30th percentile and the
measure does not have low reliability;
or
(B) Criterion (b) its average CAHPS
measure score is lower than the 15th
percentile and the measure has low
reliability; or
(C) Its average CAHPS measure score
is statistically significantly lower than
the national average CAHPS measure
score and below the 60th percentile.
(iii) A contract is assigned 3 stars if it
meets at least one of the following
criteria:
(A) Its average CAHPS measure score
is at or above the 30th percentile and
lower than the 60th percentile, and it is
not statistically significantly different
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from the national average CAHPS
measure score; or
(B)(1) Its average CAHPS measure
score is at or above the 15th percentile
and lower than the 30th percentile;
(2) The reliability is low; and
(3) The score is not statistically
significantly lower than the national
average CAHPS measure score.
(C)(1) Its average CAHPS measure
score is at or above the 60th percentile
and lower than the 80th percentile;
(2) The reliability is low; and
(3) The score is not statistically
significantly higher than the national
average CAHPS measure score.
(iv) A contract is assigned 4 stars if it
does not meet the 5-star criteria and
meets at least one of the following
criteria:
(A) Its average CAHPS measure score
is at or above the 60th percentile and
the measure does not have low
reliability.
(B) Its average CAHPS measure score
is at or above the 80th percentile and
the measure has low reliability.
(C) Its average CAHPS measure score
is statistically significantly higher than
the national average CAHPS measure
score and above the 30th percentile.
(v) A contract is assigned five stars if
both of the following criteria in
paragraphs (a)(3)(v)(A) and (B) of this
section are met and the criterion in
paragraph (a)(3)(v)(C) or (D) of this
section is met:
(A) Its average CAHPS measure score
is at or above the 80th percentile.
(B) Its average CAHPS measure score
is statistically significantly higher than
the national average CAHPS measure
score.
(C) The reliability is not low.
(D) Its average CAHPS measure score
is more than one standard error above
the 80th percentile.
(4) Measure scores are converted to a
5-star scale ranging from 1 (worst rating)
to 5 (best rating), with whole star
increments for the cut points.
(b) Domain Star Ratings. (1)(i) CMS
groups measures by domains solely for
purposes of public reporting the data on
Medicare Plan Finder. They are not
used in the calculation of the summary
or overall ratings. Domains are used to
group measures by dimensions of care
that together represent a unique and
important aspect of quality and
performance.
(ii) The 5 domains for the MA Star
Ratings are: Staying Healthy:
Screenings, Tests and Vaccines;
Managing Chronic (Long Term)
Conditions; Member Experience with
Health Plan; Member Complaints and
Changes in the Health Plan’s
Performance; and Health Plan Customer
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Service. The 4 domains for the Part D
Star Ratings are: Drug Plan Customer
Service; Member Complaints and
Changes in the Drug Plan’s Performance;
Member Experience with the Drug Plan;
and Drug Safety and Accuracy of Drug
Pricing.
(2) CMS calculates the domain ratings
as the unweighted mean of the Star
Ratings of the included measures.
(i) A contract must have scores for at
least 50 percent of the measures
required to be reported for that contract
type for that domain to have a domain
rating calculated.
(ii) The domain ratings are on a 1- to
5- star scale ranging from 1 (worst
rating) to 5 (best rating) in whole star
increments using traditional rounding
rules.
(c) Part C summary ratings. (1) CMS
will calculate the Part C summary
ratings using the weighted mean of the
measure-level Star Ratings for Part C,
weighted in accordance with paragraph
(e) of this section with an adjustment to
reward consistently high performance
and the application of the CAI under
paragraph (f) of this section.
(2)(i) A contract must have scores for
at least 50 percent of the measures
required to be reported for the contract
type to have the summary rating
calculated.
(ii) The Part C improvement measure
is not included in the count of the
minimum number of rated measures.
(3) The summary ratings are on a 1to 5-star scale ranging from 1 (worst
rating) to 5 (best rating) in half-star
increments using traditional rounding
rules.
(d) Overall MA–PD rating. (1) The
overall rating for a MA–PD contract will
be calculated using a weighted mean of
the Part C and Part D measure-level Star
Ratings, weighted in accordance with
paragraph (e) of this section and with an
adjustment to reward consistently high
performance and the application of the
CAI, under paragraph (f) of this section.
(2)(i) An MA–PD must have both Part
C and Part D summary ratings and
scores for at least 50 percent of the
measures required to be reported for the
contract type to have the overall rating
calculated.
(ii) The Part C and D improvement
measures are not included in the count
of measures needed for the overall
rating.
(iii) Any measures that share the same
data and are included in both the Part
C and Part D summary ratings will be
included only once in the calculation
for the overall rating.
(iv) The overall rating is on a 1- to 5star scale ranging from 1 (worst rating)
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to 5 (best rating) in half-increments
using traditional rounding rules.
(v) Low enrollment contracts (as
defined in § 422.252) and new MA plans
(as defined in § 422.252) do not receive
an overall and/or summary rating. They
are treated as qualifying plans for the
purposes of QBPs as described in
§ 422.258(d)(7) and as announced
through the process described for
changes in and adoption of payment
and risk adjustment policies in section
1853 (b) of the Act.
(e) Measure weights—(1) General
rules. Subject to paragraphs (e)(2) and
(3) of this section, CMS will assign
weights to measures based on their
categorization as follows.
(i) Improvement measures receive the
highest weight of 5.
(ii) Outcome and Intermediate
outcome measures receive a weight of 3.
(iii) Patient experience and complaint
measures receive a weight of 1.5.
(iv) Access measures receive a weight
of 1.5.
(v) Process measures receive a weight
of 1.
(2) Rules for new measures. New
measures to the Star Ratings program
will receive a weight of 1 for their first
year in the Star Ratings program. In
subsequent years, the measure will be
assigned the weight associated with its
category.
(3) Special rule for Puerto Rico.
Contracts that have service areas that are
wholly located in Puerto Rico will
receive a weight of zero for the Part D
adherence measures for the summary
and overall rating calculations and will
have a weight of 3 for the adherence
measures for the improvement measure
calculations.
(f) Completing the Part C summary
and overall rating calculations. CMS
will adjust the summary and overall
rating calculations to take into account
the reward factor (if applicable) and the
categorical adjustment index (CAI) as
provided in this paragraph.
(1) Reward factor. This rating-specific
factor is added to the both the summary
and overall ratings of contracts that
qualify for the reward factor based on
both high and stable relative
performance for the rating level.
(i) The contract’s performance will be
assessed using its weighted mean and
its ranking relative to all rated contracts
in the rating level (overall for MA–PDs;
Part C summary for MA–PDs and MAonly; and Part D summary for MA–PDs
and PDPs) for the same Star Ratings
year. The contract’s stability of
performance will be assessed using the
weighted variance and its ranking
relative to all rated contracts in the
rating type (overall for MA–PDs; Part C
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summary for MA–PDs and MA-only;
and Part D summary for MA–PDs and
PDPs). The weighted mean and
weighted variance are compared
separately for MA–PD and standalone
Part D contracts. The measure weights
are specified in § 422.166(e). Since
highly-rated contracts may have the
improvement measure(s) excluded in
the determination of their final highest
rating, each contract’s weighted
variance and weighted mean are
calculated both with and without the
improvement measures. For an MA–
PD’s Part C and D summary ratings, its
ranking is relative to all other contracts’
weighted variance and weighted mean
for the rating type (Part C summary, Part
D summary) with the improvement
measure.
(ii) Relative performance of the
weighted variance (or weighted variance
ranking) will be categorized as being
high (at or above 70th percentile),
medium (between the 30th and 69th
percentile) or low (below the 30th
percentile). Relative performance of the
weighted mean (or weighted mean
ranking) will be categorized as being
high (at or above the 85th percentile),
relatively high (between the 65th and
84th percentiles), or other (below the
65th percentile).
(iii) The combination of the relative
variance and relative mean is used to
determine the value of the reward factor
to be added to the contract’s summary
and overall ratings as follows:
(A) A contract with low variance and
a high mean will have a reward factor
equal to 0.4.
(B) A contract with medium variance
and a high mean will have a reward
factor equal to 0.3.
(C) A contract with low variance and
a relatively high mean will have a
reward factor equal to 0.2.
(D) A contract with medium variance
and a relatively high mean will have a
reward factor equal to 0.1.
(E) A contract with all other
combinations of variance and relative
mean will have a reward factor equal to
0.0.
(iv) The reward factor is determined
and applied before application of the
CAI adjustment under paragraph (f)(2)
of this section; the reward factor is
based on unadjusted scores.
(2) Categorical Adjustment Index.
CMS applies the categorical adjustment
index (CAI) as provided in this
paragraph to adjust for the average
within-contract disparity in
performance associated with the
percentages of beneficiaries who receive
a low income subsidy or are dual
eligible (LIS/DE) or have disability
status. The factor is calculated as the
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mean difference in the adjusted and
unadjusted ratings (overall, Part C, Part
D for MA–PDs, Part D for PDPs) of the
contracts that lie within each final
adjustment category for each rating type.
(i) The CAI is added to or subtracted
from the contract’s overall and summary
ratings and is applied after the reward
factor adjustment (if applicable).
(A) The adjustment factor is
monotonic (that is, as the proportion of
LIS/DE and disabled increases in a
contract, the adjustment factor increases
in at least one of the dimensions) and
varies by a contract’s categorization into
a final adjustment category that is
determined by a contract’s proportion of
LIS/DE and disabled beneficiaries.
(B) To determine a contract’s final
adjustment category, contract
enrollment is determined using
enrollment data for the month of
December for the measurement period
of the Star Ratings year. The count of
beneficiaries for a contract is restricted
to beneficiaries that are alive for part or
all of the month of December of the
applicable measurement year. A
beneficiary is categorized as LIS/DE if
the beneficiary was designated as full or
partially dually eligible or receiving a
LIS at any time during the applicable
measurement period. Disability status is
determined using the variable original
reason for entitlement (OREC) for
Medicare using the information from the
Social Security Administration and
Railroad Retirement Board record
systems.
(C) MA–PD contracts may have up to
three rating-specific CAI adjustments:
One for the overall Star Rating and one
for each of the summary ratings (Part C
and Part D).
(D) An MA-only contract may be
adjusted only once for the CAI for the
Part C summary rating.
(E) The CAI values are rounded and
displayed with 6 decimal places.
(ii) In determining the CAI values, a
measure will be excluded as a candidate
for inclusion for adjustment if the
measure meets any of the following:
(A) The measure is already case-mix
adjusted for socioeconomic status.
(B) The focus of the measurement is
not a beneficiary-level issue but rather
a plan or provider-level issue.
(C) The measure is scheduled to be
retired or revised.
(D) The measure is applicable only to
SNPs.
(iii) CMS will announce the measures
identified for inclusion in the
calculations of the CAI under this
paragraph through the process described
for changes in and adoption of payment
and risk adjustment policies in section
1853(b) of the Act. The measures for
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inclusion in the calculations of the CAI
values will be selected based on the
analysis of the dispersion of the LIS/DE
within-contract differences using all
reportable numeric scores for contracts
receiving a rating in the previous rating
year. CMS calculates the results of each
contract’s estimated difference between
the LIS/DE and non-LIS/DE
performance rates per contract using
logistic mixed effects models that
includes LIS/DE as a predictor, random
effects for contract and an interaction
term of contract. For each contract, the
proportion of beneficiaries receiving the
measured clinical process or outcome
for LIS/DE and non-LIS/DE beneficiaries
would be estimated separately. The
following decision criteria is used to
determine the measures for adjustment:
(A) A median absolute difference
between LIS/DE and non-LIS/DE
beneficiaries for all contracts analyzed
is 5 percentage points or more.
(B) The LIS/DE subgroup performed
better or worse than the non-LIS/DE
subgroup in all contracts.
(C) The Part D measures for MA–PDs
and PDPs will be analyzed
independently, but the Part D measures
selected for adjustment will include
measures that meet the selection criteria
for either delivery system.
(iv) The adjusted measures score for
the selected measures are determined
using the results from regression models
of beneficiary-level measure scores that
adjust for the average within-contract
difference in measure scores for MA or
PDP contracts.
(A) A logistic regression model with
contract fixed effects and beneficiarylevel indicators of LIS/DE and disability
status is used for the adjustment.
(B) The adjusted measure scores are
converted to a measure-level Star Rating
using the measure thresholds for the
Star Ratings year that corresponds to the
measurement period of the data
employed for the CAI determination.
(v) The rating-specific CAI values will
be determined using the mean
differences between the adjusted and
unadjusted Star Ratings (overall, Part C
summary, Part D summary for MA–PDs
and Part D summary for PDPs) in each
final adjustment category.
(A) For the annual development of the
CAI, the distribution of the percentages
for LIS/DE and disabled using the
enrollment data that parallels the
previous Star Ratings year’s data would
be examined to determine the number of
equal-sized initial groups for each
attribute (LIS/DE and disabled).
(B) The initial categories are created
using all groups formed by the initial
LIS/DE and disabled groups.
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(C) The mean difference between the
adjusted and unadjusted summary or
overall ratings per initial category
would be calculated and examined. The
initial categories would then be
collapsed to form the final adjustment
categories. The collapsing of the initial
categories to form the final adjustment
categories would be done to enforce
monotonicity in at least one dimension
(LIS/DE or disabled).
(D) The mean difference within each
final adjustment category by rating-type
(Part C, Part D for MA–PD, Part D for
PDPs or overall) would be the CAI
values for the next Star Ratings year.
(vi) CMS develops the model for the
modified contract-level LIS/DE
percentage for Puerto Rico using the
following sources of information:
(A) The most recent data available at
the time of the development of the
model of both 1-year American
Community Survey (ACS) estimates for
the percentage of people living below
the Federal Poverty Level (FPL) and the
ACS 5-year estimates for the percentage
of people living below 150 percent of
the FPL. The data to develop the model
will be limited to the 10 states, drawn
from the 50 states plus the District of
Columbia with the highest proportion of
people living below the FPL, as
identified by the 1-year ACS estimates.
(B) The Medicare enrollment data
from the same measurement period as
the Star Ratings’ year. The Medicare
enrollment data would be aggregated
from MA contracts that had at least 90
percent of their enrolled beneficiaries
with mailing addresses in the 10 highest
poverty states.
(vii) A linear regression model is
developed to estimate the percentage of
LIS/DE for a contacts that solely serve
the population of beneficiaries in Puerto
Rico.
(A) The maximum value for the
modified LIS/DE indicator value per
contract would be capped at 100
percent.
(B) All estimated modified LIS/DE
values for Puerto Rico would be
rounded to 6 decimal places when
expressed as a percentage.
(C) The model’s coefficient and
intercept are updated annually and
published in the Technical Notes.
(g) Applying the improvement
measure scores. (1) CMS runs the
calculations twice for each highest level
rating for each contract-type (overall
rating for MA–PD contracts and Part C
summary rating for MA-only contracts),
with all applicable adjustments (CAI
and the reward factor), once including
the improvement measure(s) and once
without including the improvement
measure(s). In deciding whether to
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include the improvement measures in a
contract’s final highest rating, CMS
applies the following rules:
(i) Contracts with 2 or fewer stars for
their highest rating when calculated
without improvement and with all
applicable adjustments (CAI and the
reward factor) will not have their rating
calculated with the improvement
measure(s).
(ii) If the highest rating for each
contract-type is 4 stars or more without
the use of the improvement measure(s)
and with all applicable adjustments
(CAI and the reward factor), a
comparison of the highest rating with
and without the improvement
measure(s) is done. The higher rating is
used for the rating.
(iii) If the highest rating is between 2
stars and 4 stars with all applicable
adjustments (CAI and the reward factor),
the rating will be calculated with the
improvement measure(s).
(2) The Part C summary rating for
MA–PDs will include the Part C
improvement measure and the Part D
summary rating for MA–PDs will
include the Part D improvement
measure.
(h) Posting and display of ratings. For
all ratings at the measure, domain,
summary and overall level, posting and
display of the ratings is based on there
being sufficient data to calculate and
assign ratings. If a contract does not
have sufficient data to calculate a rating,
the posting and display would be the
flag ‘‘Not enough data available.’’ If the
measurement period is prior to one year
past the contract’s effective date, the
posting and display would be the flag
‘‘Plan too new to be measured’’.
(1) Medicare Plan Finder Performance
icons. Icons are displayed on Medicare
Plan Finder to note performance as
provided in this paragraph (h):
(i) High-performing icon. The high
performing icon is assigned to an MAonly contract for achieving a 5-star Part
C summary rating and an MA–PD
contract for a 5-star overall rating.
(ii) Low-performing icon. (A) A
contract receives a low performing icon
as a result of its performance on the Part
C or Part D summary ratings. The low
performing icon is calculated by
evaluating the Part C and Part D
summary ratings for the current year
and the past 2 years. If the contract had
any combination of Part C or Part D
summary ratings of 2.5 or lower in all
3 years of data, it is marked with a low
performing icon. A contract must have
a rating in either Part C or Part D for all
3 years to be considered for this icon.
(B) CMS may disable the Medicare
Plan Finder online enrollment function
(in Medicare Plan Finder) for Medicare
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health and prescription drug plans with
the low performing icon; beneficiaries
will be directed to contact the plan
directly to enroll in the low-performing
plan.
(2) Plan preview of the Star Ratings.
CMS will have plan preview periods
before each Star Ratings release during
which MA organizations can preview
their Star Ratings data in HPMS prior to
display on the Medicare Plan Finder.
■ 21. Section 422.204 is amended by
removing paragraph (b)(5) and adding
paragraph (c).
The addition reads as follows:
§ 422.204 Provider selection and
credentialing.
*
*
*
*
*
(c) An MA organization must follow
a documented process that ensures
compliance with the preclusion list
provisions in § 422.222.
■ 22. Amend § 422.206 by revising
paragraph (b)(2)(i) to read as follows:
§ 422.206 Interference with health care
professionals’ advice to enrollees
prohibited.
(b) * * *
(2) * * *
(i) To CMS, with its application for a
Medicare contract, within 10 days of
submitting its bid proposal or, for policy
changes, in accordance with all
applicable requirements under subpart
V of this part.
*
*
*
*
*
■ 23. Section 422.208 is amended by
revising paragraph (f)(2)(iii) and adding
paragraphs (f)(2)(iv) through (vii) and
(f)(3) to read as follows:
§ 422.208 Physician incentive plans:
requirements and limitations.
*
*
*
*
*
(f) * * *
(2) * * *
(iii)(A) Stop-loss protection must
cover 90 percent of costs above the
deductible or an actuarial equivalent
amount of the costs of referral services
that exceed the per-patient deductible
limit. The single combined deductible,
for policies that pay 90 percent of costs
above the deductible or an actuarial
equivalent amount, for stop-loss
insurance for the various panel sizes for
contract years beginning on or after
January 1, 2019 is determined using the
table published by CMS that is
developed using the methodology in
paragraph (f)(2)(iv) of this section. For
panel sizes not shown in the table, use
linear interpolation between the table
values.
(B) To apply this table, a physician or
physician group may use linear
interpolation to compute the deductible
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for the globally capitated patients
(DGCP) as well as the deductible for
globally capitated patients plus NPEs
(DGCPNPE). The deductible for the
stop-loss insurance required to be
provided for the physician or physician
group is then based on the lesser of
DGCP+100,000 and DGCPNPE.
(iv) The table referenced in paragraph
(f)(2)(iii) of this section will be created,
updated, and published by CMS in
guidance (such as an attachment to the
Rate Announcement issued under
section 1853(b) of the Act), as necessary,
using the following methodology:
(A) The table and the methodology in
this paragraph (f)(2)(iv) only address
capitation arrangements in the PIP and
that other stop-loss insurance needs to
be used for non-capitated arrangements.
(B) If it is not a global capitation
arrangement or is a different stop/loss
arrangement, the tables developed using
this methodology do not apply. The
table is calculated using the following
methodology and assumptions:
(1) CMS used the population of all
Fee For Service (FFS) Part A and Part B
claims for the most available recent year
and assumed a multi-specialty practice
since all physician claims were allowed.
(2) CMS’s estimate of medical group
income was derived from CMS claims
files, which include payments for all
Part A and Part B services.
(3) The central limit theorem was
used to obtain the distribution of claim
means for a multi-specialty group of any
given panel size.
(4) The distribution was used to
obtain, with 98 percent confidence, the
point at which a multi-specialty group
of a given panel size would, through
referral services, lose more than 25
percent of the net income derived from
services that the physicians personally
rendered.
(i) This point is set as the deductible
in the table described in paragraph
(f)(2)(iii) of this section.
(ii) The ‘net benefit premium’ (NBP)
column in that table is not used for
computation of combined insurance but
is used to determine the separate
deductibles for physician/professional
services and institutional services.
(iii) The NBP is computed by dividing
the total amount of stop loss claims (90
percent of claims above the deductible)
for that panel size by the panel size.
(v)(A) Insurance using separate
deductibles for professional and
institutional claims is permissible for
contract years beginning on or after
January 1, 2019 so long as the separate
deductibles for institutional services
and professional services are consistent
with the table published by CMS using
the methodology and assumptions in
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paragraphs (f)(2)(vi) and (vii) of this
section. For deductible amounts not
shown in the table use linear
interpolation between the table values.
The tables and methodology in
paragraph (f)(2)(iv) of this section only
address capitation arrangements in the
PIP and that other stop-loss insurance
needs to be used for non-capitated
arrangements. If it is not a global
capitation arrangement or a different
stop/loss arrangement, these tables do
not apply.
(B) The maximum deductibles for
each category of services (institutional
and professional claims) are identified
by using the net benefit premium (NBP)
for the patient panel size from the table
described in paragraph (f)(2)(iii) of this
section. If the NBP is identified using
interpolation from the values in the
table described in paragraph (f)(2)(iii) of
this section, interpolation is also used
from the NBP values in the table
described in paragraph (f)(2)(v)(A) of
this section that are closest to the NBP
identified by using the table described
in paragraph (f)(2)(iii) of this section.
TAs with combined stop-loss insurance,
panel size may include non-risk
patients. As with combined stop-loss
insurance, the deductible for separate
insurance that must be provided for the
physician or physician group is the
lesser of DGCP+100,000 and DGCPNPE.
(vi) The table described in (f)(2)(v) of
this section is calculated using a
methodology similar to the calculation
of the table described in paragraph
(f)(2)(iii) of this section.
(A) The population of all Part A and
Part B claims was obtained.
(B) The source for our estimate of
medical group income and institutional
income is derived from CMS claims files
which includes payments for all Part A
and Part B services.
(C) The central limit theorem is used
to obtain the distribution of claim
means and deductibles are obtained at
the 98 percent confidence level.
(vii) In determining the number of
global risk patients for the types of
services covered under Parts A and B of
Medicare, commercial and Medicaid
patients who are at global risk and in
the same stop-loss risk pool may be
included.
(A) The number of non-risk patient
equivalents (NPEs) is equal to the
projected annual aggregate payments to
the physician or physician group for
non-global risk patients, divided by an
estimate of the average capitation per
member per year (PMPY) for all nonglobal risk patients, whether or not they
are capitated. Both numerator and
denominator are for physician services
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that are rendered by the physician or
physician group.
(B) The lowest deductible shown in
the tables described in paragraphs
(f)(2)(iii) and (v) of this section would
generally not be available for sale from
an insurance company. The number of
risk patients and the net premiums are
shown for the case where the MA plan
might directly insure a contracted
physician or physician group with
protection at these lower deductibles.
(3) Special insurance. If there is a
different type of stop-loss policy
obtained by the physician group, it must
be actuarially equivalent to the coverage
shown in the tables described in
paragraphs (f)(2)(iii) and (v) of this
section. Actuarially equivalent
deductibles are acceptable if the
insurance is actuarially certified by an
attesting actuary who fulfills all of the
following requirements.
(i) Develops the deductibles to be
actuarially equivalent to those coverages
in the tables.
(ii) Makes the computations in
accordance with generally accepted
actuarial principles and practices.
(iii) Is certified as meeting the
requirements in paragraphs (f)(3)(i) and
(ii) of this section by actuaries who meet
the qualification standards established
by the American Academy of Actuaries
and follow the practice standards
established by the Actuarial Standards
Board.
*
*
*
*
*
■ 24. Section 422.222 is revised to read
as follows:
§ 422.222
Preclusion list.
(a)(1) An MA organization must not
make payment for a health care item or
service furnished by an individual or
entity that is included on the preclusion
list, defined in § 422.2.
(2) CMS sends written notice to the
individual or entity via letter of their
inclusion on the preclusion list. The
notice must contain the reason for the
inclusion and inform the individual or
entity of their appeal rights. An
individual or entity may appeal their
inclusion on the preclusion list, defined
in § 422.2, in accordance with part 498
of this chapter.
(b) An MA organization that does not
comply with paragraph (a) of this
section may be subject to sanctions
under § 422.750 and termination under
§ 422.510.
■ 25. Section 422.224 is revised to read
as follows:
§ 422.224 Payment to individuals and
entities excluded by the OIG or included on
the preclusion list.
(a) An MA organization may not pay,
directly or indirectly, on any basis, for
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items or services (other than emergency
or urgently needed services as defined
in § 422.113 of this chapter) furnished to
a Medicare enrollee by any individual
or entity that is excluded by the Office
of the Inspector General (OIG) or is
included on the preclusion list, defined
in § 422.2.
(b) If an MA organization receives a
request for payment by, or on behalf of,
an individual or entity that is excluded
by the OIG or an individual or entity
that is included on the preclusion list,
defined in § 422.2, the MA organization
must notify the enrollee and the
excluded individual or entity or the
individual or entity included on the
preclusion list in writing, as directed by
contract or other direction provided by
CMS, that payments will not be made.
Payment may not be made to, or on
behalf of, an individual or entity that is
excluded by the OIG or is included on
the preclusion list.
§ 422.254
[Amended]
26. Section 422.254 is amended by
removing paragraph (a)(4) and
redesignating paragraph (a)(5) as
paragraph (a)(4).
■
§ 422.256
[Amended]
27. Section 422.256 is amended by
removing paragraph (b)(4).
■
§ 422.258
[Amended]
28. Section 422.258 is amended in
paragraph (d)(7) introductory text by
removing the phrase ‘‘section 1852(e) of
the Act)’’ and adding in its place the
phrase ‘‘section 1852(e) of the Act)
specified in subpart 166 of this part
422’’.
■ 29. Section 422.260 is amended by
revising paragraph (a) and revising the
definition of ‘‘Quality bonus payment
(QBP) determination methodology’’ in
paragraph (b) to read as follows:
■
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 422.260 Appeals of quality bonus
payment determinations.
(a) Scope. The provisions of this
section pertain to the administrative
review process to appeal quality bonus
payment status determinations based on
section 1853(o) of the Act. Such
determinations are made based on the
overall rating for MA–PDs and Part C
summary rating for MA-only contracts
for the contract assigned under subpart
D of this part
(b) * * *
Quality bonus payment (QBP)
determination methodology means the
quality ratings system specified in
subpart 166 of this part 422 for
assigning quality ratings to provide
comparative information about MA
plans and evaluating whether MA
organizations qualify for a QBP. (Low
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enrollment contracts and new MA plans
are defined in § 422.252.)
*
*
*
*
*
■ 30. Section 422.310 by adding
paragraph (d)(5) to read as follows:
§ 422.310
Risk adjustment data.
*
*
*
*
*
(d) * * *
(5) For data described in paragraph
(d)(1) of this section as data equivalent
to Medicare fee-for-service data, which
is also known as MA encounter data,
MA organizations must submit a NPI in
a billing provider field on each MA
encounter data record, per CMS
guidance.
*
*
*
*
*
■ 31. Section 422.501 is amended by
revising paragraphs (c)(1)(iv) and (2) to
read as follows:
§ 422.501
Application requirements.
*
*
*
*
*
(c) * * *
(1) * * *
(iv) Documentation that payment for
health care services or items is not being
and will not be made to individuals and
entities included on the preclusion list,
defined in § 422.2.
(2) The authorized individual must
thoroughly describe how the entity and
MA plan meet, or will meet, all the
requirements described in this part,
including providing documentation that
payment for health care services or
items is not being and will not be made
to individuals and entities included on
the preclusion list, defined in § 422.2.
*
*
*
*
*
§ 422.502
[Amended]
32. Section 422.502 is amended in
paragraphs (b)(1) and (2) by removing
the phrase ‘‘14 months’’ and adding in
its place ‘‘12 months’’ each time it
appears.
■ 33. Section 422.503 is amended—
■ a. In paragraph (b)(4)(ii), by removing
the phrase ‘‘financial and marketing
activities’’ and adding in its place
‘‘financial and communication
activities’’; and
■ b. Revising paragraph (b)(4)(vi)(C).
The revision reads as follows:
■
§ 422.503
General provisions.
*
*
*
*
*
(b) * * *
(4) * * *
(vi) * * *
(C)(1) Each MA organization must
establish and implement effective
training and education for its
compliance officer and organization
employees, the MA organization’s chief
executive and other senior
administrators, managers and governing
body members.
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(2) Such training and education must
occur at a minimum annually and must
be made a part of the orientation for a
new employee and new appointment to
a chief executive, manager, or governing
body member.
*
*
*
*
*
■ 34. Section 422.504 is amended by—
■ a. Revising paragraphs (a)
introductory text and (a)(6).
■ b. Removing paragraph (a)(16).
■ c. Redesignating paragraphs (a)(17)
and (18) as paragraphs (a)(16) and (17),
respectively; and
■ d. Revising newly redesignated
paragraph (a)(17).
■ e. Revising paragraph (i)(2)(v).
The revisions read as follows:
§ 422.504
Contract provisions.
*
*
*
*
*
(a) Agreement to comply with
regulations and instructions. The MA
organization agrees to comply with all
the applicable requirements and
conditions set forth in this part and in
general instructions. Compliance with
the terms of this paragraph is material
to the performance of the MA contract.
The MA organization agrees—
*
*
*
*
*
(6) To comply with all applicable
provider and supplier requirements in
subpart E of this part, including
provider certification requirements,
anti-discrimination requirements,
provider participation and consultation
requirements, the prohibition on
interference with provider advice, limits
on provider indemnification, rules
governing payments to providers, limits
on physician incentive plans, and the
preclusion list requirements in
§§ 422.222 and 422.224.
*
*
*
*
*
(17) To maintain a Part C summary
plan rating score of at least 3 stars under
the 5-star rating system specified in part
422 subpart D. A Part C summary plan
rating is calculated as provided in
§ 422.166.
*
*
*
*
*
(i) * * *
(2) * * *
(v) They will ensure that payments
are not made to individuals and entities
included on the preclusion list, defined
in § 422.2.
*
*
*
*
*
§ 422.506
[Amended]
35. Section 422.506 is amended by—
a. Removing paragraph (a)(3);
b. Redesignating paragraphs (a)(4) and
(5) as paragraphs (a)(3) and (4); and
■ c. Removing and reserving paragraph
(b).
■
■
■
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36. Section 422.508 is amended by
adding paragraph (a)(3) to read as
follows:
■
§ 422.508 Modification or termination of
contract by mutual consent.
(a) * * *
(3) If the organization submits a
request to end the term of its contract
after the deadline provided in
§ 422.506(a)(2)(i), the contract may be
terminated by mutual consent in
accordance with paragraphs (a) through
(d) of this section. CMS may mutually
consent to the contract termination if
the contract termination does not
negatively affect the administration of
the Medicare program.
*
*
*
*
*
■ 37. Section 422.510 is amended by
revising paragraphs (a)(4)(viii) and (xiii)
and adding paragraphs (a)(4)(xiv) and
(xv) and (b)(2)(v) to read as follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 422.510
Termination of contract by CMS.
(a) * * *
(4) * * *
(viii) Substantially fails to comply
with the requirements in subpart V of
this part.
*
*
*
*
*
(xiii) Fails to meet the preclusion list
requirements in accordance with
§ 422.222 and 422.224.
(xiv) The MA organization has
committed any of the acts in
§ 422.752(a) that support the imposition
of intermediate sanctions or civil money
penalties under Subpart O of this part.
(xv) Following the issuance of a
notice to the MA organization no later
than August 1, CMS must terminate,
effective December 31 of the same year,
an individual MA plan if that plan does
not have a sufficient number of
enrollees to establish that it is a viable
independent plan option.
(b) * * *
(2) * * *
(v) In the event that CMS issues a
termination notice to an MA
organization on or before August 1 with
an effective date of the following
December 31, the MA organization must
issue notification to its Medicare
enrollees at least 90 days before to the
effective date of the termination.
*
*
*
*
*
■ 38. Section 422.514 is amended by
revising paragraph (b) to read as follows:
§ 422.514 Minimum enrollment
requirements.
*
*
*
*
*
(b) Minimum enrollment waiver. For a
contract applicant that does not meet
the applicable requirement of paragraph
(a) of this section at application for an
MA contract, CMS may waive the
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minimum enrollment requirement for
the first 3 years of the contract. To
receive a waiver, a contract applicant
must demonstrate to CMS’s satisfaction
that it is capable of administering and
managing an MA contract and is able to
manage the level of risk required under
the contract during the first 3 years of
the contract. Factors that CMS takes into
consideration in making this evaluation
include the extent to which—
(1)(i) The contract applicant
management and providers have
previous experience in managing and
providing health care services under a
risk-based payment arrangement to at
least as many individuals as the
applicable minimum enrollment for the
entity as described in paragraph (a) of
this section; or
(ii) The contract applicant has the
financial ability to bear financial risk
under an MA contract. In determining
whether an organization is capable of
bearing risk, CMS considers factors such
as the organization’s management
experience as described in this
paragraph (b)(1) and stop-loss insurance
that is adequate and acceptable to CMS;
and
(2) The contract applicant is able to
establish a marketing and enrollment
process that allows it to meet the
applicable enrollment requirement
specified in paragraph (a) of this section
before completion of the third contract
year.
*
*
*
*
*
§ 422.590
[Amended]
39. Section 422.590 is amended by
removing paragraph (f) and
redesignating paragraphs (g) and (h) as
paragraphs (f) and (g), respectively.
■
§ 422.664
[Amended]
40. Section 422.664 is amended in
paragraph (b)(1) by removing the phrase
‘‘July 15’’ and adding in its place
‘‘September 1’’.
■ 41. Section 422.750 is amended by
revising paragraph (a)(3) to read as
follows:
■
§ 422.750 Types of intermediate sanctions
and civil money penalties.
(a) * * *
(3) Suspension of communication
activities to Medicare beneficiaries by
an MA organization, as defined by CMS.
*
*
*
*
*
■ 42. Section 422.752 is amended by
revising paragraphs (a)(11) and (13) and
(b) to read as follows:
§ 422.752 Basis for imposing intermediate
sanctions and civil money penalties.
(a) * * *
(11) Fails to comply with
communication restrictions described in
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subpart V of this part or applicable
implementing guidance.
*
*
*
*
*
(13) Fails to comply with §§ 422.222
and 422.224, that requires the MA
organization not to make payment to
excluded individuals and entities, nor
to individuals and entities on the
preclusion list, defined in § 422.2.
(b) Suspension of enrollment and
communications. If CMS makes a
determination that could lead to a
contract termination under § 422.510(a),
CMS may impose the intermediate
sanctions at § 422.750(a)(1) and (3).
*
*
*
*
*
Subpart V—Medicare Advantage
Communication Requirements
43. The subpart heading for Subpart V
is revised to read as set forth above.
■ 44. Section 422.2260 is revised to read
as follows:
■
§ 422.2260
Definitions.
For the purposes of this section—
Communications means activities and
use of materials to provide information
to current and prospective enrollees.
Communication materials means all
information provided to current and
prospective enrollees. Marketing
materials are a subset of communication
material.
Marketing means the use of materials
or activities that meet the following:
(1) By the MA organization or
downstream entities.
(2) Intended to draw a beneficiary’s
attention to a MA plan or plans.
(3) Influence a beneficiary’s decisionmaking process when making a MA
plan selection or influence a
beneficiary’s decision to stay enrolled in
a plan (that is, retention-based
marketing).
Marketing materials include, but are
not limited to the following:
(1) Materials such as brochures;
posters; advertisements in media such
as newspapers, magazines, television,
radio, billboards, or the Internet; and
social media content.
(2) Marketing representative materials
such as scripts or outlines for
telemarketing or other presentations.
(3) Presentation materials such as
slides and charts.
Marketing materials exclude materials
that—
(1) Do not include information about
the plan’s benefit structure or cost
sharing;
(2) Do not include information about
measuring or ranking standards (for
example, star ratings);
(3) Mention benefits or cost sharing,
but do not meet the definition of
marketing in this section; or
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(4) Unless otherwise specified by
CMS because of their use or purpose,
are required under § 422.111.
■ 45. Section 422.2262 is amended by
revising paragraph (d) to read as
follows:
§ 422.2262 Review and distribution of
marketing materials.
*
*
*
*
*
(d) Enrollee communication materials.
Enrollee communication materials may
be reviewed by CMS, which may upon
review determine that such materials
must be modified, or may no longer be
used.
■ 46. Section 422.2264 is revised to read
as follows:
§ 422.2264
Guidelines for CMS review.
In reviewing marketing material or
election forms under § 422.2262, CMS
determines that the materials—
(a) Provide, in a format (and, where
appropriate, print size), and using
standard terminology that may be
specified by CMS, the following
information to Medicare beneficiaries
interested in enrolling:
(1) Adequate written description of
rules (including any limitations on the
providers from whom services can be
obtained), procedures, basic benefits
and services, and fees and other charges.
(2) Adequate written description of
any supplemental benefits and services.
(b) Notify the general public of its
enrollment period in an appropriate
manner, through appropriate media,
throughout its service area and if
applicable, continuation areas.
(c) Include in written materials notice
that the MA organization is authorized
by law to refuse to renew its contract
with CMS, that CMS also may refuse to
renew the contract, and that termination
or non-renewal may result in
termination of the beneficiary’s
enrollment in the plan.
(d) Ensure that materials are not
materially inaccurate or misleading or
otherwise make material
misrepresentations.
■ 47. Section 422.2268 is amended by:
■ a. Removing the introductory text; and
■ b. Revising paragraphs (a) and (b).
The revisions read as follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 422.2268 Standards for MA organization
communications and marketing.
(a) In conducting communication
activities, MA organizations may not do
any of the following:
(1) Provide information that is
inaccurate or misleading.
(2) Engage in activities that could
mislead or confuse Medicare
beneficiaries, or misrepresent the MA
organization.
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(3) Claim the MA organization is
recommended or endorsed by CMS or
Medicare or that CMS or Medicare
recommends that the beneficiary enroll
in the MA plan. It may explain that the
organization is approved for
participation in Medicare.
(4) Employ MA plan names that
suggest that a plan is not available to all
Medicare beneficiaries. This prohibition
must not apply to MA plan names in
effect on July 31, 2000.
(5) Display the names and/or logos of
co-branded network providers on the
organization’s member identification
card, unless the provider names, and/or
logos are related to the member
selection of specific provider
organizations (for example, physicians,
hospitals).
(6) Use a plan name that does not
include the plan type. The plan type
should be included at the end of the
plan name.
(7) For markets with a significant nonEnglish speaking population, provide
materials, as defined by CMS, unless in
the language of these individuals.
Specifically, MA organizations must
translate materials into any non-English
language that is the primary language of
at least 5 percent of the individuals in
a plan benefit package (PBP) service
area.
(b) In marketing, MA organizations
may not do any of the following:
(1) Provide cash or other monetary
rebates as an inducement for enrollment
or otherwise.
(2) Offer gifts to potential enrollees,
unless the gifts are of nominal (as
defined in the CMS Marketing
Guidelines) value, are offered to all
potential enrollees without regard to
whether or not the beneficiary enrolls,
and are not in the form of cash or other
monetary rebates.
(3) Market non-health care related
products to prospective enrollees during
any MA or Part D sales activity or
presentation. This is considered crossselling and is prohibited.
(4) Market any health care related
product during a marketing
appointment beyond the scope agreed
upon by the beneficiary, and
documented by the plan, prior to the
appointment.
(5) Market additional health related
lines of plan business not identified
prior to an individual appointment
without a separate scope of appointment
identifying the additional lines of
business to be discussed.
(6) Distribute marketing materials for
which, before expiration of the 45-day
period, the MA organization receives
from CMS written notice of disapproval
because it is inaccurate or misleading,
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or misrepresents the MA organization,
its marketing representatives, or CMS.
(7) Conduct sales presentations or
distribute and accept MA plan
enrollment forms in provider offices or
other areas where health care is
delivered to individuals, except in the
case where such activities are
conducted in common areas in health
care settings.
(8) Conduct sales presentations or
distribute and accept plan applications
at educational events.
(9) Display the names and/or logos of
provider co-branding partners on
marketing materials, unless the
materials clearly indicate that other
providers are available in the network.
(10) Knowingly target or send
marketing materials to any MA enrollee
during the Open Enrollment Period.
(11) Engage in any other marketing
activity prohibited by CMS in its
marketing guidance.
(12) Engage in any discriminatory
activity such as attempting to recruit
Medicare beneficiaries from higher
income areas without making
comparable efforts to enroll Medicare
beneficiaries from lower income areas.
(13) Solicit door-to-door for Medicare
beneficiaries or through other
unsolicited means of direct contact,
including calling a beneficiary without
the beneficiary initiating the contact.
(14) Use providers or provider groups
to distribute printed information
comparing the benefits of different
health plans unless the providers,
provider groups, or pharmacies accept
and display materials from all health
plans with which the providers,
provider groups, or pharmacies contract.
The use of publicly available
comparison information is permitted if
approved by CMS in accordance with
the Medicare marketing guidance.
(15) Provide meals to potential
enrollees, which is prohibited,
regardless of value.
*
*
*
*
*
§ 422.2272
[Amended]
48. Section § 422.2272 is amended by
removing paragraph (e).
■
§ 422.2274
[Amended]
49. Section 422.2274 is amended by—
a. Redesignating paragraph (b)(1)(iii)
as paragraph (b)(1)(iv).
■ b. Redesignating paragraph (b)(2)(iii)
as paragraph (b)(1)(iii).
■ c. Removing paragraph (b)(2); and
■ d. Redesignating paragraph (b)(3) as
paragraph (b)(2).
■
■
§ 422.2410
[Amended]
50. Section 422.2410 is amended in
paragraph (a) by removing the phrase
■
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‘‘an MLR’’ and adding in its place the
phrase ‘‘the information required under
§ 422.2460’’.
§ 422.2420
[Amended]
51. Section 422.2420 is amended—
a. By removing and reserving
paragraph (b)(2)(ix); and
■ b. In paragraph (d)(2)(i), removing the
phrase ‘‘in § 422.2420(b) or (c)’’ and
adding in its place the phrase ‘‘in
paragraph (b) or (c) of this section’’.
■ 52. Section 422.2430 is amended by—
■ a. Redesignating paragraph (a)
introductory text and paragraphs (a)(1)
and (2) as paragraphs (a)(1), (2), and (3),
respectively;
■ b. Adding a paragraph (a) subject
heading and revising newly
redesignated paragraph (a)(1);
■ c. Adding paragraph (a)(4); and
■ d. Removing and reserving paragraph
(b)(8).
The revision and addition read as
follows:
■
■
§ 422.2430 Activities that improve health
care quality.
(a) Activity requirements. (1)
Activities conducted by an MA
organization to improve quality must
either—
(i) Fall into one of the categories in
paragraph (a)(2) of this section and meet
all of the requirements in paragraph
(a)(3) of this section; or
(ii) Be listed in paragraph (a)(4).
*
*
*
*
*
(4)(i) For an MA contract that
includes MA–PD plans (described in
§ 422.2420(a)(2)), Medication Therapy
Management Programs meeting the
requirements of § 423.153(d) of this
chapter.
(ii) Fraud reduction activities,
including fraud prevention, fraud
detection, and fraud recovery.
*
*
*
*
*
■ 53. Section 422.2460 is revised to read
as follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 422.2460
Reporting requirements.
(a) For each contract year, from 2014
through 2017, each MA organization
must submit to CMS, in a timeframe and
manner specified by CMS, a report that
includes but is not limited to the data
needed by the MA organization to
calculate and verify the MLR and
remittance amount, if any, for each
contract, under this part, such as
incurred claims, total revenue,
expenditures on quality improving
activities, non-claims costs, taxes,
licensing and regulatory fees, and any
remittance owed to CMS under
§ 422.2410.
(b) For contract year 2018 and for
each subsequent contract year, each MA
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organization must submit to CMS, in a
timeframe and manner specified by
CMS, the following information:
(1) Fully credible and partially
credible contracts. For each contract
under this part that has fully credible or
partially credible experience, as
determined in accordance with
§ 422.2440(d), the MA organization
must report to CMS the MLR for the
contract and the amount of any
remittance owed to CMS under
§ 422.2410.
(2) Non-credible contracts. For each
contract under this part that has noncredible experience, as determined in
accordance with § 422.2440(d), the MA
organization must report to CMS that
the contract is non-credible.
(c) Total revenue included as part of
the MLR calculation must be net of all
projected reconciliations.
(d) The MLR is reported once, and is
not reopened as a result of any payment
reconciliation processes.
§ 422.2480
[Amended]
54. Section 422.2480 is amended—
a. In the introductory text by
removing the phrase ‘‘reviews of reports
submitted’’ and adding in its place
‘‘review of data submitted’’.
■ b. In paragraph (d) introductory text
by removing the phrase ‘‘Reports
submitted ’’ and adding in its place the
phrase ‘‘Data submitted’’.
■
■
§ 422.2490
[Amended]
55. Section 422.2490 is amended in
paragraph (a) by removing the phrase
‘‘information contained in reports
submitted’’ and adding in its place the
phrase ‘‘information submitted’’.
■
PART 423—MEDICARE PROGRAM;
MEDICARE PRESCRIPTION DRUG
PROGRAM
56. The authority citation for part 423
continues to read as follows:
■
Authority: Secs. 1102, 1860D–1 through
1860D–42, and 1871 of the Social Security
Act (42 U.S.C. 1302, 1395w–101 through
1395w–152, and 1395hh).
57. Amend § 423.4 by revising the
definition of ‘‘Generic drug’’ to read as
follows:
■
§ 423.4
Definitions.
*
*
*
*
*
Generic drug means—
(1) A drug for which an application
under section 505(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C.
355(j)) is approved; and
(2) For purposes of cost sharing under
sections 1860D–2(b)(4) and 1860D–
14(a)(1)(D) of the Act only, a biological
product for which an application under
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section 351(k) of the Public Health
Service Act (42 U.S.C. 262(k)) is
approved.
*
*
*
*
*
■ 58. Amend § 423.32 by revising
paragraph (b) introductory text and
redesignating paragraphs (b)(i) and (ii)
as (b)(1) and (2).
The revision reads as follows:
§ 423.32
Enrollment process.
*
*
*
*
*
(b) Enrollment form or CMS-approved
enrollment mechanism. The enrollment
form or CMS-approved enrollment
mechanism must comply with CMS
instructions regarding content and
format and must have been approved by
CMS as described in § 423.2262.
*
*
*
*
*
■ 59. Section 423.38 is amended by—
■ a. Revising paragraph paragraphs (c)
introductory text, (c)(4), and (c)(8)(i)(C);
■ b. Adding paragraph (c)(9);
■ c. Revising paragraph (d); and
■ d. Adding paragraph (e).
The revisions and additions read as
follows:
§ 423.38
Enrollment periods.
*
*
*
*
*
(c) Special enrollment periods. A Part
D eligible individual may enroll in a
PDP or disenroll from a PDP and enroll
in another PDP or MA–PD plan (as
provided at § 422.62(b) of this chapter),
as applicable, under any of the
following circumstances:
*
*
*
*
*
(4) The individual is a full-subsidy
eligible individual or other subsidyeligible individual as defined in
§ 423.772, who has not been identified
as a ‘‘potential at-risk beneficiary’’ or
‘‘at-risk beneficiary’’ as defined in
§ 423.100 and—
(i) Making an allowable onetime-percalendar-year election; or
(ii) Making an election after
notification of a CMS or State-initiated
enrollment action or within 2 months of
that enrollment action’s effective date.
*
*
*
*
*
(8) * * *
(i) * * *
(C) The PDP (or its agent,
representative, or plan provider)
materially misrepresented the plan’s
provisions in communication materials
as outlined in subpart V.
*
*
*
*
*
(9) The individual is making an
election within 2 months of a gain, loss,
or change to Medicaid or LIS eligibility,
or notification of such a change,
whichever is later.
(d) Enrollment period to coordinate
with MA annual 45-day disenrollment
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period. Through 2018, an individual
enrolled in an MA plan who elects
Original Medicare from January 1
through February 14, as described in
§ 422.62(a)(5), may also elect a PDP
during this time.
(e) Enrollment period to coordinate
with MA open enrollment period. For
2019 and subsequent years, an
individual who makes an election as
described in § 422.62(a)(3), may make
an election to enroll in or disenroll from
Part D coverage. An individual who
elects Original Medicare during the MA
open enrollment period may elect to
enroll in a PDP during this time.
■ 60. Section 423.40 is amended by
revising paragraph (d) and adding
paragraph (e) to read as follows:
§ 423.40
Effective dates.
sradovich on DSK3GMQ082PROD with PROPOSALS2
*
*
*
*
*
(d) PDP enrollment period to
coordinate with the MA annual
disenrollment period. Through 2018, an
enrollment made from January 1
through February 14 by an individual
who has disenrolled from an MA plan
as described in § 422.62(a)(5) will be
effective the first day of the month
following the month in which the
enrollment in the PDP is made.
(e) PDP enrollment period to
coordinate with the MA annual
disenrollment period. For 2019 and
subsequent years, an enrollment made
by an individual who elects Original
Medicare during the MA open
enrollment period as described in
§ 422.62(a)(3), will be effective the first
day of the month following the month
in which the election is made.
■ 61. Section § 423.100 is amended—
■ a. By revising the definition of
‘‘Affected enrollee’’;
■ b. By adding in alphabetical order
definitions for ‘‘At risk beneficiary’’,
‘‘Clinical guidelines’’, ‘‘Exempted
beneficiary’’, ‘‘Frequently abused drug’’,
and ‘‘Mail-Order pharmacy’’;
■ c. By removing the definition of
‘‘Other authorized prescriber’’;
■ d. By adding in alphabetical order
definitions for ‘‘Potential at-risk
beneficiary’’, ‘‘Preclusion List’’, and
‘‘Program size’’; and
■ e. By revising the definition of ‘‘Retail
pharmacy’’.
The revisions and additions read as
follows:
§ 423.100
Definitions.
*
*
*
*
*
Affected enrollee means a Part D
enrollee who is currently taking a
covered Part D drug that is either being
removed from a Part D plan’s formulary,
or whose preferred or tiered cost-sharing
status is changing and such drug
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removal or cost-sharing change affects
the Part D enrollee’s access to the drug
during the current plan year.
*
*
*
*
*
At-risk beneficiary means a Part D
eligible individual—
(1) Who is—
(i) Identified using clinical guidelines
(as defined in § 423.100);
(ii) Not an exempted beneficiary; and
(iii) Determined to be at-risk for
misuse or abuse of such frequently
abused drugs under a Part D plan
sponsor’s drug management program in
accordance with the requirements of
§ 423.153(f); or
(2) With respect to whom a Part D
plan sponsor receives a notice upon the
beneficiary’s enrollment in such
sponsor’s plan that the beneficiary was
identified as an at-risk beneficiary (as
defined in the paragraph (1) of this
definition) under the prescription drug
plan in which the beneficiary was most
recently enrolled, such identification
had not been terminated upon
disenrollment, and the new plan has
adopted the identification.
*
*
*
*
*
Clinical guidelines, for the purposes
of a drug management program under
§ 423.153(f), are criteria—
(1) To identify potential at-risk
beneficiaries who may be determined to
be at-risk beneficiaries under such
programs; and
(2) That are developed in accordance
with § 423.153(f)(16) and published in
guidance annually.
*
*
*
*
*
Exempted beneficiary means with
respect to a drug management program,
an enrollee who—
(1) Has elected to receive hospice
care;
(2) Is a resident of a long-term care
facility, of a facility described in section
1905(d) of the Act, or of another facility
for which frequently abused drugs are
dispensed for residents through a
contract with a single pharmacy; or
(3) Has a cancer diagnosis.
Frequently abused drug means a
controlled substance under the Federal
Controlled Substances Act that the
Secretary determines is frequently
abused or diverted, taking into account
all of the following factors:
(1) The drug’s schedule designation
by the Drug Enforcement
Administration.
(2) Government or professional
guidelines that address that a drug is
frequently abused or misused.
(3) An analysis of Medicare or other
drug utilization or scientific data.
*
*
*
*
*
Mail-order pharmacy means a
licensed pharmacy that dispenses and
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delivers extended days’ supplies of
covered Part D drugs via common
carrier at mail-order cost sharing.
*
*
*
*
*
Potential at-risk beneficiary means a
Part D eligible individual—
(1) Who is identified using clinical
guidelines (as defined in § 423.100); or
(2) With respect to whom a Part D
plan sponsor receives a notice upon the
beneficiary’s enrollment in such
sponsor’s plan that the beneficiary was
identified as a potential at-risk
beneficiary (as defined in paragraph (1)
of this definition) under the prescription
drug plan in which the beneficiary was
most recently enrolled, such
identification had not been terminated
upon disenrollment, and the new plan
has adopted the identification.
Preclusion list means a CMS compiled
list of prescribers who—
(1) Meet all of the following
requirements:
(i) The prescriber is currently revoked
from the Medicare program under
§ 424.535.
(ii) The prescriber is currently under
a reenrollment bar under § 424.535(c).
(iii) CMS determines that the
underlying conduct that led to the
revocation is detrimental to the best
interests of the Medicare program. In
making this determination under this
paragraph, CMS considers the following
factors:
(A) The seriousness of the conduct
underlying the prescriber’s revocation;
(B) The degree to which the
prescriber’s conduct could affect the
integrity of the Part D program; and
(C) Any other evidence that CMS
deems relevant to its determination; or.
(2) Meet both of the following
requirements:
(i) The prescriber has engaged in
behavior for which CMS could have
revoked the prescriber to the extent
applicable if he or she had been
enrolled in Medicare.
(ii) CMS determines that the
underlying conduct that would have led
to the revocation is detrimental to the
best interests of the Medicare program.
In making this determination under this
paragraph, CMS considers the all of the
following factors:
(A) The seriousness of the conduct
involved.
(B) The degree to which the
prescriber’s conduct could affect the
integrity of the Part D program.
(C) Any other evidence that CMS
deems relevant to its determination.
*
*
*
*
*
Program size means the estimated
population of potential at-risk
beneficiaries in drug management
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programs (described in § 423.153(f))
operated by Part D plan sponsors that
the Secretary determines can be
effectively managed by such sponsors as
part of the process to develop clinical
guidelines.
*
*
*
*
*
Retail pharmacy means any licensed
pharmacy that is open to dispense
prescription drugs to the walk-in
general public from which Part D
enrollees could purchase a covered Part
D drug at retail cost sharing without
being required to receive medical
services from a provider or institution
affiliated with that pharmacy.
*
*
*
*
*
■ 62. Section 423.120 is amended by—
■ a. Redesignating paragraph (b)(3)(i)
introductory text and paragraphs
(b)(3)(i)(A) through (D) as paragraphs
(b)(3)(i)(A) introductory text and
(b)(3)(i)(A)(1) through (4);
■ b. Adding a new paragraph
(b)(3)(i)(B);
■ c. Revising paragraph (b)(3)(iii);
■ d. In paragraph (b)(5)(i) introductory
text, by removing the figure ‘‘60’’ and
adding in its place the figure ‘‘30’’ and
by adding the phrase ‘‘(for purposes of
this paragraph (b)(5) these entities are
referred to as ‘‘CMS and other specified
entities’’) after the word ‘‘pharmacists’’;
■ e. In paragraph (b)(5)(i)(A), by
removing the phrase ‘‘60 days’’ and
adding in its place the phrase ‘‘2
months’’;
■ f. In paragraph (b)(5)(i)(B), by
removing the figure ‘‘60’’ and adding in
its place the figure ‘‘30’’;
■ g. In paragraph (b)(5)(iii), by removing
the phrase ‘‘, CMS, State Pharmaceutical
Assistance Programs (as defined in
§ 423.454), entities providing other
prescription drug coverage (as described
in § 423.464(f)(1)), authorized
prescribers, network pharmacies, and
pharmacists’’ and adding in its place the
phrase ‘‘and CMS and other specified
entities’’;
■ h. Adding paragraph (b)(5)(iv);
■ i. In paragraph (b)(6), by removing the
phrase ‘‘under paragraphs (b)(5)(iii) of
this section’’ and adding in its place the
phrase ‘‘under paragraphs (b)(5)(iii) and
(iv) of this section’’; and
■ j. Revising paragraphs (c)(5) and (6).
The additions and revisions read as
follows:
§ 423.120
Access to covered Part D drugs.
*
*
*
*
*
(b) * * *
(3) * * *
(B) Not apply in cases in which a Part
D sponsor substitutes a generic drug for
a brand name drug as permitted under
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paragraphs (b)(5)(iv) and (b)(6) of this
section.
*
*
*
*
*
(iii) Ensure the provision of a
temporary fill when an enrollee requests
a fill of a non-formulary drug during the
time period specified in paragraph
(b)(3)(ii) of this section (including Part
D drugs that are on a plan’s formulary
but require prior authorization or step
therapy under a plan’s utilization
management rules) by providing a onetime, temporary supply of at least a
month’s supply of medication, unless
the prescription is written by a
prescriber for less than a month’s
supply and requires the Part D sponsor
to allow multiple fills to provide up to
a total of a month’s supply of
medication.
*
*
*
*
*
(5) * * *
(iv) A Part D sponsor may
immediately remove a brand name drug
(as defined in § 423.4) from its Part D
formulary or change the brand name
drug’s preferred or tiered cost-sharing
without meeting the deadlines and refill
requirements of paragraph (b)(5)(i) of
this section provided that the Part D
sponsor does all of the following:
(A) At the same time that it removes
such brand name drug or changes its
preferred or tiered cost-sharing, it adds
a therapeutically equivalent (as defined
in § 423.100) generic drug (as defined in
§ 423.4) to its formulary with the same
or lower cost-sharing and the same or
less restrictive utilization management
criteria.
(B) The Part D sponsor previously
could not have included such
therapeutically equivalent generic drug
on its formulary when it requested CMS
formulary approval consistent with
§ 423.120(b)(2) because such generic
drug was not yet available on the
market.
(C) Before making any permitted
generic substitutions, the Part D sponsor
provides general notice to all current
and prospective enrollees in its
formulary and other applicable
beneficiary communication materials
advising them that—
(1) Such changes may be made at any
time when a new generic is added in
place of a brand name drug, and there
may be no advance direct notice to the
affected enrollees;
(2) If such a substitution should
occur, affected enrollees will receive
direct notice including information on
the specific drugs involved and steps
they may take to request coverage
determinations and exceptions under
§§ 423.566 and 423.578; and
(D) Before making any permitted
generic substitutions, the Part D sponsor
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56509
provides advance general notice to CMS
and other specified entities.
(E) The Part D sponsor provides
notice of any such formulary changes to
affected enrollees and CMS and other
specified entities consistent with the
requirements of paragraphs (b)(5)(i) (as
applicable) and (ii) of this section. This
would include direct notice to the
affected enrollees.
*
*
*
*
*
(c) * * *
(5)(i) A Part D plan sponsor must
reject, or must require its pharmacy
benefit manager (PBM) to reject, a
pharmacy claim for a Part D drug unless
the claim contains the active and valid
National Provider Identifier (NPI) of the
prescriber who prescribed the drug.
(ii) The sponsor must communicate at
point-of sale whether or not a submitted
NPI is active and valid in accordance
with this paragraph (c)(5)(ii).
(A) If the sponsor communicates that
the NPI is not active and valid, the
sponsor must permit the pharmacy to—
(1) Confirm that the NPI is active and
valid; or
(2) Correct the NPI.
(B) If the pharmacy confirms that the
NPI is active and valid or corrects the
NPI, the sponsor must pay the claim if
it is otherwise payable.
(iii) A Part D sponsor must not later
recoup payment from a network
pharmacy for a claim that does not
contain an active and valid individual
prescriber NPI on the basis that it does
not contain one, unless the sponsor—
(A) Has complied with paragraph (ii)
of this section;
(B) Has verified that a submitted NPI
was not in fact active and valid; and
(C) The agreement between the parties
explicitly permits such recoupment.
(iv) With respect to requests for
reimbursement submitted by Medicare
beneficiaries, a Part D sponsor may not
make payment to a beneficiary
dependent upon the sponsor’s
acquisition of an active and valid
individual prescriber NPI, unless there
is an indication of fraud. If the sponsor
is unable to retrospectively acquire an
active and valid individual prescriber
NPI, the sponsor may not seek recovery
of any payment to the beneficiary solely
on that basis.
(6)(i) Except as provided in paragraph
(c)(6)(iv) of this section, a Part D
sponsor must reject, or must require its
PBM to reject, a pharmacy claim for a
Part D drug if the individual who
prescribed the drug is included on the
preclusion list, defined in § 423.100.
(ii) Except as provided in paragraph
(c)(6)(iv) of this section, a Part D
sponsor must deny, or must require its
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PBM to deny, a request for
reimbursement from a Medicare
beneficiary if the request pertains to a
Part D drug that was prescribed by an
individual who is identified by name in
the request and who is included on the
preclusion list, defined in § 423.100.
(iii) A Part D plan sponsor may not
submit a prescription drug event (PDE)
record to CMS unless it includes on the
PDE record the active and valid
individual NPI of the prescriber of the
drug, and the prescriber is not included
on the preclusion list, defined in
§ 423.100, for the date of service.
(iv)(A) A Part D sponsor or its PBM
must not reject a pharmacy claim for a
Part D drug under paragraph (c)(6)(i) of
this section or deny a request for
reimbursement under paragraph
(c)(6)(ii) of this section unless the
sponsor has provided the provisional
coverage of the drug and written notice
to the beneficiary required by paragraph
(c)(6)(iv)(B) of this section.
(B) Upon receipt of a pharmacy claim
or beneficiary request for
reimbursement for a Part D drug that a
Part D sponsor would otherwise be
required to reject or deny in accordance
with paragraph (c)(6)(i) or (ii) of this
section, a Part D sponsor or its PBM
must do the following:
(1) Provide the beneficiary with the
following, subject to all other Part D
rules and plan coverage requirements:
(i) A provisional supply coverage
period during which the sponsor must
cover all drugs dispensed to the
beneficiary in accordance with
prescriptions written by the individual
on the preclusion list. The provisional
supply period begins on the date-ofservice the first drug is dispensed in
accordance with a prescription written
by the individual on the preclusion list.
(ii) Written notice within 3 business
days after adjudication of the first claim
or request for the drug in a form and
manner specified by CMS.
(2) Ensure that reasonable efforts are
made to notify the prescriber of a
beneficiary who was sent a notice under
paragraph (c)(6)(iv)(B)(1)(ii) of this
section.
(v)(A) CMS sends written notice to the
prescriber via letter of his or her
inclusion on the preclusion list. The
notice must contain the reason for the
inclusion on the preclusion list and
inform the prescriber of his or her
appeal rights.
(B) A prescriber may appeal his or her
inclusion on the preclusion list under
this section in accordance with 42 CFR
part 498.
(vi) CMS has the discretion not to
include a particular individual on (or if
warranted, remove the individual from)
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the preclusion list should it determine
that exceptional circumstances exist
regarding beneficiary access to
prescriptions. In making a
determination as to whether such
circumstances exist, CMS takes into
account—
(A) The degree to which beneficiary
access to Part D drugs would be
impaired; and
(B) Any other evidence that CMS
deems relevant to its determination.
*
*
*
*
*
■ 63. Section 423.128 is amended by
revising paragraph (d)(2)(iii) to reads as
follows:
§ 423.128 Dissemination of Part D plan
information.
*
*
*
*
*
(d) * * *
(2) * * *
(iii) Provides current and prospective
Part D enrollees with notice that is
timely under § 423.120(b)(5) regarding
any removal or change in the preferred
or tiered cost-sharing status of a Part D
drug on its Part D plan’s formulary.
*
*
*
*
*
■ 64. Section 423.153 is amended by
adding a sentence at the end of
paragraph (a) and adding paragraph (f)
to read as follows:
§ 423.153 Drug utilization management,
quality assurance, and medication therapy
management programs (MTMPs).
(a) * * *
A Part D plan sponsor may establish
a drug management program for at-risk
beneficiaries enrolled in their
prescription drug benefit plans to
address overutilization of frequently
abused drugs, as described in paragraph
(f) of this section.
*
*
*
*
*
(f) Drug management programs. A
drug management program must meet
all the following requirements:
(1) Written policies and procedures. A
sponsor must document its drug
management program in written policies
and procedures that are approved by the
applicable P&T committee and reviewed
and updated as appropriate. These
policies and procedures must address
all aspects of the sponsor’s drug
management program, including but not
limited to the following:
(i) The appropriate credentials of the
personnel conducting case management
required under paragraph (f)(2) of this
section.
(ii) The necessary and appropriate
contents of files for case management
required under paragraph (f)(2) of this
section.
(iii) Monitoring reports and
notifications about incoming enrollees
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who meet the definition of an at-risk
beneficiary and a potential at-risk
beneficiary in § 423.100 and responding
to requests from other sponsors for
information about at-risk beneficiaries
and potential at-risk beneficiaries who
recently disenrolled from the sponsor’s
prescription drug benefit plan.
(2) Case management/clinical
contact/prescriber verification—(i)
General rule. The sponsor’s clinical staff
must conduct case management for each
potential at-risk beneficiary for the
purpose of engaging in clinical contact
with the prescribers of frequently
abused drugs and verifying whether a
potential at-risk beneficiary is an at-risk
beneficiary. Except as provided in
paragraph (f)(2)(ii) of this section, the
sponsor must do all of the following:
(A) Send written information to the
beneficiary’s prescribers that the
beneficiary meets the clinical guidelines
and is a potential at risk beneficiary.
(B) Elicit information from the
prescribers about any factors in the
beneficiary’s treatment that are relevant
to a determination that the beneficiary
is an at-risk beneficiary, including
whether prescribed medications are
appropriate for the beneficiary’s medical
conditions or the beneficiary is an
exempted beneficiary.
(C) In cases where the prescribers
have not responded to the inquiry
described in paragraph (f)(2)(i)(B) of this
section, make reasonable attempts to
communicate telephonically with the
prescribers within a reasonable period
after sending the written information.
(ii) Exception for identification by
prior plan. If a beneficiary was
identified as a potential at-risk or an atrisk beneficiary by his or her most
recent prior plan and such identification
has not been terminated in accordance
with paragraph (f)(14) of this section,
the sponsor meets the requirements in
paragraph (f)(2)(i) of this section, so long
as the sponsor obtains case management
information from the previous sponsor
and such information is clinically
adequate and up to date.
(3) Limitation on access to coverage
for frequently abused drugs. Subject to
the requirements of paragraph (f)(4) of
this section, a Part D plan sponsor may
do all of the following:
(i) Implement a point-of-sale claim
edit for frequently abused drugs that is
specific to an at-risk beneficiary.
(ii) In accordance with paragraphs
(f)(10) and (11) of this section, limit an
at-risk beneficiary’s access to coverage
for frequently abused drugs to those that
are—
(A) Prescribed for the beneficiary by
one or more prescribers;
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(B) Dispensed to the beneficiary by
one or more network pharmacies; or
(C) Specified in both paragraphs
(f)(3)(ii)(A) and (C) of this section.
(iii)(A) If the sponsor implements an
edit as specified in paragraph (f)(3)(i) of
this section, the sponsor must not cover
frequently abused drugs for the
beneficiary in excess of the edit, unless
the edit is terminated or revised based
on a subsequent determination,
including a successful appeal.
(B) If the sponsor limits the at-risk
beneficiary’s access to coverage as
specified in paragraph (f)(3)(ii) of this
section, the sponsor must cover
frequently abused drugs for the
beneficiary only when they are obtained
from the selected pharmacy(ies) or
prescriber(s) or both, as applicable—
(1) In accordance with all other
coverage requirements of the
beneficiary’s prescription drug benefit
plan, unless the limit is terminated or
revised based on a subsequent
determination, including a successful
appeal; and
(2) Except as necessary to provide
reasonable access in accordance with
paragraph (f)(12) of this section.
(4) Requirements for limiting access to
coverage for frequently abused drugs. (i)
A sponsor may not limit the access of
an at-risk beneficiary to coverage for
frequently abused drugs under
paragraph (f)(3) of this section, unless
the sponsor has done all of the
following:
(A) Conducted case management as
required by paragraph (f)(2) of this
section and updated it, if necessary.
(B) Obtained the agreement of the
prescribers of frequently abused drugs
for the beneficiary that the specific
limitation is appropriate.
(C) Provided the notices to the
beneficiary in compliance with
paragraphs (f)(5) and (6) of this section.
(ii) If the sponsor has complied with
the requirement of paragraph (f)(2)(i)(C)
of this section, and the prescribers were
not responsive after 3 attempts by the
sponsor to contact them by telephone
within 10 business days, then the
sponsor has met the requirement of
paragraph (f)(4)(i)(B) of this section.
(iii) The sponsor has met the case
management requirement in paragraph
(f)(2)(i) of this section if—
(A) The beneficiary meets paragraph
(2) of the definition of a potential at-risk
beneficiary or an at-risk beneficiary; and
(B) The sponsor has obtained the
applicable case management
information from the sponsor of the
beneficiary’s most recent plan and
updated it as appropriate.
(iv) A Part D sponsor must not limit
an at-risk beneficiary’s access to
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coverage for frequently abused drugs to
those that are prescribed for the
beneficiary by one or more prescribers
under paragraph (f)(3)(ii)(A) of this
section unless—
(A) At least 6 months has passed from
the date the beneficiary was first
identified as a potential at-risk
beneficiary from the date of the
applicable CMS identification report;
and
(B) The beneficiary meets the clinical
guidelines and was reported by the most
recent CMS identification report.
(5) Initial notice to a beneficiary. (i) A
Part D sponsor that intends to limit the
access of a potential at-risk beneficiary
to coverage for frequently abused drugs
under paragraph (f)(3) of this section
must provide an initial written notice to
the beneficiary.
(ii) The notice must do all of the
following:
(A) Use language approved by the
Secretary.
(B) Be in a readable and
understandable form.
(C) Provide all of the following
information:
(1) An explanation that the
beneficiary’s current or immediately
prior Part D plan sponsor has identified
the beneficiary as a potential at-risk
beneficiary.
(2) A description, of all State and
Federal public health resources that are
designed to address prescription drug
abuse to which the beneficiary has
access, including mental health and
other counseling services and
information on how to access such
services, including any such services
covered by the plan under its Medicare
benefits, supplemental benefits, or
Medicaid benefits (if the plan integrates
coverage of Medicare and Medicaid
benefits).
(3) An explanation of the beneficiary’s
right to a redetermination if the sponsor
issues a determination that the
beneficiary is an at-risk beneficiary and
the standard and expedited
redetermination processes described at
§ 423.580 et seq.
(4) A request that the beneficiary
submit to the sponsor within 30 days of
the date of this initial notice any
information that the beneficiary believes
is relevant to the sponsor’s
determination, including which
prescribers and pharmacies the
beneficiary would prefer the sponsor to
select if the sponsor implements a
limitation under paragraph (f)(3)(ii) of
this section.
(5) An explanation of the meaning
and consequences of being identified as
an at-risk beneficiary, including the
following:
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56511
(i) An explanation of the sponsor’s
drug management program, the specific
limitation the sponsor intends to place
on the beneficiary’s access to coverage
for frequently abused drugs under the
program.
(ii) The timeframe for the sponsor’s
decision
(iii) If applicable, any limitation on
the availability of the special enrollment
period described in § 423.38.
(6) Clear instructions that explain
how the beneficiary can contact the
sponsor, including how the beneficiary
may submit information to the sponsor
in response to the request described in
paragraph (f)(5)(ii)(C)(4) of this section.
(7) Contact information for other
organizations that can provide the
beneficiary with assistance regarding
the sponsor’s drug management
program.
(8) Other content that CMS
determines is necessary for the
beneficiary to understand the
information required in this notice.
(iii) The Part D plan sponsor must
make reasonable efforts to provide the
beneficiary’s prescriber(s) of frequently
abused drugs with a copy of the notice
required under paragraph (f)(5)(i) of this
section.
(6) Second notice. (i) Upon making a
determination that a beneficiary is an atrisk beneficiary and to limit the
beneficiary’s access to coverage for
frequently abused drugs under
paragraph (f)(3) of this section, a Part D
sponsor must provide a second written
notice to the beneficiary.
(ii) The second notice must do all of
the following:
(A) Use language approved by the
Secretary.
(B) Be in a readable and
understandable form.
(C) Provide all of the following
information:
(1) An explanation that the
beneficiary’s current or immediately
prior Part D plan sponsor has identified
the beneficiary as an at-risk beneficiary.
(2) An explanation that the
beneficiary is subject to the
requirements of the sponsor’s drug
management program, including—
(i) The limitation the sponsor is
placing on the beneficiary’s access to
coverage for frequently abused drugs
and the effective and end date of the
limitation; and
(ii) If applicable, any limitation on the
availability of the special enrollment
period described in § 423.38.
(3) The prescriber(s) or pharmacy(ies)
or both, if and as applicable, from which
the beneficiary must obtain frequently
abused drugs in order for them to be
covered by the sponsor.
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(4) An explanation of the beneficiary’s
right to a redetermination under
§ 423.580 et seq., including—
(i) A description of both the standard
and expedited redetermination
processes; and
(ii) The beneficiary’s right to, and
conditions for, obtaining an expedited
redetermination.
(5) An explanation that the
beneficiary may submit to the sponsor,
if the beneficiary has not already done
so, the prescriber(s) and pharmacy(ies),
as applicable, from which the
beneficiary would prefer to obtain
frequently abused drugs.
(6) Clear instructions that explain
how the beneficiary may contact the
sponsor, including how the beneficiary
may submit information to the sponsor
in response to the request described in
paragraph (f)(6)(ii)(C)(5) of this section.
(7) Other content that CMS
determines is necessary for the
beneficiary to understand the
information required in this notice.
(iii) The Part D plan sponsor must
make reasonable efforts to provide the
beneficiary’s prescriber(s) of frequently
abused drugs with a copy of the notice
required by paragraph (f)(6)(i) of this
section.
(7) Alternate second notice. (i) If, after
providing an initial notice to a potential
at-risk beneficiary under paragraph (f)(4)
of this section, a Part D sponsor
determines that the potential at-risk
beneficiary is not an at-risk beneficiary,
the sponsor must provide an alternate
second written notice to the beneficiary.
(ii) The alternate second notice must
do all of the following:
(A) Use language approved by the
Secretary.
(B) Be in a readable and
understandable form.
(C) Provide all of the following
information:
(1) The sponsor has determined that
the beneficiary is not an at-risk
beneficiary.
(2) The sponsor will not limit the
beneficiary’s access to coverage for
frequently abused drugs.
(3) If applicable, the SEP limitation no
longer applies.
(4) Clear instructions that explain
how the beneficiary may contact the
sponsor.
(5) Other content that CMS
determines is necessary for the
beneficiary to understand the
information required in this notice.
(ii) The Part D sponsor must make
reasonable efforts to provide the
beneficiary’s prescriber(s) of frequently
abused drugs with a copy of the notice
required in accordance with paragraph
(f)(7)(i) of this section.
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(8) Timing of notices. (i) Subject to
paragraph (f)(8)(ii) of this section, a Part
D sponsor must provide the second
notice described in paragraph (f)(6) of
this section or the alternate second
notice described in paragraph (f)(7) of
this section, as applicable, on a date that
is not less than 30 days and not more
than the earlier of the date the sponsor
makes the relevant determination or 90
days after the date of the initial notice
described in paragraph (f)(5) of this
section.
(ii) Immediately upon the
beneficiary’s enrollment in the gaining
plan, the gaining plan sponsor may
immediately provide a second notice
described in paragraph (f)(6) of this
section to a beneficiary for whom the
gaining sponsor received a notice that
the beneficiary was identified as an atrisk beneficiary by his or her most
recent prior plan, and such
identification had not been terminated
in accordance with paragraph (f)(14) of
this section, if the sponsor is
implementing either of the following:
(A) A beneficiary-specific point-ofsale claim edit as described in
paragraph (f)(3)(i) of this section.
(B) A limitation on access to coverage
as described in paragraph (f)(3(ii) of this
section, if such limitation would require
the beneficiary to obtain frequently
abused drugs from the same location of
pharmacy and/or the same prescriber, as
applicable, that was selected under the
immediately prior plan under paragraph
(f)(9) of this section.
(9) Beneficiary preferences. Except as
described in paragraph (f)(10) of this
section, if a beneficiary submits
preferences for prescribers or
pharmacies or both from which the
beneficiary prefers to obtain frequently
abused drugs, the sponsor must do the
following:
(i) Review such preferences.
(ii) If the beneficiary is—
(A) Enrolled in a stand-alone
prescription drug benefit plan and
specifies a prescriber(s) or network
pharmacy(ies) or both, select or change
the selection of prescriber(s) or network
pharmacy(ies) or both for the
beneficiary based on beneficiary’s
preference(s).
(B) Enrolled in a Medicare Advantage
prescription drug benefit plan and
specifies a network prescriber(s) or
network pharmacy(ies) or both, select or
change the selection of prescriber(s) or
pharmacy(ies) or both for the
beneficiary based on the beneficiary’s
preference(s).
(iii) The sponsor must inform the
beneficiary of the selection in—
(A) The second notice; or
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(B) If the second notice is not feasible
due to the timing of the beneficiary’s
submission, in a subsequent written
notice, issued no later than 14 days after
receipt of the submission.
(10) Exception to beneficiary
preferences. (i) If the Part D sponsor
determines that the selection or change
of a prescriber or pharmacy under
paragraph (f)(9) of this section would
contribute to prescription drug abuse or
drug diversion by the at-risk beneficiary,
the sponsor may change the selection
without regard to the beneficiary’s
preferences if there is strong evidence of
inappropriate action by the prescriber,
pharmacy, or beneficiary.
(ii) If the sponsor changes the
selection, the sponsor must provide the
beneficiary with—
(A) At least 30 days advance written
notice of the change; and
(B) A rationale for the change.
(11) Reasonable access. In making the
selections under paragraph (f)(12) of this
section, a Part D plan sponsor must
ensure both of the following:
(i) That the beneficiary continues to
have reasonable access to frequently
abused drugs, taking into account—
(1) Geographic location;
(2) Beneficiary preference;
(3) The beneficiary’s predominant
usage of a prescriber or pharmacy or
both;
(4) The impact on cost-sharing; and
(5) Reasonable travel time.
(ii) Reasonable access to frequently
abused drugs in the case of—
(A) Individuals with multiple
residences;
(B) Natural disasters and similar
situations; and
(C) The provision of emergency
services.
(12) Selection of prescribers and
pharmacies. (i) A Part D plan sponsor
must select, as applicable—
(A) One, or, if the sponsor reasonably
determines it necessary to provide the
beneficiary with reasonable access,
more than one, network prescriber who
is authorized to prescribe frequently
abused drugs for the beneficiary, unless
the plan is a stand-alone PDP and the
selection involves a prescriber(s), in
which case, the prescriber need not be
a network prescriber; and
(B) One, or, if the sponsor reasonably
determines it necessary to provide the
beneficiary with reasonable access,
more than one, network pharmacy that
may dispense such drugs to such
beneficiary.
(ii)(A) For purposes of this paragraph
(f)(12) of this section, in the case of a
pharmacy that has multiple locations
that share real-time electronic data, all
such locations of the pharmacy must
collectively be treated as one pharmacy.
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(B) For purposes of this paragraph
(f)(12) of this section, in the case of a
group practice, all prescribers of the
group practice must be treated as one
prescriber.
(13) Confirmation of selections(s). (i)
Before selecting a prescriber or
pharmacy under this paragraph, a Part
D plan sponsor must notify the
prescriber or pharmacy, as applicable,
that the beneficiary has been identified
for inclusion in the drug management
program for at-risk beneficiaries and
that the prescriber or pharmacy or both
is (are) being selected as the
beneficiary’s designated prescriber or
pharmacy or both for frequently abused
drugs.
(ii) The sponsor must receive
confirmation from the prescriber(s) or
pharmacy(ies) or both that the selection
is accepted before conveying this
information to the at-risk beneficiary,
unless the prescriber or pharmacy has
agreed in advance in its network
agreement with the sponsor to accept all
such selections and the agreement
specifies how the prescriber or
pharmacy will be notified by the
sponsor of its selection.
(14) Termination of identification as
an at-risk beneficiary. The identification
of an at-risk beneficiary as such must
terminate as of the earlier of the
following:
(i) The date the beneficiary
demonstrates through a subsequent
determination, including but not limited
to, a successful appeal, that the
beneficiary is no longer likely, in the
absence of the limitations under this
paragraph, to be an at-risk beneficiary.
(ii) The end of a 12-calendar month
period calculated from the effective date
of the limitation, as specified in the
notice provided under paragraph (f)(6)
of this section.
(15) Data disclosure. (i) CMS
identifies each potential at-risk
beneficiary to the sponsor of the
prescription drug plan in which the
beneficiary is enrolled.
(ii) A Part D sponsor that operates a
drug management program must
disclose any data and information to
CMS and other Part D sponsors that
CMS deems necessary to oversee Part D
drug management programs at a time,
and in a form and manner specified by
CMS. The data and information
disclosures must do all of the following:
(A) Respond to CMS within 30 days
of receiving a report about a potential atrisk beneficiary from CMS.
(B) Provide information to CMS about
any potential at-risk beneficiary that a
sponsor identifies within 30 days from
the date of the most recent CMS report
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identifying potential at-risk
beneficiaries;
(C) Provide information to CMS
within 7 business days of the date of the
initial notice or second notice that the
sponsor provided to a beneficiary, or
within 7 days of a termination date, as
applicable, about a beneficiary-specific
opioid claim edit or a limitation on
access to coverage for frequently abused
drugs.
(D) Transfer case management
information upon request of a gaining
sponsor as soon as possible but not later
than 2 weeks from the gaining sponsor’s
request when—
(1) An at-risk beneficiary or potential
at-risk beneficiary disenrolls from the
sponsor’s plan and enrolls in another
prescription drug plan offered by the
gaining sponsor; and
(2) The edit or limitation that the
sponsor had implemented for the
beneficiary had not terminated before
disenrollment.
(16) Clinical guidelines. Potential atrisk beneficiaries and at-risk
beneficiaries are identified by CMS or
the Part D sponsor using clinical
guidelines that—
(i) Are developed with stakeholder
consultation;
(ii) Are based on the acquisition of
frequently abused drugs from multiple
prescribers, multiple pharmacies, the
level of frequently abused drugs used, or
any combination of this factors;
(iii) Are derived from expert opinion
and an analysis of Medicare data; and
(iv) Include a program size estimate.
■ 65. Section 423.160 is amended by
■ a. Revising paragraph (b)(1)(iv);
■ b. Adding paragraph (b)(1)(v);
■ c. Revising paragraph (b)(2)(iii);
■ d. Adding paragraph (b)(2)(iv);
■ e. Revising paragraph (b)(4); and
■ f. Adding paragraph (c)(1)(vii).
The revisions and additions read as
follows:
§ 423.160 Standards for electronic
prescribing.
*
*
*
*
*
(b) * * *
(1) * * *
(iv) From March 1, 2015 until January
1, 2019, the standards specified in
paragraphs (b)(2)(iii), (b)(3), (b)(4)(i),
(b)(5)(iii), and (b)(6).
(v) On or after January 1, 2019, the
standards specified in paragraphs
(b)(2)(iii) and (b)(3), (b)(4)(ii), (b)(5)(iii),
and (b)(6) of this section.
(2) * * *
(iii) National Council for Prescription
Drug Programs Prescriber/Pharmacist
Interface SCRIPT Standard,
Implementation Guide, Version 10,
Release 6 (Version 10.6), November 12,
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2008 (incorporated by reference in
paragraph (c)(1)(i) of this section), to
provide for the communication of a
prescription or prescription-related
information between prescribers and
dispensers, for the following:
(A) Get message transaction.
(B) Status response transaction.
(C) Error response transaction.
(D) New prescription transaction.
(E) Prescription change request
transaction.
(F) Prescription change response
transaction.
(G) Refill/Resupply prescription
request transaction.
(H) Refill/Resupply prescription
response transaction.
(I) Verification transaction.
(J) Password change transaction.
(K) Cancel prescription request
transaction.
(L) Cancel prescription response
transaction.
(M) Fill status notification.
(iv) The National Council for
Prescription Programs SCRIPT standard,
Implementation Guide Version 2017071
approved July 28, 2017 (incorporated by
reference in paragraph (c)(1)(i) of this
section), to provide for the
communication of a prescription or
related prescription-related information
between prescribers and dispensers for
the following:
(A) Get message transaction.
(B) Status response transaction.
(C) Error response transaction.
(D) New prescription transaction.
(E) Prescription change request
transaction.
(F) Prescription change response
transaction.
(G) Refill/Resupply prescription
request transaction.
(H) Refill/Resupply prescription
response transaction.
(I) Verification transaction.
(J) Password change transaction.
(K) Cancel prescription request
transaction.
(L) Cancel prescription response
transaction.
(M) Fill status notification.
(N) Prescription drug administration
message.
(O) New prescription requests.
(P) New prescription response
denials.
(Q) Prescription transfer message.
(R) Prescription fill indicator change.
(S) Prescription recertification.
(T) REMS initiation request.
(U) REMS initiation response.
(V) REMS request.
(W) REMS response.
*
*
*
*
*
(4) Medication history. Medication
history to provide for the
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communication of Medicare Part D
medication history information among
Medicare Part D sponsors, prescribers
and dispensers:
(i) Until January 1, 2017, Either the
National Council for Prescription Drug
Programs Prescriber/Pharmacist
Interface SCRIPT Standard,
Implementation Guide Version 8,
Release 1 (Version 8.1), October 2005
(incorporate by reference in paragraph
(c)(1)(v) of this section, or the National
Council for Prescription Drug Programs
SCRIPT Standard, Implementation
Guide Version 10.6, approved
November 12, 2008 (incorporated by
reference in paragraph (c)(1)(vi) of this
section.
(ii) On or after January 1, 2019, the
National Council for Prescription Drug
Programs SCRIPT Standard,
Implementation Guide Version 2017071,
approved July 28, 2017 (incorporated by
reference in paragraph (c)(1)(vii) of this
section).
*
*
*
*
*
(c) * * *
(1) * * *
(vii) National Council for Prescription
Drug Programs SCRIPT Standard,
Implementation Guide Version 2017071,
approved July 28, 2017.
*
*
*
*
*
■ 66. Sections 423.180, 423.182,
423.184 and 423.186 are added Subpart
D to read as follows:
Subpart D—Cost Control and Quality
Improvement Requirements
*
*
*
*
*
Sec.
423.180 Basis and scope of the Part D
Quality Rating System.
423.182 Part D Quality Rating System.
423.184 Adding, updating, and removing
measures.
423.186 Calculation of star ratings.
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 423.180 Basis and scope of the Part D
Quality Rating System.
(a) Basis. This subpart is based on
sections 1851(d), 1852(e), 1853(o) and
1854(b)(3)(iii), (v), and (vi) of the Act
and the general authority under section
1856(b) of the Act requiring the
establishment of standards consistent
with and to carry out Part D.
(b) Purpose. Ratings calculated and
assigned under this subpart will be used
by CMS for the following purposes:
(1) To provide comparative
information on plan quality and
performance to beneficiaries for their
use in making knowledgeable
enrollment and coverage decisions in
the Medicare program.
(2) To provide quality ratings on a 5star rating system.
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(3) To provide a means to evaluate
and oversee overall and specific
compliance with certain regulatory and
contract requirements by Part D plans,
where appropriate and possible to use
data of the type described in
§ 423.182(c).
(c) Applicability. The regulations in
this subpart will be applicable
beginning with the 2019 measurement
period and the associated 2021 Star
Ratings that are released prior to the
annual coordinated election period for
the 2021 contract year.
§ 423.182
Part D Quality Rating System.
(a) Definitions. In this subpart the
following terms have the meanings:
CAHPS refers to a comprehensive and
evolving family of surveys that ask
consumers and patients to evaluate the
interpersonal aspects of health care.
CAHPS surveys probe those aspects of
care for which consumers and patients
are the best or only source of
information, as well as those that
consumers and patients have identified
as being important. CAHPS initially
stood for the Consumer Assessment of
Health Plans Study, but as the products
have evolved beyond health plans the
acronym now stands for Consumer
Assessment of Healthcare Providers and
Systems.
Case-mix adjustment means an
adjustment to the measure score made
prior to the score being converted into
a Star Rating to take into account certain
enrollee characteristics that are not
under the control of the plan. For
example age, education, chronic
medical conditions, and functional
health status that may be related to the
enrollee’s survey responses.
Categorical Adjustment Index (CAI)
means the factor that is added to or
subtracted from an overall or summary
Star Rating (or both) to adjust for the
average within-contract (or within-plan
as applicable) disparity in performance
associated with the percentages of
beneficiaries who are dually eligible for
Medicare and enrolled in Medicaid,
beneficiaries who receive a Low Income
Subsidy, or have disability status in that
contract (or plan as applicable).
Clustering refers to a variety of
techniques used to partition data into
distinct groups such that the
observations within a group are as
similar as possible to each other, and as
dissimilar as possible to observations in
any other group. Clustering of the
measure-specific scores means that gaps
that exist within the distribution of the
scores are identified to create groups
(clusters) that are then used to identify
the four cut points resulting in the
creation of five levels (one for each Star
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Rating), such that scores in the same
Star Rating level are as similar as
possible and scores in different Star
Rating levels are as different as possible.
Technically, the variance in measure
scores is separated into within-cluster
and between-cluster sum of squares
components. The clusters reflect the
groupings of numeric value scores that
minimize the variance of scores within
the clusters. The Star Ratings levels are
assigned to the clusters that minimize
the within-cluster sum of squares. The
cut points for star assignments are
derived from the range of measure
scores per cluster, and the star levels
associated with each cluster are
determined by ordering the means of the
clusters.
Consolidation means when an MA
organization that has at least two
contracts for health and/or drug services
of the same plan type under the same
parent organization in a year combines
multiple contracts into a single contract
for the start of the subsequent contract
year.
Consumed contract means a contract
that will no longer exist after a contract
year’s end as a result of a consolidation.
Display page means the CMS Web site
on which certain measures and scores
are publicly available for informational
purposes; the measures that are
presented on the display page are not
used in assigning Part C and D Star
Ratings.
Domain rating means the rating that
groups measures together by dimensions
of care.
Dual-eligible (DE) means a beneficiary
who is enrolled in both Medicare and
Medicaid.
Highest rating means the overall
rating for MA–PDs, the Part C summary
rating for MA-only contracts, and the
Part D summary rating for PDPs.
Highly-rated contract means a
contract that has 4 or more stars for its
highest rating when calculated without
the improvement measures and with all
applicable adjustments (CAI and the
reward factor).
Low-income subsidy (LIS) means the
subsidy that a beneficiary receives to
help pay for prescription drug coverage
(see § 423.34 for definition of a lowincome subsidy eligible individual).
Measurement period means the
period for which data are collected for
a measure or the performance period
that a measures covers.
Measure score means the numeric
value of the measure or an assigned
‘missing data’ message.
Measure star means the measure’s
numeric value is converted to a Star
Rating. It is displayed to the nearest
whole star, using a 1–5 star scale.
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Overall rating means a global rating
that summarizes the quality and
performance for the types of services
offered across all unique Part C and Part
D measures.
Part C summary rating means a global
rating that summarizes the health plan
quality and performance on Part C
measures.
Part D summary rating means a global
rating that summarizes prescription
drug plan quality and performance on
Part D measures.
Plan benefit package (PBP) means a
set of benefits for a defined MA or PDP
service area. The PBP is submitted by
Part D plan sponsors and MA
organizations to CMS for benefit
analysis, bidding, marketing, and
beneficiary communication purposes.
Reliability means a measure of the
fraction of the variation among the
observed measure values that is due to
real differences in quality (‘‘signal’’)
rather than random variation (‘‘noise’’);
it is reflected on a scale from 0 (all
differences in plan performance
measure scores are due to measurement
error) to 1 (the difference in plan
performance scores is attributable to real
differences in performance).
Reward factor means a rating-specific
factor added to the contract’s summary
or overall ratings (or both) if a contract
has both high and stable relative
performance.
Statistical significance assesses how
likely differences observed in
performance are due to random chance
alone under the assumption that plans
are actually performing the same.
Surviving contract means the contact
that will still exist under a
consolidation, and all of the
beneficiaries enrolled in the consumed
contract(s) are moved to the surviving
contracts.
Traditional rounding rules mean that
the last digit in a value will be rounded.
If rounding to a whole number, look at
the digit in the first decimal place. If the
digit in the first decimal place is 0, 1,
2, 3 or 4, then the value should be
rounded down by deleting the digit in
the first decimal place. If the digit in the
first decimal place is 5 or greater, then
the value should be rounded up by 1
and the digit in the first decimal place
deleted.
(b) Contract ratings—(1) General.
CMS calculates an overall Star Rating,
Part C summary rating, and Part D
summary rating for each MA–PD
contract and a Part D summary rating for
each PDP contract using the 5-star rating
system described in this subpart. For
PDP contracts, the Part D summary
rating is the highest rating. Measures are
assigned stars at the contract level and
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weighted in accordance with
§ 423.186(a). Domain ratings are the
average of the individual measure
ratings under the topic area in
accordance with § 423.186(b). Summary
ratings are the weighted average of the
individual measure ratings for Part C or
Part D in accordance with § 423.186(c).
Overall Star Ratings are calculated by
using the weighted average of the
individual measure ratings in
accordance with § 423.186(d) with both
the reward factor and CAI applied as
applicable, as described in § 423.186(f).
(2) Plan benefit packages. All plan
benefit packages (PBPs) offered under
an MA contract or PDP plan sponsor
have the same overall and/or summary
Star Ratings as the contract under which
the PBP is offered by the MA
organization or PDP plan sponsor. Data
from all the PBPs offered under a
contract are used to calculate the
measure and domain ratings for the
contract. A contract level score is
calculated using an enrollmentweighted mean of the PBP scores and
enrollment reported as part of the
measure specification in each PBP.
(3) Contract consolidations. (i) In the
case of contract consolidations
involving two or more contracts for
health and/or drug services of the same
plan type under the same parent
organization, CMS assigns Star Ratings
for the first and second years following
the consolidation based on the
enrollment-weighted mean of the
measure scores of the surviving and
consumed contract(s) as provided in
paragraph (b)(3)(ii) of this section.
(ii) The Star Ratings posted on
Medicare Plan Finder for contracts that
consolidate are as follows:
(A) For the first year after
consolidation, CMS will use enrollmentweighted measure scores using the July
enrollment of the measurement period
of the consumed and surviving contracts
for all measures, except the surveybased and call center measures. The
survey-based measures would use
enrollment of the surviving and
consumed contracts at the time the
sample is pulled for the rating year. The
call center measures would use average
enrollment during the study period.
(B) For the second year after
consolidation, CMS will use the
enrollment-weighted measure scores
using the July enrollment of the
measurement year of the consumed and
surviving contracts for all measures
except those from CAHPS. CMS will
ensure that the CAHPS survey sample
will include enrollees in the sample
frame from both the surviving and
consumed contracts.
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(c) Data sources. (1) Part D Star
Ratings measures reflect structure,
process, and outcome indices of quality.
This includes information of the
following types: Beneficiary
experiences, benefit administration
information, clinical data, and CMS
administrative data. Data underlying
Star Ratings measures may include
survey data, data separately collected
and used in oversight of Part D plans’
compliance with contract requirements,
data submitted by plans, and CMS
administrative data.
(2) Part D sponsors are required to
collect, analyze, and report data that
permit measurement of indices of
quality. Part D sponsors must provide
unbiased, accurate, and complete
quality data described in paragraph
(c)(1) to CMS on a timely basis as
requested by CMS.
§ 423.184 Adding, updating, and removing
measures.
(a) General. CMS adds, updates, and
removes measures used to calculate the
Star Ratings as provided in this section.
CMS lists the measures used for a
particular Star Rating each year in the
Technical Notes or similar guidance
document with publication of the Star
Ratings.
(b) Review of data quality. CMS
reviews the quality of the data on which
performance, scoring and rating of a
measure is based before using the data
to score and rate performance or in
calculating a Star Rating. This includes
review of variation in scores among MA
organizations and Part D plan sponsors,
and the accuracy, reliability, and
validity of measures and performance
data before making a final determination
about inclusion of measures in each
year’s Star Ratings.
(c) Adding measures. (1) CMS will
continue to review measures that are
nationally endorsed and in alignment
with the private sector, such as
measures developed by National
Committee for Quality Assurance and
the Pharmacy Quality Alliance or
endorsed by the National Quality Forum
for adoption and use in the Part D
Quality Ratings System. CMS may
develop its own measures as well when
appropriate to measure and reflect
performance specific to the Medicare
program.
(2) In advance of the measurement
period, CMS will announce potential
new measures and solicit feedback
through the process described for
changes in and adoption of payment
and risk adjustment policies in section
1853(b) of the Act and then
subsequently will propose and finalize
new measures through rulemaking.
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(3) New measures added to the Part D
Star Ratings program will be on the
display page on www.cms.gov for a
minimum of 2 years prior to becoming
a Star Ratings measure.
(4) A measure will remain on the
display page for longer than 2 years if
CMS finds reliability or validity issues
with the measure specification.
(d) Updating measures—(1) Nonsubstantive updates. For measures that
are already used for Star Ratings, CMS
will update measures so long as the
changes in a measure are not
substantive. CMS will announce nonsubstantive updates to measures that
occur (or are announced by the measure
steward) during or in advance of the
measurement period through the
process described for changes in and
adoption of payment and risk
adjustment policies in section 1853(b) of
the Act. Non-substantive measure
specification updates include those
that—
(i) Narrow the denominator or
population covered by the measure;
(ii) Do not meaningfully impact the
numerator or denominator of the
measure;
(iii) Update the clinical codes with no
change in the target population or the
intent of the measure;
(iv) Provide additional clarifications:
(A) Adding additional qualifiers that
would meet the numerator
requirements;
(B) Clarifying documentation
requirements;
(C) Adding additional instructions; or
(v) Add alternative data sources.
(2) Substantive updates. For measures
that are already used for Star Ratings, in
the case of measure specification
updates that are substantive updates not
subject to paragraph (d)(1), CMS will
propose and finalize these measures
through rulemaking similar to the
process for adding new measures. CMS
will initially solicit feedback on
whether to make substantive measure
updates through the process described
for changes in and adoption of payment
and risk adjustment policies in section
1853(b) of the Act. Once the update has
been made to the measure specification
by the measure steward, CMS may
continue collection of the performance
data for the legacy measure and include
it in Star Ratings until the updated
measure has been on display for 2 years.
CMS will place the updated measure on
the display page for at least 2 years prior
to using the updated measure to
calculate and assign Star Ratings as
specified in paragraph (c) of this
section.
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(e) Removing measures. (1) CMS will
remove a measure from the Star Ratings
program as follows:
(i) When the clinical guidelines
associated with the specifications of the
measure change such that the
specifications are no longer believed to
align with positive health outcomes, or
(ii) A measure shows low statistical
reliability.
(2) CMS will announce in advance of
the measurement period the removal of
a measure based upon its application of
this paragraph through the process
described for changes in and adoption
of payment and risk adjustment policies
in section 1853(b) of the Act in advance
of the measurement period.
(f) Improvement measure. CMS will
calculate improvement measure scores
based on a comparison of the measure
scores for the current year to the
immediately preceding year as provided
in this paragraph; the improvement
measure score would be calculated for
Parts C and D separately by taking a
weighted sum of net improvement
divided by the weighted sum of the
number of eligible measures.
(1) Identifying eligible measures.
Annually, the subset of measures to be
included in the Part D improvement
measure will be announced through the
process described for changes in and
adoption of payment and risk
adjustment policies in section 1853(b) of
the Act. CMS identifies measures to be
used in the improvement measure if the
measures meet all the following:
(i) CMS will include only measures
available for the current and previous
year in the improvement measures and
that have numeric value scores in both
the current and prior year.
(ii) CMS will exclude any measure for
which there was a substantive
specification change, from the previous
year.
(iii) The Part D improvement measure
will include only Part D measure scores.
(2) Determining eligible contracts.
CMS will calculate an improvement
score only for contracts that have
numeric measure scores for both years
in at least half of the measures
identified for use applying the standards
in paragraphs (f)(1)(i) through (iii) of
this section.
(3) Special rules for calculation of the
improvement score. For any measure
used for the improvement measure for
which a contract received 5 stars in each
of the years examined, but for which the
measure score demonstrates a
statistically significant decline based on
the results of the significance testing (at
a level of significance of 0.05) on the
change score, the measure will be
categorized as having no significant
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change and included in the count of
measures used to determine eligibility
for the measure (that is, for the
denominator of the improvement
measure score).
(4) Calculation of the improvement
score. The improvement measure will
be calculated as follows:
(i) The improvement change score
(the difference in the measure scores in
the 2-year period) will be determined
for each measure that has been
designated an improvement measure
and for which a contract has a numeric
score for each of the 2 years examined.
(ii) Each contract’s improvement
change score per measure will be
categorized as a significant change or
not a significant change by employing a
two-tailed t-test with a level of
significance of 0.05.
(iii) The net improvement per
measure category (outcome, access,
patient experience, process) would be
calculated by finding the difference
between the weighted number of
significantly improved measures and
significantly declined measures, using
the measure weights associated with
each measure category.
(iv) The improvement measure score
will then be determined by calculating
the weighted sum of the net
improvement per measure category
divided by the weighted sum of the
number of eligible measures.
(v) The improvement measure score
will be converted to a measure-level
Star Rating using hierarchical clustering
algorithms.
(vi) The Part D improvement measure
scores for MA–PDs and PDPs will be
determined using cluster algorithms in
accordance with § 423.186(a)(2)(ii). The
Part D improvement measure thresholds
for MA–PDs and PDPs would be
reported separately.
(g) Data integrity. (1) CMS will reduce
a contract’s measure rating when CMS
determines that a contract’s measure
data are inaccurate, incomplete, or
biased; such determinations may be
based on a number of reasons, including
mishandling of data, inappropriate
processing, or implementation of
incorrect practices that have an impact
on the accuracy, impartiality, or
completeness of the data used for one or
more specific measures.
(i) CMS will reduce measures based
on Part D reporting requirements data to
1 star when a contract did not score at
least 95 percent on data validation for
the applicable reporting section or was
not compliant with CMS data validation
standards/sub-standards for data
directly used to calculate the associated
measure.
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(ii) For the appeals measures, CMS
will use statistical criteria to estimate
the percentage of missing data for each
contract using data from multiple
sources such as a timeliness monitoring
study or audit information to scale the
star reductions to determine whether
the data at the independent review
entity (IRE) are complete.
(A) The criteria would allow CMS to
use scaled reductions for the Star
Ratings for the applicable appeals
measures to account for the degree to
which the IRE data are missing.
(B) The data submitted for the
timeliness monitoring project (TMP) or
audit that aligns with the Star Ratings
year measurement period will be used
to determine the scaled reduction.
(C) The determination of the Part C
appeals measure IRE data reduction is
done independently of the Part D
appeals measure IRE data reduction.
(D) The reductions range from a onestar reduction to a four-star reduction;
the most severe reduction for the degree
of missing IRE data would be a four-star
reduction.
(E) The thresholds used for
determining the reduction and the
associated appeals measure reduction
are as follows:
(1) 20 percent, 1 star reduction.
(2) 40 percent, 2 star reduction.
(3) 60 percent, 3 star reduction.
(4) 80 percent, 4 star reduction.
(F) If a contract receives a reduction
due to missing Part D IRE data, the
reduction is applied to both of the
contract’s Part D appeals measures.
(G) The scaled reduction is applied
after the calculation for the appeals
measure-level star ratings. If the
application of the scaled reduction
results in a measure-level star rating less
than one-star, the contract will be
assigned one-star for the appeals
measure.
(H) The Part D Calculated Error is
determined by the quotient of the
number of untimely cases not autoforwarded to the IRE and the total
number of untimely cases.
(I) The projected number of cases not
forwarded to the IRE in a 3-month
period is calculated by multiplying the
number of cases found not to be
forwarded to the IRE based on the TMP
or audit data by a constant determined
by the data collection or data sample
time period. The value of the constant
will be 1.0 for contracts that submitted
3 months of data; 1.5 for contracts that
submitted 2 months of data; and 3.0 for
contracts that submitted 1 month of
data.
(J) Contracts would be subject to a
possible reduction due to lack of IRE
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data completeness if both of the
following conditions are met:
(1) The calculated error rate is 20
percent or more; and
(2) The projected number of cases not
forwarded to the IRE is at least 10 in a
3-month period.
(K) A confidence interval estimate for
the true error rate for the contract is
calculated using a Score Interval
(Wilson Score Interval) at a confidence
level of 95 percent and an associated z
of 1.959964 for a contract that is subject
to a possible reduction.
(1) A contract’s lower bound is
compared to the thresholds of the scaled
reductions to determine the IRE data
completeness reduction.
(2) The reduction is identified by the
highest threshold that a contract’s lower
bound exceeds.
(2) CMS will reduce a measure rating
to 1 star for additional concerns that
data inaccuracy, incompleteness, or bias
have an impact on measure scores and
are not specified in paragraphs (g)(1)(i)
and (ii) of this section, including a
contract’s failure to adhere to CAHPS
reporting requirements.
§ 423.186
Calculation of Star Ratings.
(a) Measure Star Ratings—(1) Cut
points. CMS will determine cut points
for the assignment of a Star Rating for
each numeric measure score by
applying either a clustering or a relative
distribution and significance testing
methodology. For the Part D measures,
we propose to determine MA–PD and
PDP cut points separately.
(2) Clustering algorithm for all
measures except CAHPS measures. (i)
The method minimizes differences
within star categories and maximize
differences across star categories using
the hierarchical clustering method.
(ii) In cases where multiple clusters
have the same measure score value
range, those clusters would be
combined, leading to fewer than 5
clusters.
(iii) The clustering algorithm for the
improvement measure scores is done in
two steps to determine the cut points for
the measure-level Star Ratings.
Clustering is conducted separately for
improvement measure scores greater
than or equal to zero and those with
improvement measure scores less than
zero.
(A) Improvement scores of zero or
greater would be assigned at least 3 stars
for the improvement Star Rating.
(B) Improvement scores less than zero
would be assigned either 1 or 2 stars for
the improvement Star Rating.
(3) Relative distribution and
significance testing for CAHPS
measures. The method combines
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evaluating the relative percentile
distribution with significance testing
and accounts for the reliability of scores
produced from survey data; no measure
Star Rating is produced if the reliability
of a CAHPS measure is less than 0.60.
Low reliability scores are those with at
least 11 respondents, reliability greater
than or equal to 0.60 but less than 0.75,
and also in the lowest 12 percent of
contracts ordered by reliability. The
following rules apply:
(i) A contract is assigned 1 star if both
of the following criteria in paragraphs
(a)(3)(i)(A) and (B) of this section are
met and the criterion in paragraph
(a)(3)(i)(C) or (D) of this section is met:
(A) Its average CAHPS measure score
is lower than the 15th percentile; and
(B) Its average CAHPS measure score
is statistically significantly lower than
the national average CAHPS measure
score.
(C) The reliability is not low.
(D) Its average CAHPS measure score
is more than one standard error below
the 15th percentile.
(ii) A contract is assigned two stars if
it does not meet the 1 star criteria and
meets at least one of the following
criteria:
(A) Its average CAHPS measure score
is lower than the 30th percentile and the
measure does not have low reliability.
(B) Its average CAHPS measure score
is lower than the 15th percentile and the
measure has low reliability.
(C) Its average CAHPS measure score
is statistically significantly lower than
the national average CAHPS measure
score and below the 60th percentile.
(iii) A contract is assigned three stars
if it meets at least one of the following
criteria:
(A) Its average CAHPS measure score
is at or above the 30th percentile and
lower than the 60th percentile, and it is
not statistically significantly different
from the national average CAHPS
measure score.
(B)(1) Its average CAHPS measure
score is at or above the 15th percentile
and lower than the 30th percentile;
(2) The reliability is low; and
(3) The score is not statistically
significantly lower than the national
average CAHPS measure score.
(C)(1) Its average CAHPS measure
score is at or above the 60th percentile
and lower than the 80th percentile;
(2) The reliability is low; and
(3) The score is not statistically
significantly higher than the national
average CAHPS measure score.
(iv) A contract is assigned 4 stars if it
does not meet the 5-star criteria and
meets at least one of the following
criteria:
(A) Its average CAHPS measure score
is at or above the 60th percentile and
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the measure does not have low
reliability.
(B) Its average CAHPS measure score
is at or above the 80th percentile and
the measure has low reliability.
(C) Its average CAHPS measure score
is statistically significantly higher than
the national average CAHPS measure
score and above the 30th percentile.
(v) A contract is assigned five stars if
both of the following criteria in
paragraphs (a)(3)(v)(A) and (B) of this
section are met and the criterion in
paragraph (a)(3)(v)(C) or (D) of this
section is met:
(A) Its average CAHPS measure score
is at or above the 80th percentile.
(B) Its average CAHPS measure score
is statistically significantly higher than
the national average CAHPS measure
score.
(C) The reliability is not low.
(D) Its average CAHPS measure score
is more than one standard error above
the 80th percentile.
(4) Measure scores are converted to a
5-star scale ranging from 1 (worst rating)
to 5 (best rating), with whole star
increments for the cut points.
(b) Domain Star Ratings. (1)(i) CMS
groups measures by domains solely for
purposes of public reporting the data on
Medicare Plan Finder. They are not
used in the calculation of the summary
or overall ratings. Domains are used to
group measures by dimensions of care
that together represent a unique and
important aspect of quality and
performance.
(ii) The 4 domains for the Part D Star
Ratings are: Drug Plan Customer
Service; Member Complaints and
Changes in the Drug Plan’s Performance;
Member Experience with the Drug Plan;
and Drug Safety and Accuracy of Drug
Pricing.
(2) CMS calculates the domain ratings
as the unweighted mean of the Star
Ratings of the included measures.
(i) A contract must have scores for at
least 50 percent of the measures
required to be reported for that contract
type for that domain to have a domain
rating calculated.
(ii) The domain ratings are on a 1 to
5 star scale ranging from 1 (worst rating)
to 5 (best rating) in whole star
increments using traditional rounding
rules.
(c) Part D summary ratings. (1) CMS
will calculate the Part D summary
ratings using the weighted mean of the
measure-level Star Ratings for Part D,
weighted in accordance with paragraph
(e) with an adjustment to reward
consistently high performance described
and the application of the CAI, under
paragraph (f) of this section.
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(2)(i) A contract must have scores for
at least 50 percent of the measures
required to be reported for the contract
type to have a summary rating
calculated.
(ii) The Part D improvement measure
is not included in the count of the
minimum number of rated measures.
(3) The summary ratings are on a 1 to
5 star scale ranging from 1 (worst rating)
to 5 (best rating) in half-star increments
using traditional rounding rules.
(d) Overall MA–PD rating. (1) The
overall rating for a MA–PD contract will
be calculated using a weighted mean of
the Part C and Part D measure-level Star
Ratings, weighted in accordance with
paragraph (e) of this section and with an
adjustment to reward consistently high
performance described and the
application of the CAI, under paragraph
(f).
(2)(i) An MA–PD must have both Part
C and Part D summary ratings and
scores for at least 50 percent of the
measures required to be reported for the
contract type to have the overall rating
calculated.
(ii) The Part C and D improvement
measures are not included in the count
of measures needed for the overall
rating.
(iii) Any measures that share the same
data and are included in both the Part
C and Part D summary ratings will be
included only once in the calculation
for the overall rating.
(iv) The overall rating is on a 1 to 5
star scale ranging from 1 (worst rating)
to 5 (best rating) in half-increments
using traditional rounding rules.
(e) Measure weights—(1) General
rules. Subject to paragraphs (e)(2) and
(3) of this section, CMS will assign
weights to measures based on their
categorization as follows.
(i) Improvement measures receive the
highest weight of 5.
(ii) Outcome and Intermediate
outcome measures receive a weight of 3.
(iii) Patient experience and complaint
measures receive a weight of 1.5.
(iv) Access measures receive a weight
of 1.5.
(v) Process measures receive a weight
of 1.
(2) Rules for new measures. New
measures to the Star Ratings program
will receive a weight of 1 for their first
year in the Star Ratings program. In
subsequent years, the measure will be
assigned the weight associated with its
category.
(3) Special rule for Puerto Rico.
Contracts that have service areas that are
wholly located in Puerto Rico will
receive a weight of zero for the Part D
adherence measures for the summary
and overall rating calculations and will
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have a weight of 3 for the adherence
measures for the improvement measure
calculations.
(f) Completing the Part D summary
and overall rating calculations. CMS
will adjust the summary and overall
rating calculations to take into account
the reward factor (if applicable) and the
categorical adjustment index (CAI) as
provided in this paragraph.
(1) Reward factor. This rating-specific
factor is added to both the summary and
overall ratings of contracts that qualify
for the reward factor based on both high
and stable relative performance for the
rating level.
(i) The contract’s performance will be
assessed using its weighted mean and
its ranking relative to all rated contracts
in the rating level (overall for MA–PDs
and Part D summary for MA–PDs and
PDPs) for the same Star Ratings year.
The contract’s stability of performance
will be assessed using the weighted
variance and its ranking relative to all
rated contracts in the rating type
(overall for MA–PDs and Part D
summary for MA–PDs and PDPs). The
weighted mean and weighted variance
are compared separately for MA–PD and
standalone Part D contracts (PDPs). The
measure weights are specified in
paragraph (e) of this section. Since
highly-rated contracts may have the
improvement measure(s) excluded in
the determination of their final highest
rating, each contract’s weighted
variance and weighted mean will be
calculated both with and without the
improvement measures. For an MA–
PD’s Part C and D summary ratings, its
ranking is relative to all other contracts’
weighted variance and weighted mean
for the rating type (Part C summary, Part
D summary) with the improvement
measure.
(ii) Relative performance of the
weighted variance (or weighted variance
ranking) will be categorized as being
high (at or above 70th percentile),
medium (between the 30th and 69th
percentile) or low (below the 30th
percentile). Relative performance of the
weighted mean (or weighted mean
ranking) will be categorized as being
high (at or above the 85th percentile),
relatively high (between the 65th and
84th percentiles), or other (below the
65th percentile).
(iii) The combination of the relative
variance and relative mean is used to
determine the reward factor to be added
to the contract’s summary and overall
ratings as follows:
(A) A contract with low variance and
a high mean will have a reward factor
equal to 0.4.
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(B) A contract with medium variance
and a high mean will have a reward
factor equal to 0.3.
(C) A contract with low variance and
a relatively high mean will have a
reward factor equal to 0.2.
(D) A contract with medium variance
and a relatively high mean will have a
reward factor equal to 0.1.
(E) A contract with all other
combinations of variance and relative
mean will have a reward factor equal to
0.0.
(iv) The reward factor is determined
and applied before application of the
CAI adjustment under paragraph (f)(2)
of this section; the reward factor is
based on unadjusted scores.
(2) Categorical adjustment index.
CMS applies the categorical adjustment
index (CAI) as provided in this
paragraph to adjust for the average
within-contract disparity in
performance associated with the
percentages of beneficiaries who receive
a low income subsidy or are dual
eligible (LIS/DE)/or have disability
status. The factor is calculated as the
mean difference in the adjusted and
unadjusted ratings (overall, Part D for
MA–PDs, Part D for PDPs) of the
contracts that lie within each final
adjustment category for each rating type.
(i) The CAI is added to or subtracted
from the contract’s overall and summary
ratings and is applied after the reward
factor adjustment (if applicable).
(A) The adjustment factor is
monotonic (that is, as the proportion of
LIS/DE and disabled increases in a
contract, the adjustment factor increases
in at least one of the dimensions) and
varies by a contract’s categorization into
a final adjustment category that is
determined by a contract’s proportion of
LIS/DE and disabled beneficiaries.
(B) To determine a contract’s final
adjustment category, contract
enrollment is determined using
enrollment data for the month of
December for the measurement period
of the Star Ratings year. The count of
beneficiaries for a contract is restricted
to beneficiaries that are alive for part or
all of the month of December of the
applicable measurement year. A
beneficiary is categorized as LIS/DE if
the beneficiary was designated as full or
partially dually eligible or receiving a
LIS at any time during the applicable
measurement period. Disability status is
determined using the variable original
reason for entitlement (OREC) for
Medicare using the information from the
Social Security Administration and
Railroad Retirement Board record
systems.
(C) A MA–PD contract may be
adjusted up to three times with the CAI:
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one for the overall Star Rating and one
for each of the summary ratings (Part C
and Part D).
(D) A PDP contract may be adjusted
only once for the CAI: For the Part D
summary rating.
(E) The CAI values are rounded and
displayed with 6 decimal places.
(ii) In determining the CAI values, a
measure will be excluded as a candidate
for inclusion for adjustment if the
measure meets any of the following:
(A) The measure is already case-mix
adjusted for socioeconomic status.
(B) The focus of the measurement is
not a beneficiary-level issue but rather
a plan or provider-level issue.
(C) The measure is scheduled to be
retired or revised.
(D) The measure is applicable only to
SNPs.
(iii) CMS will announce the measures
identified for inclusion in the
calculations of the CAI in accordance
with this paragraph through the process
described for changes in and adoption
of payment and risk adjustment policies
in section 1853(b) of the Act. The
measures for inclusion in the
calculations of the CAI values will be
selected based on the analysis of the
dispersion of the LIS/DE within contract
differences using all reportable numeric
scores for contracts receiving a rating in
the previous rating year. CMS calculates
the results of each contract’s estimated
difference between the LIS/DE and nonLIS/DE performance rates per contract
using logistic mixed effects model that
includes LIS/DE as a predictor, random
effects for contract and an interaction
term of contract. For each contract, the
proportion of beneficiaries receiving the
measured clinical process or outcome
for LIS/DE and non-LIS/DE beneficiaries
would be estimated separately. The
following decision criteria is used to
determine the measures for adjustment:
(A) A median absolute difference
between LIS/DE and non-LIS/DE
beneficiaries for all contracts analyzed
is 5 percentage points or more.
(B) The LIS/DE subgroup performed
better or worse than the non-LIS/DE
subgroup in all contracts.
(C) The Part D measures for MA–PDs
and PDPs will be analyzed
independently, but the Part D measures
selected for adjustment will include
measures that meet the selection criteria
for either delivery system.
(iv) The adjusted measures scores for
the selected measures are determined
using the results from regression models
of beneficiary level measure scores that
adjust for the average within contract
difference in measure scores for MA or
PDP contracts.
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(A) A logistic regression model with
contract fixed effects and beneficiary
level indicators of LIS/DE and disability
status is used for the adjustment.
(B) The adjusted measure scores are
converted to a measure-level Star Rating
using the measure thresholds for the
Star Ratings year that corresponds to the
measurement period of the data
employed for the CAI determination.
(v) The rating-specific CAI values will
be determined using the mean
differences between the adjusted and
unadjusted Star Ratings (overall, Part D
summary for MA–PDs and Part D
summary for PDPs) in each final
adjustment category.
(A) For the annual development of the
CAI, the distribution of the percentages
for LIS/DE and disabled (using the
enrollment data that parallels the
previous Star Ratings year’s data) would
be examined to determine the number of
equal-sized initial groups for each
attribute (LIS/DE and disabled).
(B) The initial categories are created
using all groups formed by the initial
LIS/DE and disabled groups.
(C) The mean difference between the
adjusted and unadjusted summary or
overall ratings per initial category
would be calculated and examined. The
initial categories would then be
collapsed to form the final adjustment
categories. The collapsing of the initial
categories to form the final adjustment
categories would be done to enforce
monotonicity in at least one dimension
(LIS/DE or disabled).
(D) The mean difference within each
final adjustment category by rating-type
(Part D for MA–PD, Part D for PDPs or
overall) would be the CAI values for the
next Star Ratings year.
(vi) CMS develops the model for the
modified contract-level LIS/DE
percentage for Puerto Rico using the
following sources of information:
(A) The most recent data available at
the time of the development of the
model of both 1-year American
Community Survey (ACS) estimates for
the percentage of people living below
the Federal Poverty Level (FPL) and the
ACS 5-year estimates for the percentage
of people living below 150 percent of
the FPL. The data to develop the model
will be limited to the 10 states, drawn
from the 50 states plus the District of
Columbia with the highest proportion of
people living below the FPL, as
identified by the 1-year ACS estimates.
(B) The Medicare enrollment data
from the same measurement period as
the Star Rating’s year. The Medicare
enrollment data would be aggregated
from MA contracts that had at least 90
percent of their enrolled beneficiaries
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with mailing addresses in the 10 highest
poverty states.
(vii) A linear regression model is
developed to estimate the percentage of
LIS/DE for a contacts that solely serve
the population of beneficiaries in Puerto
Rico.
(A) The maximum value for the
modified LIS/DE indicator value per
contract would be capped at 100
percent.
(B) All estimated modified LIS/DE
values for Puerto Rico would be
rounded to 6 decimal places when
expressed as a percentage.
(C) The model’s coefficient and
intercept are updated annually and
published in the Technical Notes.
(g) Applying the improvement
measure scores. (1) CMS runs the
calculations twice for each highest
rating for each contract-type (overall
rating for MA–PD contracts and Part D
summary rating for PDPs), with all
applicable adjustments (CAI and the
reward factor), once including the
improvement measure(s) and once
without including the improvement
measure(s). In deciding whether to
include the improvement measures in a
contract’s highest rating, CMS applies
the following rules:
(i) Contracts with 2 or fewer stars for
their highest rating when calculated
without improvement and with all
applicable adjustments (CAI and the
reward factor) will not have their rating
calculated with the improvement
measure(s).
(ii) If the highest rating for each
contract-type is 4 stars or more without
the use of the improvement measure(s)
and with all applicable adjustments
(CAI and the reward factor), a
comparison of the highest rating with
and without the improvement
measure(s) is done. The higher rating is
used for the rating.
(iii) If the highest rating is between 2
stars and 4 stars with all applicable
adjustments (CAI and the reward factor),
the rating will be calculated with the
improvement measure(s).
(2) The Part D summary rating for
MA–PDs will include the Part D
improvement measure.
(h) Posting and display of ratings. For
all ratings at the measure, domain,
summary and overall level, posting and
display of the ratings is based on there
being sufficient data to calculate and
assign ratings. If a contract does not
have sufficient data to calculate a rating,
the posting and display would be the
flag ‘‘Not enough data available.’’ If the
measurement period is prior to one year
past the contract’s effective date, the
posting and display would be the flag
‘‘Plan too new to be measured’’.
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(i) Medicare Plan Finder performance
icons. Icons are displayed on Medicare
Plan Finder to note performance as
provided in this paragraph:
(1) High-performing icon. The high
performing icon is assigned to a Part D
plan sponsor for achieving a 5-star Part
D summary rating and an MA–PD
contract for a 5-star overall rating.
(2) Low-performing icon. (i) A contract
receives a low performing icon as a
result of its performance on the Part C
or Part D summary ratings. The low
performing icon is calculated by
evaluating the Part C and Part D
summary ratings for the current year
and the past 2 years. If the contract had
any combination of Part C or Part D
summary ratings of 2.5 or lower in all
3 years of data, it is marked with a low
performing icon. A contract must have
a rating in either Part C or Part D for all
3 years to be considered for this icon.
(ii) CMS may disable the Medicare
Plan Finder online enrollment function
(in Medicare Plan Finder) for Medicare
health and prescription drug plans with
the low performing icon; beneficiaries
will be directed to contact the plan
directly to enroll in the low-performing
plan.
(3) Plan preview of the Star Ratings.
CMS will have plan preview periods
before each Star Ratings release during
which Part D plan sponsors can preview
their Star Ratings data in HPMS prior to
display on the Medicare Plan Finder.
■ 67. Section 423.265 is amended by
revising paragraph (b)(2) to read as
follows.
§ 423.265 Submission of bids and related
information.
*
*
*
*
*
(b) * * *
(2) Substantial differences between
bids—(i) General rule. Except as
provided in paragraph (b)(2)(ii) of this
section, potential Part D sponsors’ bid
submissions must reflect differences in
benefit packages or plan costs that CMS
determines to represent substantial
differences relative to a sponsor’s other
bid submissions. In order to be
considered ‘‘substantially different,’’
each bid must be significantly different
from the sponsor’s other bids with
respect to beneficiary out-of-pocket
costs or formulary structures.
(ii) Exception. A potential Part D
sponsor’s enhanced bid submission
does not have to reflect the substantial
differences as required in paragraph
(b)(2)(i) of this section relative to any of
its other enhanced bid submissions.
*
*
*
*
*
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§ 423.503
[Amended]
68. Section 423.503 is amended in
paragraphs (b)(1) and (2) by removing
the phrase ‘‘14 months’’ and adding in
its place ‘‘12 months’’ each time it
appears.
■ 69. Section 423.504 is amended by
revising paragraphs (b)(4)(ii) and
(b)(4)(vi)(C) to read as follows.
■
§ 423.504
General provisions.
*
*
*
*
*
(b) * * *
(4) * * *
(ii) Personnel and systems sufficient
for the Part D plan sponsor to organize,
implement, control, and evaluate
financial and communication activities,
the furnishing of prescription drug
services, the quality assurance, medical
therapy management, and drug and or
utilization management programs, and
the administrative and management
aspects of the organization.
*
*
*
*
*
(vi) * * *
(C)(1) Each Part D plan sponsor must
establish and implement effective
training and education for its
compliance officer and organization
employees, the Part D sponsor’s chief
executive and other senior
administrators, managers and governing
body members.
(2) Such training and education must
occur at a minimum annually and must
be made a part of the orientation for a
new employee, and new appointment to
a chief executive, manager, or governing
body member.
*
*
*
*
*
■ 70. Section 423.505 is amended—
■ a. By revising paragraph (b)(18);
■ b. In paragraph (b)(25), by removing
the word ‘‘marketing’’ and adding in its
place the word ‘‘communication’’; and
■ c. By revising paragraph (b)(26).
The revisions read as follows:
§ 423.505
Contract provisions.
*
*
*
*
*
(b) * * *
(18) To agree to 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
including all of the following:
(i) Making standard contracts
available upon request from interested
pharmacies no later than September 15
of each year for contracts effective
January 1 of the following year.
(ii) Providing a copy of a standard
contract to a requesting pharmacy
within 2 business days after receiving
such a request from the pharmacy.
*
*
*
*
*
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(26) Maintain a Part D summary plan
rating score of at least 3 stars under the
5-star rating system specified in subpart
186 of this part 423. A Part D summary
plan rating is calculated as provided in
§ 423.186.
*
*
*
*
*
§ 423.507
[Amended]
71. Section 423.507 is amended by
removing and reserving paragraph (b).
■ 72. Section 423.508 is amended by
revising paragraph (a) to read as follows:
■
§ 423.508 Modification or termination of
contract by mutual consent.
(a) General rule. A contract may be
modified or terminated at any time by
written mutual consent. If the PDP
sponsor submits a request to end the
term of its contract after the deadline
provided in § 423.507(a)(2)(i), the
contract may be terminated by mutual
consent in accordance with paragraphs
(b) through (f) of this section. CMS may
mutually consent to the contract
termination if the contract termination
does not negatively affect the
administration of the Medicare Part D
program.
*
*
*
*
*
■ 73. Section 423.509 is amended by
revising paragraph (a)(4)(v)(A) and
adding paragraphs (a)(4)(xiii) and (xiv)
and (b)(2)(v) to read as follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 423.509
Termination of contract by CMS.
(a) * * *
(4) * * *
(v) * * *
(A) Requirements in subpart V of this
part.
*
*
*
*
*
(xiii) The Part D plan sponsor has
committed any of the acts in § 423.752
that support the imposition of
intermediate sanctions or civil money
penalties under § 423.750.
(xiv) Following the issuance of a
notice to the sponsor no later than
August 1, CMS must terminate, effective
December 31 of the same year, an
individual PDP if that plan does not
have a sufficient number of enrollees to
establish that it is a viable independent
plan option.
(b) * * *
(2) * * *
(v) In the event that CMS issues a
termination notice to a Part D plan
sponsor on or before August 1 with an
effective date of the following December
31, the Part D plan sponsor must issue
notification to its Medicare enrollees at
least 90 days prior to the effective date
of the termination.
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*
*
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74. Section 423.558 is amended by
adding paragraph (a)(4) to read as
follows:
■
§ 423.558
Scope.
(a) * * *
(4) Review of at-risk determinations
made under a drug management
program in accordance with
§ 423.153(f).
*
*
*
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*
■ 75. Section 423.560 is amended by
revising the definitions of ‘‘Appeal’’,
‘‘Grievance’’, ‘‘Reconsideration’’, and
‘‘Redetermination’’ and adding in
alphabetical order a definition for
‘‘Specialty tier’’ to read as follows:
§ 423.560
Definitions.
*
*
*
*
*
Appeal means any of the procedures
that deal with the review of adverse
coverage determinations made by the
Part D plan sponsor on the benefits
under a Part D plan the enrollee believes
he or she is entitled to receive,
including delay in providing or
approving the drug coverage (when a
delay would adversely affect the health
of the enrollee), or on any amounts the
enrollee must pay for the drug coverage,
as defined in § 423.566(b). Appeal also
includes the review of at-risk
determinations made under a drug
management program in accordance
with § 423.153(f). These procedures
include redeterminations by the Part D
plan sponsor, reconsiderations by the
independent review entity, ALJ
hearings, reviews by the Medicare
Appeals Council (Council), and judicial
reviews.
*
*
*
*
*
Grievance means any complaint or
dispute, other than one that involves a
coverage determination or at-risk
determination, expressing
dissatisfaction with any aspect of the
operations, activities, or behavior of a
Part D plan sponsor, regardless of
whether remedial action is requested.
*
*
*
*
*
Reconsideration means a review of an
adverse coverage determination or atrisk determination by an independent
review entity (IRE), the evidence and
findings upon which it was based, and
any other evidence the enrollee submits
or the IRE obtains.
Redetermination means a review of an
adverse coverage determination or atrisk determination by a Part D plan
sponsor, the evidence and findings
upon which it is based, and any other
evidence the enrollee submits or the
Part D plan sponsor obtains.
Specialty tier means a formulary costsharing tier dedicated to very high cost
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56521
Part D drugs and biological products
that exceed a cost threshold established
by the Secretary.
■ 76. Section 423.562 is amended by
revising paragraph (a)(1)(ii), adding
paragraph (a)(1)(v), and revising
paragraph (b)(4) to read as follows:
§ 423.562
General provisions.
(a) * * *
(1) * * *
(ii) Use a single, uniform exceptions
and appeals process which includes
procedures for accepting oral and
written requests for coverage
determinations and redeterminations
that are in accordance with
§ 423.128(b)(7) and (d)(1)(iv).
*
*
*
*
*
(v) If the Part D plan sponsor has
established a drug management program
under § 423.153(f), appeal procedures
that meet the requirements of this
subpart for issues that involve at-risk
determinations.
*
*
*
*
*
(b) * * *
(4) If dissatisfied with any part of a
coverage determination or an at-risk
determination under a drug
management program in accordance
with § 423.153(f), all of the following
appeal rights:
(i) The right to a redetermination of
the adverse coverage determination or
at-risk determination by the Part D plan
sponsor, as specified in § 423.580.
(ii) The right to request an expedited
redetermination, as provided under
§ 423.584.
(iii) If, as a result of the
redetermination, a Part D plan sponsor
affirms, in whole or in part, its adverse
coverage determination or at-risk
determination, the right to a
reconsideration or expedited
reconsideration by an independent
review entity (IRE) contracted by CMS,
as specified in § 423.600.
(iv) If the IRE affirms the plan’s
adverse coverage determination or atrisk determination, in whole or in part,
the right to an ALJ hearing if the amount
in controversy meets the requirements
in § 423.1970.
(v) If the ALJ or attorney adjudicator
affirms the IRE’s adverse coverage
determination or at-risk determination,
in whole or in part, the right to request
Council review of the ALJ’s or attorney
adjudicator’s decision, as specified in
§ 423.1974.
(vi) If the Council affirms the ALJ’s or
attorney adjudicator’s adverse coverage
determination or at-risk determination,
in whole or in part, the right to judicial
review of the decision if the amount in
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controversy meets the requirements in
§ 423.1976.
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*
■ 77. Section 423.564 is amended by
revising paragraph (b) to read as follows:
§ 423.564
Grievance procedures.
*
*
*
*
*
(b) Distinguished from appeals.
Grievance procedures are separate and
distinct from appeal procedures, which
address coverage determinations as
defined in § 423.566(b) and at-risk
determinations made under a drug
management program in accordance
with § 423.153(f). Upon receiving a
complaint, a Part D plan sponsor must
promptly determine and inform the
enrollee whether the complaint is
subject to its grievance procedures or its
appeal procedures.
*
*
*
*
*
■ 78. Section 423.578 is amended by—
■ a. Revising paragraphs (a)
introductory text, (a)(1) and (2), (a)(4)
introductory text, and (a)(5) and (6);
■ b. Removing paragraph (a)(7); and
■ c. Revising paragraph (c)(3).
The revisions read as follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 423.578
Exceptions process.
(a) Requests for exceptions to a plan’s
tiered cost-sharing structure. Each Part
D plan sponsor that provides
prescription drug benefits for Part D
drugs and manages this benefit through
the use of a tiered formulary must
establish and maintain reasonable and
complete exceptions procedures subject
to CMS’ approval for this type of
coverage determination. The Part D plan
sponsor grants an exception whenever it
determines that the requested nonpreferred drug for treatment of the
enrollee’s condition is medically
necessary, consistent with the
physician’s or other prescriber’s
statement under paragraph (a)(4) of this
section.
(1) The tiering exceptions procedures
must address situations where a
formulary’s tiering structure changes
during the year and an enrollee is using
a drug affected by the change.
(2) Part D plan sponsors must
establish criteria that provide for a
tiering exception, consistent with
paragraphs (a)(3) through (6) of this
section.
*
*
*
*
*
(4) A prescribing physician or other
prescriber must provide an oral or
written supporting statement that the
preferred drug(s) for the treatment of the
enrollee’s condition—
*
*
*
*
*
(5) If the physician or other prescriber
provides an oral supporting statement,
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the Part D plan sponsor may require the
physician or other prescriber to
subsequently provide a written
supporting statement. The Part D plan
sponsor may require the prescribing
physician or other prescriber to provide
additional supporting medical
documentation as part of the written
follow-up.
(6) Limitations on tiering exceptions:
A Part D plan sponsor is permitted to
design its tiering exceptions procedures
such that an exception is not approvable
in the following circumstances:
(i) To cover a brand name drug, as
defined in § 423.4, at a preferred costsharing level that applies only to
alternative drugs that are—
(A) Generic drugs, for which an
application is approved under section
505(j) of the Federal Food, Drug, and
Cosmetic Act; or
(B) Authorized generic drugs as
defined in section 505(t)(3) of the
Federal Food, Drug, and Cosmetic Act.
(ii) To cover a biological product
licensed under section 351 of the Public
Health Service Act at a preferred costsharing level that does not contain any
alternative drug(s) that are biological
products.
(iii) If a Part D plan sponsor maintains
a specialty tier, as defined in § 423.560,
the sponsor may design its exception
process so that Part D drugs and
biological products on the specialty tier
are not eligible for a tiering exception.
*
*
*
*
*
(c) * * *
(3) When a tiering exceptions request
is approved. Whenever an exceptions
request made under paragraph (a) of this
section is approved—
(i) The Part D plan sponsor may not
require the enrollee to request approval
for a refill, or a new prescription to
continue using the Part D prescription
drug after the refills for the initial
prescription are exhausted, as long as—
(A) The enrollee’s prescribing
physician or other prescriber continues
to prescribe the drug;
(B) The drug continues to be
considered safe for treating the
enrollee’s disease or medical condition;
and
(C) The enrollment period has not
expired. If an enrollee renews his or her
membership after the plan year, the plan
may choose to continue coverage into
the subsequent plan year.
(ii) The Part D plan sponsor must
provide coverage for the approved
prescription drug at the cost-sharing
level that applies to preferred
alternative drugs. If the plan’s formulary
contains alternative drugs on multiple
tiers, cost-sharing must be assigned at
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the lowest applicable tier, under the
requirements in paragraph (a) of this
section.
*
*
*
*
*
■ 79. Section 423.580 is revised to read
as follows:
§ 423.580
Right to a redetermination.
An enrollee who has received a
coverage determination (including one
that is reopened and revised as
described in § 423.1978) or an at-risk
determination under a drug
management program in accordance
with § 423.153(f) may request that it be
redetermined under the procedures
described in § 423.582, which address
requests for a standard redetermination.
The prescribing physician or other
prescriber (acting on behalf of an
enrollee), upon providing notice to the
enrollee, may request a standard
redetermination under the procedures
described in § 423.582. An enrollee or
an enrollee’s prescribing physician or
other prescriber (acting on behalf of an
enrollee) may request an expedited
redetermination as specified in
§ 423.584.
■ 80. Section 423.582 is amended by
revising paragraphs (a) and (b) to read
as follows:
§ 423.582 Request for a standard
redetermination.
(a) Method and place for filing a
request. An enrollee or an enrollee’s
prescribing physician or other
prescriber (acting on behalf of the
enrollee) must ask for a redetermination
by making a written request with the
Part D plan sponsor that made the
coverage determination or the at-risk
determination under a drug
management program in accordance
with § 423.153(f). The Part D plan
sponsor may adopt a policy for
accepting oral requests.
(b) Timeframe for filing a request.
Except as provided in paragraph (c) of
this section, a request for a
redetermination must be filed within 60
calendar days from the date of the
notice of the coverage determination or
the at-risk determination under a drug
management program in accordance
with § 423.153(f).
*
*
*
*
*
■ 81. Section 423.584 is amended by
revising paragraph (a) to read as follows:
§ 423.584 Expediting certain
redeterminations.
(a) Who may request an expedited
redetermination. An enrollee or an
enrollee’s prescribing physician or other
prescriber may request that a Part D
plan sponsor expedite a redetermination
that involves the issues specified in
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§ 423.566(b) or an at-risk determination
made under a drug management
program in accordance with
§ 423.153(f). (This does not include
requests for payment of drugs already
furnished.)
*
*
*
*
*
■ 82. Section 423.590 is amended by
revising paragraphs (a), (b)(1) and (2),
the paragraph (f) subject heading, and
paragraphs (f)(1) and (g)(3)(i) to read as
follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 423.590 Timeframes and responsibility
for making redeterminations.
(a) Standard redetermination—
request for covered drug benefits or
review of an at-risk determination. (1) If
the Part D plan sponsor makes a
redetermination that is completely
favorable to the enrollee, the Part D plan
sponsor must notify the enrollee in
writing of its redetermination (and
effectuate it in accordance with
§ 423.636(a)(1) or (3) as expeditiously as
the enrollee’s health condition requires,
but no later than 7 calendar days from
the date it receives the request for a
standard redetermination.
(2) If the Part D plan sponsor makes
a redetermination that affirms, in whole
or in part, its adverse coverage
determination or at-risk determination,
it must notify the enrollee in writing of
its redetermination as expeditiously as
the enrollee’s health condition requires,
but no later than 7 calendar days from
the date it receives the request for a
standard redetermination.
(b) * * *
(1) If the Part D plan sponsor makes
a redetermination that is completely
favorable to the enrollee, the Part D plan
sponsor must issue its redetermination
(and effectuate it in accordance with
§ 423.636(a)(2)) no later than 14
calendar days from the date it receives
the request for redetermination.
(2) If the Part D plan sponsor affirms,
in whole or in part, its adverse coverage
determination, it must notify the
enrollee in writing of its
redetermination no later than 14
calendar days from the date it receives
the request for redetermination.
*
*
*
*
*
(f) Who must conduct the review of an
adverse coverage determination or atrisk determination. (1) A person or
persons who were not involved in
making the coverage determination or
an at-risk determination under a drug
management program in accordance
with § 423.153(f) must conduct the
redetermination.
*
*
*
*
*
(g) * * *
(3) * * *
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(i) For adverse drug coverage
redeterminations, or redeterminations
related to a drug management program
in accordance with § 423.153(f),
describe both the standard and
expedited reconsideration processes,
including the enrollee’s right to, and
conditions for, obtaining an expedited
reconsideration and the rest of the
appeals process;
*
*
*
*
*
■ 83. Section 423.602 is amended by
revising paragraph (b)(2) to read as
follows:
§ 423.602 Notice of reconsideration
determination by the independent review
entity.
*
*
*
*
*
(b) * * *
(2) If the reconsideration
determination is adverse (that is, does
not completely reverse the adverse
coverage determination or
redetermination by the Part D plan
sponsor), inform the enrollee of his or
her right to an ALJ hearing if the amount
in controversy meets the threshold
requirement under § 423.1970;
*
*
*
*
*
■ 84. Section 423.636 is amended by
revising paragraph (a)(2) and adding
paragraphs (a)(3) and (b)(3) to read as
follows:.
§ 423.636 How a Part D plan sponsor must
effectuate standard redeterminations,
reconsiderations, or decisions.
(a) * * *
(2) Requests for payment. If, on
redetermination of a request for
payment, the Part D plan sponsor
reverses its coverage determination, the
Part D plan sponsor must authorize
payment for the benefit within 14
calendar days from the date it receives
the request for redetermination, and
make payment no later than 30 calendar
days after the date the plan sponsor
receives the request for redetermination.
(3) Review of an at-risk determination.
If, on redetermination of an at-risk
determination made under a drug
management program in accordance
with § 423.153(f), the Part D plan
sponsor reverses its at-risk
determination, the Part D plan sponsor
must implement the change to the atrisk determination as expeditiously as
the enrollee’s health condition requires,
but no later than 7 calendar days from
the date it receives the request for
redetermination.
(b) * * *
(3) Review of an at-risk determination.
If, on appeal of an at-risk determination
made under a drug management
program in accordance with
§ 423.153(f), the determination by the
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Part D plan sponsor is reversed in whole
or in part by the independent review
entity, or at a higher level of appeal, the
Part D plan sponsor must implement the
change to the at-risk determination
within 72 hours from the date it receives
notice reversing the determination. The
Part D plan sponsor must inform the
independent review entity that the Part
D plan sponsor has effectuated the
decision.
■ 85. Section 423.638 is revised to read
as follows:
§ 423.638 How a Part D plan sponsor must
effectuate expedited redeterminations or
reconsiderations.
(a) Reversals by the Part D plan
sponsor—
(1) Requests for benefits. If, on an
expedited redetermination of a request
for benefits, the Part D plan sponsor
reverses its coverage determination, the
Part D plan sponsor must authorize or
provide the benefit under dispute as
expeditiously as the enrollee’s health
condition requires, but no later than 72
hours after the date the Part D plan
sponsor receives the request for
redetermination.
(2) Review of an at-risk determination.
If, on an expedited redetermination of
an at-risk determination made under a
drug management program in
accordance with § 423.153(f), the Part D
plan sponsor reverses its at-risk
determination, the Part D plan sponsor
must implement the change to the atrisk determination as expeditiously as
the enrollee’s health condition requires,
but no later than 72 hours after the date
the Part D plan sponsor receives the
request for redetermination.
(b) Reversals other than by the Part D
plan sponsor—
(1) Requests for benefits. If the
expedited determination or expedited
redetermination for benefits by the Part
D plan sponsor is reversed in whole or
in part by the independent review
entity, or at a higher level of appeal, the
Part D plan sponsor must authorize or
provide the benefit under dispute as
expeditiously as the enrollee’s health
condition requires but no later than 24
hours from the date it receives notice
reversing the determination. The Part D
plan sponsor must inform the
independent review entity that the Part
D plan sponsor has effectuated the
decision.
(2) Review of an at-risk determination.
If the expedited redetermination of an
at-risk determination made under a drug
management program in accordance
with § 423.153(f) by the Part D plan
sponsor is reversed in whole or in part
by the independent review entity, or at
a higher level of appeal, the Part D plan
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sponsor must implement the change to
the at-risk determination as
expeditiously as the enrollee’s health
condition requires but no later than 24
hours from the date it receives notice
reversing the determination. The Part D
plan sponsor must inform the
independent review entity that the Part
D plan sponsor has effectuated the
decision.
§ 423.652
[Amended]
86. Section 423.652 is amended
paragraph (b)(1) by removing the phrase
‘‘July 15’’ and adding in its place
‘‘September 1’’.
■ 87. Section 423.750 is amended by
revising paragraph (a)(3) to read as
follows:
■
§ 423.750 Types of intermediate sanctions
and civil money penalties.
(a) * * *
(3) Suspension of communication
activities to Medicare beneficiaries by a
Part D plan sponsor, as defined by CMS.
*
*
*
*
*
■ 88. Section 423.752 is amended by
revising paragraphs (a)(9) and (b) to read
as follows:
§ 423.752 Basis for imposing intermediate
sanctions and civil money penalties.
(a) * * *
(9) Fails to comply with
communication restrictions described in
subpart V or applicable implementing
guidance.
*
*
*
*
*
(b) Suspension of enrollment and
communications. If CMS makes a
determination that could lead to a
contract termination under § 423.509(a),
CMS may impose the intermediate
sanctions at § 423.750(a)(1) and (3).
*
*
*
*
*
■ 89. Section 423.756 is amended by
revising paragraph (c)(3)(ii) introductory
text to read as follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 423.756 Procedures for imposing
intermediate sanctions and civil money
penalties.
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Right to an ALJ hearing.
*
*
*
*
*
(b) Calculating the amount in
controversy in specific circumstances.
(1) If the basis for the appeal is the
refusal by the Part D plan sponsor to
provide drug benefits, CMS uses the
projected value of those benefits to
compute the amount remaining in
controversy. The projected value of a
Part D drug or drugs must include any
costs the enrollee could incur based on
the number of refills prescribed for the
drug(s) in dispute during the plan year.
(2) If the basis for the appeal is an atrisk determination made under a drug
management program in accordance
with § 423.153(f), CMS uses the
projected value of the drugs subject to
the drug management program to
compute the amount remaining in
controversy. The projected value of the
drugs subject to the drug management
program shall include the value of any
refills prescribed for the drug(s) in
dispute during the plan year.
*
*
*
*
*
§ 423.2018
[Amended]
91. Section 423.2018 is amended—
a. In paragraph (a)(1), by removing the
phrase ‘‘appealed coverage
determination was made’’ and adding in
its place the phrase ‘‘appealed coverage
determination or at-risk determination
was made’’; and
■ b. In paragraph (a)(2), by removing the
phrase ‘‘after the coverage
determination to be considered’’ and
adding in its place the phrase ‘‘after the
coverage determination or at-risk
determination to be considered’’.
■
■
§ 423.2020
[Amended]
92. Section 423.2020 is amended in
paragraph (c)(1) by removing the phrase
‘‘the coverage determination, and’’ and
adding in its place the phrase ‘‘the
coverage determination or at-risk
determination, and’’.
■
§ 423.2022
(c) * * *
(3) * * *
(ii) In instances where intermediate
sanctions have been imposed, CMS may
require a Part D plan sponsor to market
or to accept enrollments or both for a
limited period of time in order to assist
CMS in making a determination as to
whether the deficiencies that are the
bases for the intermediate sanctions
have been corrected and are not likely
to recur.
*
*
*
*
*
■ 90. Section 423.1970 is amended by
revising paragraph (b) to read as follows:
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§ 423.1970
[Amended]
93. Section 423.2022 is amended by—
a. Removing the first appearance of
paragraph the (b) subject heading and
paragraph (b)(1) introductory text; and.
■ b. In paragraph (b)(1)(i) by removing
the phrase ‘‘the coverage determination,
redetermination,’’ and adding in its
place the phrase ‘‘the coverage
determination or at-risk determination,
redetermination,’’.
■
■
§ 423.2032
[Amended]
94. Section 423.2032 is amended in
paragraph (a) by removing the phrase
‘‘the coverage determination,
redetermination,’’ and adding in its
■
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place the phrase ‘‘the coverage
determination or at-risk determination,
redetermination,’’.
§ 423.2036
[Amended]
95. Section 423.2036 is amended in
paragraph (e) by removing the phrase ‘‘a
coverage determination’’ and adding in
its place the phrase ‘‘a coverage
determination or at-risk determination’’.
■
§ 423.2038
[Amended]
96. Section 423.2038 is amended in
paragraph (c) by removing the phrase
‘‘may be made, and’’ and adding in its
place the phrase ‘‘may be made, or an
enrollee’s at-risk determination should
be reversed, and’’.
■
§ 423.2046
[Amended]
97. Section 423.2046 is amended in
paragraph (a)(1)(iii) by removing the
phrase ‘‘the coverage determination.’’
and adding in its place the phrase ‘‘the
coverage determination or at-risk
determination.
■
§ 423.2056
[Amended]
98. Section 423.2056 is amended—
a. In paragraph (a)(1) by removing the
phrase ‘‘appealed coverage
determination’’ and adding in its place
the phrase ‘‘appealed coverage
determination or at-risk determination’’,
and
■ b. In paragraph (e) by removing the
phrase ‘‘the coverage determination to
be considered in the appeal.’’ and
adding in its place ‘‘the coverage
determination or at-risk determination
to be considered in the appeal.’’
■
■
§ 423.2062
[Amended]
99. Section 423.2062 is amended in
paragraph (b) by removing the phrase
‘‘coverage determination being
considered and does not have
precedential effect’’ and adding in its
place the phrase ‘‘coverage
determination or at-risk determination
being considered and does not have
precedential effect’’.
■
§ 423.2122
[Amended]
100. Section 423.2122 is amended—
a. In paragraph (a)(1) by removing the
phrase ‘‘the coverage determination.’’
and adding in its place the phrase ‘‘the
coverage determination or at-risk
determination’’;
■ b. In paragraph (a)(3) by removing the
phrase ‘‘a coverage determination is
made’’ and adding in its place ‘‘a
coverage determination or at-risk
determination is made’’ and by
removing the phrase ‘‘after the coverage
determination considered’’ and adding
in its place ‘‘after the coverage
determination or at-risk determination
considered’’.
■
■
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§ 423.2126
[Amended]
101. Section 423.2126 is amended in
paragraph (b) by removing the phrase
‘‘coverage determination to be
considered in the appeal.’’ and adding
in its place the phrase ‘‘coverage
determination or at-risk determination
to be considered in the appeal.’’
■
*
*
*
*
(d) Enrollee communication
materials. Enrollee communication
materials may be reviewed by CMS,
which may upon review determine that
such materials must be modified, or
may no longer be used.
■ 105. Section 423.2264 is revised to
read as follows:
102. The subpart V heading is
amended to read as set forth above.
■ 103. Section 423.2260 is amended
by—
■ a. Revising the section heading;
■ b. Adding in alphabetical order
definitions for ‘‘Communications’’,
‘‘Communications materials’’, and
‘‘Marketing’’; and
■ c. Revising the definition of
‘‘Marketing materials’’.
The revisions and additions read as
follows:
■
sradovich on DSK3GMQ082PROD with PROPOSALS2
§ 423.2264
Definitions.
*
*
*
*
*
Communications means activities and
use of materials to provide information
to current and prospective enrollees.
Communication materials means all
information provided to current and
prospective enrollees. Marketing
materials are a subset of communication
materials.
Marketing means the use of materials
or activities that meet the following:
(1) By the Part D sponsor or
downstream entities.
(2) Intended to draw a beneficiary’s
attention to a Part D plan or plans.
(3) Influence a beneficiary’s decision
making process when making a Part D
plan selection or influence a
beneficiary’s decision to stay enrolled in
a plan (that is, retention-based
marketing).
Marketing materials—
(1) Include, but are not limited to
following:
(i) Materials such as brochures;
posters; advertisements in media such
as newspapers, magazines, television,
radio, billboards, or the Internet; and
social media content.
(ii) Marketing representative materials
such as scripts or outlines for
telemarketing or other presentations.
(iii) Presentation materials such as
slides and charts.
(2) Exclude the following materials:
(i) Information about the plan’s
benefit structure or cost sharing;
(ii) Information about measuring or
ranking standards (for example, star
ratings);
(iii) Mention benefits or cost sharing,
but do not meet the definition of
marketing in this section; or
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§ 422.2262 Review and distribution of
marketing materials.
*
Subpart V—Part D Communication
Requirements
§ 423.2260
(3) Unless otherwise specified by
CMS because of their use or purpose,
are required under § 423.128.
■ 104. Section 422.2262 is amended by
revising paragraph (d) to read as
follows:
Guidelines for CMS review.
In reviewing marketing material or
election forms under § 423.2262 of this
part, CMS determines that the
materials—
(a) Provide to Medicare beneficiaries
interested in enrolling, adequate written
description of rules (including any
limitations on the providers from whom
services can be obtained), procedures,
basic benefits and services, and fees and
other charges in a format (and, where
appropriate, print size) and using
standard terminology that may be
specified by CMS.
(b) Notify the general public of its
enrollment period in an appropriate
manner, through appropriate media,
throughout its service area.
(c) Include in written materials notice
that the Part D sponsor is authorized by
law to refuse to renew its contract with
CMS, that CMS also may refuse to
renew the contract, and that termination
or non-renewal may result in
termination of the beneficiary’s
enrollment in the Part D plan. In
addition, the Part D plan may reduce its
service area and no longer be offered in
the area where a beneficiary resides.
(d) Ensure that materials are not
materially inaccurate or misleading or
otherwise make material
misrepresentations.
■ 106. Section 423.2268 is revised to
read as follows:
§ 423.2268 Standards for Part D Sponsor
communications and marketing.
(a) In conducting communication
activities, Part D sponsors may not do
any of the following:
(1) Provide information that is
inaccurate or misleading.
(2) Engage in activities that could
mislead or confuse Medicare
beneficiaries, or misrepresent the Part D
sponsor.
(3) Claim the Part D sponsor is
recommended or endorsed by CMS or
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Medicare or that CMS or Medicare
recommends that the beneficiary enroll
in the Part D plan. It may explain that
the organization is approved for
participation in Medicare.
(4) Employ Part D plan names that
suggest that a plan is not available to all
Medicare beneficiaries.
(5) Display the names and/or logos of
co-branded network providers or
pharmacies on the sponsor’s member
identification card, unless the names,
and/or logos are related to the member
selection of specific provider
organizations (for example, physicians,
hospitals).
(6) Use a plan name that does not
include the plan type. The plan type
should be included at the end of the
plan name.
(7) For markets with a significant nonEnglish speaking population, provide
materials, as defined by CMS, unless in
the language of these individuals.
Specifically, MA organizations must
translate materials into any non-English
language that is the primary language of
at least 5 percent of the individuals in
a plan benefit package (PBP) service
area.
(b) In marketing, Part D sponsors may
not do any of the following:
(1) Provide cash or other monetary
rebates as an inducement for enrollment
or otherwise.
(2) Offer gifts to potential enrollees,
unless the gifts are of nominal (as
defined in the CMS Marketing
Guidelines) value, are offered to all
potential enrollees without regard to
whether or not the beneficiary enrolls,
and are not in the form of cash or other
monetary rebates.
(3) Market non-health care/nonprescription drug plan related products
to prospective enrollees during any Part
D sales activity or presentation. This is
considered cross-selling and is
prohibited.
(4) Market any health care related
product during a marketing
appointment beyond the scope agreed
upon by the beneficiary, and
documented by the plan, prior to the
appointment.
(5) Market additional health related
lines of plan business not identified
prior to an individual appointment
without a separate scope of appointment
identifying the additional lines of
business to be discussed.
(6) Distribute marketing materials for
which, before expiration of the 45-day
period, the Part D sponsor receives from
CMS written notice of disapproval
because it is inaccurate or misleading,
or misrepresents the Part D sponsor, its
marketing representatives, or CMS.
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(7) Conduct sales presentations or
distribute and accept Part D plan
enrollment forms in provider offices or
other areas where health care is
delivered to individuals, except in the
case where such activities are
conducted in common areas in health
care settings.
(8) Conduct sales presentations or
distribute and accept plan applications
at educational events.
(9) Display the names and/or logos of
provider co-branding partners on
marketing materials, unless the
materials clearly indicate that other
providers are available in the network.
(10) Knowingly target or send
marketing materials to any Part D
enrollee, whose prior year enrollment
was in an MA plan, during the Open
Enrollment Period.
(11) Engage in any other marketing
activity prohibited by CMS in its
marketing guidance.
(12) Engage in any discriminatory
activity such as attempting to recruit
Medicare beneficiaries from higher
income areas without making
comparable efforts to enroll Medicare
beneficiaries from lower income areas.
(13) Solicit door-to-door for Medicare
beneficiaries or through other
unsolicited means of direct contact,
including calling a beneficiary without
the beneficiary initiating the contact.
(14) Use providers or provider groups
to distribute printed information
comparing the benefits of different
health plans unless the providers,
provider groups, or pharmacies accept
and display materials from all health
plans with which the providers,
provider groups, or pharmacies contract.
The use of publicly available
comparison information is permitted if
approved by CMS in accordance with
the Medicare marketing guidance.
(15) Provide meals to potential
enrollees, which is prohibited,
regardless of value.
§ 423.2272
[Amended]
107. Section 423.2272 is amended by
removing paragraph (e).
■
§ 423.2274
[Amended]
108. Section 423.2274 is amended—
a. By redesignating paragraph
(b)(1)(iii) as paragraph (b)(1)(iv);
■ b. By redesignating paragraph
(b)(2)(iii) as paragraph (b)(1)(iii);
■ c. By removing paragraph (b)(2);
■ d. By redesignating paragraph (b)(3) as
paragraph (b)(2); and
■ e. In newly redesignated paragraph
(b)(2)(iii), by removing the phrase ‘‘from
an MA plan,’’ and adding the phrase
‘‘from a Part D sponsor,’’ in its place.
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■
■
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§ 423.2410
[Amended]
§ 423.2460
109. Section 423.2410 is amended in
paragraph (a) by removing the phrase
‘‘an MLR’’ and adding in its place the
phrase ‘‘the information required under
§ 423.2460’’.
■
§ 423.2420
[Amended]
110. Section 423.2420 is amended
by—
■ a. Removing and reserving paragraph
(b)(2)(viii);
■ b. Revising paragraph (d)(2)(i); and
■ c. Removing the first paragraph
designated as (d)(2)(ii).
The revision reads as follows:
■
§ 423.2420
ratio.
Calculation of medical loss
*
*
*
*
*
(d) * * *
(2)
(i) Allocation to each category must be
based on a generally accepted
accounting method that is expected to
yield the most accurate results. Specific
identification of an expense with an
activity that is represented by one of the
categories in paragraph (b) or (c) of this
section will generally be the most
accurate method.
*
*
*
*
*
■ 111. Section 423.2430 is amended
by—
■ a. Redesignating paragraphs (a)
introductory text and paragraphs (a)(1)
and (2) as paragraphs (a)(1), (2), and (3),
respectively;
■ b. Revising newly redesignated
paragraph (a)(1);
■ c. Adding paragraph (a)(4); and
■ d. Removing and reserving paragraph
(b)(8).
The revisions and additions read as
follows:
§ 423.2430 Activities that improve health
care quality.
(a) Activity requirements. (1)
Activities conducted by a Part D
sponsor to improve quality must
either—
(i) Fall into one of the categories in
paragraph (a)(2) of this section and meet
all of the requirements in paragraph
(a)(3) of this section; or
(ii) Be listed in paragraph (a)(4) of this
section.
*
*
*
*
*
(4)(i) Medication Therapy
Management Programs meeting the
requirements of § 423.153(d).
(ii) Fraud reduction activities,
including fraud prevention, fraud
detection, and fraud recovery.
*
*
*
*
*
■ 112. Section 423.2460 is revised to
read as follows:
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Reporting requirements.
(a) For each contract year, from 2014
through 2017, each Part D sponsor must
submit to CMS, in a timeframe and
manner specified by CMS, a report that
includes but is not limited to the data
needed by the Part D sponsor to
calculate and verify the MLR and
remittance amount, if any, for each
contract, under this part, such as
incurred claims, total revenue,
expenditures on quality improving
activities, non-claims costs, taxes,
licensing and regulatory fees, and any
remittance owed to CMS under
§ 423.2410.
(b) For contract year 2018 and for
each subsequent contract year, each Part
D sponsor must submit to CMS, in a
timeframe and manner specified by
CMS, the following information:
(1) Fully credible and partially
credible contracts. For each contract
under this part that has fully credible or
partially credible experience, as
determined in accordance with
§ 423.2440(d), the Part D sponsor must
report to CMS the MLR for the contract
and the amount of any remittance owed
to CMS under § 423.2410.
(2) Non-credible contracts. For each
contract under this part that has noncredible experience, as determined in
accordance with § 423.2440(d), the Part
D sponsor must report to CMS that the
contract is non-credible.
(c) Total revenue included as part of
the MLR calculation must be net of all
projected reconciliations.
(d) The MLR is reported once, and is
not reopened as a result of any payment
reconciliation processes.
§ 423.2480
[Amended]
113. Section 423.2480 is amended—
a. In the introductory text by
removing the phrase ‘‘reviews of reports
submitted’’ and adding in its place
‘‘review of data submitted’’; and
■ b. In paragraph (d) introductory text
by removing the phrase ‘‘Reports
submitted under’’ and adding in its
place the phrase ‘‘Data submitted
under’’.
■
■
§ 423.2490
[Amended]
114. Section 423.2490 is amended in
paragraph (a) by removing the phrase
‘‘information contained in reports
submitted’’ and adding in its place the
phrase ‘‘information submitted’’.
■
PART 460—PROGRAMS OF ALLINCLUSIVE CARE FOR THE ELDERLY
(PACE)
115. The authority citation for part
460 continues to read as follows:
■
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Authority: Secs. 1102, 1871, 1894(f), and
1934(f) of the Social Security Act (42 U.S.C.
1302, 1395, 1395eee(f), and 1396u–4(f)).
116. Section 460.40 is amended by
revising paragraph (j) to read as follows:
■
§ 460.40 Violations for which CMS may
impose sanctions.
*
*
*
*
*
(j) Makes payment to any individual
or entity that is included on the
preclusion list, defined in § 422.2 of this
chapter.
■ 117. Section 460.50 is amended by
revising paragraph (b)(1)(ii) to read as
follows:
§ 460.50 Termination of PACE program
agreement.
*
*
*
*
*
(b) * * *
(1) * * *
(ii) The PACE organization failed to
comply substantially with conditions
for a PACE program or PACE
organization under this part, or with
terms of its PACE program agreement,
including making payment to an
individual or entity that is included on
the preclusion list, defined in § 422.2 of
this chapter.
*
*
*
*
*
§ 460.68
[Amended]
118. Section 460.68 is amended by
removing paragraph (a)(4).
■
§ 460.70
§ 460.86 Payment to individuals and
entities excluded by the OIG or included on
the preclusion list.
(a) A PACE organization may not pay,
directly or indirectly, on any basis, for
items or services (other than emergency
or urgently needed services as defined
in § 460.100) furnished to a Medicare
enrollee by any individual or entity that
is excluded by the OIG or is included on
the preclusion list, defined in § 422.2 of
this chapter.
(b) If a PACE organization receives a
request for payment by, or on behalf of,
an individual or entity that is excluded
by the OIG or is included on the
preclusion list, defined in § 422.2 of this
chapter, the PACE organization must
notify the enrollee and the excluded
individual or entity or the individual or
entity that is included on the preclusion
list in writing, as directed by contract or
other direction provided by CMS, that
payments will not be made. Payment
may not be made to, or on behalf of, an
individual or entity that is excluded by
the OIG or is included on the preclusion
list.
PART 498—APPEALS PROCEDURES
FOR DETERMINATIONS THAT AFFECT
PARTICIPATION IN THE MEDICARE
PROGRAM AND FOR
DETERMINATIONS THAT AFFECT THE
PARTICIPATION OF ICFs/IID AND
CERTAIN NFs IN THE MEDICAID
PROGRAM
122. The authority for part 498
continues to read as follows:
■
[Amended]
119. Section 460.70 is amended by
removing paragraph (b)(1)(iv).
Authority: Secs. 1102, 1128I and 1871 of
the Social Security Act (42 U.S.C. 1302,
1320a–7j, and 1395hh).
§ 460.71
■
■
[Amended]
120. Section 460.71 is amended by
removing paragraph (b)(7).
■ 121. Section 460.86 is revised to read
as follows:
sradovich on DSK3GMQ082PROD with PROPOSALS2
■
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123. Section 498.3 is amended by
adding paragraph (b)(20) to read as
follows:
§ 498.3
*
PO 00000
*
Scope and applicability.
*
Frm 00193
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Fmt 4701
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(b) * * *
(20) An individual or entity is to be
included on the preclusion list as
defined in § 422.2 or § 423.100 of this
chapter.
*
*
*
*
*
■ 124. Section 498.5 is amended by
adding paragraph (n) to read as follows:
§ 498.5
Appeal rights.
*
*
*
*
*
(n) Appeal rights of individuals and
entities on preclusion list. (1) Any
individual or entity that is dissatisfied
with an initial determination or revised
initial determination that they are to be
included on the preclusion list (as
defined in § 422.2 or § 423.100 of this
chapter) may request a reconsideration
in accordance with § 498.22(a).
(2) If CMS or the individual or entity
under paragraph (n)(1) of this section is
dissatisfied with a reconsidered
determination under paragraph (n)(1) of
this section, or a revised reconsidered
determination under § 498.30, CMS or
the individual or entity is entitled to a
hearing before an ALJ.
(3) If CMS or the individual or entity
under paragraph (n)(2) of this section is
dissatisfied with a hearing decision as
described in paragraph (n)(2) of this
section, CMS or the individual or entity
may request Board review and the
individual or entity has a right to seek
judicial review of the Board’s decision.
Dated: October 27, 2017.
Seema Verma,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: October 30, 2017.
Eric D. Hargan,
Acting Secretary, Department of Health and
Human Services.
[FR Doc. 2017–25068 Filed 11–16–17; 4:15 pm]
BILLING CODE 4120–01–P
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Agencies
[Federal Register Volume 82, Number 227 (Tuesday, November 28, 2017)]
[Proposed Rules]
[Pages 56336-56527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25068]
[[Page 56335]]
Vol. 82
Tuesday,
No. 227
November 28, 2017
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 417, 422, et al.
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;
Proposed Rule
Federal Register / Vol. 82 , No. 227 / Tuesday, November 28, 2017 /
Proposed Rules
[[Page 56336]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 417, 422, 423, and 498
[CMS-4182-P]
RIN 0938-AT08
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
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would revise the Medicare Advantage program
(Part C) regulations and Prescription Drug Benefit program (Part D)
regulations to implement certain provisions of the Comprehensive
Addiction and Recovery Act (CARA) and the 21st Century Cures Act;
improve program quality, accessibility, and affordability; improve the
CMS customer experience; address program integrity policies related to
payments based on prescriber, provider and supplier status in Medicare
Advantage, Medicare cost plan, Medicare Part D and the PACE programs;
provide a proposed update to the official Medicare Part D electronic
prescribing standards; and clarify program requirements and certain
technical changes regarding treatment of Medicare Part A and Part B
appeal rights related to premiums adjustments.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on January 16, 2018.
ADDRESSES: In commenting, please refer to file code CMS-4182-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://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-4182-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-4182-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Theresa Wachter, (410) 786-1157, Part C Issues.
Marie Manteuffel, (410) 786-3447, Part D Issues.
Kristy Nishimoto, (206) 615-2367, Beneficiary Enrollment and
Appeals Issues.
Raghav Aggarwal, (410) 786-0097, Part C and D Payment Issues.
Vernisha Robinson-Savoy, (267) 970-2395, Part C and D Compliance
Issues.
Frank Whelan, (410) 786-1302, Preclusion List Issues.
Shelly Winston, (410) 786-3694, Part D E-Prescribing Program.
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 Web
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
1. Implementation of the Comprehensive Addiction and Recovery
Act of 2016 (CARA) Provisions
2. Updating the Part D E-Prescribing Standards (Sec. 423.160)
3. Revisions to Timing and Method of Disclosure Requirements
4. Preclusion List
a. Part D
b. Part C
C. Summary of Costs and Benefits
II. Provisions of the Proposed Regulations
A. Supporting Innovative Approaches to Improving Quality,
Accessibility, and Affordability
1. Implementation of the Comprehensive Addiction and Recovery
Act of 2016 (CARA) Provisions
a. Medicare Part D Drug Management Programs
b. Stakeholder Input Informing This Notice of Proposed
Rulemaking
c. Integration of CARA and the Current Part D Opioid DUR Policy
and OMS
(1) Current Part D Opioid DUR Policy and OMS
(2) Proposed Requirements for Part D Drug Management Programs
(Sec. Sec. 423.100, 423.153)
(i) Definitions (Sec. 423.100)
(A) Definition of ``Potential At-Risk Beneficiary'' and ``At-
Risk Beneficiary'' (Sec. 423.100)
(B) Definition of ``Frequently Abused Drug'', ``Clinical
Guidelines'', ``Program Size'', and ``Exempted Beneficiary'' (Sec.
423.100)
(ii) Requirements of Drug Management Programs (Sec. Sec.
423.153, 423.153(f)))
(iii) Written Policies and Procedures (Sec. 423.153(f)(1))
(iv) Case Management/Clinical Contact/Prescriber Verification
(Sec. 423.153(f)(2))
[[Page 56337]]
(v) Limitations on Access to Coverage for Frequently Abused
Drugs (Sec. 423.153(f)(3))
(vi) Requirements for Limiting Access to Coverage for Frequently
Abused Drugs (Sec. 423.153(f)(4))
(vii) Beneficiary Notices and Limitation of the Special
Enrollment Period (Sec. Sec. 423.153(f)(5), 423.153(f)(6), 423.38)
(A) Initial Notice to Beneficiary and Sponsor Intent To
Implement Limitation on Access to Coverage for Frequently Abused
Drugs (Sec. 423.153(f)(5))
(B) Limitation on the Special Enrollment Period for LIS
Beneficiaries With an At-Risk Status (Sec. 423.38)
(C) Second Notice to Beneficiary and Sponsor Implementation of
Limitation on Access to Coverage for Frequently Abused Drugs by
Sponsor (Sec. 423.153(f)(6))
(D) Alternate Second Notice When Limit To Access to Coverage for
Frequently Abused Drugs by Sponsor Will Not Occur (Sec.
423.153(f)(7))
(E) Timing of Notices (Sec. 423.153(f)(8))
(F) Exceptions to Timing of the Notices (Sec. 423.153(f)(8))
(viii) Provisions Specific to Limitation on Access to Coverage
of Frequently Abused Drugs to Selected Pharmacies and Prescribers
(Sec. 423.153(f)(4) and (f)(9) Through (13))
(A) Special Requirement To Limit Access to Coverage of
Frequently Abused Drugs to Selected Prescriber(s) (Sec.
423.153(f)(4))
(B) Selection of Pharmacies and Prescribers (Sec. 423.153(f)(9)
Through (13))
(1) Beneficiary Preferences (Sec. 423.153(f)(9))
(2) Exception to Beneficiary Preferences (Sec. 423.153(f)(10))
(3) Reasonable Access (Sec. Sec. 423.100, 423.153(f)(11),
423.153(f)(12))
(4) Confirmation of Pharmacy and Prescriber Selection (Sec.
423.153(f)(13))
(ix) Drug Management Program Appeals (Sec. Sec. 423.558,
423.560, 423.562, 423.564, 423.580, 423.582, 423.584, 423.590,
423.602, 423.636, 423.638, 423.1970, 423.2018, 423.2020, 423.2022,
423.2032, 423.2036, 423.2038, 423.2046, 423.2056, 423.2062,
423.2122, and 423.2126)
(x) Termination of a Beneficiary's Potential At-Risk or At-Risk
Status (Sec. 423.153(f)(14))
(xi) Data Disclosure and Sharing of Information for Subsequent
Sponsor Enrollments (Sec. 423.153(f)(15))
(xii) Summary
2. Flexibility in the Medicare Advantage Uniformity Requirements
3. Segment Benefits Flexibility
4. Maximum Out-of-Pocket Limit for Medicare Parts A and B
Services (Sec. Sec. 422.100 and 422.101)
5. Cost Sharing Limits for Medicare Parts A and B Services
(Sec. Sec. 417.454 and 422.100)
6. Meaningful Differences in Medicare Advantage Bid Submissions
and Bid Review (Sec. Sec. 422.254 and 422.256)
7. Coordination of Enrollment and Disenrollment Through MA
Organizations and Effective Dates of Coverage and Change of Coverage
(Sec. Sec. 422.66 and 422.68)
8. Passive Enrollment Flexibilities To Protect Continuity of
Integrated Care for Dually Eligible Beneficiaries (Sec. 422.60(g))
9. Part D Tiering Exceptions (Sec. Sec. 423.560, 423.578(a) and
(c))
a. Background
b. General Rules
c. Limitations on Tiering Exceptions
d. Alternative Drugs for Treatment of the Enrollee's Condition
e. Approval of Tiering Exception Requests
f. Additional Technical Changes and Corrections
10. Establishing Limitations for the Part D Special Election
Period (SEP) for Dually Eligible Beneficiaries (Sec. 423.38)
11. Medicare Advantage and Part D Prescription Drug Plan Quality
Rating System
a. Introduction
b. Background
c. Basis, Purpose and Applicability of the Quality Star Ratings
System
d. Definitions
e. Contract Ratings
f. Contract Consolidations
g. Data Sources
h. Adding, Updating, and Removing Measures
i. Measure Set for Performance Periods Beginning on or After
January 1, 2019
j. Improvement Measures
k. Data Integrity
l. Measure-Level Star Ratings
m. Hierarchical Structure of the Ratings
n. Domain Star Ratings
o. Part C and D Summary Ratings
p. Overall Rating
q. Measure Weights
r. Application of the Improvement Measure Scores
s. Reward Factor (Formerly Referred to as Integration Factor)
t. Categorical Adjustment Index
u. High and Low Performing Icons
v. Plan Preview of Star Ratings
w. Technical Changes
12. Any Willing Pharmacy Standards Terms and Conditions and
Better Define Pharmacy Types (Sec. Sec. 423.100, 423.505)
a. Any Willing Pharmacy Required for All Pharmacy Business
Models
b. Revise the Definition of Retail Pharmacy and To Add a
Definition of Mail-Order Pharmacy
c. Treatment of Accreditation and Other Similar Any Willing
Pharmacy Requirements in Standard Terms and Conditions
d. Timing of Contracting Requirements
13. Changes to the Days' Supply Required by the Part D
Transition Process
14. Expedited Substitutions of Certain Generics and Other
Midyear Formulary Changes (Sec. Sec. 423.100, 423.120, and 423.128)
15. Treatment of Follow-On Biological Products as Generics for
Non-LIS Catastrophic and LIS Cost Sharing
16. Eliminating the Requirement To Provide PDP Enhanced
Alternative (EA) to EA Plan Offerings With Meaningful Differences
(Sec. 423.265)
17. Request for Information Regarding the Application of
Manufacturer Rebates and Pharmacy Price Concessions to Drug Prices
at the Point of Sale
B. Improving the CMS Customer Experience
1. Restoration of the Medicare Advantage Open Enrollment Period
(Sec. Sec. 422.60, 422.62, 422.68, 423.38, and 423.40)
2. Reducing the Burden of the Compliance Program Training
Requirements (Sec. Sec. 422.503 and 423.504)
3. Medicare Advantage Plan Minimum Enrollment Waiver (Sec.
422.514(b))
4. Revisions to Timing and Method of Disclosure Requirements
(Sec. Sec. 422.111 and 423.128)
5. Revisions to Parts 422 and 423, Subpart V, Communication/
Marketing Materials and Activities
a. Revising the Scope of Subpart V To Include Communications and
Communications Materials
b. Amending the Regulatory Definition of Marketing and Marketing
Materials
c. Prohibition of Marketing During the Open Enrollment Period
d. Technical Changes to Other Regulatory Provisions as a Result
of the Changes to Subpart V
6. Lengthening Adjudication Timeframes for Part D Payment
Redeterminations and IRE Reconsiderations (Sec. Sec. 423.590 and
423.636)
7. Elimination of Medicare Advantage Plan Notice for Cases Sent
to the IRE (Sec. 422.590)
8. E-Prescribing and the Part D Prescription Drug Program;
Updating Part D E-Prescribing Standards
a. Legislative Background
b. Regulatory History
c. Proposed Adoption of NCPDP SCRIPT Version 2017071 as the
Official Part D E-Prescribing Standard, Retirement of NCPDP SCRIPT
10.6, Implementing Related Conforming Changes Elsewhere in Sec.
423.160 and Correction of a Typographical Error Which Occurred When
NCPDP SCRIPT 10.6 Was Initially Adopted
9. Reduction of Past Performance Review Period for Applications
Submitted by Current Medicare Contracting Organizations (Sec. Sec.
422.502 and 423.503)
10. Part D Prescriber Preclusion List
a. Background
(1) 2014 Final Rule
(2) 2015 Interim Final Rule
(3) Preparations for Enforcement of Prescriber Enrollment
Requirement
b. Proposed Provisions
(1) Prescriber NPI Validation on Part D Claims
(a) Provisions of Sec. 423.120(c)(5)
(b) Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
(i) Preclusion List
(b) Replacement of Enrollment Requirement With Preclusion List
Requirement
(ii) Updates to Preclusion List
(3) Provisional Coverage
(4) Appeals
c. Specific Regulatory Changes
11. Part C/Medicare Advantage Cost Plan and PACE Preclusion List
(Sec. 422.224)
12. Removal of Quality Improvement Project for Medicare
Advantage Organizations (Sec. 422.152)
[[Page 56338]]
13. Reducing Provider Burden--Comment Solicitation
C. Implementing Other Changes
1. Reducing the Burden of the Medicare Part C and Part D Medical
Loss Ratio Requirements (Sec. Sec. 422.2420 and 423.2430)
a. Background
b. Proposed Regulatory Changes to the Calculation of the Medical
Loss Ratio (Sec. Sec. 422.2420, 422.2430, 423.2420, and 423.2430)
(1) Fraud Reduction Activities (Sec. Sec. 422.2420, 422.2430,
423.2420, and 423.2430)
(2) Medication Therapy Management (MTM) (Sec. Sec. 422.2430 and
423.2430)
(3) Additional Technical Changes to Calculation of the Medical
Loss Ratio (Sec. Sec. 422.2420 and 423.2420)
c. Proposed Regulatory Changes to Medicare MLR Reporting
Requirements (Sec. Sec. 422.2460 and 423.2460)
d. Proposed Technical Changes to Medicare MLR Review and Non-
Compliance and the Release of MLR Data (Sec. Sec. 422.2410,
422.2480, 422.2490, 423.2410, 423.2480, and 423.2490)
2. Medicare Advantage Contract Provisions (Sec. 422.504)
3. Late Contract Non-Renewal Notifications (Sec. Sec. 422.506,
422.508, and 423.508)
4. Contract Request for a Hearing (Sec. Sec. 422.664(b) and
423.652(b))
5. Physician Incentive Plans--Update Stop-Loss Protection
Requirements (Sec. 422.208)
6. Changes to the Agent/Broker Compensation Requirements
(Sec. Sec. 422.2274 and 423.2274)
7. Changes to the Agent/Broker Requirements (Sec. Sec.
422.2272(e) and 423.2272(e))
8. Codification of Certain Medicare Premium Adjustments as
Initial Determinations (Sec. 405.924)
9. Eliminate Use of the Term ``Non-Renewal'' To Refer to a CMS-
Initiated Termination (Sec. Sec. 422.506, 422.510, 423.507, and
423.509)
III. Collection of Information Requirements
A. Wages
B. Proposed Information Collection Requirements (ICRs)
1. ICRs Regarding Passive Enrollment Flexibilities To Protect
Continuity of Integrated Care for Dually Eligible Beneficiaries
(Sec. 422.60(g))
2. ICRs Regarding Restoration of the Medicare Advantage Open
Enrollment Period (Sec. Sec. 422.60, 422.62, 422.68, 423.38, and
423.40)
3. ICRs Regarding Coordination of Enrollment and Disenrollment
Through MA Organizations and Effective Dates of Coverage and Change
of Coverage (Sec. Sec. 422.66 and 422.68)
4. ICRs Regarding Revisions to Timing and Method of Disclosure
Requirements (Sec. Sec. 422.111 and 423.128)
5. ICRs Regarding the Removal of Quality Improvement Project for
Medicare Advantage Organizations (Sec. 422.152)
6. ICRs Regarding Medicare Advantage Quality Rating System
(Sec. Sec. 422.162, 422.164, 422.166, 422.182, 422.184, and
422.186)
7. ICRs Regarding the Medicare Advantage Plan Minimum Enrollment
Waiver (Sec. 422.514(b))
8. ICRs Regarding Revisions to Parts 422 and 423, Subpart V,
Communication/Marketing Materials and Activities
9. ICRs Regarding Medical Loss Ratio Reporting Requirements
(Sec. Sec. 422.2460 and 423.2460)
10. ICRs Regarding Establishing Limitations for the Part D
Special Enrollment Period for Dual Eligible Beneficiaries (Sec.
423.38(c)(4))
11. ICRs Regarding Expedited Substitutions of Certain Generics
and Other Midyear Formulary Changes (Sec. Sec. 423.100, 423.120,
and 423.128)
12. ICRs Related to Preclusion List Requirements for Prescribers
in Part D and Individuals and Entities in Medicare Advantage, Cost
Plans and PACE
13. ICRs Regarding the Part D Tiering Exceptions (Sec. Sec.
423.560, 423.578(a), and (c))
14. ICRs Regarding the Implementation of the Comprehensive
Addiction and Recovery Act of 2016 (CARA) Provisions (Sec. Sec.
423.38 and 423.153(f))
IV. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. CARA Provisions
2. Reducing the Burden of the Compliance Program Training
Requirements (Sec. Sec. 422.503 and 423.504)
3. Meaningful Differences in Medicare Advantage Bid Submissions
and Bid Review (Sec. Sec. 422.254 and 422.256)
4. Physician Incentive Plans--Update Stop-Loss Protection
Requirements (Sec. 422.208)
5. Changes to the Agent/Broker Requirements (Sec. Sec.
422.2272(e) and 423.2272(e))
6. Coordination of Enrollment and Disenrollment Through MA
Organizations and Effective Dates of Coverage and Change of Coverage
7. Lengthening Adjudication Timeframes for Part D Payment
Redeterminations and IRE Reconsiderations
8. Elimination of Medicare Advantage Plan Notice for Cases Sent
to the IRE
9. Medicare Advantage and Prescription Drug Plan Quality Rating
System
10. Changes to the Days' Supply Required by the Part D
Transition Process
11. Treatment of Follow-On Biological Products as Generics for
Non-LIS Catastrophic and LIS Catastrophic Cost Sharing
12. Eliminating the Requirement To Provide PDP Enhanced
Alternative (EA) to EA Plan Offerings With Meaningful Differences
(Sec. 423.265)
13. Removal of Quality Improvement Project for Medicare
Advantage Organizations (Sec. 422.152)
14. Preclusion List Requirements for Prescribers in Part D and
Providers and Suppliers in Medicare Advantage, Cost Plans and PACE
15. Any Willing Pharmacy Standard Terms and Conditions and
Better Define Pharmacy Types
16. Expedited Substitutions of Certain Generics and Other
Midyear Formulary Changes (Sec. Sec. 423.100, 423.120, and 423.128)
D. Expected Benefits
E. Alternatives Considered
F. Accounting Statement and Table
G. Conclusion
Acronyms
ACA Affordable Care Act
ACS American Community Survey
AEP Annual Election Period
ANDA Abbreviated New Drug Application
ANOC Annual Notice of Change
AMA American Medical Association
AO Accrediting Organization
ASPE Office of the Assistant Secretary for Planning and Evaluation
AWP Any Willing Pharmacy
CAI Categorical Adjustment Index
CARA Comprehensive Addiction and Recovery Act
CCIP Chronic Care Improvement Program
CMS Centers for Medicare & Medicaid Services
CPT Current Procedural Terminology
DAB Departmental Appeals Board
DE Dual Eligible
DIR Direct or Indirect Remuneration
DME Durable Medical Equipment
DSMO Designated Standards Maintenance Organization
D-SNP Dual-Eligible Special Needs Plan
EDM Enhanced Disease Management
EHR Electronic Health Record
EOC Evidence of Coverage
EP Eligible Professionals
FFS Fee-for-Service
ePA Electronic Prior Authorization
eRx Electronic Prescription (e-prescribing)
FDA Food and Drug Administration
FIDE Fully Integrated Dual Eligible
FMV Fair Market Value
FPL Federal Poverty Level
HPMS Health Plan Management System
ICD-10 ICD-10-CM
IRE Independent Review Entity
LIS Low Income Subsidy
LPPO Local Preferred Provider Organization
LTC Long Term Care
MA Medicare Advantage
MADP Medicare Advantage Disenrollment Period
MA-PD Medicare Advantage Prescription Drug
MAO Medicare Advantage Organizations
MIPPA Medicare Improvements for Patients and Providers Act
MLR Medical Loss Ratio
MOOP Maximum Out-of-Pocket
NCPDP National Council of Prescription Drug Programs
NCQA National Committee for Quality Assurance
NDC National Drug Code
NSO National Standard Organization
OIG Office of Inspector General
OEP Open Enrollment Period
OMHA Office of Medicare Hearings and Appeals
OOPC Out-of-Pocket Cost
PA Prior Authorization
PBM Pharmacy Benefit Manager
PBP Plan Benefit Package
PDP Prescription Drug Plan
PHSA Public Health Service Act
[[Page 56339]]
PIP Physician Incentive Plan
PQA Pharmacy Quality Alliance
PSO Provider Sponsored Organization
PSP Provider Specific Plan
QBP Quality Bonus Payment
QI Quality Improvement
QIA Quality Improvement Activities
QIP Quality Improvement Project
REMS Risk Evaluation and Mitigation Strategies
RFI Request for Information
RHC Rural Health Center
RI Rewards and Incentives
RPPO Regional Preferred Provider Organization
RRB Railroad Retirement Board
SE Standard Error
SEP Special Enrollment/Election Period
SES Socio-Economic Status
SNP Special Needs Plan
SSA Social Security Administration
TMP Timeliness Monitoring Project
I. Executive Summary
A. Purpose
The primary purpose of this proposed rule is to make revisions to
the Medicare Advantage (MA) program (Part C) and Prescription Drug
Benefit Program (Part D) regulations based on our continued experience
in the administration of the Part C and Part D programs and to
implement certain provisions of the Comprehensive Addiction and
Recovery Act and the 21st Century Cures Act. The proposed changes are
necessary to--(1) Support Innovative Approaches to Improving Quality,
Accessibility, and Affordability; (2) Improve the CMS Customer
Experience; and (3) Implement Other Changes. In addition, this rule
proposes technical changes related to treatment of Part A and Part B
premium adjustments and updates the Script standard used for Part D
electronic prescribing. While the Part D program has high satisfaction
among users, we continually evaluate program policies and regulations
to remain responsive to current trends and newer technologies.
Specifically, this regulation meets the Administration's priorities to
reduce burden and provide the regulatory framework to develop MA and
Part D products that better meet the individual beneficiary's
healthcare needs. Additionally, this regulation includes a number of
provisions that will help address the opioid epidemic and mitigate the
impact of increasing drug prices in the Part D program.
B. Summary of the Major Provisions
1. Implementation of the Comprehensive Addiction and Recovery Act of
2016 (CARA) Provisions
This proposed regulatory provision would implement statutory
provisions of the Comprehensive Addiction and Recovery Act of 2016
(CARA), enacted into law on July 22, 2016, which amended the Social
Security Act and includes new authority for Medicare Part D drug
management programs, effective on or after January 1, 2019. Through
this provision, CMS proposes a framework under which Part D plan
sponsors may establish a drug management program for beneficiaries at
risk for prescription drug abuse or misuse, or ``at-risk
beneficiaries.'' CMS proposes that, under such programs, sponsors may
limit at-risk beneficiaries' access to coverage of controlled
substances that CMS determines are ``frequently abused drugs'' to a
selected prescriber(s) and/or network pharmacy(ies). CMS also proposes
to limit the use of the special enrollment period (SEP) for dually- or
other low income subsidy (LIS)-eligible beneficiaries who are
identified as at-risk or potentially at-risk for prescription drug
abuse under such a drug management program. Finally, this provision
proposes to codify the current Part D Opioid Drug Utilization Review
(DUR) Policy and Overutilization Monitoring System (OMS) by integrating
this current policy with our proposals for implementing the drug
management program provisions. The current policy involves Part D
prescription drug benefit plans engaging in case management with
prescribers when an enrollee is found to be taking a very high dose of
opioids and obtaining them from multiple prescribers and multiple
pharmacies who may not know about each other. Through the adoption of
this policy, from 2011 through 2016, there was a 61 percent decrease
(over 17,800 beneficiaries) in the number of Part D beneficiaries
identified as potential very high risk opioid overutilizers.\1\ Thus,
this proposal expands upon an existing, innovative, successful approach
to reduce opioid overutilization in the Part D program by improving
quality of care through coordination while maintaining access to
necessary pain medications.
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\1\ CY 2018 Final Parts C&D Call Letter, April 3, 2017.
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2. Updating the Part D E-Prescribing Standards (Sec. 423.160)
This provision proposes an update to the electronic standards to be
used by Medicare Part D prescription drug plans. This includes the
proposed adoption of the NDPDP SCRIPT Standard Version 2017071, and
retirement of the current NCPDP SCRIPT Version 10.6, as the official
electronic prescribing standard for transmitting prescriptions and
prescription-related information using electronic media for covered
Part D drugs for Part D eligible individuals. These changes would
become effective January 1, 2019. The NCPDP SCRIPT standards are used
to exchange information between prescribers, dispensers, intermediaries
and Medicare prescription drug plans.
Although e-prescribing is optional for physicians and pharmacies,
the Medicare Part D statute and regulations require drug plans
participating in the prescription benefit to support electronic
prescribing, and physicians and pharmacies who elect to transmit e-
prescriptions and related communications electronically must utilize
the adopted standards. The proposed updated NCPDP SCRIPT standards have
been requested by the industry and could provide a number of
efficiencies which the industry and CMS supports.
In order to facilitate this change, we propose to update Sec.
423.160, and also make a number of conforming technical changes to
other sections of part 423. In addition, we are proposing to correct a
typographical error that occurred in the regulatory text listing the
applicability dates of the standards by changing the reference in Sec.
423.160(b)(1)(iv) to reference (b)(2)(iii) instead of (b)(2)(ii) to
correctly cite to the present use of the currently adopted NCPDP SCRIPT
Standard Version 10.
3. Revisions to Timing and Method of Disclosure Requirements
We are proposing to allow the electronic delivery of certain
information normally provided in hard copy documents such as the
Evidence of Coverage (EOC). Additionally, we are proposing to change
the timeframe for delivery of the EOC in particular to the first day of
the Annual Election Period (AEP) rather than fifteen days prior to that
date. Allowing plans to provide the EOC electronically would alleviate
plan burden related to printing and mailing, and simultaneously would
reduce the number of paper documents that beneficiaries receive from
plans. This would allow beneficiaries to focus on materials, like the
Annual Notice of Change (ANOC), that drive decision making. Changing
the date by which plans must provide the EOC to members would allow
plans more time to finalize the formatting and ensure the accuracy of
the information, as well as further distance it from the ANOC, which
must still be delivered 15 days prior to the AEP. We see this proposed
change as an overall reduction of impact that our regulations have on
plans and beneficiaries. In aggregate, we estimate a savings (to plans
for not producing
[[Page 56340]]
and mailing hard-copy EOCs) of approximately $51 million.
4. Preclusion List
a. Part D
This proposed rule would rescind the current provisions in Sec.
423.120(c)(6) that require physicians and eligible professionals (as
defined in section 1848(k)(3)(B) of the Act) to enroll in or validly
opt-out of Medicare in order for a Part D drug prescribed by the
physician or eligible professional to be covered. As a replacement, we
propose that a Part D plan sponsor must reject, or must require its
pharmacy benefit manager to reject, a pharmacy claim for a Part D drug
if the individual who prescribed the drug is included on the
``preclusion list,'' which would be defined in Sec. 423.100 and would
consist of certain prescribers who are currently revoked from the
Medicare program under Sec. 424.535 and are under an active
reenrollment bar, or have engaged in behavior for which CMS could have
revoked the prescriber to the extent applicable if he or she had been
enrolled in Medicare, and CMS determines that the underlying conduct
that led, or would have led, to the revocation is detrimental to the
best interests of the Medicare program. We recognize, however, the need
to minimize interruptions to Part D beneficiaries' access to needed
medications. Therefore, we also propose to prohibit plan sponsors from
rejecting claims or denying beneficiary requests for reimbursement for
a drug on the basis of the prescriber's inclusion on the preclusion
list, unless the sponsor has first covered a 90-day provisional supply
of the drug and provide individualized written notice to the
beneficiary that the drug is being covered on a provisional basis.
b. Part C
This proposed rule would rescind the current provisions in Sec.
422.222 stating that providers or suppliers that are types of
individuals or entities that can enroll in Medicare in accordance with
section 1861 of the Act must be enrolled in Medicare in order to
provide health care items or services to a Medicare enrollee who
receives his or her Medicare benefit through an MA organization. As a
replacement, we propose that an MA organization shall not make payment
for an item or service furnished by an individual or entity that is on
the ``preclusion list.'' The preclusion list, which would be defined in
Sec. 422.2, would consist of certain individuals and entities that are
currently revoked from the Medicare program under Sec. 424.535 and are
under an active reenrollment bar, or have engaged in behavior for which
CMS could have revoked the individual or entity to the extent
applicable if he or she had been enrolled in Medicare, and CMS
determines that the underlying conduct that led, or would have led, to
the revocation is detrimental to the best interests of the Medicare
program.
C. Summary of Costs and Benefits
------------------------------------------------------------------------
Provision Savings
------------------------------------------------------------------------
Implementation of the Besides the benefits of preventing opioid
Comprehensive Addiction and dependency in beneficiaries we estimate
Recovery Act of 2016. a net savings in 2019 of $13 million to
the Trust Fund because of reduced
scripts, modestly increasing to a
savings of $14 million in 2023. The cost
to industry is estimated at about $2.8
million per year.
Revisions to Timing and We estimate 67% of the current 47.8
Method of Disclosure million beneficiaries will prefer use of
Requirements. the internet vs. hard copies. This will
result in savings of $55 million in 2019
and growing due to inflation to $67
million in 2023.
------------------------------------------------------------------------
II. Provisions of the Proposed Regulations
A. Supporting Innovative Approaches to Improving Quality,
Accessibility, and Affordability
1. Implementation of the Comprehensive Addiction and Recovery Act of
2016 (CARA) Provisions
a. Medicare Part D Drug Management Programs
The Comprehensive Addiction and Recovery Act of 2016 (CARA),
enacted into law on July 22, 2016, amended the Social Security Act and
includes new authority for the establishment of drug management
programs in Medicare Part D, effective on or after January 1, 2019. In
accordance with section 704(g)(3) of CARA and revised section 1860D-
4(c) of the Act, CMS must establish through notice and comment
rulemaking a framework under which Part D plan sponsors may establish a
drug management program for beneficiaries at-risk for prescription drug
abuse, or ``at-risk beneficiaries.'' Under such a Part D drug
management program, sponsors may limit at-risk beneficiaries' access to
coverage of controlled substances that CMS determines are ``frequently
abused drugs'' to a selected prescriber(s) and/or network
pharmacy(ies). While such programs, commonly referred to as ``lock-in
programs,'' have been a feature of many state Medicaid programs for
some time, prior to the enactment of CARA, there was no statutory
authority to allow Part D plan sponsors to require beneficiaries to
obtain controlled substances from a certain pharmacy or prescriber in
the Medicare Part D program.
In summary, this proposed rule would implement the CARA Part D drug
management program provisions by integrating them with the current Part
D Opioid Drug Utilization Review (DUR) Policy and Overutilization
Monitoring System (OMS) (``current policy''). As explained in more
detail later in this section, this integration would mean that Part D
sponsors implementing a drug management program could limit an at-risk
beneficiary's access to coverage of opioids beginning 2019 through a
point-of-sale (POS) claim edit and/or by requiring the beneficiary to
obtain opioids from a selected pharmacy(ies) and/or prescriber(s) after
case management and notice to the beneficiary. To do so, the
beneficiary would have to meet clinical guidelines that factor in that
the beneficiary is taking a high-risk dose of opioids over a sustained
time period and that the beneficiary is obtaining them from multiple
prescribers and multiple pharmacies. This proposed rule would also
implement a limitation on the use of the special enrollment period
(SEP) for low income subsidy (LIS)-eligible beneficiaries who are
identified as potential at-risk beneficiaries.
b. Stakeholder Input Informing This Notice of Proposed Rulemaking
Section 704(g)(2) of CARA required us to convene stakeholders to
provide input on specific topics so that we could take such input into
account in promulgating regulations governing Part D drug management
programs. Stakeholders include Medicare beneficiaries with Part A or
Part B, advocacy groups representing Medicare beneficiaries,
physicians, pharmacists, and other clinicians (particularly other
lawful prescribers of controlled
[[Page 56341]]
substances), retail pharmacies, Part D plan sponsors and their
delegated entities (such as pharmacy benefit managers), and
biopharmaceutical manufacturers.
We hosted a Listening Session on the CARA drug management program
provisions via a public conference call on November 14, 2016 that was
announced in the October 26, 2016 Federal Register (81 FR 74388). We
sought stakeholder input on specific topics enumerated in sections
704(a)(1) and 704(g)(2)(B) of the CARA and other related topics of
concern to the stakeholders.
In developing this proposed rule, we considered the stakeholders'
comments provided during the Listening Session, as well as written
comments submitted afterward, including those submitted in response to
the Request for Information associated with the publication of the Plan
Year 2018 Medicare Parts C&D Final Call Letter. We refer to this input
in this preamble using the terms ``stakeholders,'' ``commenters'' and
``comments.''
c. Integration of CARA and the Current Part D Opioid DUR Policy and OMS
As noted in section II.A.1. of this proposed rule previously, we
are proposing to implement the CARA Part D drug management program
provisions by integrating them with our current policy that is not
currently codified, but would be under this proposal. In using the term
``current policy'', we refer to the aspect of our current Part D opioid
overutilization policy that is based on retrospective DUR.\2\
Specifically, we are proposing a regulatory framework for Part D plan
sponsors to voluntarily adopt drug management programs through which
they address potential overutilization of frequently abused drugs
identified retrospectively through the application of clinical
guidelines/criteria that identify potential at-risk beneficiaries and
conduct case management which incorporates clinical contact and
prescriber verification that a beneficiary is an at-risk beneficiary.
If deemed necessary, a sponsor could limit at-risk beneficiaries'
access to coverage for such drugs through pharmacy lock-in, prescriber
lock-in, and/or a beneficiary-specific point-of-sale (POS) claim edit.
Finally, sponsors would report to CMS the status and results of their
case management to OMS and any beneficiary coverage limitations they
have implemented to MARx, CMS' system for payment and enrollment
transactions. While plan sponsors would have the option to implement a
drug management program, our proposal codifies a framework that would
place requirements upon such programs. We foresee that all plan
sponsors will implement such drug management programs based on our
experience that all plan sponsors' are complying with the current
policy as laid out in guidance, the fact that our proposal largely
incorporates the CARA drug management provisions into existing CMS and
sponsor operations, and especially, in light of the national opioid
epidemic and the declaration that the opioid crisis is a nationwide
Public Health Emergency.
---------------------------------------------------------------------------
\2\ Please refer to the CMS Web site, ``Improving Drug
Utilization Review Controls in Part D'' at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.html which contains CMS communications regarding the
current policy.
---------------------------------------------------------------------------
Because we propose to integrate the CARA Part D drug management
program provisions with the current policy and codify them both, we
describe the current policy in section II.A.1.c.(1) of this proposed
rule, noting where our proposal incorporates changes to the current
policy in order to comply with CARA and achieve operational
consistency. Where we do not note a change, our intent is to codify the
current policy, and we seek specific comment as to whether we have
overlooked any feature of the current policy that should be codified.
CMS communications regarding the current policy can be found at the CMS
Web site, ``Improving Drug Utilization Review Controls in Part D'' at
https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.html.
Then we set forth our proposal for codification of the regulatory
framework for drug management programs in section II.A.1.c.(2) of this
proposed rule, which includes provisions specific to lock-in, which is
not a feature of the current policy.
(1) Current Part D Opioid DUR Policy and OMS
CMS is actively engaged in addressing the opioid epidemic and
committed to implementing effective tools in Medicare Part D. We will
work across all stakeholder, beneficiary and advocacy groups, health
plans, and other federal partners to help address this devastating
epidemic. CMS has worked with plan sponsors and other stakeholders to
implement Medicare Part D opioid overutilization policies with multiple
initiatives to address opioid overutilization in Medicare Part D
through a medication safety approach. These initiatives include better
formulary and utilization management; real-time safety alerts at the
pharmacy aimed at coordinated care; retrospective identification of
high risk opioid overutilizers who may need case management; and
regular actionable patient safety reports based on quality metrics to
sponsors.
The goal of the current policy and OMS is to reduce opioid
overutilization in Part D. In conjunction with related Part D opioid
overutilization policies that address prospective opioid use, the
current policy has played a key role in reducing high risk opioid
overutilization in the Part D program by 61 percent (representing over
17,800 beneficiaries) from 2011 (pre-policy pilot) through 2016, even
as the number of beneficiaries enrolled in Part D increased overall
during this period from 31.5 million to 43.6 million enrollees, or a 38
percent increase.\3\
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\3\ Final CY 2018 Parts C&D Call Letter, April 3, 2017.
---------------------------------------------------------------------------
The purpose of the current policy is to provide Part D plan
sponsors with specific guidance about compliance with Sec.
423.153(b)(2) as to opioid overutilization, which requires a Part D
plan sponsor to have a reasonable and appropriate drug utilization
management program that maintains policies and systems to assist in
preventing overutilization of prescribed medications. We adopted the
current policy on January 1, 2013, and it has evolved over time in
scope in several ways with stakeholder feedback and support, including
through the addition of the OMS in July 2013, primarily via the annual
Parts C&D Call Letter process.
The current policy has two aspects. First, in the CY 2013 final
Call Letter and subsequent supplemental guidance, we provided guidance
about our expectations for Part D plan sponsors to retrospectively
identify beneficiaries who are at high risk for potential opioid
overutilization and provide appropriate case management aimed at
coordinated care.\4\ More specifically, we currently expect Part D plan
sponsors' Pharmacy and Therapeutics (P&T) committees to establish
criteria consistent with CMS guidance to retrospectively identify
potential opioid overutilizers at high risk for an adverse event
enrolled in their plans who may warrant case management because they
are receiving opioid prescriptions from multiple prescribers and
pharmacies. Enrollees
[[Page 56342]]
with cancer or in hospice are excluded from the current policy, because
the benefit of their high opioid use may outweigh the risk associated
with such use. This exclusion was supported by stakeholder feedback on
the current policy.
---------------------------------------------------------------------------
\4\ An excerpt from the Final 2013 Call Letter, the supplemental
guidance, and additional information about the policy and OMS are
available on the CMS Web page, ``Improving Drug Utilization Controls
in Part D'' at https://www.cms.gov/Medicare/Prescription-Drug/PrescriptionDrugCovContra/RxUtilization.html.
---------------------------------------------------------------------------
Once such enrollees are identified through retrospective
prescription drug claims review, we expect the Part D plan sponsors to
diligently assess each case, and if warranted, have their clinical
staff conduct case management with the beneficiary's opioid prescribers
until the case is resolved. According to the supplemental guidance,\5\
case management entails:
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\5\ September 6, 2012 HPMS memo, ``Supplemental Guidance Related
to Improving Drug Utilization Review Controls in Part D.''
---------------------------------------------------------------------------
The personnel communicating with prescribers have
appropriate credentials.
Written inquiries to the prescribers of the opioid
medications about the appropriateness, medical necessity and safety of
the apparent high dosage for their patient.
Attempts to schedule telephone conversations with the
prescribers (separately or together) within a reasonable period from
the issuance of the written inquiry notification, if necessary.
The clinician-to-clinician communication includes
information about the existence of multiple prescribers and the
beneficiary's total opioid utilization, and the plan's clinician
elicits the information necessary to identify any complicating factors
in the beneficiary's treatment that are relevant to the case management
effort.
After discussion or communication about the appropriate
level of opioid use, the consensus reached by the prescribers is
implemented by the sponsor, with a beneficiary-specific opioid POS
claim edit, as deemed appropriate by the prescribers, to prevent
further Part D coverage of an unsafe level of drug.
In cases of non-responsive prescribers, the sponsor may
also implement a beneficiary-specific opioid POS claim edit to prevent
further coverage of an unsafe level of drug and to encourage the
prescribers to participate in case management.
Thus, we expect case management to confirm that the beneficiary's
opioid use is medically necessary or resolve an overutilization issue.
As part of the current policy, and because the Food and Drug
Administration (FDA)-approved labeling for opioids generally does not
include maximum daily doses, CMS developed specific criteria to
identify beneficiaries at high risk through retrospective review of
their opioid use in order to assist Part D sponsors in identifying such
beneficiaries. These criteria incorporate a morphine milligram
equivalent (MME) \6\ approach, which is a method to uniformly calculate
the total daily dosage of opioids across all of a patient's opioid
prescription drug claims. Beginning with plan year 2018, we adjusted
these criteria to align with the Centers for Disease Control (CDC)
Guideline for Prescribing Opioids for Chronic Pain (CDC Guideline) \7\
issued in March 2016 in terms of using 90 MME as a threshold to
identify beneficiaries who appear to be at high risk due to their
opioid use. In its guideline, after considering information from
relevant studies and experts, the CDC identifies 50 MME daily dose as a
threshold for increased risk of opioid overdose, and to generally avoid
increasing the daily dosage to 90 MME. Our criteria, which we will
discuss more fully later in the preamble, also incorporate a multiple
prescriber and pharmacy count to focus on beneficiaries who appear to
be not only overutilizing opioids but who also are at increased risk
due to potential coordination of care issues, such that the providers
who are prescribing or dispensing opioids to these beneficiaries may
not know that other providers are also doing so.
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\6\ Please note that CMS will use the term ``MME'' going forward
instead of morphine equivalent dose (MED), which CMS has used to
date. CMS used the term MED in a manner that was equivalent to MME.
We will update CMS documents that currently refer to MED as soon as
practicable.
\7\ Please see https://www.cdc.gov/drugoverdose/prescribing/guideline.html.
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The second aspect of the current policy came into place in July
2013, when CMS launched the OMS as a tool to monitor Part D plan
sponsors' effectiveness in complying with Sec. 423.153(b)(2) to
address opioid overutilization. Through the OMS, CMS sends sponsors
quarterly reports about their Part D enrollees who meet the criteria
for being at high risk of opioid overutilization. Then, we expect
sponsors to address each case through the case management process
previously described and respond to CMS through the OMS using
standardized responses. In addition, we expect sponsors to provide
information to their regional CMS representatives and the MARx system
about beneficiary-specific opioid POS claim edits that they intend to
or have implemented.\8\
---------------------------------------------------------------------------
\8\ Please refer to the CMS Web site, ``Improving Drug
Utilization Review Controls in Part D'' at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.html which contains CMS communications regarding the
current policy.
---------------------------------------------------------------------------
Because case management is very resource intensive for sponsors and
PBMs, we have limited the scope of the current policy in terms of the
number of beneficiaries identified by OMS, and when expanding that
number, we have made changes incrementally through annual Parts C&D
Call Letter process.
(2) Proposed Requirements for Part D Drug Management Programs
(Sec. Sec. 423.100 and 423.153)
We first propose several definitions for terms we propose to use in
establishing requirements for Part D drug management programs.
(i) Definitions (Sec. 423.100)
(A) Definition of ``Potential At-Risk Beneficiary'' and ``At-Risk
Beneficiary'' (Sec. 423.100)
Section 1860D-4(c)(5)(C) of the Act contains a definition for ``at-
risk beneficiary'' that we propose to codify at Sec. 423.100. In
addition, although the section 1860D-4(c)(5) of the Act does not
explicitly define a ``potential at-risk beneficiary,'' it contemplates
a beneficiary who is potentially at-risk. Accordingly, we propose to
define these two terms at Sec. 423.100 as follows: Potential at-risk
beneficiary means a Part D eligible individual--(1) Who is identified
using clinical guidelines (as defined in Sec. 423.100); or (2) With
respect to whom a Part D plan sponsor receives a notice upon the
beneficiary's enrollment in such sponsor's plan that the beneficiary
was identified as a potential at-risk beneficiary (as defined in
paragraph (1) of this definition) under the prescription drug plan in
which the beneficiary was most recently enrolled, such identification
had not been terminated upon disenrollment, and the new plan has
adopted the identification. At-risk beneficiary means a Part D eligible
individual--(1) who is--(i) Identified using clinical guidelines (as
defined in Sec. 423.100); (ii) Not an exempted beneficiary; and (iii)
Determined to be at-risk for misuse or abuse of such frequently abused
drugs under a Part D plan sponsor's drug management program in
accordance with the requirements of Sec. 423.153(f); or (2) With
respect to whom a Part D plan sponsor receives a notice upon the
beneficiary's enrollment in such sponsor's plan that the beneficiary
was identified as an at-risk beneficiary (as defined in paragraph (1)
of this definition) under the prescription drug plan in which the
beneficiary was most
[[Page 56343]]
recently enrolled, such identification had not been terminated upon
disenrollment, and the new plan has adopted the identification. The
distinction between a ``potential at-risk beneficiary'' and an ``at-
risk beneficiary'' is important for a few reasons that we will explain
later in this preamble. Also, we added the phrase, ``and the new plan
has adopted the identification'' to both definitions for cases where a
beneficiary has been identified as a potential at-risk or at-risk
beneficiary by the immediately prior plan to indicate that the
beneficiary's status in the subsequent plan is not automatic.
(B) Definition of ``Frequently Abused Drug'', ``Clinical Guidelines'',
``Program Size'', and ``Exempted Beneficiary'' (Sec. 423.100)
Because we use these terms in the proposed definitions of
``potential at-risk beneficiary'' and ``at-risk beneficiary,'' we
propose to define ``frequently abused drug,'' ``clinical guidelines'',
``program size'', and ``exempted beneficiary'' at Sec. 423.100 as
follows:
Frequently Abused Drug
Section 1860D-4(c)(5)(G) of the Act defines ``frequently abused
drug'' as a drug that is a controlled substance that the Secretary
determines to be frequently abused or diverted. Consistent with the
statutory definition, we propose to define ``Frequently abused drug''
at Sec. 423.100 to mean a controlled substance under the federal
Controlled Substances Act that the Secretary determines is frequently
abused or diverted, taking into account the following factors: (1) The
drug's schedule designation by the Drug Enforcement Administration; (2)
Government or professional guidelines that address that a drug is
frequently abused or misused; and (3) An analysis of Medicare or other
drug utilization or scientific data. This definition is intended to
provide enough specificity for stakeholders to know how the Secretary
will determine a frequently abused drug, while preserving flexibility
to update which drugs CMS considers to be frequently abused drugs based
on relevant factors, such as actions by the Drug Enforcement
Administration and/or trends observed in Medicare or scientific data.
We plan to publish and update a list of frequently abused drugs for
purposes of Part D drug management programs. We propose that future
designations of frequently abused drugs by the Secretary primarily be
included in the annual Parts C&D Call Letter or in similar guidance,
which would be subject to public comment, if necessary to address
midyear entries to the drug market or evolving government or
professional guidelines. This approach would be consistent with our
approach under the current policy and necessary for Part D drug
management programs to be responsive to changing public health issues
over time.
While this is the approach we propose for future designations of
frequently abused drugs, we are including a discussion of the
designation for plan year 2019 in this preamble. For plan year 2019,
consistent with current policy, we propose that opioids are frequently
abused drugs. Our proposal to designate opioids as frequently abused
drugs illustrates how the proposed definition could work in practice:
First, the Secretary determines opioids are frequently abused or
diverted, because they are controlled substances, and drugs and other
substances that are considered controlled substances under the
Controlled Substances Act (CSA) are so considered precisely because
they have abuse potential. The Drug Enforcement Administration (DEA)
divides controlled substances into five schedules based on whether they
have a currently accepted medical use in treatment in the United
States, their relative abuse potential, and their likelihood of causing
dependence when abused. Most prescription opioids are Schedule II,
where the DEA places substances with a high potential for abuse with
use potentially leading to severe psychological or physical
dependence.\9\ A few opioids are Schedule III or IV, where the DEA
places substances that have a potential for abuse.
---------------------------------------------------------------------------
\9\ The abuse rate is a determinate factor in the DEA's
scheduling of the drug; for example, Schedule I drugs have a high
potential for abuse and the potential to create severe psychological
and/or physical dependence. As the drug schedule changes-- Schedule
II, Schedule III, etc., so does the abuse potential-- Schedule V
drugs represents the least potential for abuse. See DEA Web site
about Drug Scheduling: https://www.dea.gov/druginfo/ds.shtml.
---------------------------------------------------------------------------
Second, on October 26, 2017, the President directed that executive
agencies use all appropriate emergency authorities and other relevant
authorities to address drug addiction and opioid abuse, and the Acting
Secretary of Health and Human Services declared a nationwide Public
Health Emergency to address the opioid crisis.\10\ In addition, the CDC
has declared opioid overuse a national epidemic, both of which are
relevant factors.\11\ More than 33,000 people died from opioid overuse
in 2015, which is the highest number per year on record. From 2000 to
2015, more than half a million people died from drug overdoses, and 91
Americans die every day from an opioid overdose. Nearly half of all
opioid overdose deaths involve a prescription opioid. Given that
opioids, including prescription opioids, are the main driver of drug
overdose deaths in the U.S., it is reasonable for the Secretary to
conclude that opioids are frequently abused and misused.
---------------------------------------------------------------------------
\10\ See White House Web site https://www.whitehouse.gov/the-press-office/2017/10/26/presidential-memorandum-heads-executive-departments-and-agencies, and the HHS Web site https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
\11\ See CDC Web site https://www.cdc.gov/drugoverdose/ for all statistics in this paragraph.
---------------------------------------------------------------------------
Third, government or professional guidelines support determining
that opioids are frequently abused or misused. Consistent with current
policy, we propose to designate all opioids as frequently abused drugs
except buprenorphine for medication-assisted treatment (MAT) and
injectables. The CDC MME Conversion Factor file \12\ does not include
all formulations of buprenorphine for MAT so that access is not
limited, and injectables are not included due to low claim volume.
Therefore, CMS cannot determine the MME. CMS will consider revisions to
the CDC MME Conversion Factor file when updating the list of opioids
designated as frequently abused drugs in future guidance.
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\12\ See https://www.cdc.gov/drugoverdose/resources/data.html.
---------------------------------------------------------------------------
Fourth, an analysis of Medicare data supports designating opioids
as ``frequently abused drugs,'' at least initially. Over 727,000 Part D
beneficiaries had an average MME of at least 90 mg during the 6-month
period from July 1, 2015 to December 31, 2015 (``90 mg MME + users''),
a number which excludes beneficiaries with cancer or in hospice, whom
we propose to exempt from drug management programs, as we discuss
later. As noted earlier, the CDC recommends prescribers generally avoid
increasing the daily opioid dosage to 90 MME. Given that so many
beneficiaries have an average MME above this threshold, it is
reasonable that the Secretary consider this data to be a relevant
factor in determining that opioids are frequently abused or diverted.
Most stakeholders recommended designating opioids as frequently
abused drugs. In this regard, we note
[[Page 56344]]
that our current policy applies only to opioids and that we are
integrating the drug management provisions of CARA with our current
policy. Therefore, designating opioids as frequently abused drugs, at
least in the initial implementation of drug management programs, would
have the added benefit of allowing CMS and stakeholders to gain
experience with the use of lock-in in the Part D program, before
potentially designating other controlled substances as frequently
abused drugs.
Some commenters expressed support for including other or all
controlled substances, such as benzodiazepines, sedatives, and certain
muscle relaxants as frequently abused drugs; however, we are not
persuaded. Opioids are unique in that there is generally no maximum
dose for them in the FDA labeling. Also, in the proposed Contract Year
2016 Parts C&D Call Letter, we solicited feedback on expanding the
current policy to other drugs, and the comments were mixed. A few
commenters suggested that we expand the current policy to
benzodiazepines and muscle relaxants when used with opioids. In respond
to the feedback, we did not expand the current policy beyond the opioid
class but indicated that we would investigate. Subsequently, the CDC
Guideline was published and it specifically recommends that clinicians
avoid prescribing opioid pain medication and benzodiazepines
concurrently whenever possible due to increased risk for overdose.
Therefore, we added a concurrent benzodiazepine-opioid flag to OMS in
October 2016 to alert Part D sponsors that concurrent use may be an
issue that should be addressed during case management, and we will
continue to do so.\13\
---------------------------------------------------------------------------
\13\ Please refer to the memo, ``Medicare Part D Overutilization
Monitoring System (OMS) Update: Addition of the Concurrent Opioid-
Benzodiazepine Use Flag'' dated October 21, 2016.
---------------------------------------------------------------------------
Other than conveying the concurrent benzodiazepine use information
to sponsors, we have not expanded the current policy to address non-
opioid medications. However, we have stated that if a sponsor chooses
to implement the current policy for non-opioid medications, we would
expect the sponsor to employ the same level of diligence and
documentation with respect to non-opioid medications that we expect for
opioid medications.\14\ We have taken this approach to the current
policy so that we could focus on the opioid epidemic and also due to
the difficulty in establishing overuse guidelines for non-opioid
controlled substances. For this reason our proposal would not identify
benzodiazepines as frequently abused drugs. However, we solicit
additional comment on our proposed approach to frequently abused drugs.
Also, we propose that, if finalized, this rule would supersede our
current policy, and sponsors would no longer be allowed to implement
the current policy for non-opioid medications. We seek feedback on
allowing sponsors to continue to implement the current policy for non-
opioid medications with respect to beneficiary-specific claim edits.
---------------------------------------------------------------------------
\14\ See ``Supplemental Guidance Related to Improving Drug
Utilization Review Controls in Part D,'' dated September 6, 2012.
---------------------------------------------------------------------------
Clinical Guidelines and Program Size
Section 1860D-4(c)(5)(C)(i)(I) of the Act requires at-risk
beneficiaries to be identified using clinical guidelines that indicate
misuse or abuse of frequently abused drugs and that are developed in
consultation with stakeholders. We propose to include a definition of
``clinical guidelines'' that cross references standards that we are
proposing at Sec. 423.153(f) for how the guidelines would be
established and updated. Specifically, we propose to define clinical
guidelines for purposes of a Part D drug management program as criteria
to identify potential at-risk beneficiaries who may be determined to be
at-risk beneficiaries under such programs, and that are developed in
accordance with the proposed standards in Sec. 423.153(f)(16) and
published in guidance annually.
We also propose to add Sec. 423.153(f)(16) to state that potential
at-risk beneficiaries and at-risk beneficiaries are identified by CMS
or the Part D sponsor using clinical guidelines that: (1) Are developed
with stakeholder consultation; (2) Are based on the acquisition of
frequently abused drugs from multiple prescribers, multiple pharmacies,
the level of frequently abused drugs, or any combination of these
factors; (3) Are derived from expert opinion and an analysis of
Medicare data; and (4) Include a program size estimate. This proposed
approach to developing and updating the clinical guidelines is intended
to provide enough specificity for stakeholders to know how CMS would
determine the guidelines by identifying the standards we would apply in
determining them.
This proposed approach indicates that the program size would be
determined as part of the process to develop the clinical guidelines--a
process into which stakeholders would provide input. Section 1860D-
4(c)(5)(C)(iii) of the Act states that the Secretary shall establish
policies, including the guidelines and exemptions, to ensure that the
population of enrollees in drug management programs could be
effectively managed by plans. We propose to define ``program size'' in
Sec. 423.100 to mean the estimated population of potential at-risk
beneficiaries in drug management programs (described in Sec.
423.153(f)) operated by Part D plan sponsors that the Secretary
determines can be effectively managed by such sponsors as part of the
process to develop clinical guidelines.
This proposed approach to developing and updating the clinical
guidelines would also be flexible enough to allow for updates to the
guidelines outside of the regulatory process to address trends in
Medicare with respect to the misuse and/or diversion of frequently
abused drugs. We have determined this approach is appropriate to enable
CMS to assist Part D drug management programs in being responsive to
public health issues over time. This approach would also be consistent
with how the OMS criteria have been established over time through the
annual Medicare Parts C&D Call Letter process, which we plan to
continue except for 2019.
For plan year 2019, we propose the clinical guidelines in this
preamble to be the OMS criteria established for plan year 2018, which
meet the proposed standards for the clinical guidelines for the
following reasons: First, as described earlier, the OMS criteria
incorporate a 90 MME threshold cited in a CDC Guideline, which was
developed by experts as the level that prescribers should avoid
reaching with their patients. This threshold does not function as a
prescribing limit for the Part D program; rather, it identifies
potentially risky and dangerous levels of opioid prescribing in terms
of misuse or abuse. Second, the OMS criteria also incorporate a
multiple prescriber and pharmacy count. A high MED level combined with
multiple prescribers and/or pharmacies may also indicate the abuse or
misuse of opioids due to the possible lack of care coordination among
the providers for the patient. Third, the OMS criteria have been
revised over time based on analysis of Medicare data and with
stakeholder input via the annual Parts C&D Call Letter process. Indeed,
many stakeholders recommended the use of the CDC Guideline as part of
the clinical guidelines the Secretary must develop, with some noting
that they would need to be used in a way that accounts for use of
multiple providers, which the OMS criteria do. Fourth, these criteria
are familiar to Part D sponsors--they will already have experience with
them by
[[Page 56345]]
2019, and they were established with an estimate of program size.
Several stakeholders in their comments referred to various criteria
used in state Medicaid lock-in programs to identify beneficiaries
appropriate for lock-in, without suggesting that any particular ones be
adopted. Other commenters suggested CMS consider other guidelines, such
as the American Society of Addiction Medicine (ASAM) National Practice
Guideline for the Use of Medications in the Treatment of Addiction
Involving Opioid Use and the Veterans Affairs/Department of Defense
(VA/DoD) Clinical Practice Guideline on Opioid Therapy for Chronic
Pain. However, these guidelines are similar to or moving toward an MME
methodology which we currently use or address a more narrow population
than persons who may be abusing or misusing frequently abused drugs,
and they do not directly address situations involving multiple opioid
providers. The VA/DoD Clinical Practice Guideline for Opioid Therapy
for Chronic Pain is similar to the scope of the CDC Guideline. The ASAM
Guideline for the Use of Medications in the Treatment of Addiction
Involving Opioid Use was developed specifically for the evaluation and
treatment of opioid use disorder and for the management of opioid
overdose, which would not be applicable here because it serves a
different purpose. Therefore, we do not see a reason to adopt these
guidelines instead of the 2018 OMS criteria.
The clinical guidelines for use in drug management programs we are
proposing for 2019 are: Use of opioids with an average daily MME
greater than or equal to 90 mg for any duration during the most recent
6 months and either: 4 or more opioid prescribers and 4 or more opioid
dispensing pharmacies OR 6 or more opioid prescribers, regardless of
the number of opioid dispensing pharmacies. We note that we have
described alternative clinical guidelines that we considered in the
Regulatory Impact Analysis section of this rule. Stakeholders are
invited to comment on those alternatives and any others which would
involve identifying more or fewer potential at-risk beneficiaries.
We propose that under the proposed clinical guidelines, prescribers
associated with the same single Tax Identification Number (TIN) be
counted as a single prescriber. This is consistent with the current
policy under which we have found that such prescribers are typically in
the same group practice that is coordinating the care of the patients
served by it. Thus, it is appropriate to count such prescribers as one,
so as not to identify beneficiaries who are not at-risk.
In this regard, in applying the OMS criteria, CMS counts
prescribers with the same TIN as one prescriber, unless any of the
prescribers are associated with multiple TINs. For example, under the
criteria we have proposed, a beneficiary who meets the 90 MME criterion
and received opioid prescriptions from 4 prescribers in the same group
practice and 3 independent opioid prescribers (1 group practice + 3
prescribers = 4 prescribers) and filled the prescriptions at 4 opioid
dispensing pharmacies, would still meet the criteria, which is
appropriate. However, a beneficiary who meets that 90 MME criterion and
received opioid prescriptions from 4 prescribers in the same group
practice and 1 independent opioid prescriber (1 group practice + 1
prescriber = 2 prescribers) and filled the prescriptions at 4 opioid
dispensing pharmacies would not meet the criteria, which is also
appropriate at this time given program size concerns.
Section 1860D-4(c)(5)(D) of the Act specifies that for purposes of
limiting access to coverage of frequently abused drugs to those
obtained from a selected pharmacy, if the pharmacy has multiple
locations that share real-time electronic data, all such locations of
the pharmacy collectively are treated as one pharmacy. Given this
provision, as well as our proposal to treat multiple prescribers from
the same group practice as one prescriber under the clinical
guidelines, we propose that where a pharmacy has multiple locations
that share real-time electronic data, all locations of the pharmacy
collectively be treated as one pharmacy under the clinical guidelines.
Because not all Part D plans' data systems may be able to account
for group practice prescribers as we described above, or chain
pharmacies through data analysis alone, or may not be able to fully
account for them, we request information on sponsors' systems
capabilities in this regard. Also, if a plan sponsor does not have the
systems capability to automatically determine when a prescriber is part
of a group or a pharmacy is part of a chain, the plan sponsor would
have to make these determinations during case management, as they do
with respect to group practices under the current policy. If through
such case management, the Part D plan finds that the multiple
prescribers who prescribed frequently abused drugs for the beneficiary
are members of the same group practice, the Part D plan would treat
those prescribers as one prescriber for purposes of identification of
the beneficiary as a potential at-risk beneficiary. Similarly, if
through such case management, the Part D plan finds that multiple
locations of a pharmacy used by the beneficiary share real-time
electronic data, the Part D plan would treat those locations as one
pharmacy for purposes of identification of the beneficiary as a
potential at-risk beneficiary. Both of these scenarios may result in a
Part D sponsor no longer conducting case management for a beneficiary
because the beneficiary does not meet the clinical guidelines. We also
note that group practices and chain pharmacies are important to
consider for purposes of the selection of a prescriber(s) and
pharmacy(ies) in cases when a Part D plan limits a beneficiary's access
to coverage of frequently abused drugs to selected pharmacy(ies) and/or
prescriber(s), which we discuss in more detail later in this preamble.
Under the current policy, sponsors must use 90 MME as a ``floor''
for their own criteria to identify beneficiaries who may be
overutilizing opioids, but they may vary the prescriber and pharmacy
count. This means sponsors may review beneficiaries who do not meet the
OMS criteria but meet the sponsors' internal criteria for review, or
they may not review beneficiaries who meet the OMS criteria but do not
meet the sponsors' internal criteria for review. However, under our
proposal to adopt the 2018 OMS criteria as the 2019 clinical guidelines
for Part D drug management programs, we also propose to mostly
eliminate this feature of the current policy. Under our proposal, Part
D plan sponsors would not be able to vary the criteria of the
guidelines to include more or fewer beneficiaries in their drug
management programs, except that we propose to continue to permit plan
sponsors to apply the criteria more frequently than CMS would apply
them through OMS in 2018, which can result in sponsors identifying
beneficiaries earlier. This is because CMS evaluates enrollees
quarterly using a 6-month look back period, whereas sponsors may
evaluate enrollees more frequently (for example, monthly).
While several commenters stated that Part D plan sponsors should
have flexibility in developing their own criteria for identifying at-
risk beneficiaries in their plans, a more conservative and uniform
approach is warranted for the initial implementation of Part D drug
management programs. While we already have experience with how
frequently Part D plan sponsors use beneficiary-specific opioid POS
claim edits to prevent opioid overutilization, we wish to learn how
sponsors will use
[[Page 56346]]
lock-in as a tool to address this issue before adopting clinical
guidelines that might include parameters for permissible variations of
the criteria. We plan to monitor compliance of drug management programs
as we monitor compliance with the current policy through various CMS
data sources, such as OMS, MARx, beneficiary complaints and appeals.
Also, we note that despite sponsors' additional identification of
some beneficiaries currently, in practice, we have found that CMS
identifies the vast majority of beneficiaries who are reviewed by Part
D sponsors through OMS. CMS identifies over 80 percent of the cases
reviewed through OMS, and about 20 percent are identified by sponsors
based on their internal criteria. We understand that most of the
beneficiaries representing the 20 percent were reported to OMS due to
the sponsors averaging the MME calculations across all opioid
prescriptions, which has subsequently been changed in the 2018 OMS
criteria. The 2018 OMS criteria also have a lower MME threshold and
account for additional beneficiaries who receive their opioids from
many prescribers regardless of the number of pharmacies, which will
result in the identification of more beneficiaries through OMS. Thus,
our proposal would not substantially change the current practice.
Furthermore, in approximately 39 percent of current OMS cases, sponsors
respond that the case does not meet the sponsor's internal criteria for
review.\15\ We found that the original OMS criteria generated false
positives that some sponsors' internal criteria did not because these
sponsors used a shorter look back period or were able to group
prescribers within the same practice or chain pharmacies. These best
practices have also been incorporated into the revised 2018 OMS
criteria, which are the basis of the proposed 2019 clinical guidelines.
Thus, while our proposal will prevent sponsors from voluntarily
reviewing more potential at-risk beneficiaries than CMS identifies
through OMS, it will likely require sponsors to review more
beneficiaries than they currently do.
---------------------------------------------------------------------------
\15\ We noted in the final CY Parts C&D Call Letter, for the
January 2014 OMS reports, 67 percent of the potential opioid
overutilization responses were that the beneficiary did not meet the
sponsor's internal criteria. We explained the reasons for this
figure and the actions we took to reduce it.
---------------------------------------------------------------------------
Table 1 shows that in 2015 approximately 33,000 beneficiaries would
have met the proposed 2019 clinical guidelines, which is approximately
0.08 percent of the 42 million beneficiaries enrolled in Part D in
2015. We think this population would constitute a manageable program
size because this is the estimated OMS population we finalized during
the Plan Year 2018 Parts C&D Call Letter process. Moreover, we have no
evidence to suggest that this program size will be problematic for
sponsors.
In addition, current Medicaid lock-in programs support the notion
that this program size would be manageable by Part D plan sponsors. In
2015, an average 0.37 percent of Medicaid recipients were locked-in and
the percentage of recipient's locked-in by state programs ranged from
0.01 percent to 1.8 percent.\16\
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\16\ Medicaid Drug Utilization Review State Comparison/Summary
Report FFY 2015 Annual Report: Prescription Drug-Fee-For-Service
Programs (December 2016), pg. 26.
---------------------------------------------------------------------------
To derive this estimated population of potential at-risk
beneficiaries, we analyzed prescription drug event data (PDE) from
2015,\17\ using the CDC opioid drug list and MME conversion factors,
and applying the criteria we proposed earlier as the clinical
guidelines. This estimate is over-inclusive because we did not exclude
beneficiaries in long-term care (LTC) facilities who would be exempted
from drug management programs, as we discuss later in this section.
However, based on similar analyses we have conducted, this exclusion
would not result in a noteworthy reduction to our estimate. Also, we
were unable to count all locations of a pharmacy that has multiple
locations that share real-time electronic data as one, which is a topic
we discussed earlier and will return to later. Thus, there likely are
beneficiaries counted in our estimate who would not be identified as
potential at-risk beneficiaries because they are in an LTC facility or
only use multiple locations of a retail chain pharmacy that share real-
time electronic data.
---------------------------------------------------------------------------
\17\ Unique count of beneficiaries who met the criteria in any 6
month measurement period (January 2015-June 2015; April 2015-
September 2015; or July 2015-December 2015).
Table 1--Clinical Guidelines or Identifying Potential At-Risk
Beneficiaries
------------------------------------------------------------------------
Criteria applied Impact to Part D program
------------------------------------------------------------------------
[gteqt]90 mg MED and either: 33,053 beneficiaries in 2015
(76.3% were LIS).
4+ opioid prescribers AND 4+ opioid Represents 0.08% of 41,835,016
dispensing pharmacies. Part D beneficiaries in 2015.
OR LTC beneficiaries included in
estimate but are exempt.
6+ opioid prescribers (regardless Prescribers associated with the
of the number of opioid dispensing same single Tax Identification
pharmacies). Numbers (TIN) are counted as a
single prescriber.
------------------------------------------------------------------------
We note that the alternatives for clinical guidelines that we
considered, which are described in the Regulatory Impact Analysis (RIA)
section of this rule, also include estimated population of potential
at-risk beneficiaries for each alternative. Most of the options include
a 90 MME threshold with varying prescriber and pharmacy counts and
range from identifying 33,053 to 319,133 beneficiaries. Again,
stakeholders are invited to comment on these alternatives. We are
particularly interested in receiving comments on whether CMS should
adjust the clinical guidelines so that more or fewer potential at-risk
beneficiaries are identified, and if more are identified, whether the
additional number would result in a manageable program size for plan
sponsors (or too few beneficiaries to be meaningful).
Exempted Beneficiary
Section 1860D-4(c)(5)(C)(ii) of the Act defines an exempted
individual as one who receives hospice care, who is a resident of a
long-term care facility for which frequently abused drugs are dispensed
for residents through a contract with a single pharmacy, or who the
Secretary elects to treat as an exempted individual. Consistent with
this, we propose that an exempted beneficiary, with respect to a drug
management program, would mean an enrollee who: (1) Has elected to
receive hospice care; (2) Is a resident of a long-term care facility,
of a facility described in section 1905(d) of the Act, or of another
facility for which frequently abused drugs are dispensed for residents
[[Page 56347]]
through a contract with a single pharmacy; or (3) Has a cancer
diagnosis.
While the first two exceptions are required under CARA, we propose
to exercise the authority in section 1860D-4(c)(5)(C)(ii)(III) of the
Act to treat a beneficiary who has a cancer diagnosis as an exempted
individual for two reasons. First, many commenters recommended that the
Secretary exempt beneficiaries who have a cancer diagnosis, because a
Part D drug management program should not be able to interfere
administratively with their pain control regimen in the form of
additional notices from their prescription drug benefit plans and
limitations on their access to coverage for frequently abused drugs. We
agree with these commenters. Second, exempting beneficiaries with a
cancer diagnosis would be consistent with current policy. Under the
current policy, which has been developed through stakeholder feedback,
beneficiaries with cancer are excluded because the benefit of their
opioid use may outweigh the risk associated with their opioid use.
Also, as noted previously, some commenters requested that
implementation of the drug management program provisions of CARA be as
consistent as possible with the current policy for operational ease. We
also agree with these commenters.
Some commenters recommended against exempting beneficiaries with
cancer diagnoses, stating that there is no standard clinical reason why
a beneficiary with cancer should be receiving opioids from multiple
prescribers and/or multiple pharmacies, and that such situations
warrant further review. While we understand the concern of these
commenters, we maintain that beneficiaries who have a cancer diagnosis
should be exempted for the reasons stated just above. Moreover, our
experience with this exemption under the current policy suggests that
the exemption is workable and appropriate. We understand beneficiaries
with cancer diagnoses are identifiable by Part D plan sponsors either
through recorded diagnoses, their drug regimens or case management, and
no major concerns have been expressed about this exemption under our
current policy, including from standalone Part D plan sponsors who may
not have access to their enrollees' medical records.
A few commenters suggested exempting beneficiaries who are
receiving palliative and end-of-life care, since not all patients
receiving this type of care are necessarily enrolled in hospice or
reside in an LTC facility. Two commenters suggested exempting
beneficiaries in assisted living. Other commenters suggested exempting
beneficiaries in various other health care facilities, such as group
homes and adult day care centers, where medication is supervised. Other
commenters suggested exempting beneficiaries with debilitating
disorders or receiving medication-assisted treatment for substance
abuse disorders.
We have not proposed to exempt these additional categories of
beneficiaries but we seek specific comment on whether to do so and our
rationale. First, we have not exempted these other beneficiaries under
the current policy, and we thus do not think it is necessary to exempt
them from drug management programs. Second, unlike with cancer
diagnoses, we are not able to determine administratively through CMS
data who these beneficiaries are to exempt them from OMS reporting.
Consequently, it could be burdensome for Part D sponsors to attempt to
exempt these beneficiaries, by definition, from their drug management
programs. Third, it is important to remember that the proposed clinical
guidelines would only identify potential at-risk beneficiaries in the
Part D program who are receiving potentially unsafe doses of opioids
from multiple prescribers and/or multiple pharmacies who typically do
not know about each other in terms of providing services to the
beneficiary. Thus, it is likely that a plan would discover during case
management that a potential at-risk beneficiary is receiving palliative
and end-of-life care during case management. Absent a compelling
reason, we would expect the plan not to seek to implement a limit on
such beneficiary's access to coverage of opioids under the current
policy nor a drug management program, as it would seem to outweigh the
medication risk in such circumstances. Moreover, in cases where a
prescriber is cooperating with case management, we would not expect the
prescriber to agree to such a limitation, again, absent a compelling
reason. With respect to beneficiaries receiving medication-assisted
treatment for substance abuse for opioid use disorder, we decline to
propose to treat these individuals as exempted individuals. It is these
beneficiaries who are among the most likely to benefit from a drug
management program.
(ii) Requirements of Drug Management Programs (Sec. Sec. 423.153,
423.153(f))
As noted previously, we are proposing to codify a regulatory
framework under which Part D plan sponsors may adopt drug management
programs to address overutilization of frequently abused drugs.
Therefore, we propose to amend Sec. 423.153(a) by adding this sentence
at the end: ``A Part D plan sponsor may establish a drug management
program for at-risk beneficiaries enrolled in their prescription drug
benefit plans to address overutilization of frequently abused drugs, as
described in paragraph (f) of this section,'' in accordance with our
authority under revised section 1860D-4(c)(5)(A) of the Act.
We also propose to revise Sec. 423.153 by adding a new paragraph
(f) about drug management programs for which the introductory sentence
would read: ``(f) Drug Management Programs. A drug management program
must meet all the following requirements.'' Thus, the requirements that
a Part D plan sponsor must meet to operate a drug management program
would be codified in various provisions under subsection Sec.
423.153(f).
(iii) Written Policies and Procedures (Sec. 423.153(f)(1))
We propose to require Part D sponsors document their programs in
written policies and procedures that are approved by the applicable P&T
committee and reviewed and updated as appropriate, which is consistent
with the current policy. Also consistent with the current policy, we
would require these policies and procedures to address the appropriate
credentials of the personnel conducting case management and the
necessary and appropriate contents of files for case management. We
additionally propose to require sponsors to monitor information about
incoming enrollees who would meet the definition of a potential at-risk
and an at-risk beneficiary in proposed Sec. 423.100 and respond to
requests from other sponsors for information about potential at-risk
and at-risk beneficiaries who recently disenrolled from the sponsor's
prescription drug benefit plans. We discuss potential at-risk and at-
risk beneficiaries who are identified as such in their most recent Part
D plan later in this preamble.
To codify these requirements, we propose that section Sec.
423.153(f)(1) read as follows: (1) Written policies and procedures. A
sponsor must document its drug management program in written policies
and procedures that are approved by the applicable P&T committee and
reviewed and updated as appropriate. The policies and procedures must
address all aspects of the sponsor's drug management program, including
but not limited to the following: (i) The appropriate credentials of
the personnel conducting case management required under
[[Page 56348]]
paragraph (f)(2); (ii) The necessary and appropriate contents of files
for case management required under paragraph (f)(2); and (iii)
Monitoring reports and notifications about incoming enrollees who meet
the definition of an at-risk beneficiary and a potential at-risk
beneficiary in Sec. 423.100 and responding to requests from other
sponsors for information about at-risk beneficiaries and potential at-
risk beneficiaries who recently disenrolled from the sponsor's
prescription drug benefit plans. Thus, Part D sponsors would have
flexibility--as they do today under the current policy--to adopt
specific policies and procedures for their drug management programs, as
long as they are consistent with the requirements of Sec. 423.153, as
finalized.
(iv) Case Management/Clinical Contact/Prescriber Verification (Sec.
423.153(f)(2))
As discussed earlier, case management is a key feature of the
current policy, under which we currently expect Part D plan sponsors'
clinical staff to diligently engage in case management with the
relevant opioid prescribers to coordinate care with respect to each
beneficiary reported by OMS until the case is resolved (unless the
beneficiary does not meet the sponsor's internal criteria). We propose
that the second requirement for drug management programs in a new Sec.
423.153(f)(2) reflect the current policy with some adjustment to the
current policy to require all beneficiaries reported by OMS to be
reviewed by sponsors.
Our proposal for a new Sec. 423.153(f)(2) also meets the
requirements of section 1860D-4I(5)(C) of the Act. This section of the
Act requires that, with respect to each at-risk beneficiary, the
sponsor shall contact the beneficiary's providers who have prescribed
frequently abused drugs regarding whether prescribed medications are
appropriate for such beneficiary's medical conditions. Further, our
proposal meets the requirements of Section 1860D-4(c)(5)(B)(i)(II) of
the Act, which requires that a Part D sponsor first verify with the
beneficiary's providers that the beneficiary is an at-risk beneficiary,
if the sponsor intends to limit the beneficiary's access to coverage
for frequently abused drugs.
Specifically, we propose that a new Sec. 423.153(f)(2) read as
follows: Case Management/Clinical Contact/Prescriber Verification. (i)
General Rule. The sponsor's clinical staff must conduct case management
for each potential at-risk beneficiary for the purpose of engaging in
clinical contact with the prescribers of frequently abused drugs and
verifying whether a potential at-risk beneficiary is an at-risk
beneficiary. Proposed Sec. 423.153(f)(2)(i) would further state that,
except as provided in paragraph (f)(2)(ii) of this section, the sponsor
must do all of the following: (A) Send written information to the
beneficiary's prescribers that the beneficiary meets the clinical
guidelines and is a potential at-risk beneficiary; (B) Elicit
information from the prescribers about any factors in the beneficiary's
treatment that are relevant to a determination that the beneficiary is
an at-risk beneficiary, including whether prescribed medications are
appropriate for the beneficiary's medical conditions or the beneficiary
is an exempted beneficiary; and (C) In cases where the prescribers have
not responded to the inquiry described in (i)(B), make reasonable
attempts to communicate telephonically with the prescribers within a
reasonable period after sending the written information.
Given the ``Except as provided in paragraph (f)(2)(ii) of this
section'', we propose to add paragraph (ii) to Sec. 423.153(f)(2) that
would read: (ii) Exception for identification by prior plan. If a
beneficiary was identified as a potential at-risk or an at-risk
beneficiary by his or her most recent prior plan, and such
identification has not been terminated in accordance with paragraph
(f)(14) of this section, the sponsor meets the requirements in
paragraph (f)(2)(i) of this section, so long as the sponsor obtains
case management information from the previous sponsor and such
information is still clinically adequate and up to date. This proposal
is to avoid unnecessary burden on health care providers when additional
case management outreach is not necessary. This is consistent with the
current policy under which sponsors are expected to enter information
into MARx about pending, implemented and terminated beneficiary-
specific POS claim edits, which is transferred to the next sponsor, if
applicable. Pending and implemented POS claim edits are actions that
sponsors enter into MARx after case management. We discuss potential
at-risk and at-risk beneficiaries who change plans again later in this
preamble.
The information that the plan sends to the prescribers and elicits
from them is intended to assist a Part D sponsor to understand why the
beneficiary meets the clinical guidelines and if a plan intervention is
warranted for the safety of the beneficiary. Also, sponsors use this
information to choose standardized responses in OMS and provide
information to MARx about plan interventions that were referenced
earlier. We will address required reporting to OMS and MARx by sponsors
again later.
We note that, currently, OMS standardized responses generally fall
into four categories: First, in approximately 18 percent of cases, the
enrollee's opioid use is medically necessary. Second, approximately 38
percent of cases are resolved without a beneficiary-specific POS opioid
claim edit, for example, when the sponsor takes a ``wait and see''
approach to observe if the prescribers adjust their management of, and
the opioid prescriptions they are writing for, their patient due to the
written information they received from the sponsor about their patient.
Third, a small subset of cases--on average 1.3 percent--need a
beneficiary-specific opioid POS claim edit to resolve the beneficiary's
opioid overutilization issue. From 2013 through of July 4, 2017, CMS
received 4,617 contract-beneficiary-level opioid POS claim edit
notifications through MARx for 3,961 unique beneficiaries. Fourth, as
previously mentioned, approximately 39 percent of cases do not meet the
sponsor's internal criteria for review. We expect adjustment to these
percentages under our proposal, particularly since we anticipate that
plans will no longer be able to respond that a case does not meet its
internal criteria for review. In addition, the revised 2018 OMS
criteria which are the basis of the proposed 2019 clinical guidelines
should reduce ``false positives'' which may have been reported through
OMS but not identified through sponsors' internal criteria due to a
shorter look back period and ability to group prescribers within the
same practice.
We also note that under the current policy, sponsors are expected
to make ``at least three (3) attempts to schedule telephone
conversations with the prescribers (separately or together) within a
reasonable period (for example, a 10 business day period) from the
issuance of the written inquiry notification.'' If the prescribers are
unresponsive to case management, under our current policy, a sponsor
may also implement a beneficiary-specific POS claim edit for opioids as
a last resort to encourage prescriber engagement with case management.
By contrast, our proposed Sec. 423.153(f)(2) uses the terms
``reasonable attempts'' and ``reasonable period'' rather than a
specific number of attempts or a specific timeframe for plan to call
prescribers. The reason for this proposed adjustment to our policy is
because our current policy also states that ``[s]ponsors are not
required to
[[Page 56349]]
automatically contact prescribers telephonically,'' but those that
``employ a wait-and-see approach'' should understand that ``we expect
sponsors to address the most egregious cases of opioid overutilization
without unreasonable delay, and that we do not believe that all such
cases can be addressed through a prescriber letter campaign.'' Our
guidance further states that, ``to the extent that some cases can be
addressed through written communication to prescribers only, we would
acknowledge the benefit of not aggravating prescribers with unnecessary
telephonic communications.'' Finally, our guidance states that,
``[s]ponsors must determine for themselves the usefulness of attempting
to call or contact all opioid prescribers when there are many,
particularly when they are emergency room physicians.'' \18\
---------------------------------------------------------------------------
\18\ See ``Supplemental Guidance Relating to Improving Drug
Utilization Review Controls in Part D'', September 6, 2012 (pp. 5,
19-20) at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.html.
---------------------------------------------------------------------------
Given the competing priorities of sponsors' diligently addressing
opioid overutilization in the Part D program through case management,
which may necessitate telephone calls to the prescribers, while being
cognizant of the need to be judicious in contacting prescribers
telephonically in order to not unnecessarily disrupt their practices,
we wish to leave flexibility in the regulation text for sponsors to
balance these priorities on a case-by-case basis in their drug
management programs, particularly since this flexibility exists under
the current policy. We note however, that we propose a 3 attempts/10
business days requirement for sponsors to conclude that a prescriber is
unresponsive to case management in Sec. 423.153(f)(4) discussed later
in this section.
(v) Limitations on Access to Coverage for Frequently Abused Drugs
(Sec. 423.153(f)(3))
As described earlier, under the current policy, Part D sponsors may
implement a beneficiary-specific opioid POS claim edit to prevent
continued overutilization of opioids, with prescriber agreement or in
the case of an unresponsive prescriber during case management. If a
sponsor implements a POS claim edit, the sponsor thereafter does not
cover opioids for the beneficiary in excess of the edit, absent a
subsequent determination, including a successful appeal.
As noted earlier, revised section 1860D-4(c)(5)(A) of the Act
provides additional tools commonly known as ``lock-in'', for Part D
plans to limit an at-risk beneficiary's access to coverage for
frequently abused drugs. Prescriber lock-in would limit an at-risk
beneficiary's access to coverage for frequently abused drugs to those
that are prescribed for the beneficiary by one or more prescribers, and
pharmacy lock-in would restrict an at-risk beneficiary's access to
coverage for frequently abused drugs to those that are dispensed to the
beneficiary by one or more network pharmacies.
If the sponsor uses a lock-in tool(s), the sponsor must generally
cover frequently abused drugs for the beneficiary only when they are
obtained from the selected pharmacy(ies) and/or prescriber(s), as
applicable, absent a subsequent determination, including a successful
appeal. Pursuant to section 1860D-4(c)(5)(D)(i)(II) of the Act, a
sponsor would also have to cover frequently abused drugs from a non-
selected pharmacy or prescriber, if such coverage were necessary in
order to provide reasonable access. We discuss selection of pharmacies
and prescribers and reasonable access later.
We propose to describe all the tools that would be available to
sponsors to limit an at-risk beneficiary's access to coverage for
frequently abused drugs through a drug management program in Sec.
423.153(f)(3) as follows: Limitation on Access to Coverage for
Frequently Abused Drugs. Subject to the requirements of paragraph
(f)(4) of this section, a Part D plan sponsor may do all of the
following: (i) Implement a point-of-sale claim edit for frequently
abused drugs that is specific to an at-risk beneficiary; or (ii) In
accordance with paragraphs (f)(10) and (f)(11) of this section, limit
an at-risk beneficiary's access to coverage for frequently abused drugs
to those that are (A) Prescribed for the beneficiary by one or more
prescribers; (B) Dispensed to the beneficiary by one or more network
pharmacies; or (C) Specified in both paragraphs (3)(ii)(B)(1) and (2)
of this paragraph. Paragraph (iii)(A) would state that if the sponsor
implements an edit as specified in paragraph (f)(3)(i) of this section,
the sponsor must not cover frequently abused drugs for the beneficiary
in excess of the edit, unless the edit is terminated or revised based
on a subsequent determination, including a successful appeal. Paragraph
(iii)(B) would state that if the sponsor limits the at-risk
beneficiary's access to coverage as specified in paragraph (f)(3)(ii)
of this section, the sponsor must cover frequently abused drugs for the
beneficiary only when they are obtained from the selected pharmacy(ies)
and/or prescriber(s), or both, as applicable, (1) in accordance with
all other coverage requirements of the beneficiary's prescription drug
benefit plan, unless the limit is terminated or revised based on a
subsequent determination, including a successful appeal, and (2) except
as necessary to provide reasonable access in accordance with paragraph
(f)(12) of this section.
(vi) Requirements for Limiting Access to Coverage for Frequently Abused
Drugs (Sec. 423.153(f)(4))
We propose that before a Part D plan sponsor could limit the access
of at-risk beneficiary to coverage for frequently abused drugs, the
sponsor must first take certain actions, consistent with current
policy. We propose that a sponsor must first conduct the case
management discussed earlier, which includes clinical contact to
determine whether prescribed medications are appropriate for the
potential at-risk beneficiary's medical conditions and prescriber
verification that the beneficiary is an at-risk beneficiary. We also
propose that the sponsor must first obtain the agreement of the
prescribers of frequently abused drugs with the limitation, unless the
prescribers were not responsive to the required case management, in
light of the risk to the beneficiary's health. We further propose that
the sponsor must first provide notice to the beneficiary in accordance
with section 1860D-4(c)(5)(B)(i)(I) of the Act.
We propose to require the additional step of prescriber agreement,
which is consistent with the current policy as discussed earlier,
because a prescriber may verify that the beneficiary is an at-risk
beneficiary but may not view a limitation on the beneficiary's access
to coverage for frequently abused drugs as appropriate. Given the
additional information the prescribers would have from the Part D
sponsor through case management about the beneficiary's utilization of
frequently abused drugs, the prescribers' professional opinion may be
that an adjustment to their prescribing for, and care of, the
beneficiary is all that is needed to safely manage the beneficiary's
use of frequently abused drugs going forward. We invite stakeholders to
comment on not requiring prescriber agreement to implement pharmacy
lock-in. We could foresee a case in which the prescriber is responsive,
but does not agree with pharmacy lock-in.
We also propose language that would provide an exception to the
case management requirement in Sec. 423.153(f)(2) when an at-risk
[[Page 56350]]
beneficiary was identified as an at-risk beneficiary by the
beneficiary's most recent prior prescription drug benefit plan. We
discuss such cases more later in this section. Given the foregoing, we
propose to add a paragraph (f)(4) to Sec. 423.153 that reads:
Requirements for Limiting Access to Coverage for Frequently Abused
Drugs. (i) A sponsor may not limit the access of an at-risk beneficiary
to coverage for frequently abused drugs under paragraph (f)(3) of this
section, unless the sponsor has done all of the following: (A)
Conducted the case management required by paragraph (f)(2) of this
section and updated it, if necessary; (B) Obtained the agreement of the
prescribers of frequently abused drugs for the beneficiary that the
specific limitation is appropriate; and (C) Provided the notices to the
beneficiary in compliance with paragraphs (f)(5) and (6) of this
section. We would also state in subsection (ii) that if the sponsor
complied with the requirement of paragraph (f)(2)(i)(C) of this
section, and the prescribers were not responsive after 3 attempts by
the sponsor to contact them by telephone within 10 business days, then
the sponsor has met the requirement of paragraph (f)(4)(i)(B) of this
section. Finally, we would state in a subsection (iii) that if the
beneficiary meets paragraph (2) of the definition of a potential at-
risk beneficiary or an at-risk beneficiary, and the sponsor has
obtained the applicable case management information from the sponsor of
the beneficiary's most recent plan and updated it as appropriate, the
sponsor has met the case management requirement in paragraph (f)(2)(i).
(vii) Beneficiary Notices and Limitation of Special Enrollment Period
(Sec. Sec. 423.153(f)(5), 423.153(f)(6), 423.38)
(A) Initial Notice to Beneficiary and Sponsor Intent To Implement
Limitation on Access to Coverage for Frequently Abused Drugs (Sec.
423.153(f)(5))
The notices referred to in proposed Sec. 423.153(f)(4)(i)(C) are
the initial and second notice that section 1860D-4(c)(5)(B)(i)(I) of
the Act requires Part D sponsors to send to potential at-risk and at-
risk beneficiaries regarding their drug management programs. We remind
Part D sponsors that under Section 504 of the Rehabilitation Act of
1973, effective communications requirements would apply to both these
notices. We first discuss the initial notice.
We propose in Sec. 423.153(f)(5) that if a Part D plan sponsor
intends to limit the access of a potential at-risk beneficiary to
coverage for frequently abused drugs, the sponsor would be required to
provide an initial written notice to the potential at-risk beneficiary.
We also propose that the language be approved by the Secretary and be
in a readable and understandable form that contains the language
required by section 1860D-4(c)(5)(B)(ii) of the Act to which we propose
to add detail in the regulation text. Finally, we propose that the
sponsor be required to make reasonable efforts to provide the
prescriber(s) of frequently abused drugs with a copy of the notice.
We propose that Sec. 423.153(f)(5)(i) read as follows: Initial
Notice to Beneficiary. A Part D sponsor that intends to limit the
access of a potential at-risk beneficiary to coverage for frequently
abused drugs under paragraph (f)(3) of this section must provide an
initial written notice to the beneficiary. Paragraph (f)(5)(ii) would
require that the notice use language approved by the Secretary and be
in a readable and understandable form that provides the following
information: (1) An explanation that the beneficiary's current or
immediately prior Part D plan sponsor has identified the beneficiary as
a potential at-risk beneficiary; (2) A description of all State and
Federal public health resources that are designed to address
prescription drug abuse to which the beneficiary has access, including
mental health and other counseling services and information on how to
access such services, including any such services covered by the plan
under its Medicare benefits, supplemental benefits, or Medicaid
benefits (if the plan integrates coverage of Medicare and Medicaid
benefits); (3) An explanation of the beneficiary's right to a
redetermination if the sponsor issues a determination that the
beneficiary is an at-risk beneficiary and the standard and expedited
redetermination processes described at Sec. 423.580 et seq.; (4) A
request that the beneficiary submit to the sponsor within 30 days of
the date of this initial notice any information that the beneficiary
believes is relevant to the sponsor's determination, including which
prescribers and pharmacies the beneficiary would prefer the sponsor to
select if the sponsor implements a limitation under Sec.
423.153(f)(3)(ii); (5) An explanation of the meaning and consequences
of being identified as an at-risk beneficiary, including an explanation
of the sponsor's drug management program, the specific limitation the
sponsor intends to place on the beneficiary's access to coverage for
frequently abused drugs under the program, the timeframe for the
sponsor's decision, and if applicable, any limitation on the
availability of the special enrollment period described in Sec.
423.38; (6) Clear instructions that explain how the beneficiary can
contact the sponsor, including how the beneficiary may submit
information to the sponsor in response to the request described in
paragraph (f)(5)(ii)(C)(4); (7) Contact information for other
organizations that can provide the beneficiary with assistance
regarding the sponsor's drug management program; and (8) Other content
that CMS determines is necessary for the beneficiary to understand the
information required in this notice.
We propose to require at Sec. 423.153(f)(5)(iii) that the Part D
plan sponsor make reasonable efforts to provide the beneficiary's
prescriber(s) of frequently abused drugs with a copy of the notice
required under paragraph (f)(5)(i).
The content of the initial notice we propose in Sec. 423.153(f)(5)
closely follows the content required by section 1860D-4(c)(5)(B)(ii) of
the Act, but as noted previously, we have proposed to add some detail
to the regulation text. In proposed paragraph (f)(5)(ii)(C)(2)--which
would require a description of public health resources that are
designed to address prescription drug abuse--we propose to require that
the notice contain information on how to access such services. We also
included a reference in proposed paragraph (ii)(C)(4) to the fact that
a beneficiary would have 30 days to provide information to the sponsor,
which is a timeframe we discuss later in this preamble. We propose an
additional requirement in paragraph (ii)(C)(5) that the sponsor include
the limitation the sponsors intends to place on the beneficiary's
access to coverage for frequently abused drugs, the timeframe for the
sponsor's decision, and, if applicable, any limitation on the
availability of the SEP. Finally, we proposed a requirement in
paragraph (ii)(C)(8) that the notice contain other content that CMS
determines is necessary for the beneficiary to understand the
information required in the initial notice.
We note that our proposed implementation of the statutory
requirements for the initial notice would permit the notice also to be
used when the sponsor intends to implement a beneficiary-specific POS
claim edit for frequently abused drugs. This is consistent with our
current policy and would streamline beneficiary notices about opioids
since we propose frequently abused drugs to consist of opioids for
2019.
[[Page 56351]]
Although section 1860D-4(c)(5) is silent as to the sequence of the
steps of clinical contact, prescriber verification, and the initial
notice, we propose to implement these requirements such that they would
occur in the following order: First, the plan sponsor would conduct the
case management which encompasses clinical contact and prescriber
verification required by Sec. 423.153(f)(2) and prescriber agreement
required by Sec. 423.153(f)(4), and second would, as applicable,
indicate the sponsor's intent to limit the beneficiary's access to
frequently abused drugs by providing the initial notice. In our view, a
sponsor cannot reasonably intend to limit the beneficiary's access
unless it has first undertaken case management to make clinical contact
and obtain prescriber verification and agreement. Further, under our
proposal, although the proposed regulatory text of (f)(4)(i) states
that the sponsor must verify with the prescriber(s) that the
beneficiary is an at-risk beneficiary in accordance with the applicable
statutory language, the beneficiary would still be a potential at-risk
beneficiary from the sponsor's perspective when the sponsor provides
the beneficiary the initial notice. This is because the sponsor has yet
to solicit information from the beneficiary about his or her use of
frequently abused drugs, and such information may have a bearing on
whether a sponsor identifies a potential at-risk beneficiary as an at-
risk beneficiary.
Moreover, we believe that in general, a sponsor should not send a
potential at-risk beneficiary an initial notice until after the sponsor
has been in contact with the beneficiary's prescribers of frequently
abused drugs, so as to avoid unnecessarily alarming the beneficiary,
considering that a sponsor may learn from the prescribers that the
beneficiary's use of the drugs is medically necessary, or that the
beneficiary is an exempted beneficiary. This proposed approach is also
consistent with our current policy and stakeholder comments. Therefore,
under this approach, a sponsor would provide an initial notice to a
potential at-risk beneficiary if the sponsor intends to limit the
beneficiary's access to coverage for frequently abused drugs, and the
sponsor would provide a second notice to an at-risk beneficiary when it
actually limits the beneficiary's access to coverage for frequently
abused drugs. Alternatively, the sponsor would provide an alternate
second notice if it decides not to limit the beneficiary's access to
coverage for frequently abused drugs. We discuss the second notice and
alternate second notice later in this preamble.
We intend to develop language for the initial notice. Therefore,
the proposed regulatory text states that the notice must use language
approved by the Secretary.
(B) Limitation on the Special Enrollment Period for LIS Beneficiaries
With an At-Risk Status (Sec. 423.38)
In addition to providing relevant information to a potential at-
risk beneficiary, we propose that the initial notice will notify
dually- and other low income subsidy (LIS)-eligible beneficiaries, that
they will be unable to use the special enrollment period (SEP) for LIS
beneficiaries due to their at-risk status. (Hereafter, this SEP is
referred to as the ``duals' SEP''). Section 1860D-1(b)(3)(D) of the Act
requires the Secretary to establish a Part D SEP for full-benefit
dually eligible (FBDE) beneficiaries. This SEP, codified at Sec.
423.38(c)(4), was later extended to all other subsidy-eligible
beneficiaries (75 FR 19720) so that all LIS-eligible beneficiaries were
treated uniformly. The duals' SEP currently allows such individuals to
make Part D enrollment changes (that is, enroll in, disenroll from, or
change Part D plans) throughout the year, unlike other Part D enrollees
who generally may make enrollment changes only during the annual
election period (AEP). Individuals using this SEP can enroll in either
a stand-alone Part D prescription drug plan (PDP) or a Medicare
Advantage plan with prescription drug coverage.
Section 704(a)(3) of CARA gives the Secretary the discretion to
limit the SEP for FBDE beneficiaries outlined in section 1860D-
1(b)(3)(D) of the Act. This limitation is related to, but distinct
from, other changes to the duals' SEP proposed in section III.A.11 of
this proposed rule (as discussed later). A limitation under a sponsor's
drug management program can only be effective as long as the individual
is enrolled in that plan or another plan that also has a drug
management program. Therefore, this proposed SEP limitation would be an
important tool to reduce the opportunities for LIS-eligible
beneficiaries designated as at-risk to switch plans. If an individual
is determined to be an at-risk beneficiary, and is permitted to change
plans using the duals' SEP, he or she could avoid the drug management
program by leaving the plan before the program can be started or by
enrolling in a PDP that does not have a drug management program. This
would allow the beneficiary to circumvent the lock-in program and not
receive the care coordination such a program provides. Even if an-risk
beneficiary joined another plan that had a drug management program in
place, there would be challenges in terms of preventing a gap managing
their potential or actual overutilization of frequently abused drugs
due to timing of information sharing between the plans and possible
difference in provider networks.
Accordingly, we are proposing to revise Sec. 423.38(c)(4), so that
it is not available to potential at-risk beneficiaries or at-risk
beneficiaries. Once an individual is identified as a potential at-risk
beneficiary and the sponsor intends to limit the beneficiary's access
to coverage for frequently abused drugs, the sponsor would provide an
initial notice to the beneficiary and the duals' SEP would no longer be
available to the otherwise eligible individual. This means that he or
she would be unable to use the duals' SEP to enroll in a different plan
or disenroll from the current Part D plan. The limitation would be
effective as of the date the Part D plan sponsor identifies an
individual to be potentially at-risk. Limiting the duals' SEP
concurrent with the plan's identification of a potential at-risk
beneficiary would reduce the opportunities for such beneficiaries to
use the interval between receipt of the initial notice and application
of the limitation (for example, pharmacy or prescriber lock-in,
beneficiary-specific POS claim edit) as an opportunity to change plans
before the restriction takes effect.
Based on the 2015 data in CMS' OMS, more than 76 percent of all
beneficiaries estimated to be potential at-risk beneficiaries are LIS-
eligible individuals. Based on this data, without an SEP limitation at
the initial point of identification, the notification of a potential
drug management program may prompt these individuals to switch plans
immediately after receiving the initial notice. In effect, under the
current regulations, if unchanged, the dually- or other LIS-eligible
individual, could keep changing plans and avoid being subject to any
drug management program.
We propose that, consistent with the timeframes discussed in
proposed paragraph Sec. 423.153(f)(7), if the Part D plan sponsor
takes no additional action to identify the individual as an at-risk
beneficiary within 90 days from the initial notice, the ``potentially
at-risk'' designation and the duals' SEP limitation would expire. If
the sponsor determines that the potential at-risk beneficiary is an at-
risk beneficiary, the
[[Page 56352]]
duals' SEP would not be available to that beneficiary until the date
the beneficiary's at-risk status is terminated based on a subsequent
determination, including a successful appeal, or at the end of a 12-
month period calculated from the effective date the sponsor provided
the beneficiary in the second notice as proposed at Sec. 423.153(f)(6)
whichever is sooner.
As discussed in section III.A.11 of this proposed rule, we are also
proposing to revise Sec. 423.38(c)(4) to make the SEP for FBDE or
other subsidy-eligible individuals available only in certain
circumstances. As further explained in section III.A.11, we also are
proposing to establish a new SEP at Sec. 423.38(c)(9) to permit any
beneficiary to make an enrollment change when he or she has a gain,
loss, or change in Medicaid or LIS eligibility.
We propose not to limit the availability of this new SEP to
potential at-risk and at-risk beneficiaries. In situations where an
individual is designated as a potential at-risk beneficiary or an at-
risk beneficiary and later determined to be dually-eligible for
Medicaid or otherwise eligible for LIS, that beneficiary should be
afforded the ability to receive the subsidy benefit to the fullest
extent for which he or she qualifies and therefore should be able to
change to a plan that is more affordable, or that is within the premium
benchmark amount if desired. Likewise, if an individual with an ``at-
risk'' designation loses dual-eligibility or LIS status, or has a
change in the level of extra help, he or she would be afforded an
opportunity to elect a different Part D plan, as discussed in section
III.A.11 of this proposed rule. This is also a life changing event that
may have a financial impact on the individual, and could necessitate an
individual making a plan change in order to continue coverage.
We note that auto- and facilitated enrollment of LIS eligible
individuals and plan annual reassignment processes would still apply to
dual- and other LIS-eligible individuals who were identified as an at-
risk beneficiary in their previous plan. This is consistent with CMS's
obligation and general approach to ensure Part D coverage for LIS-
eligible beneficiaries and to protect the individual's access to
prescription drugs. Furthermore, we note that the proposed enrollment
limitations for Medicaid or other LIS-eligible individuals designated
as at-risk beneficiaries would not apply to other Part D enrollment
periods, including the AEP or other SEPs. As discussed previously, we
propose that the ability to use the duals' SEP, as outlined in section
III.A.11. of this proposed rule, would not be permissible once the
individual is enrolled in a plan that has identified him or her as a
potential at-risk beneficiary or at-risk beneficiary, for a dual or
other LIS-eligible who meets the definition of at-risk beneficiary or
potential at-risk beneficiary under proposed Sec. 423.100.
(C) Second Notice to Beneficiary and Sponsor Implementation of
Limitation on Access to Coverage for Frequently Abused Drugs by Sponsor
(Sec. 423.153(f)(6))
As previously noted, section 1860D-4(c)(5)(B)(i)(I) of the Act
requires Part D sponsors to provide a second written notice to at-risk
beneficiaries when they limit their access to coverage for frequently
abused drugs. Also, as with the initial notice, our proposed
implementation of this statutory requirement for the second notice
would permit the second notice to be used when the sponsor implements a
beneficiary-specific POS claim edit for frequently abused drugs.
We propose to codify this requirement in Sec. 423.153(f)(6)(i).
Specifically, we propose to require the sponsor to provide the second
notice when it determines that the beneficiary is an at-risk
beneficiary and to limit the beneficiary's access to coverage for
frequently abused drugs. We further propose to require the second
notice to include the effective and end date of the limitation. Thus,
this second notice would function as a written confirmation of the
limitation the sponsor is implementing with respect to the beneficiary,
and the timeframe of that limitation.
We also propose that the second notice, like the initial notice,
contain language required by section 1860D-4(c)(5)(B)(iii) of the Act
to which we propose to add detail in the regulation text. We also
propose that the second notice, like the initial notice, be approved by
the Secretary and be in a readable and understandable form, as well as
contain other content that CMS determines is necessary for the
beneficiary to understand the information required in this notice.
Finally, in Sec. 423.153(f)(6)(iii), we propose that the sponsor be
required to make reasonable efforts to provide the beneficiary's
prescriber(s) of frequently abused drugs with a copy of the notice, as
we proposed with the initial notice.
Proposed Sec. 423.153(f)(6)(i) would read as follows: Second
notice. Upon making a determination that a beneficiary is an at-risk
beneficiary and to limit the beneficiary's access to coverage for
frequently abused drugs under paragraph (f)(3) of this section, a Part
D sponsor must provide a second written notice to the beneficiary.
Paragraph (f)(6)(ii) would require that the second notice use language
approved by the Secretary and be in a readable and understandable form
that contains the following information: (1) An explanation that the
beneficiary's current or immediately prior Part D plan sponsor has
identified the beneficiary as an at-risk beneficiary; (2) An
explanation that the beneficiary is subject to the requirements of the
sponsor's drug management program, including the limitation the sponsor
is placing on the beneficiary's access to coverage for frequently
abused drugs and the effective and end date of the limitation; and, if
applicable, any limitation on the availability of the special
enrollment period described in Sec. 423.38 et seq.; (3) The
prescriber(s) and/or pharmacy(ies) or both, if and as applicable, from
which the beneficiary must obtain frequently abused drugs in order for
them to be covered by the sponsor; (4) An explanation of the
beneficiary's right to a redetermination under Sec. 423.580 et seq.,
including a description of both the standard and expedited
redetermination processes, with the beneficiary's right to, and
conditions for, obtaining an expedited redetermination; (5) An
explanation that the beneficiary may submit to the sponsor, if the
beneficiary has not already done so, the prescriber(s) and
pharmacy(ies), as applicable, from which the beneficiary would prefer
to obtain frequently abused drugs; (6) Clear instructions that explain
how the beneficiary may contact the sponsor, including how the
beneficiary may submit information to the sponsor in response to the
request described in paragraph (f)(6)(ii)(C)(5) of this section; and
(7) Other content that CMS determines is necessary for the beneficiary
to understand the information required in this notice.
The content of the second notice we propose in Sec. 423.153(f)(6)
closely follows the content required by section 1860D-4(c)(5)(B)(iii)
of the Act, but as noted previously, we have proposed to add some
detail to the regulation text. In proposed paragraph (2), we have
proposed language that would require a sponsor to include the
limitation the sponsors is placing on the beneficiary's access to
coverage for frequently abused drugs, the effective and end date of the
limitation, and if applicable, any limitation on the availability of
the SEP. We propose an additional requirement in paragraph (6) that the
sponsor include instructions how the beneficiary
[[Page 56353]]
may submit information to the sponsor in response to the request
described in paragraph (4). Finally, we proposed a requirement in
paragraph (7) that the notice contain other content that CMS determines
is necessary for the beneficiary to understand the information required
in the initial notice.
We note that under our current policy, plan sponsors send only one
notice to the beneficiary if they intend to implement a beneficiary-
specific POS opioid claim edit, which generally provides the
beneficiary with a 30-day advance written notice and opportunity to
provide additional information, as well as to request a coverage
determination if the beneficiary disagrees with the edit. If our
proposal is finalized, the implementation of a beneficiary-specific POS
claim edit or a limitation on the at-risk beneficiary's coverage for
frequently abused drugs to a selected pharmacy(ies) or prescriber(s)
would be an at-risk determination (a type of initial determination that
would confer appeal rights). Also, the sponsor would generally be
required to send two notices--the first signaling the sponsor's intent
to implement a POS claim edit or limitation (both referred to generally
as a ``limitation''), and the second upon implementation of such
limitation. Under our proposal, the requirement to send two notices
would not apply in certain cases involving at-risk beneficiaries who
are identified as such and provided a second notice by their
immediately prior plan's drug management program.
(D) Alternate Second Notice When Limit on Access Coverage for
Frequently Abused Drugs by Sponsor Will Not Occur (Sec. 423.153(f)(7))
We propose that if a sponsor does not implement the limitation on
the potential at-risk beneficiary's access to coverage of frequently
abused drugs it described in the initial notice, then the sponsor would
be required to provide the beneficiary with an alternate second notice.
Although not explicitly required by the statute, we believe this notice
is consistent with the intent of the statute and is necessary to avoid
beneficiary confusion and minimize unnecessary appeals. We propose
generally that in such an alternate notice, the sponsor must notify the
beneficiary that the sponsor no longer considers the beneficiary to be
a potential at-risk beneficiary upon making such determination; will
not place the beneficiary in its drug management program; will not
limit the beneficiary's access to coverage for frequently abused drugs;
and if applicable, that the SEP limitation no longer applies.
Specifically, we propose that Sec. 423.153(f)(7)(i) would read:
Alternate second notice. (i) If, after providing an initial notice to a
potential at-risk beneficiary under paragraph (f)(4) of this section, a
Part D sponsor determines that the potential at-risk beneficiary is not
an at-risk beneficiary, the sponsor must provide an alternate second
written notice to the beneficiary. Paragraph (f)(7)(ii) would require
that the notice use language approved by the Secretary in a readable
and understandable form containing the following information: (1) The
sponsor has determined that the beneficiary is not an at-risk
beneficiary; (2) The sponsor will not limit the beneficiary's access to
coverage for frequently abused drugs; (3) If applicable, the SEP
limitation no longer applies; (4) Clear instructions that explain how
the beneficiary may contact the sponsor; and (5) Other content that CMS
determines is necessary for the beneficiary to understand the
information required in this notice.
Again, as with the initial and second notices, we propose in a
paragraph (f)(7)(iii) that the Part D sponsor be required to make
reasonable efforts to provide the beneficiary's prescriber(s) of
frequently abused drugs with a copy of the notice required by paragraph
(f)(7)(i). Also, as with the initial and second notices, we propose in
paragraph (ii) that the notice use language approved by the Secretary
and be in a readable and understandable form; in paragraph (ii)(C)(4)
that the notice contain clear instructions that explain how the
beneficiary may contact the sponsor; and in paragraph (ii)(C)(5), that
the notice contain other content that CMS determines is necessary for
the beneficiary to understand the information required in the notice.
(E) Timing of Notices (Sec. 423.153(f)(8))
Section 1860D-4(c)(5)(B)(iv) of the Act requires a Part D sponsor
to provide the second notice to the beneficiary on a date that is not
less than 30 days after the sponsor provided the initial notice to the
beneficiary. We interpret the purpose of this requirement to be that
the beneficiary should have ample time to provide information to the
sponsor that may alter the sponsor's intended action that is contained
in the initial notice to the beneficiary, or to provide the sponsor
with the beneficiary's pharmacy and/or prescriber preferences, if the
sponsor's intent is to limit the beneficiary's access to coverage for
frequently abused drugs from selected a pharmacy(ies) and/or
prescriber(s).
In addition, we propose to impose a deadline by when a sponsor must
provide the second notice or alternate second notice to the
beneficiary, although not specifically required by CARA. Such a
requirement should provide the sponsor with sufficient time to complete
the administrative steps necessary to execute the action the sponsor
intends to take that was explained in the initial notice to the
beneficiary, while acknowledging that the sponsor would have already
met in the case management, clinical contact and prescriber
verification requirement.
In the case of an alternate second notice, the timeframe should
provide the beneficiary with definitive notice that the sponsor has not
identified the beneficiary as an at-risk beneficiary and that there
will be no limitation on his/her access to coverage for frequently
abused drugs. Accordingly, we propose that the sponsor would be
required to send either the second notice or the alternate second
notice, as applicable, when it makes its determination or no later than
90 calendar days after the date on the initial notice, whichever comes
sooner.
Specifically, we propose to include at Sec. 423.153(f)(8) the
following: Timing of Notices. (i) Subject to paragraph (ii) of this
section, a Part D sponsor must provide the second notice described in
paragraph (f)(6) of this section or the alternate second notice
described in paragraph (f)(7) of this section, as applicable, on a date
that is not less than 30 days and not more than the earlier of the date
the sponsor makes the relevant determination or 90 days after the date
of the initial notice described in paragraph (f)(5) of this section. We
intend this proposed timeframe for the sponsor to provide either the
second notice or the alternate second notice, as applicable, to be
reasonable for both Part D sponsors and the relevant beneficiaries and
important to ensuring clear, timely and reasonable communication
between the parties.
Section 1860D-4(c)(5)(B)(iv)(II) of the Act explicitly provides for
an exception to the required timeframe for issuing a second notice.
Specifically, the statute permits the Secretary to identify through
rulemaking concerns regarding the health or safety of a beneficiary or
significant drug diversion activities that would necessitate that a
Part D sponsor provide the second written notice to the beneficiary
before the 30 day time period normally required has elapsed. For this
reason, we included the language, ``subject to paragraph (ii),'' at the
beginning of proposed Sec. 423.153(f)(8)(i).
[[Page 56354]]
We note that the proposed definition of at-risk beneficiary would
include beneficiaries for whom a gaining Part D plan sponsor received a
notice upon the beneficiary's enrollment that the beneficiary was
identified as an at-risk beneficiary under the prescription drug plan
in which the beneficiary was most recently enrolled and such
identification had not been terminated upon enrollment. This proposed
definition is based on the language in section 1860-D-4(c)(5)(C)(i)(II)
of the Act.
Given that this provision allows an at-risk identification to carry
forward to the next plan, we believe it is appropriate to propose to
permit a gaining plan to provide the second notice to an at-risk
beneficiary so identified by the most recent prior plan sooner than
would otherwise be required. For the same reasons, we believe that it
would be appropriate to permit the gaining plan to even send the
beneficiary a combined initial and second notice, under certain
circumstances. However, because the content of the initial notice would
not be appropriate for an at-risk beneficiary, and because such
beneficiary would have already received an initial notice from his or
her immediately prior plan sponsor, the content of this combined notice
should only consist of the required content for the second notice so as
not to confuse the beneficiary. Thus, our interpretation of section
1860D-4(c)(5)(B)(iv)(II) of the Act in conjunction with section 1860D-
4(c)(5)(C)(i)(II) of the Act is that a gaining Part D sponsor may send
the second notice immediately to a beneficiary for whom the sponsor
received a notice upon the beneficiary's enrollment that the
beneficiary was identified as an at-risk beneficiary under the
prescription drug plan in which the beneficiary was most recently
enrolled and such identification had not been terminated upon
disenrollment. This is consistent with our current policy under which a
gaining sponsor may immediately implement a beneficiary-specific opioid
POS claim edit, if the gaining sponsor is notified that the beneficiary
was subject to such an edit in the immediately prior plan and such edit
had not been terminated.\19\
---------------------------------------------------------------------------
\19\ See ``Beneficiary-Level Point-of-Sale Claim Edits and Other
Overutilization Issues,'' August 25, 2014.
---------------------------------------------------------------------------
We propose that sending a second notice to an at-risk beneficiary
so identified in the most recent plan would be permissible only if the
new sponsor is implementing a beneficiary-specific POS claim edit for a
frequently abused drug, or if the sponsor is implementing a limitation
on access to coverage for frequently abused drugs to a selected
pharmacy(ies) or prescriber(s) and has the same location of
pharmacy(ies) and/or the same prescriber(s) in its provider network, as
applicable, that the beneficiary used to obtain frequently abused drugs
in the most recent plan. Otherwise, we propose that the new sponsor
would be required to provide the initial notice to the at-risk
beneficiary, even though the initial notice is generally intended for
potential at-risk beneficiaries, and could not provide the second
notice until at least 30 days had passed. This is because even though
there would also be a concern for the at-risk beneficiary's health and
safety in this latter case as well, this concern would be outweighed by
the fact that the beneficiary had not been afforded a chance to submit
his or her preference for a pharmacy(ies) and/or prescriber(s), as
applicable, from which he or she would have to obtain frequently abused
drugs to obtain coverage under the new plan's drug management program.
We propose to codify this policy by adding a paragraph (ii) to
Sec. 423.153(f)(8), as noted earlier, to read as follows: Immediately
upon the beneficiary's enrollment in the gaining plan, the gaining plan
sponsor may provide a second notice described in paragraph (f)(6) to a
beneficiary for whom the gaining sponsor received notice that the
beneficiary was identified as an at-risk beneficiary by his or her most
recent prior plan and such identification had not been terminated in
accordance with Sec. 423.153(f)(14), if the sponsor is implementing
either of the following: (A) A beneficiary-specific point-of-sale claim
edit as described in paragraph (f)(3)(i); or (B) A limitation on access
to coverage as described in paragraph(f)(3)(ii), if such limitation
would require the beneficiary to obtain frequently abused drugs from
the same location of pharmacy and/or the same prescriber, as
applicable, that was selected under the immediately prior plan under
(f)(9).
Some stakeholders commented that sponsors should be allowed to
expedite the second notice in cases of egregious and potentially
dangerous overutilization or in cases involving an active criminal
investigation when allowed by a court. However, given the importance of
a beneficiary having advance notice of a pending limit on his or her
access to coverage for frequently abused drugs and sufficient time to
respond and/or prepare, we believe exceptions to the timing of the
notices should be very narrow. Therefore, we have only included a
proposal for an exception to shorten the 30 day timeframe between the
initial and second notice that is based on a beneficiary's status as an
at-risk beneficiary in an immediately preceding plan. We note that is a
status the drug management provisions of CARA explicitly requires to be
shared with the next plan sponsor, if a beneficiary changes plans,
which means there would be a concrete data point for this proposed
exception to the timing of the notices. We discuss such sharing of
information later in the preamble.
(viii) Provisions Specific to Limitations on Access to Coverage of
Frequently Abused Drugs to Selected Pharmacies and Prescribers
(Sec. Sec. 423.153(f)(4), 423.153(f)(9), 423.153(f)(10),
423.153(f)(11), 423.153(f)(12), 423,153(f)(13))
Some of the drug management program provisions in CARA are only
relevant to ``lock-in''. We propose several regulatory provisions to
implement these provisions, as follows:
(A) Special Requirement To Limit Access to Coverage of Frequently
Abused Drugs to Selected Prescriber(s) (Sec. 423.153(f)(4))
We believe prescriber lock-in should be a tool of last resort to
manage at-risk beneficiaries' use of frequently abused drugs, meaning
when a different approach has not been successful, whether that was a
``wait and see'' approach or the implementation of a beneficiary
specific POS claim edit or a pharmacy lock-in. Limiting an at-risk
beneficiary's access to coverage for frequently abused drugs from only
selected prescribers impacts the beneficiary's relationship with his or
her health care providers and may impose burden upon prescribers in
terms of prescribing frequently abused drugs.
As a result, we propose that a sponsor may not limit an at-risk
beneficiary's access to coverage of frequently abused drugs to a
selected prescriber(s) until at least 6 months has passed from the date
the beneficiary is first identified as a potential at-risk beneficiary.
We propose that this date be the date of the first OMS report that
identified the beneficiary, so long as the beneficiary was also
reported in the most recent OMS report that the sponsor received. This
is because limiting the beneficiary's access to coverage of frequently
abused drugs from a selected prescriber would only be necessary if the
beneficiary continues to meet the clinical guidelines despite any
existing
[[Page 56355]]
intervention or limitation. We discuss OMS reports in more detail
later.
We expect that the 6-month waiting period will provide the sponsor
additional time to assess whether case management or another tool, such
as a beneficiary-specific POS claim edit or pharmacy lock-in has failed
to resolve the beneficiary's overutilization of frequently abused
drugs. Sponsors have indicated in comments on the current policy that
the case management process can take 3 to 6 months. Also, sponsors
would need time to determine whether the beneficiary still meets the
clinical guidelines and is thus continuing to be reported by OMS.
Therefore, the time period we propose was chosen to account for time
needed for the case management process and to align with the 6 month
measurement period of the proposed clinical guidelines.
We seek comment on whether this 6-month waiting period would reduce
provider burden sufficiently to outweigh the additional case
management, clinical contact and prescriber verification that providers
may experience if a sponsor believes a beneficiary's access to coverage
of frequently abused drugs should be limited to a selected
prescriber(s). Comments should include the additional operational
considerations for sponsors to implement this proposal.
Given our proposal, we propose adding a paragraph (iv) to Sec.
423.153(f)(4) that would state: (f)(4)(iv) A Part D sponsor must not
limit an at-risk beneficiary's access to coverage for frequently abused
drugs to those that are prescribed for the beneficiary by one or more
prescribers under Sec. 423.153(f)(3)(ii)(A) unless--(A) At least 6
months has passed from the date the beneficiary was first identified as
a potential at-risk beneficiary from the date of the applicable CMS
identification report; and (B) The beneficiary meets the clinical
guidelines and was reported by the most recent CMS identification
report.
We note that in conducting the case management required under Sec.
423.153(f)(4)(i)(A) in anticipation of implementing a prescriber lock-
in, the sponsor would be expected to update any case management it had
already conducted. Also, even if a sponsor had already obtained the
prescriber's agreement to implement a limitation on the beneficiary's
coverage of frequently abused drugs to a selected pharmacy to comply
with Sec. 423.153(f)(4)(i)(B), for example, the sponsor would have to
obtain the agreement of the prescriber who would be selected to
implement a limitation on a beneficiary's coverage of frequently abused
drugs to a selected prescriber. Finally, we note that even if a sponsor
had already provided the beneficiary with the required notices to
comply with Sec. 423.153(f)(4)(i)(C), the sponsor would have to
provide them again in order to remain compliant, because the
beneficiary would not have been notified about the specific limitation
on his or her access to coverage for frequently abused drugs to a
selected prescriber(s) and has an opportunity to select the
prescriber(s).
We foresee a scenario in which a sponsor may wish to implement a
limitation on a beneficiary's access to coverage of frequently abused
drugs to a selected prescriber(s) when the sponsor's first round of
case management, clinical contact and prescriber verification resulted
only in sending the prescribers of frequently abused drugs a written
report about the beneficiary's utilization of frequently abused drugs
and taking a ``wait and see'' approach, which did not result in the
prescribers' adjusting their prescriptions for frequently abused drugs
for their patient. In such a scenario, assuming the patient still meets
the clinical guidelines and continues to be reported by OMS, the
sponsor would need to try another intervention to address the opioid
overuse. Another scenario could be that the sponsor implemented a
pharmacy lock-in, but after 6-months, the beneficiary still meets the
clinical guidelines due to receiving frequently abused drugs from
additional prescribers.
(B) Selection of Pharmacies and Prescribers (Sec. Sec. 423.153(f)(9),
423.153(f)(10), 423.153(f)(11), 423.153(f)(12), 423.153(f)(13))
(1) Beneficiary Preferences (Sec. 423.153(f)(9))
Section 1860D-4(c)(5)(D) of the Act provides that, if a sponsor
intends to impose, or imposes, a limit on a beneficiary's access to
coverage of frequently abused drugs to selected pharmacy(ies) or
prescriber(s), and the potential at-risk beneficiary or at-risk
beneficiary submits preferences for a pharmacy(ies) or prescriber(s),
the sponsor must select the pharmacy(ies) and prescriber(s) for the
beneficiary based on such preferences, unless an exception applies,
which we will address later in the preamble. We further propose that
such pharmacy(ies) or prescriber(s) must be in-network, except if the
at-risk beneficiary's plan is a stand-alone prescription drug benefit
plan and the beneficiary's preference involves a prescriber. Because
stand-alone Part D plans (PDPs) do not have provider networks, and thus
no prescriber would be in-network, the plan sponsor must generally
select the prescriber that the beneficiary prefers, unless an exception
applies. We discuss exceptions in the next section of this preamble. In
our view, it is essential that an at-risk beneficiary must generally
select in-network pharmacies and prescribers so that the plan is in the
best possible position to coordinate the beneficiary's care going
forward in light of the demonstrated concerns with the beneficiary's
utilization of frequently abused drugs.
Accordingly, we propose Sec. 423.153(f)(9) to read: Beneficiary
preferences. Except as described in paragraph (f)(10) of this section,
if a beneficiary submits preferences for prescribers or pharmacies or
both from which the beneficiary prefers to obtain frequently abused
drugs, the sponsor must do the following--(i) Review such preferences
and (ii) If the beneficiary is--(A) Enrolled in a stand-alone
prescription drug benefit plan and specifies a prescriber(s) or network
pharmacy(ies) or both, select or change the selection of prescriber(s)
or network pharmacy(ies) or both for the beneficiary based on
beneficiary's preference(s) or (B) Enrolled in a Medicare Advantage
prescription drug benefit plan and specifies a network prescriber(s) or
network pharmacy(ies) or both, select or change the selection of
prescriber(s) or pharmacy(ies) or both for the beneficiary based on the
beneficiary's preference(s). If the beneficiary submits preferences for
a non-network pharmacy(ies), or in the case of a Medicare Advantage
prescription drug benefit plan a non-network prescriber(s), or both,
the sponsor does not have to select or change the selection for the
beneficiary to a non-network pharmacy or prescriber except if necessary
to provide reasonable access.
In a paragraph (iii), we propose that the sponsor must inform the
beneficiary of the selection in the second notice, or if not feasible
due to the timing of the beneficiary's submission, in a subsequent
written notice, issued no later than 14 days after receipt of the
submission. Thus, this section would require a Part D plan sponsor to
honor an at-risk beneficiary's preferences for in-network prescribers
and pharmacies from which to obtain frequently abused drugs, unless the
plan was a stand-alone PDP and the selection involves a prescriber. In
other words, a stand-alone PDP or MA-PD does not have to honor a
beneficiary's selection of a non-network pharmacy, except as necessary
[[Page 56356]]
to provide reasonable access, which we discuss later in this section.
Also, under our proposal, the beneficiary could submit preferences at
any time. Finally, the sponsor would be required to confirm the
selection in writing either in the second notice, if feasible, or
within 14 days of receipt of the beneficiary's submission.
(2) Exception to Beneficiary Preferences (Sec. 423.153(f)(10))
Section 1860D-4(c)(5)(D)(iv) of the Act, provides for an exception
to an at-risk beneficiary's preference of prescriber or pharmacy from
which the beneficiary must obtain frequently abused drugs, if the
beneficiary's allowable preference of prescriber or pharmacy would
contribute to prescription drug abuse or drug diversion by the at-risk
beneficiary. Section 1860-D-4(c)(5)(D)(iv) of the Act requires the
sponsor to provide the at-risk beneficiary with at least 30 days
written notice and a rationale for not honoring his or her allowable
preference for pharmacy or prescriber from which the beneficiary must
obtain frequently abused drugs under the plan.
A few commenters asserted there should be limits to how many times
beneficiaries can submit their preferences. Other commenters stated
there should be a strong evidence of inappropriate action before a
sponsor can change a beneficiary's selection.
We are not proposing to place a limit on how many times
beneficiaries can submit their preferences, but we are open to
additional comments on this topic. We agree with commenters who stated
that there should be a strong evidence of inappropriate action before a
sponsor can change a beneficiary's selection, but we note that because
such a situation would often involve a network pharmacy or prescriber,
we would expect that the sponsor would also take appropriate action
with respect to the pharmacy or prescriber, such as termination from
the network.
Given the foregoing, we propose to add the following: Sec.
423.153(f)(10) Exception to Beneficiary Preferences. (i) If the Part D
sponsor determines that the selection or change of a prescriber or
pharmacy under paragraph (f)(9) of this section would contribute to
prescription drug abuse or drug diversion by the at-risk beneficiary,
the sponsor may change the selection without regard to the
beneficiary's preferences if there is strong evidence of inappropriate
action by the prescriber, pharmacy or beneficiary. (ii) If the sponsor
changes the selection, the sponsor must provide the beneficiary with
(A) At least 30 days advance written notice of the change; and (B) A
rationale for the change.
(3) Reasonable Access (Sec. Sec. 423.100, 423.153(f)(11),
423.153(f)(12))
If a potential at-risk beneficiary or at-risk beneficiary does not
submit pharmacy or prescriber preferences, section 1860-D-4(c)(5)(D)(i)
of the Act provides that the Part D sponsor shall make the selection.
Section 1860-D-4(c)(5)(D)(ii) of the Act further provides that, in
making the selection, the sponsor shall ensure that the beneficiary
continues to have reasonable access to frequently abused drugs, taking
into account geographic location, beneficiary preference, impact on
cost-sharing, and reasonable travel time.
We propose to add the following at Sec. 423.153(f)(11): Reasonable
access. In making the selections under paragraph (f)(12) of this
section, a Part D plan sponsor must ensure both of the following: (i)
That the beneficiary continues to have reasonable access to frequently
abused drugs, taking into account geographic location, beneficiary
preference, the beneficiary's predominant usage of a prescriber or
pharmacy or both, impact on cost-sharing, and reasonable travel time;
and (ii) reasonable access to frequently abused drugs in the case of
individuals with multiple residences, in the case of natural disasters
and similar situations, and in the case of the provision of emergency
services.
Since the statute explicitly allows the beneficiary to submit
preferences, we interpret the additional reference to beneficiary
preference in the context of reasonable access to mean that a
beneficiary allowable preference should prevail over a sponsor's
evaluation of geographic location, the beneficiary's predominant usage
of a prescriber and/or pharmacy impact on cost-sharing and reasonable
travel time. In the absence of a beneficiary preference for pharmacy
and/or prescriber, however, a Part D plan sponsor must take into
account geographic location, the beneficiary's predominant usage of a
prescriber and/or pharmacy, impact on cost-sharing and reasonable time
travel in selecting a pharmacy and/or prescriber, as applicable, from
which the at-risk beneficiary will have to obtain frequently abused
drugs under the plan. Thus, absent a beneficiary's allowable
preference, or the beneficiary's selection would contribute to
prescription drug abuse or drug diversion, the sponsor must ensure
reasonable access by choosing the network pharmacy or prescriber that
the beneficiary uses most frequently to obtain frequently abused drugs,
unless the plan is a stand-alone PDP and the selection involves a
prescriber(s). In the latter case, the prescriber will not be a network
provider, because such plans do not have provider networks. In urgent
circumstances, we propose that reasonable access means the sponsor must
have reasonable policies and procedures in place to ensure beneficiary
access to coverage of frequently abused drugs without a delay that may
seriously jeopardize the life or health of the beneficiary or the
beneficiary's ability to regain maximum function.
Determining reasonable access may be complicated when an enrollee
has multiple addresses or his or her health care necessitates obtaining
frequently abused drugs from more than one prescriber and/or more than
one pharmacy. Section 1860D-4(c)(5) addresses this issue by requiring
the Part D plan sponsor to select more than one prescriber to prescribe
frequently abused drugs and more than one pharmacy to dispense them, as
applicable, when it reasonably determines it is necessary to do so to
provide the at-risk beneficiary with reasonable access.
Given the foregoing, we propose the following at Sec.
423.153(f)(12): Selection of Prescribers and Pharmacies. (i) A Part D
plan sponsor must select, as applicable--(A) One, or, if the sponsor
reasonably determines it necessary to provide the beneficiary with
reasonable access, more than one, network prescriber who is authorized
to prescribe frequently abused drugs for the beneficiary, unless the
plan is a stand-alone PDP and the selection involves a prescriber(s),
in which case, the prescriber need not be a network prescriber; and (B)
One, or, if the sponsor reasonably determines it necessary to provide
the beneficiary with reasonable access, more than one, network pharmacy
that may dispense such drugs to such beneficiary.
We also propose to address chain pharmacies and group practices by
adding a paragraph (ii) that states: (ii) (A) For purposes of this
subsection (f)(12) of this section, in the case of a pharmacy that has
multiple locations that share real-time electronic data, all such
locations of the pharmacy shall collectively be treated as one
pharmacy; and (B) For purposes of this subsection (f)(12), in the case
of a group practice, all prescribers of the group practice shall be
treated as one prescriber.
We would interpret these provisions to mean that a sponsor would be
required to select more than one prescriber of frequently abused drugs,
if more than one prescriber has asserted
[[Page 56357]]
during case management that multiple prescribers of frequently abused
drugs are medically necessary for the at-risk beneficiary. We further
propose that if no prescribers of frequently abused drugs were
responsive during case management, and the beneficiary does not submit
preferences, the sponsor would be required to select the pharmacy or
prescriber that the beneficiary predominantly uses to obtain frequently
abused drugs.
(4) Confirmation of Pharmacy and Prescriber Selection (Sec.
423.153(f)(13))
Section 1860D-4(c)(5)(D)(v) of the Act requires that, before
selecting a prescriber or pharmacy, a Part D plan sponsor must notify
the prescriber and/or pharmacy that the at-risk beneficiary has been
identified for inclusion in the drug management program which will
limit the beneficiary's access to coverage of frequently abused drugs
to selected pharmacy(ies) and/or prescriber(s) and that the prescriber
and/or pharmacy has been selected as a designated prescriber and/or
pharmacy for the at-risk beneficiary.
We propose that plan sponsors can obtain a network provider's
confirmation in advance by including a provision in the network
agreement specifying that the provider agrees to serve as at-risk
beneficiaries' selected prescriber or pharmacy, as applicable. In these
cases, the network provider would agree to forgo providing specific
confirmation if selected under a drug management program to serve an
at-risk beneficiary. However, the contract between the sponsor and the
network provider would need to specify how the sponsor will notify the
provider of its selection. Absent a provision in the network contract,
however, the sponsor would be required to receive confirmation from the
prescriber(s) and/or pharmacy(ies) that the selection is accepted
before conveying this information to the at-risk beneficiary.
Otherwise, the plan would need to make another selection and seek
confirmation.
We propose Sec. 423.153(f)(13) to read: Confirmation of
Selections(s). (i) Before selecting a prescriber or pharmacy under this
paragraph, a Part D plan sponsor must notify the prescriber or
pharmacy, as applicable, that the beneficiary has been identified for
inclusion in the drug management program for at-risk beneficiaries and
that the prescriber or pharmacy or both is (are) being selected as the
beneficiary's designated prescriber or pharmacy or both for frequently
abused drugs. (ii) The sponsor must receive confirmation from the
prescriber(s) or pharmacy(ies) or both that the selection is accepted
before conveying this information to the at-risk beneficiary, unless
the prescriber or pharmacy has agreed in advance in its network
agreement with the sponsor to accept all such selections and the
agreement specifies how the prescriber or pharmacy will be notified by
the sponsor of its selection.
(ix) Drug Management Program Appeals (Sec. Sec. 423.558, 423.560,
423.562, 423.564, 423.580, 423.582, 423.584, 423.590, 423.602, 423.636,
423.638, 423.1970, 423.2018, 423.2020, 423.2022, 423.2032, 423.2036,
423.2038, 423.2046, 423.2056, 423.2062, 423.2122, and 423.2126)
Section 1860D-4(c)(5)(E) of the Act specifies that the
identification of an individual as an at-risk beneficiary for
prescription drug abuse under a Part D drug management program, a
coverage determination made under such a program, the selection of a
prescriber or pharmacy, and information sharing for subsequent plan
enrollments shall be subject to reconsideration and appeal under
section 1860D-4(h) of the Act. This provision also permits the option
of an automatic escalation to external review to the extent provided by
the Secretary.
As discussed earlier in this preamble, we are proposing to
integrate the lock-in provisions with existing Part D Opioid DUR
Policy/OMS. Determinations made in accordance with any of those
processes, proposed at Sec. 423.153(f), and discussed previously, are
interrelated issues that we collectively refer to as an ``at-risk
determination'' made under a drug management program. The at-risk
determination includes prescriber and/or pharmacy selection for lock-
in, beneficiary-specific POS claim edits for frequently abused drugs,
and information sharing for subsequent plan enrollments. Given the
concomitant nature of the at-risk determination and associated aspects
of the drug management program applicable to an at-risk beneficiary, we
expect that any dispute under a plan's drug management program will be
adjudicated as a single case involving a review of all aspects of the
drug management program for the at-risk beneficiary. While a
beneficiary who is subject to a Part D plan sponsor's drug management
program always retains the right to request a coverage determination
under existing Sec. 423.566 for any Part D drug that the beneficiary
believes may be covered by their plan, we believe that appeals of an
at-risk determination made under proposed Sec. 423.153(f) should
involve consideration of all relevant elements of that at-risk
determination. For example, if a Part D plan determines that a
beneficiary is at-risk, implements a beneficiary-specific claim edit on
2 drugs that beneficiary is taking and locks that beneficiary into a
specific pharmacy, the affected beneficiary should not be expected to
raise a dispute about the pharmacy selection and about one of the claim
edits in distinct appeals.
We note that, while section 1860D-4(c)(5)(B)(ii)(III) of the Act
requires the initial written notice to the beneficiary, which
identifies him or her as potentially being at-risk, to include ``notice
of, and information about, the right of the beneficiary to appeal such
identification under subsection (h),'' we interpret ``such
identification'' to refer to any subsequent identification that the
beneficiary is actually at-risk. Because CARA, at section 1860D-
4(c)(5)(E) of the Act, specifically provides for appeal rights under
subsection (h) but does not refer to identification as a potential at-
risk beneficiary, we believe this interpretation is consistent with the
statutory intent. Furthermore, when a beneficiary is identified as
being potentially at-risk, but has not yet been identified as at-risk,
the plan is not taking any action to limit such beneficiary's access to
frequently abused drugs; therefore, the situation is not ripe for
appeal. While an LIS SEP under Sec. 423.38 would be restricted at the
time the beneficiary is identified as potentially at-risk under
proposed Sec. 423.100, the loss of such SEP is not appealable under
section 1860D-4(h) of the Act.
As noted previously, section 1860D-4(c)(5)(E) of the Act
specifically refers to the Part D benefit appeals provisions in section
1860D-4(h) of the Act, which require Part D plan sponsors to meet the
requirements of paragraphs (4) and (5) of section 1852(g) of the Act
for benefits in a manner similar to the manner such requirements apply
to MA organizations. Section 1852(g)(4) of the Act specifically
provides for independent review of ``reconsiderations that affirm
denial of coverage, in whole or in part (emphasis added).'' We believe
section 1860D-4(c)(5)(E) of the Act broader reference to
``reconsideration and appeal'' should be interpreted to mean that
individuals have a right to a plan level appeal, consistent with the
reconsideration provisions under section 1860D-4(g) of the Act,
followed by the right to independent review if the plan level affirms
the initial adverse decision. In other words, we believe the reference
to ``reconsideration'' means that a Part D plan sponsor should conduct
the initial
[[Page 56358]]
level of appeal following an at-risk determination under the plan
sponsor's drug management program, consistent with the existing Part D
drug benefit appeals process, despite the absence of a specific
reference to section 1860D-4(g) of the Act.
Part D enrollees, plan sponsors, and other stakeholders are already
familiar with the Part D benefit appeals process. Resolving disputes
that arise under a plan sponsor's drug management program within the
existing Part D benefit appeals process would allow at-risk
beneficiaries to be more familiar with, and more easily access, the
appeals process instead of creating a new process specific to appeals
related to a drug management program. Also, allowing a plan sponsor the
opportunity to review information it used to make an at-risk
determination under the drug management program (and any additional
relevant information submitted as part of the appeal) would be
efficient for both the individual and the Medicare program because it
would potentially resolve the issues at a lower level of administrative
review. Conversely, permitting review by the independent review entity
(IRE) before a plan sponsor has an opportunity to review and resolve
any errors or omissions that may have been made during the initial at-
risk determination would likely result in an unnecessary increase in
costs for plan sponsors as well as CMS' Part D IRE contract costs.
As noted previously, the Secretary has the discretion under CARA to
provide for automatic escalation of drug management program appeals to
external review. Under existing Part D benefit appeals procedures,
there is no automatic escalation to external review for adverse appeal
decisions; instead, the enrollee (or prescriber, on behalf of the
enrollee) must request review by the Part D IRE. Under the existing
Part D benefit appeals process, cases are auto-forwarded to the IRE
only when the plan fails to issue a coverage determination within the
applicable timeframe. During the stakeholder call and in subsequent
written comments, most commenters opposed automatic escalation to the
IRE, citing support for using the existing appeals process for reasons
of administrative efficiency and better outcomes for at-risk
beneficiaries. The majority of stakeholders supported following the
existing Part D appeals process, and some commenters specifically
supported permitting the plan to review its lock-in decision prior to
the case being subject to IRE review. Stakeholders cited a variety of
reasons for their opposition, including increased costs to plans, the
IRE, and the Part D program. Stakeholders cited administrative
efficiency in using the existing appeal process that is familiar to
enrollees, plans, and the IRE, while other commenters expressed support
for automatic escalation to the IRE as a beneficiary protection.
We are proposing that at-risk determinations made under the
processes at Sec. 423.153(f) be adjudicated under the existing Part D
benefit appeals process and timeframes set forth in Subpart M. However,
we are not proposing to revise the existing definition of a coverage
determination. The types of decisions made under a drug management
program align more closely with the regulatory provisions in Subpart D
than with the provisions in Subpart M related to coverage or payment
for a drug based on whether the drug is medically necessary for an
enrollee. Therefore, we believe it is clearer to set forth the rules
for at-risk determinations as part of Sec. 423.153 and cross reference
Sec. 423.153(f) in relevant provisions in Subpart M and Subpart U.
While a coverage determination made under a drug management program
would be subject to the existing rules related to coverage
determinations, the other types of initial determinations made under a
drug management program (for example, a restriction on the at-risk
beneficiary's access to coverage of frequently abused drugs to those
that are prescribed for the beneficiary by one or more prescribers)
would be subject to the processes set forth at proposed Sec.
423.153(f). Consistent with existing rules for redeterminations at
Sec. 423.582, an enrollee who wishes to dispute an at-risk
determination would have 60 days from the date of the second written
notice to make such request, unless the enrollee shows good cause for
untimely filing under Sec. 423.582(c). As previously discussed for
proposed Sec. 423.153(f)(6), the second written notice is sent to a
beneficiary the plan has identified as an at-risk beneficiary and with
respect to whom the sponsor limits his or her access to coverage of
frequently abused drugs regarding the requirements of the sponsor's
drug management programs.
Also consistent with the existing Part D benefit appeals process,
we are proposing that at-risk beneficiaries (or an at-risk
beneficiary's prescriber, on behalf of the at-risk beneficiary) must
affirmatively request IRE review of adverse plan level appeal decisions
made under a plan sponsor's drug management program. In other words,
under this proposal, an adverse redetermination would not be
automatically escalated to the Part D IRE, unless the plan sponsor
fails to meet the redetermination adjudication timeframe. We are also
proposing to amend the existing Subpart M rules at Sec. 423.584 and
Sec. 423.600 related to obtaining an expedited redetermination and IRE
reconsideration, respectively, to apply them to appeals of a
determination made under a drug management program. The right to an
expedited appeal of such a determination, which must be adjudicated as
expeditiously as the at-risk beneficiary's health condition requires,
would ensure that the rights of at-risk beneficiaries are protected
with respect to access to medically necessary drugs. While we are not
proposing to adopt auto-escalation, we believe our proposed approach
ensures that an at-risk beneficiary has the right to obtain IRE review
and higher levels of appeal (ALJ/attorney adjudicator, Council, and
judicial review). Accordingly, we also are proposing to add the
reference to an ``at-risk determination'' to the following regulatory
provisions that govern ALJ and Council processes: Sec. Sec. 423.2018,
423.2020, 423.2022, 423.2032, 423.2036, 423.2038, 423.2046, 423.2056,
423.2062, 423.2122, and 423.2126.
Finally, we are also proposing a change to Sec. 423.1970(b) to
address the calculation of the amount in controversy (AIC) for an ALJ
hearing in cases involving at-risk determinations made under a drug
management program in accordance with proposed Sec. 423.153(f).
Specifically, we propose that the projected value of the drugs subject
to the drug management program be used to calculate the amount
remaining in controversy. For example, if the beneficiary is disputing
the lock-in to a specific pharmacy for frequently abused drugs and the
beneficiary takes 3 medications that are subject to the plan's drug
management program, the projected value of those 3 drugs would be used
to calculate the AIC, including the value of any refills prescribed for
the drug(s) in dispute during the plan year.
In addition to the proposed changes related to the implementation
of drug management program appeals, we are also proposing to make
technical changes to Sec. 423.562(a)(1)(ii) to remove the comma after
``includes'' and replace the reference to ``Sec. Sec. 423.128(b)(7)
and (d)(1)(iii)'' with a reference to ``Sec. Sec. 423.128(b)(7) and
(d)(1)(iv).''
(x) Termination of a Beneficiary's Potential At-Risk or At-Risk Status
(Sec. 423.153(f)(14))
Section 1860-D-4(c)(5)(F) of the Act provides that the Secretary
shall develop standards for the termination of the identification of an
individual as an at-risk beneficiary, which shall be the
[[Page 56359]]
earlier of the date the individual demonstrates that he or she is no
longer likely to be an at-risk beneficiary in the absence of
limitations, or the end of such maximum period as the Secretary may
specify.
Most commenters recommended a maximum 12-month period for an at-
risk beneficiary to be locked-in. We also note that a 12-month lock-in
period is common in Medicaid lock-in programs.\20\ A few commenters
stated that a physician should be able to determine that a beneficiary
is no longer an at-risk beneficiary. One commenter was opposed to an
arbitrary termination based on a time period.
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\20\ Medicaid Drug Utilization Review State Comparison/Summary
Report FFY 2015 Annual Report: Prescription Drug Fee-For Service
Program (December 2016).
---------------------------------------------------------------------------
Given that most commenters recommended a 12-month period and such a
period is common in Medicaid ``lock-in'' program, we propose a maximum
12-month period for both a lock-in period, and also for the duration of
a beneficiary-specific POS claim edit for frequently abused drugs
through the addition of the following language at Sec. 423.153(f)(14):
Termination of Identification as an At-Risk Beneficiary. The
identification of an at-risk beneficiary as such shall terminate as of
the earlier of the following--
(i) The date the beneficiary demonstrates through a subsequent
determination, including but not limited to, a successful appeal, that
the beneficiary is no longer likely, in the absence of the limitations
under this paragraph, to be an at-risk beneficiary; or
(ii) The end of a 12 calendar month period calculated from the
effective date of the limitation, as specified in the notice provided
under paragraph (f)(6) of this section.
Thus, we note that if a beneficiary continues to meet the clinical
guidelines and, if the sponsor implements an additional, overlapping
limitation on the at-risk beneficiary's access to coverage for
frequently abused drugs, the beneficiary may experience a coverage
limitation beyond 12-months. The same is true for at-risk beneficiaries
who were identified as such in the most recent prescription drug plan
in which they were enrolled and the sponsor of his or her subsequent
plan immediately implements a limitation on coverage of frequently
abused drugs.
Section 1860-D-4(c)(5)(F)(ii) of the Act states that nothing in
CARA shall be construed as preventing a plan from identifying an
individual as an at-risk beneficiary after such termination on the
basis of additional information on drug use occurring after the date of
notice of such termination. Accordingly, we note that our proposed
approach to termination of an at-risk determination would not prevent
an at-risk beneficiary from being subsequently identified as a
potential at-risk beneficiary or at-risk beneficiary on the basis of
new information on drug use occurring after the date of such
termination that causes the beneficiary to once again meet the clinical
guidelines.
(xi) Data Disclosure and Sharing of Information for Subsequent Sponsor
Enrollments (Sec. 423.153(f)(15))
In order for Part D sponsors to conduct the case management/
clinical contact/prescriber verification required by proposed Sec.
423.153(f)(2), CMS must identify potential at-risk beneficiaries to
sponsors who are in the sponsors' Part D prescription drug benefit
plans. In addition, new sponsors must have information about potential
at-risk beneficiaries and at-risk beneficiaries who were so identified
by their immediately prior plan and enroll in the new sponsor's plan
and such identification had not terminated before the beneficiary
disenrolled from the immediately prior plan. Finally, as discussed
earlier, sponsors may identify potential at-risk beneficiaries by their
own application of the clinical guidelines on a more frequent basis. It
is important that CMS be aware of which Part D beneficiaries sponsors
identify on their own, as well as which ones have been subjected to
limitations on their access to coverage for frequently abused drugs
under sponsors' drug management programs for Part D program
administration and other purposes. This data disclosure process would
be consistent with current policy, as described earlier in this
preamble.
As we also discussed earlier, under the current policy, CMS
provides quarterly reports to sponsors about beneficiaries enrolled in
their plans who meet the OMS criteria. In turn, Part D sponsors are
expected to provide responses to CMS through the OMS for each case
identified within 30 days of receiving a report that reflects the
status or outcome of their case management.\21\ At the same time, also
within 30 days, sponsors are expected to report additional
beneficiaries to OMS that they identify using their own opioid
overutilization identification criteria.\22\
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\21\ See ``Medicare Part D Overutilization Monitoring System,''
July 5, 2013.
\22\ See ``Medicare Part D Overutilization Monitoring System,
January 17, 2014.
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Regarding data disclosures, section 1860D-4(c)(5)(H) of the Act
provides that, in the case of potential at-risk beneficiaries and at-
risk beneficiaries, the Secretary shall establish rules and procedures
to require the Part D plan sponsor to disclose data, including any
necessary individually identifiable health information, in a form and
manner specified by the Secretary, about the decision to impose such
limitations and the limitations imposed by the sponsor under this part.
Sponsors also report information to CMS' MARx system about pending,
implemented and terminated beneficiary-specific POS claim edit for
opioids within 7 business days of the date on the applicable
beneficiary notice or of the termination.\23\ The MARx system transfers
information about pending and implemented claim edits to the gaining
sponsor with the beneficiary's enrollment record if the beneficiary
disenrolls and enrolls in the gaining sponsor's plan. If a gaining
sponsor requests case management information from the losing sponsor
about the beneficiary, we expect the losing sponsor to transfer the
information to the gaining sponsor as soon as possible, but no later
than 2 weeks from the date of the gaining sponsor's request.\24\
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\23\ Final Parts C&D 2017 Call Letter, April 4, 2016.
\24\ See ``Beneficiary-Level Point-of-Sale Claim Edits and Other
Overutilization Issues,'' August 25, 2014.
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Section 1860-D-4(c)(5)(I) of the Act requires that the Secretary
establish procedures under which Part D sponsors must share information
when at-risk beneficiaries or potential at-risk beneficiaries enrolled
in one prescription drug plan subsequently disenroll and enroll in
another prescription drug plan offered by the next sponsor (gaining
sponsor). We plan to expand the scope of the reporting to MARx under
the current policy to include the ability for sponsors to report
similar information to MARx about all pending, implemented and
terminated limitations on access to coverage of frequently abused drugs
associated with their plans' drug management programs.
We propose to codify the data disclosure and information sharing
process under the current policy, with the expansion just described, by
adding the following requirement to Sec. 423.153: (f)(15) Data
Disclosure. (i) CMS identifies each potential at-risk beneficiary to
the sponsor of the prescription drug plan in which the beneficiary is
enrolled. (ii) A Part D sponsor that operates a drug management program
must disclose any
[[Page 56360]]
data and information to CMS and other Part D sponsors that CMS deems
necessary to oversee Part D drug management programs at a time, and in
a form and manner, specified by CMS. The data and information
disclosures must do all of the following: (A) Respond to CMS within 30
days of receiving a report about a potential at-risk beneficiary from
CMS; (B) Provide information to CMS about any potential at-risk
beneficiary that a sponsor identifies within 30 days from the date of
the most recent CMS report identifying potential at-risk beneficiaries;
(C) Provide information to CMS within 7 business days of the date of
the initial notice or second notice that the sponsor provided to a
beneficiary, or within 7 days of a termination date, as applicable,
about a beneficiary-specific opioid claim edit or a limitation on
access to coverage for frequently abused drugs; and (D) Transfer case
management information upon request of a gaining sponsor as soon as
possible but no later than 2 weeks from the gaining sponsor's request
when: (1) An at-risk beneficiary or potential at-risk beneficiary
disenrolls from the sponsor's plan and enrolls in another prescription
drug plan offered by the gaining sponsor; and (2) The edit or
limitation that the sponsor had implemented for the beneficiary had not
terminated before disenrollment.
(xii) Summary
Our proposal is intended to be responsive to stakeholder input that
CMS focus on opioids; allow for flexibility to adjust the clinical
guidelines and frequently abused drugs in the future; is reflective of
the importance of the provider-patient relationship; protects
beneficiary's rights and access, and allows for operational
manageability and consistency with the current policy to the extent
possible. This proposal, if finalized, should result in effective Part
D drug management programs within a regulatory framework provided by
CMS, and further reduce opioid overutilization in the Part D program.
2. Flexibility in the Medicare Advantage Uniformity Requirements
We have determined that providing access to services (or specific
cost sharing for services or items) that is tied to health status or
disease state in a manner that ensures that similarly situated
individuals are treated uniformly is consistent with the uniformity
requirement in the Medicare Advantage (MA) regulations at Sec.
422.100(d). This regulatory requirement is a means to implement both
section 1852(d) of the Act, which requires that benefits under the MA
plan be available and accessible to each enrollee in the plan, and
section 1854(c) of the Act, which requires uniform premiums for each
enrollee in the plan. Previously, we required MA plans to offer all
enrollees access to the same benefits at the same level of cost
sharing. We have determined that these statutory provisions and the
regulation at Sec. 422.100(d) mean that we have the authority to
permit MA organizations the ability to reduce cost sharing for certain
covered benefits, offer specific tailored supplemental benefits, and
offer lower deductibles for enrollees that meet specific medical
criteria, provided that similarly situated enrollees (that is, all
enrollees who meet the identified criteria) are treated the same. For
example, reduced cost sharing flexibility would allow an MA plan to
offer diabetic enrollees zero cost sharing for endocrinologist visits.
Similarly, with this flexibility, a MA plan may offer diabetic
enrollees more frequent foot exams as a tailored, supplemental benefit.
In addition, with this flexibility, a MA plan may offer diabetic
enrollees a lower deductible. Under this example, non-diabetic
enrollees would not have access to these diabetic-specific tailored
cost-sharing or supplemental benefits; however, any enrollee that
develops diabetes would then have access to these benefits.
Such flexibility under our new interpretation of the uniformity
requirement is not without limits, however, as section 1852(b)(1)(A) of
the Act prohibits an MA plan from denying, limiting, or conditioning
the coverage or provision of a service or benefit based on health-
status related factors. MA regulations (for example, Sec. Sec.
422.100(f)(2) and 422.110(a)) reiterate and implement this non-
discrimination requirement. In interpreting these obligations to
protect against discrimination, we have historically indicated that the
purpose of the requirements is to protect high-acuity enrollees from
adverse treatment on the basis of their higher cost health conditions
(79 FR 29843; 76 FR 21432; and 74 FR 54634). As MA plans consider this
new flexibility in meeting the uniformity requirement, they must be
mindful of ensuring compliance with non-discrimination responsibilities
and obligations.\25\ MA plans that exercise this flexibility must
ensure that the cost sharing reductions and targeted supplemental
benefits are for health care services that are medically related to
each disease condition. CMS will be concerned about potential
discrimination if an MA plan is targeting cost sharing reductions and
additional supplemental benefits for a large number of disease
conditions, while excluding other higher-cost conditions. We will
review benefit designs to make sure that the overall impact is non-
discriminatory and that higher acuity, higher cost enrollees are not
being excluded in favor of healthier populations.
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\25\ Among these responsibilities and obligations are compliance
with Title VI of the Civil Rights Act, section 504 of the
Rehabilitation Act, the Age Discrimination Act, and section 1557 of
the Affordable Care Act.
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For example, an MA plan could identify enrollees diagnosed with
specific diseases, such as diabetes, chronic heart failure, and COPD,
as medically vulnerable and in need of certain services, which could be
offered to these enrollees in the form of tailored supplemental
benefits. In identifying eligible enrollees, the MA plan must use
medical criteria that are objective and measurable, and the enrollee
must be diagnosed by a plan provider or have their existing diagnosis
certified or affirmed by a plan provider to assure equal application of
the objective criteria necessary to provide equal treatment of
similarly situated individuals.
For contract year 2019, we are considering issuing guidance
clarifying the flexibility MA plans have to offer targeted supplemental
benefits for their most medically vulnerable enrollees. A benefit
package that offers differential access to enhanced services or
benefits or reduced cost sharing or different deductibles based on
objective criteria, and ensures equal treatment of similarly situated
enrollees, for whom such services and benefits are useful, can be
priced at a uniform premium consistent with the requirements for
availability and accessibility throughout the service area for all
enrollees in section 1852(d)(1)(A) of the Act and for uniform bids and
premiums in section 1854(c) of the Act. We believe this flexibility
will help MA plans better manage health care services for the most
vulnerable enrollees. The benefit and cost sharing flexibility we have
discussed here applies to Part C benefits but not Part D benefits. We
are requesting comments and/or questions from stakeholders about the
implementation of this flexibility. We note that CMS is currently
testing value based insurance design (VBID) through the use of our
demonstration authority under Section 1115A of the Act (42 U.S.C.
1315a, added by Section 3021 of the Affordable Care Act), which will
include some of the elements we have discussed
[[Page 56361]]
previously. However, there are also features of the VBID demonstration
that are unique to the demonstration test. We expect the VBID
demonstration to provide CMS with insights into future VBID innovations
for the MA program.
3. Segment Benefits Flexibility
In reviewing section 1854(h) of the Social Security Act and
Medicare Advantage (MA) regulations governing plan segments, we have
determined that the statute and existing regulations may be interpreted
to allow MA plans to vary supplemental benefits, in addition to premium
and cost sharing, by segment, as long as the benefits, premium, and
cost sharing are uniform within each segment of an MA plan's service
area. Plans segments are county-level portions of a plan's overall
service area which, under current CMS policy, are permitted to have
different premiums and cost sharing amounts as long as these premiums
and cost sharing amounts are uniform throughout the segment. We are
proposing to revise our interpretation of the existing statute and
regulations to allow MA plan segments to vary by benefits in addition
to premium and cost sharing, consistent with the MA regulatory
requirements defining segments at Sec. 422.262(c)(2).
4. Maximum Out-of-Pocket Limit for Medicare Parts A and B Services
(Sec. Sec. 422.100 and 422.101)
As provided at Sec. 422.100(f)(4) and (5) and Sec. 422.101(d)(2)
and (3), all Medicare Advantage (MA) plans (including employer group
waiver plans (EGWPs) and special needs plans (SNPs)), must establish
limits on enrollee out-of-pocket cost sharing for Parts A and B
services that do not exceed the annual limits established by CMS. CMS
added Sec. Sec. 422.100(f)(4) and (f)(5), effective for coverage in
2011, under the authority of sections 1852(b)(1)(A), 1856(b)(1), and
1857(e)(1) of the Act in order not to discourage enrollment by
individuals who utilize higher than average levels of health care
services (that is, in order for a plan not to be discriminatory) (75 FR
19709-11). Section 1858(b)(2) of the Act requires a limit on in-network
out-of-pocket expenses for enrollees in Regional MA Plans. In addition,
Local Preferred Provider Organization (LPPO) plans, under Sec.
422.100(f)(5), and Regional PPO (RPPO) plans, under section 1858(b)(2)
of the Act and Sec. 422.101(d)(3), are required to have a
``catastrophic'' limit inclusive of both in- and out-of-network cost
sharing for all Parts A and B services, the annual limit which is also
established by CMS. All cost sharing (that is, deductibles,
coinsurance, and copayments) for Parts A and B services, excluding plan
premium, must be included in each plan's Maximum Out-of-Pocket (MOOP)
amount subject to these limits.
As discussed in the 2010 rulemaking (75 FR 19709), CMS affords
greater flexibility in establishing Parts A and B cost sharing to MA
plans that adopt a lower, voluntary MOOP limit than is available to
plans that adopt the higher, mandatory MOOP limit. The percentage of
eligible Medicare beneficiaries with access to an MA plan (excluding
employer and dual eligible special needs plans) offering a voluntary
MOOP limit has decreased from 97.7 percent in CY 2011 to 68.1 percent
in CY 2017. This has resulted in the percentage of total enrollees in a
voluntary MOOP plan decreasing from 51 percent in CY 2011 to 21 percent
in CY 2017.
As stated in the CY 2018 final Call Letter \26\ and in the 2010
final rule (75 FR 19710), CMS currently sets MOOP limits based on a
beneficiary-level distribution of Parts A and B cost sharing for
individuals enrolled in Medicare Fee-for-Service (FFS) for local and
regional MA plans. The mandatory MOOP amount represents approximately
the 95th percentile of projected beneficiary out-of-pocket spending.
Stated differently, 5 percent of Medicare FFS beneficiaries are
expected to incur approximately $6,700 or more in Parts A and B
deductibles, copayments, and coinsurance. The voluntary MOOP amount of
$3,400 represents approximately the 85th percentile of projected
Medicare FFS out-of-pocket costs. The Office of the Actuary conducts an
annual analysis to help CMS determine the MOOP limits. Since the MOOP
requirements for local and regional MA plans were finalized in
regulation, a strict application of the 95th and 85th percentile would
have resulted in MOOP limits for local and regional MA plans
fluctuating from year-to-year. Therefore, CMS has exercised discretion
in order to maintain stable MOOP limits from year-to-year, when the
beneficiary-level distribution of Parts A and B cost sharing for
individuals enrolled in Medicare FFS is approximately equal to the
appropriate percentile. This approach avoids enrollee confusion, allows
plans to provide stable benefit packages year over year, and does not
discourage the adoption of the lower voluntary MOOP amount because of
fluctuations in the amount. CMS expects to change MOOP limits if a
consistent pattern of increasing or decreasing costs emerges over time.
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\26\ The CY 2018 final Call Letter may be accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html.
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As part of the annual Call Letter process, stakeholders have
suggested changes to how CMS establishes MOOP limits. Some of the
comments suggested CMS use Medicare FFS and MA encounter data to inform
its decision-making. Other suggestions received have included
increasing the voluntary MOOP limit, increasing the number of service
categories that have higher cost sharing in return for a plan offering
a lower MOOP limit, and considering three levels of MOOP and service
category cost sharing to encourage plan offerings with lower MOOP
limits.
CMS's goal is to establish future MOOP limits based on the most
relevant and available data, or combination of data, that reflects
beneficiary health care costs in the MA program and maintains benefit
stability over time. Medicare FFS data currently represents the most
relevant and available data at this time. CMS may consider future
rulemaking regarding the use of MA encounter cost data to understand
program health care costs and compare to Medicare FFS data in
establishing cost sharing limits. Under this current proposal to revise
the regulations controlling MOOP limits, CMS might change its existing
methodology of using the 85th and 95th percentiles of projected
beneficiary out-of-pocket Medicare FFS spending in the future. CMS
expects to establish future limits by striking the appropriate balance
between limiting MOOP costs and potential changes in premium, benefits,
and cost sharing with the goal of making sure beneficiaries can access
affordable and sustainable benefit packages. While CMS intends to
continue using the 85th and 95th percentiles of projected beneficiary
out-of-pocket spending for the immediate future to set MA MOOP limits,
CMS proposes to amend the regulation text in Sec. Sec. 422.100(f)(4)
and (5) and 422.101(d)(2) and (d)(3) to incorporate authority to
balance factors discussed previously. The flexibility provided by these
proposed changes will permit CMS to annually adjust mandatory and
voluntary MOOP limits based on changes in market conditions and to
ensure the sustainability of the MA program and benefit options.
The proposed new authority permitting changes in data and
methodology related to establishing MOOP limits would be exercised by
CMS in advance of each plan year; CMS would use the annual Call Letter
and other guidance documents to explain its application of this
proposed regulatory standard and the data used to identify MOOP limits
in advance of bid
[[Page 56362]]
deadlines. This will provide MA organizations adequate time to comment
and prepare for changes. In addition, CMS plans to transition any
significant changes under this proposal over time to avoid disruption
to benefit designs and minimize potential beneficiary confusion.
CMS proposes to codify specific requirements because of the number
of comments received in the past about MOOP changes. CMS proposes to
amend Sec. Sec. 422.100(f)(4) and (f)(5) and 422.101(d)(2) and (d)(3)
to clarify that CMS may use Medicare FFS data to establish annual MOOP
limits. In addition, CMS would have authority to increase the voluntary
MOOP limit to another percentile level of Medicare FFS, increase the
number of service categories that have higher cost sharing in return
for offering a lower MOOP amount, and implement more than two levels of
MOOP and cost sharing limits to encourage plan offerings with lower
MOOP limits. This proposal includes authority to increase the number of
service categories that have higher cost sharing in return for offering
a lower (voluntary) MOOP amount and considering more than two levels of
MOOP (with associated cost sharing limits) to encourage plan offerings
with lower MOOP limits. Consistent with past practice, CMS will
continue to publish annual limits and a description of how the
regulation standard was applied (that is, the methodology used) in the
annual Call Letter prior to bid submission so that MA plans can submit
bids consistent with parameters that CMS has determined to meet the
cost sharing limits requirements. CMS seeks comments and suggestions on
the topics discussed in this section.
5. Cost Sharing Limits for Medicare Parts A and B Services (Sec. Sec.
417.454 and 422.100)
As provided at Sec. Sec. 417.454(e), 422.100(f)(6), and
422.100(j), MA plan cost sharing for Parts A and B services specified
by CMS must not exceed certain levels. Section 422.100(f)(6) provides
that cost sharing must not be discriminatory and CMS determines
annually the level at which certain cost sharing becomes
discriminatory. Sections 417.454(e) and 422.100(j), on the other hand,
are based on how section 1852(a)(1)(B)(iii) and (iv) of the Act directs
that cost sharing for certain services may not exceed cost sharing
levels in Medicare Fee-for-Service (FFS); under the statute and the
regulations, CMS may add to that list of services. CMS reviews cost
sharing set by MA organizations using parameters based on Parts A and B
services that are more likely to have a discriminatory impact on
beneficiaries. The review parameters are currently based on Medicare
FFS data and reflect a combination of patient utilization scenarios and
length of stays or services used by average to sicker patients. CMS
uses multiple utilization scenarios for some services (for example,
inpatient care) to guard against MA organizations distributing benefit
cost sharing amounts in a manner that is discriminatory. Review
parameters are also established for frequently used professional
services, such as primary and specialty care services.
CMS proposes here to amend Sec. 422.100(f)(6) to clarify that it
may use Medicare FFS data to establish appropriate cost sharing limits.
In addition, CMS intends to use MA utilization encounter data to inform
patient utilization scenarios used to help identify MA plan cost
sharing standards and thresholds that are not discriminatory; we
solicit comment on whether to codify that use of MA encounter data for
this purpose in Sec. 422.100(f)(6). This proposal is not related to a
statutory change.
This proposal aims to allow CMS to use the most relevant and
appropriate information in determining whether specific cost sharing is
discriminatory and to set standards and thresholds above which CMS
believes cost sharing is discriminatory. CMS intends to continue the
practice of furnishing information to MA organizations about the
methodology used to establish cost sharing limits and the thresholds
CMS identifies as non-discriminatory through the annual Call Letter
process or Health Plan Management System (HPMS) memoranda and solicit
comments, as appropriate. This process allows MA organizations to
prepare plan bids consistent with parameters that CMS have determined
to be non-discriminatory.
As specified in section 1852(a)(1)(B)(iv) of the Act, the cost
sharing charged by MA plans for chemotherapy administration services,
renal dialysis services, and skilled nursing care may not exceed the
cost sharing for those services under Parts A and B. Although CMS has
not established a specific service category cost sharing limit for all
possible services, CMS has issued guidance that MA plans must pay at
least 50 percent of the contracted (or Medicare allowable) rate and
that cost sharing for services cannot exceed 50 percent of the total MA
plan financial liability for the benefit in order for the cost sharing
for such services to be considered non-discriminatory; CMS believes
that cost sharing (service category deductibles, copayments or co-
insurance) that fails to cover at least half the cost of a particular
service or item acts to discriminate against those for whom those
services and items are medically necessary and discourages enrollment
by beneficiaries who need those services and items. If a plan uses a
copayment method of cost sharing, then the copayment for an in-network
Medicare FFS service category cannot exceed 50 percent of the average
contracted rate of that service under this guidance (Medicare Managed
Care Manual, Chapter 4, Section 50.1). Some service categories may
identify specific benefits for which a unique copayment would apply,
while others include a variety of services with different levels of
cost which may reasonably have a range of copayments based on groups of
similar services, such as durable medical equipment or outpatient
diagnostic and radiological services.
CMS affords MA plans that adopt a lower, voluntary MOOP limit
greater flexibility in establishing Parts A and B cost sharing than is
available to plans that adopt the higher, mandatory MOOP limit. As
discussed in section III.A.5, CMS intends to continue to establish more
than one set of Parts A and B service cost sharing thresholds for plans
choosing to offer benefit designs with either a lower, voluntary MOOP
limit or the higher, mandatory MOOP limit set under Sec. Sec.
422.100(f)(4) and (5) and 422.101(d)(2) and (3). Medicare FFS data
currently represents the most relevant and available data at this time
and is used to evaluate cost sharing for specific services as well in
applying the standard currently at Sec. 422.100(f)(6) and in
considering CMS's authority to add (by regulation) categories of
services for which cost sharing may not exceed levels in Medicare FFS.
As noted with regard to setting MOOP limits under Sec. Sec.
422.100 and 422.101, CMS expects that MA encounter data will be more
accurate and complete in the future and may consider future rulemaking
regarding the use of MA encounter to understand program health care
costs and compare to Medicare FFS data in establishing cost sharing
limits. For reasons discussed in section III.A.5, CMS proposes to amend
Sec. 422.100(f)(6) to permit use of Medicare FFS to evaluate whether
cost sharing for Part A and B services is discriminatory to set the
evaluation limits announced each year in the Call Letter: in addition,
we propose to use MA utilization encounter data as part of that
evaluation process. As with the proposal to authorize use of this data
for setting MOOP limits, CMS intends to use the Advance Notice/Call
Letter process to communicate its
[[Page 56363]]
application of the regulation and to transition any significant changes
over time to avoid disruption to benefit designs and minimize potential
beneficiary confusion.
This proposal will allow CMS to use the most relevant and
appropriate information in determining cost sharing standards and
thresholds. For example, analyses of MA utilization encounter data can
be used with Medicare FFS data to establish the appropriate utilization
scenarios to determine MA plan cost sharing standards and thresholds.
CMS seeks comments and suggestions on this proposal, particularly
whether additional regulation text is needed to achieve CMS's goal of
setting and announcing each year presumptively discriminatory levels of
cost sharing.
6. Meaningful Differences in Medicare Advantage Bid Submissions and Bid
Review (Sec. Sec. 422.254 and 422.256)
As provided at Sec. Sec. 422.254(a)(4) and 422.256(b)(4), CMS will
only approve a bid submitted by a Medicare Advantage (MA) organization
if its plan benefit package is substantially different from those of
other plans offered by the organization in the area with respect to key
plan characteristics such as premiums, cost sharing, or benefits
offered. MA organizations may submit bids for multiple plans in the
same area under the same contract only if those plans are substantially
different from one another based on CMS's annual meaningful difference
evaluation standards. CMS proposes to eliminate this meaningful
difference requirement beginning with MA bid submissions for contract
year (CY) 2019. Separate meaningful difference rules were concurrently
adopted for MA and stand-alone prescription drug plans (PDPs), but this
specific proposal is limited to the meaningful difference provision
related to the MA program. This proposal is not related to a statutory
change.
This proposal aims to improve competition, innovation, available
benefit offerings, and provide beneficiaries with affordable plans that
are tailored for their unique health care needs and financial
situation. CMS will maintain requirements that prohibit plans from
misleading beneficiaries in their communication materials, provide CMS
the authority to disapprove a bid if a plan's proposed benefit design
substantially discourages enrollment in that plan by certain Medicare-
eligible individuals, and allow CMS to non-renew a plan that fails to
attract a sufficient number of enrollees over a sustained period of
time (Sec. Sec. 422.100(f)(2), 422.510(a)(4)(xiv), 422.2264, and
422.2260(e)). CMS expects organizations to continue designing plan
benefit packages that, within a service area, are different from one
another with respect to key benefit design characteristics, so that any
potential beneficiary confusion is minimized when comparing multiple
plans offered by the organization. For example, beneficiaries may
consider the following factors when they make their health care
decisions: plan type, Part D coverage, differences in provider network,
Part B and plan premiums, and unique populations served (for example,
special needs plans, or SNPs). In addition, CMS intends to continue the
practice of furnishing information to MA organizations about their bid
evaluation methodology through the annual Call Letter process and/or
Health Plan Management System (HPMS) memoranda and solicit comments, as
appropriate. This process allows CMS to articulate bid requirements and
MA organizations to prepare bids that satisfy CMS requirements and
standards prior to bid submission in June each year.
Research studies indicate that consumers, especially elderly
consumers, may be challenged by a large number of plan choices that
may: (1) Result in not making a choice, (2) create a bias to not change
plans, and (3) impact MA enrollment growth.\27\ Beneficiaries indicate
they want to make informed and effective decisions, but do not feel
qualified. As a result, they seek help from Medicare Plan Finder (MPF),
brokers or plan representatives, providers, and family members.
Although challenged by choices, beneficiaries do not want their plan
choices to be limited and understand key decision factors such as
premiums, out-of-pocket cost sharing, Part D coverage, familiar
providers, and company offering the plan.\28\ CMS continues to explore
enhancements to MPF that will improve the customer experience; some
examples of recent updates are provided below.
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\27\ McWilliams JM, Afendulis CC, McGuire TG, Landon BE. Complex
Medicare advantage choices may overwhelm seniors--especially those
with impaired decision making. Health Aff (Millwood).
2011;30(9):1786-94.
\28\ Jacobson, G. Swoope, C., Perry, M. Slosar, M. How are
seniors choosing and changing health insurance plans? Kaiser Family
Foundation. 2014.
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As discussed later in this section, CMS believes that it is
challenging to apply the current standardized meaningful difference
evaluation (which is applied consistently to all plans) in a manner
that accommodates and evaluates important considerations objectively.
CMS is concerned that the current evaluation may create unintended
consequences related to innovative benefit designs. In addition, CMS's
efforts in implementing more sophisticated approaches to consumer
engagement and decision-making should help beneficiaries, caregivers,
and family members make informed plan choices. For example, in MPF,
plan details have been expanded to include MA and Part D benefits and a
new consumer friendly tool for the CY 2018 Medicare open enrollment
period which will assist beneficiaries in choosing a plan that meets
their unique and financial needs based on a set of 10 quick questions.
Prior to implementing the meaningful difference evaluation for CY
2011 bid submissions, the beneficiary weighted average number of plans
per county was about 30 in 2010 compared to 18 in 2017 (these numbers
do not include SNPs or employer group plans which have additional
criteria for enrollment). Private-fee-for-service (PFFS) plans
represented 13 of the 30 plans in 2010 and less than 1 of the 18 plans
in 2017. The Medicare Improvements for Patients and Providers Act of
2008 required PFFS plans to establish contracted provider networks by
2011 and many PFFS plans non-renewed. The weighted average number of
plans has remained relatively stable since the decline of PFFS options.
MA enrollment continued to grow from more than 11 million in July 2010
to 18.7 million in July 2017, fueled by the continued overall
acceptance of managed care, the baby boom generation aging into
Medicare beginning in 2011, and decreases in average plan premium
during the time period.
As stated in the October 22, 2009, proposed rule (74 FR 54670
through 73) and April 15, 2010, final rule (75 FR 19736 through 40),
CMS's goal for the meaningful difference evaluation was to ensure a
proper balance between affording beneficiaries a wide range of plan
choices and avoiding undue beneficiary confusion in making coverage
selections. The meaningful difference evaluation was initiated when
cost sharing and benefits were relatively consistent within each plan
and similar plans within the same contract could be readily compared by
measuring estimated out-of-pocket costs and other factors currently
integrated in the evaluation's methodology.
The current meaningful difference evaluation uses estimated
enrollee out-of-pocket costs based on the CMS Out-of-Pocket Cost (OOPC)
model. This model uses a nationally representative cohort of
beneficiaries from the Medicare Beneficiary Surveys (MCBS)
[[Page 56364]]
and is intended to be objective and applied in a standardized and
consistent manner across plans. MCBS data collected by CMS from
beneficiaries are used to create the cohort of beneficiaries whose
medical and prescription data are used to estimate out-of-pocket costs.
The OOPC model generates estimated out-of-pocket costs based on
utilization from the cohort of beneficiaries and each plan's benefit
design entered into the Plan Benefit Package submitted to CMS as part
of the bidding process. Detailed information about the meaningful
difference evaluation is available in the CY 2018 Final Call Letter
issued April 3, 2017 (pages 115-118) and information about the CMS OOPC
model is available at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/OOPCResources.html. Estimated
enrollee cost sharing is determined by the cost sharing amounts for
Part A, B, and D services and most mandatory supplemental benefits (for
example, dental services). Benefit service categories within a plan may
have a range of multiple and varying cost sharing amounts. For example,
the outpatient procedures, tests, labs, and radiology services benefit
category includes many services that may have a wide range of cost
sharing amounts. The OOPC model uses the minimum or lowest cost sharing
value placed in the Plan Benefit Package (PBP) for each service
category to estimate out-of-pocket costs in these situations. As
discussed in the CY 2018 Final Call Letter, the differences between
similar plans must have at least a $20 per member per month estimated
beneficiary out-of-pocket cost difference. Differences in plan type
(for example, HMO, LPPO), SNP sub-type, and inclusion of Part D
coverage are considered meaningful differences which aligns with
beneficiary decision-making. Premiums, risk scores, actual plan
utilization and enrollment are not included in the evaluation because
these factors would introduce risk selection, costs, and margin into
the evaluation, resulting in a negation of the evaluation's
objectivity.
Based on CMS's efforts to revisit MA standards and the
implementation of the governing law to find flexibility for MA
beneficiaries and plans, MA organizations are able to: (1) Tier the
cost sharing for contracted providers as an incentive to encourage
enrollees to seek care from providers the plan identifies based on
efficiency and quality data which was communicated in CY 2011 guidance;
(2) establish Provider Specific Plans (PSPs) designed to offer
enrollees benefits through a subset of the overall contracted network
in a given service area, which are sometimes referred to as narrower
networks, and which was collected in the PBP beginning in CY 2011; and
(3) beginning in CY 2019, provide different cost sharing and/or
additional supplemental benefits for enrollees based on defined health
conditions within the same plan (Flexibility in the Medicare Advantage
Uniformity Requirements). These flexibilities allow MA organizations to
provide beneficiaries with access to health care benefits that are
tailored to individual needs, but make it difficult for CMS to
objectively measure meaningful differences between plans. Items 1 and 3
provide greater cost sharing flexibility to address individual
beneficiary needs, but result in a much broader range of cost sharing
values being entered into PBP. As discussed in the previous paragraph,
the CMS OOPC model uses the lowest cost sharing value for each service
category to estimate out-of-pocket costs which may or may not be a
relevant comparison between different plans for purposes of evaluating
meaningful difference when variable cost sharing of this type is
involved.
CMS remains committed to ensuring transparency in plan offerings so
that beneficiaries can make informed decisions about their health care
plan choices. It is also important to encourage competition,
innovation, and provide access to affordable health care approaches
that address individual needs. The current meaningful difference
methodology evaluates the entire plan and does not capture differences
in benefits that are tied to specific health conditions. As a result,
the meaningful difference evaluation would not fully represent benefit
and cost sharing differences experienced by enrollees and could lead to
MA organizations to focus on CMS standards, rather than beneficiary
needs, when designing benefit packages.
In order to capture differences in provider network, more tailored
benefit and cost sharing designs, or other innovations, the evaluation
process would have to use more varied and complex assumptions to
identify plans that are not meaningfully different from one another.
CMS believes that such an evaluation could result in more complicated
and potentially confusing benefit designs to achieve differences
between plans. This process may require greater administrative
resources for MA organizations and CMS, while not producing results
that are useful to beneficiaries.
The current meaningful difference methodology may force MA
organizations to design benefit packages to meet CMS standards rather
than beneficiary needs. To satisfy current CMS meaningful difference
standards, MA organizations may have to change benefit coverage or cost
sharing in certain plans to establish the necessary benefit value
difference, even if substantial difference exists based on factors CMS
is currently unable to incorporate into the evaluation (such as tiered
cost sharing, and unique benefit packages based on enrollee health
conditions). Although these changes in benefits coverage may be
positive or negative, CMS is concerned the meaningful difference
requirement results in organizations potentially reducing the value of
benefit offerings. On the basis of bid review activities performed over
the past several years, CMS is concerned that benefits may be decreased
or cost sharing increased to satisfy the meaningful difference
evaluation. These are unintended consequences of the existing
meaningful difference evaluation and may restrict innovative benefit
designs that address individual beneficiary needs and affordability.
Beneficiaries may also consider plan and Part B premiums when
choosing among health plan options. Making changes to the existing
meaningful difference evaluation to consider premiums differences as
sufficient to distinguish among otherwise similar plans may limit the
value of CMS's evaluation by introducing factors that plans can easily
leverage, such as risk selection, costs, and margin, to satisfy the
evaluation test without resulting in additional benefit value or choice
for enrollees.
Stakeholders have expressed concern that without the meaningful
difference evaluation the number of bids and plan choices will likely
increase and make beneficiary decisions more difficult. The number of
plan bids may increase because of a variety of factors, such as
payments, bidding and service area strategies, serving unique
populations, and in response to other program constraints or
flexibilities. CMS expects that eliminating the meaningful difference
requirement will improve the plan options available for beneficiaries,
but CMS does not believe the number of similar plan options offered by
the same MA organization in each county will necessarily increase
significantly or create confusion in beneficiary decision-making. New
flexibilities in benefit design and more sophisticated approaches to
consumer engagement and decision-making should help
[[Page 56365]]
beneficiaries, caregivers, and family members make informed plan
choices among more individualized plan offerings. Based on the
previously stated information, CMS does not expect a significant
increase in time spent in bid review as a direct result of eliminating
meaningful difference nor increased health care provider burden.
In addition, new flexibilities in benefit design may allow MA
organizations to address different beneficiary needs within existing
plan options and reduce the need for new plan options to navigate
existing CMS requirements. In addition, MA organizations may be able to
offer a portfolio of plan options with clear differences between
benefits, providers, and premiums which would allow beneficiaries to
make more effective decisions if the MA organizations are not required
to change benefit and cost sharing designs in order to satisfy
Sec. Sec. 422.254 and 422.256. Currently, MA organizations must
satisfy CMS meaningful difference standards (and other requirements),
rather than solely focusing on beneficiary purchasing needs when
establishing a range of plan options.
CMS supports beneficiary decision-making by providing tools and
materials that focus on key beneficiary purchasing criteria, such as
eligibility to enroll in SNPs, need for Part D coverage, Part D
formulary and benefit coverage, plan type preference (for example, HMO
vs. PPO), network providers, medical benefit coverage, premiums, and
the brand or organization offering the plan options. CMS is also taking
steps to improve information available through MPF and 1-800-MEDICARE
to help beneficiaries, caregivers, and family members make informed
plan choices.
CMS continually evaluates consumer engagement tools and outreach
materials (including marketing, educational, and member materials) to
ensure information is formatted consistently so beneficiaries can
easily compare multiple plans. CMS also provides annual guidance and
model materials to MA organizations to assist them in providing
resources, such as the plan's Annual Notice of Change and Evidence of
Coverage, which contain valuable information for the enrollee to
evaluate and select the best plan for their needs. To reinforce
informed decision making, CMS invests substantial resources in
engagement strategies such as 1-800-MEDICARE, MPF, standard and
electronic mail, and social media to continuously communicate with
beneficiaries, caregivers, family members, providers, community
resources, and other stakeholders.
CMS will continue to furnish information to MA organizations and
solicit comments on bid evaluation methodology through the annual Call
Letter process or HPMS memoranda, as appropriate.
In addition, CMS is maintaining requirements around plans not
misleading beneficiaries in communication materials, disapproving a bid
if CMS finds that a plan's proposed benefit design substantially
discourages enrollment in that plan by certain Medicare-eligible
individuals, and non-renewing plans that fail to attract a sufficient
number of enrollees over a sustained period of time (Sec. Sec.
422.100(f)(2), 422.510(a)(4)(xiv), 422.2264, and 422.2260(e)). CMS
expects these measures will continue to protect beneficiaries from
discriminatory plan benefit packages and health plans that demonstrate
a lack of beneficiary interest if the meaningful difference requirement
is eliminated. For all these reasons, CMS proposes to remove Sec. Sec.
422.254(a)(4) and 422.256(b)(4) to eliminate the meaningful difference
requirement for MA bid submissions. CMS seeks comments and suggestions
on the topics discussed in this section about making sure beneficiaries
have access to innovative plans that meet their unique needs.
7. Coordination of Enrollment and Disenrollment Through MA
Organizations and Effective Dates of Coverage and Change of Coverage
(Sec. Sec. 422.66 and 422.68)
Section 1851(c)(3)(A)(ii) of the Act provides the Secretary with
the authority to implement default enrollment rules for the Medicare
Advantage (MA) program in addition to the statutory direction that
beneficiaries who do not elect an MA plan are defaulted to original
(fee-for-service) Medicare. This provision states that the Secretary
may establish procedures whereby an individual currently enrolled in a
non-MA health plan offered by an MA organization at the time of his or
her Initial Coverage Election Period is deemed to have elected an MA
plan offered by the organization if he or she does not elect to receive
Medicare coverage in another way.
We initially addressed default enrollment upon conversion to
Medicare in rulemaking (70 FR 4606 through 4607) in 2005, indicating
that we would retain the flexibility to implement this provision
through future instructions and guidance to MA organizations. Such
subregulatory guidance was established later that same year and was
applicable to the 2006 contract year. As outlined in Chapter 2 of the
Medicare Managed Care Manual, we established an optional enrollment
mechanism, whereby MA organizations may develop processes and, with CMS
approval, provide seamless continuation of coverage by way of
enrollment in an MA plan for newly MA eligible individuals who are
currently enrolled in other health plans offered by the MA organization
(such as commercial or Medicaid plans) at the time of the individuals'
initial eligibility for Medicare. The guidance emphasized that MA
organizations not limit seamless continuation of coverage to situations
in which an enrollee becomes eligible for Medicare by virtue of age,
but includes all newly eligible Medicare beneficiaries, including those
whose Medicare eligibility is based on disability. We did not mandate
that organizations implement a process for seamless continuation of
coverage but, instead, gave organizations the option of implementing
such a process for its enrollees who are approaching Medicare
eligibility. From its inception, the guidance has required that
individuals receive advance notice of the proposed MA enrollment and
have the ability to ``opt out'' of such an enrollment prior to the
effective date of coverage. This guidance has been in practice for the
past decade for MA organizations that requested to use this voluntary
enrollment mechanism, but we have encountered complaints and heard
concerns about the practice. We are proposing new regulation text to
establish limits and requirements for these types of default
enrollments to address these concerns and our administrative experience
with seamless continuation of coverage, commonly referred to as
seamless conversion.
Based on our experience with the seamless conversion process thus
far, we are proposing, to be codified at Sec. 422.66(c)(2),
requirements for seamless default enrollments upon conversion to
Medicare. As proposed in more detail later in this section, such
default enrollments would be into dual eligible special needs plans (D-
SNPs) and be subject to five substantive conditions: (1) The individual
is enrolled in an affiliated Medicaid managed care plan and is dually
eligible for Medicare and Medicaid; (2) the state has approved use of
this default enrollment process and provided Medicare eligibility
information to the MA organization; (3) the individual does not opt out
of the default enrollment; (4) the MA
[[Page 56366]]
organization provides a notice that meets CMS requirements to the
individual; and (5) CMS has approved the MA organization to use the
default enrollment process before any enrollments are processed. We are
also proposing that coverage under these types of default enrollments
begin on the first of the month that the individual's Part A and Part B
eligibility is effective. We are also proposing changes to Sec. Sec.
422.66(d)(1) and (d)(5) and 422.68 that coordinate with the proposal
for Sec. 422.66.
In the Advance Notice of Methodological Changes for Calendar Year
(CY) 2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part
D Payment Policies and 2016 Call Letter, we explained how entities that
sponsor Medicaid managed care organizations (MCOs) and affiliated D-
SNPs can promote coverage of an integrated Medicare and Medicaid
benefit through existing authority for seamless continuation of
coverage of Medicaid MCO members as they become eligible for Medicare.
We received positive comments from state Medicaid agencies that
supported this enrollment mechanism and requested that we clarify the
process for approval of seamless continuation of coverage as a
mechanism to promote enrollment in integrated D-SNPs that deliver both
Medicare and Medicaid benefits. We also received comments from
beneficiary advocates asking that additional consumer protections,
including requiring written beneficiary confirmation and a special
enrollment period for those individuals who transition from non-
Medicare products to Medicare Advantage. We believe that our proposal,
described later in this section, adequately addresses the concerns on
which these requests are based, given that the default enrollment
process would be permissible only for individuals enrolled in a
Medicaid managed care plan in states that support this process. This
means that the Medicare plan into which individuals would be defaulted
would be one that is offered by the same parent organization as their
existing Medicaid plan, such that much of the information needed by the
MA plan would already be in the possession of the MA organization to
facilitate the default enrollment process. Also, default enrollment
would not be permitted if the state does not actively support this
process, ensuring an accurate source of data for use by MA
organizations to appropriately identify and notify individuals eligible
for default enrollment.
On October 21, 2016,\29\ in response to inquiries regarding this
enrollment mechanism, its use by MA organizations, and the beneficiary
protections currently in place, we announced a temporary suspension of
acceptance of new proposals for seamless continuation of coverage.
Based on our subsequent discussions with beneficiary advocates and MA
organizations approved for this enrollment mechanism, it is clear that
organizations attempting to conduct seamless continuation of coverage
from commercial coverage (that is, private coverage and Marketplace
coverage) find it difficult to comply with our current guidance and
approval parameters. This is especially true of the requirement to
identify commercial members who are approaching Medicare eligibility
based on disability. Also challenging for these organizations is the
requirement that they have the means to obtain the individual's
Medicare number and are able to confirm the individual's entitlement to
Part A and enrollment in Part B no fewer than 60 days before the MA
plan enrollment effective date.
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\29\ https://www.cms.gov/Medicare/Eligibility-and-Enrollment/MedicareMangCareEligEnrol/Downloads/HPMS_Memo_Seamless_Moratorium.pdf.
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In addition, the ability for organizations to conduct seamless
enrollment of individuals converting to Medicare will be further
limited due to the statutory requirement that CMS remove Social
Security Numbers (SSNs) from all Medicare cards by April 2019. A new
Medicare number will replace the SSN-based Health Insurance Claim
Number (HICN) on the new Medicare cards for Medicare transactions.
Beginning in April 2018, we'll start mailing the new Medicare cards
with the new number to all people with Medicare. Given the random and
unique nature of the new Medicare number, we believe MA organizations
will be limited in their ability to automatically enroll newly eligible
Medicare beneficiaries without having to contact them to obtain their
Medicare numbers, as CMS does not share Medicare numbers with
organizations for their commercial members who are approaching Medicare
eligibility. We note that contacting the individual in order to obtain
the information necessary to process the enrollment does not align with
the intent of default enrollment, which is designed to process
enrollments and have coverage automatically shift into the MA plan
without an enrollment action required by the beneficiary.
Organizations operating Medicaid managed care plans are better able
to meet these requirements when states provide data, including the
individual's Medicare number, on those about to become Medicare
eligible. As part of coordination between the Medicare and Medicaid
programs, CMS shares with states, via the State MMA file, data of
individuals with Medicaid who are newly becoming entitled to Medicare;
such data includes the Medicare number of newly eligible Medicare
beneficiaries. MA organizations with state contracts to offer D-SNPs
would be able to obtain (under their agreements with state Medicare
agencies) the data necessary to process the MA enrollment submission to
CMS. Therefore, we are proposing to revise Sec. 422.66 to permit
default enrollment only for Medicaid managed care enrollees who are
newly eligible for Medicare and who are enrolled into a D-SNP
administered by an MA organization under the same parent organization
as the organization that operates the Medicaid managed care plan in
which the individual remains enrolled. These requirements would be
codified at Sec. 422.66(c)(2)(i) (as a limit on the type of plan into
which enrollment is defaulted) and (c)(2)(i)(A) (requiring existing
enrollment in the affiliated Medicaid managed care plan as a condition
of default MA enrollment). At paragraph (c)(2)(i)(B), we are also
proposing to limit these default enrollments to situations where the
state has actively facilitated and approved the MA organization's use
of this enrollment process and articulates this in the agreement with
the MA organization offering the D-SNP, as well as providing necessary
identifying information to the MA organization.
The option of default enrollment can be particularly beneficial for
Medicaid managed care enrollees who are newly eligible for Medicare,
because in the case that the parent organization of the Medicaid
managed care plan also offers a D-SNP, default enrollment promotes
enrollment in a plan that offers some level of integration of acute
care, behavioral health and, for eligible beneficiaries, long-term care
services and supports, including institutional care, and home and
community-based services (HCBS). This is in line with CMS' support of
state efforts to increase enrollment of dually eligible individuals in
fully integrated systems of care and the evidence \30\ that such
systems
[[Page 56367]]
improve health outcomes. Further this proposal will provide states with
additional flexibility and control. States can decide if they wish to
allow their contracted Medicaid managed care plans to use default
enrollment of Medicaid enrollees into D-SNPs and can control which D-
SNPs receive default enrollments through two means: The contracts that
states maintain with D-SNPs (Sec. 422.107(b)) and by providing the
data necessary for MA organizations to successfully implement the
process. Under our proposal, MA organizations can process default
enrollments only for dual-eligible individuals in states where the
contract with the state under Sec. 422.107 approves it and the state
identifies eligibility and shares necessary data with the organization.
---------------------------------------------------------------------------
\30\ There is a growing evidence that integrated care and
financing models can improve beneficiary experience and quality of
care, including:
Health Management Associates, Value Assessment of the
Senior Care Options (SCO) Program, July 21, 2015, available at:
https://www.mahp.com/unify-files/HMAFinalSCOWhitePaper_2015_07_21.pdf;
MedPAC chapter ``Care coordination programs for dual-
eligible beneficiaries,'' June 2012, available at: https://www.medpac.gov/docs/default-source/reports/chapter-3-appendixes-care-coordination-programs-for-dual-eligible-beneficiaries-june-2012-report-.pdf?sfvrsn=0;
Anderson, Wayne L., Zhanlian Fen, and Sharon K. Long,
RTI International and Urban Institute, Minnesota Managed Care
Longitudinal Data Analysis, prepared for the U.S. Department of
Health and Human Services Assistant Secretary for Planning and
Evaluation (ASPE), March 2016, available at: https://aspe.hhs.gov/report/minnesota-managed-care-longitudinal-data-analysis.
---------------------------------------------------------------------------
To ensure that Medicaid beneficiaries considered for default
enrollment upon their conversion to Medicare are aware of the default
MA enrollment and of the changes to their Medicare and Medicaid
coverage, we also propose, at Sec. 422.66(c)(2)(i)(C) and (c)(2)(iv),
that the MA organization must issue a notice no fewer than 60 days
before the default enrollment effective date to the enrollee. The
proposed revised notice \31\ must include clear information on the D-
SNP, as well as instructions to the individual on how to opt out (or
decline) the default enrollment and how to enroll in Original Medicare
or a different MA plan. This notice requirement aims to help ensure a
smooth transition of eligible individuals into the D-SNP for those who
choose not to opt out. All MA organizations currently approved to
conduct seamless conversion enrollment issue at least one notice 60
days prior to the MA enrollment effective date, so our proposal would
not result in any additional burden to these MA organizations using
this process. Recent discussions with MA organizations currently
conducting seamless conversion enrollment have revealed that several of
them already include in their process additional outreach, including
reminder notices and outbound telephone calls to aid in the transition.
We believe that these additional outreach efforts are helpful and we
would encourage their use under our proposal.
---------------------------------------------------------------------------
\31\ Enrollment requirements and burden are currently approved
by OMB under control number 0938-0753 (CMS-R-267). Since this rule
would not impose any new or revised requirements/burden, we are not
making any changes to that control number.
---------------------------------------------------------------------------
We also propose, in paragraph (c)(2)(i)(E) and (2)(ii), that MA
organizations must obtain approval from CMS before implementing default
enrollment. Under our proposal in paragraph (c)(2)(i)(B), CMS approval
would be granted only if the applicable state approves the default
enrollment through its agreement with the MA organization. MA
organizations would be required to implement default enrollment in a
non-discriminatory manner, consistent with their obligations under
Sec. 422.110; that is, MA organizations could not select for default
enrollment only certain of the members of the affiliated Medicaid plan
who were identified as eligible for default enrollment. Lastly, we
propose that CMS may suspend or rescind approval at any time if it is
determined that the MA organization is not in compliance with the
requirements. We request comment whether this authority to rescind
approval should be broader; we have considered whether a time limit on
the approval (such as 2 to 5 years) would be appropriate so that CMS
would have to revisit the processes and procedures used by an MA
organization under this proposed regulation in order to assure that the
regulation requirements are still being followed. We are particularly
interested in comment on this point in conjunction with our alternative
(discussed later in this section) proposal to codify the existing
parameters for this type of seamless conversion default enrollment such
that all MA organizations would be able to use this default enrollment
process for newly eligible and newly enrolled Medicare beneficiaries in
the MA organization's non-Medicare coverage.
Under our proposal, default enrollment of individuals at the time
of their conversion to Medicare would be more limited than the default
enrollments Congress authorized the Secretary to permit in section
1851(c)(3)(A)(ii) of the Act. However, we are also proposing some
flexibility for MA organizations that wish to offer seamless
continuation of coverage to their non-Medicare members, commercial,
Medicaid or otherwise, who are gaining Medicare eligibility. As
discussed in more detail below, affirmative elections would be
necessary for individuals not enrolled in a Medicaid managed care plan,
consistent with Sec. 422.50. However, because individuals enrolled in
an organization's commercial plan, for example would already be known
to the parent organization offering both the non-Medicare plan and the
MA plan and the statute acknowledges that this existing relationship is
somewhat relevant to Part C coverage, we propose to amend Sec.
422.66(d)(5) and to establish, through subregulatory guidance, a new
and simplified positive (that is, ``opt in'') election process that
would be available to all MA organizations for the MA enrollments of
their commercial, Medicaid or other non-Medicare plan members. To
reflect our change in policy with regard to a default enrollment
process and this proposal to permit a simplified election process for
individuals who are electing coverage in an MA plan offered by the same
entity as the individual's non-Medicare coverage, we are also proposing
to add text in Sec. 422.66(d)(5) authorizing a simplified election for
purposes of converting existing non-Medicare coverage, commercial,
Medicaid or otherwise, to MA coverage offered by the same organization.
This new mechanism would allow for a less burdensome process for MA
organizations to offer enrollment in their MA plans to their non-
Medicare health plan members who are newly eligible for Medicare. As
the MA organization has a significant amount of the information from
the member's non-Medicare enrollment, this new simplified election
process aims to make enrollment easier for the newly-eligible
beneficiary to complete and for the MA organization to process. It
would align with the individual's Part A and Part B initial enrollment
period (and initial coordinated election period for MA coverage),
provided he or she enrolled in both Medicare Parts A and B when first
eligible for Medicare. This new election process would provide a longer
period of time for MA organizations to accept enrollment requests than
the time period in which MA organizations would be required to
effectuate default enrollments, as organizations would be able to
accept enrollments throughout the individual's Initial Coverage
Election Period (ICEP), which for an aged beneficiary is the 7-month
period that begins 3 months before the month in which the individual
turns 65 and ends 3 months after the month in which the individual
turns 65. We would use existing authority to create this new enrollment
[[Page 56368]]
mechanism which, if implemented, would be available to MA organizations
in the 2019 contract year. We solicit comments on the proposed changes
to the regulation text as well as the form and manner in which such
enrollments may occur.
This optional simplified election process for the enrollment of
non-Medicare plan members into MA upon their initial eligibility (or
initial entitlement) for Medicare would provide individuals the option
to remain with the organization that offers their non-Medicare
coverage. A positive election in this circumstance provides an
additional beneficiary protection for non-dually eligible individuals,
so that they may actively choose a Medicare plan structure similar to
that of their commercial, Medicaid or other non-Medicare health plans,
as there may be significant differences between an organization's
commercial plans, for example, and its MA plans in terms of provider
networks, drug formularies, costs and benefit structures. While these
differences may result in a more restrictive network, a mandated change
in a primary care physician and increased out-of-pocket costs for
converting enrollees, default enrollment of a dually eligible
individual enrolled in a Medicaid plan into a D-SNP, triggers no
premium liability or cost sharing for medical care or prescription
drugs above levels that apply under Original Medicare. Further, the
individual remains in the Medicaid managed care plan and is gaining
additional Medicare coverage, which is not always the case in other
contexts. We solicit comment on these coordinated proposals to
implement section 1851(c)(3)(A)(ii) in general as discussed below and
in two particular ways: (1) To permit default MA enrollments for
dually-eligible beneficiaries who are newly eligible for Medicare under
certain conditions and (2) to permit simplified elections for seamless
continuations of coverage for other newly-eligible beneficiaries who
are in non-Medicare health coverage offered by the same parent
organization that offers the MA plan. We further invite comments
regarding whether the CMS approval of an organization's request to
conduct default enrollment should be limited to a specific time frame.
In addition, we are proposing amendments to Sec. Sec. 422.66(d)(1) and
422.68 that are also related to MA enrollment. Currently, as described
in the 2005 final rule (70 FR 4606 through 4607), Sec. 422.66(d)(1)
requires MA organizations to accept, during the month immediately
preceding the month in which he or she is entitled to both Part A and
Part B, enrollment requests from an individual who is enrolled in a
non-Medicare health plan offered by the MA organization and who meets
MA eligibility requirements. To better reflect section
1851(c)(3)(A)(ii), we are proposing to amend Sec. 422.66(d)(1) to add
text clarifying that seamless continuations of coverage are available
to an individual who requests enrollment during his or her Initial
Coverage Election Period. In light of our proposal to permit a
simplified election process for individuals who are electing coverage
in an MA plan offered by the same parent organization as the
individual's non-Medicare coverage, we are also proposing a revision to
Sec. 422.68(a) to ensure that ICEP elections made during or after the
month of entitlement to both Part A and Part B are effective the first
day of the calendar month following the month in which the election is
made. This proposed revision would codify the subregulatory guidance
that MA organizations have been following since 2006. This proposal is
also consistent with the proposal at Sec. 422.66(c)(2)(iii) regarding
the effective date of coverage for default enrollments into D-SNPs. We
also solicit comment on these related proposals.
In conclusion, we are proposing to add regulation text at Sec.
422.66(c)(2)(i) through (iv) to set limits and requirements for a
default enrollment of the type authorized under section
1851(c)(3)(A)(ii). We are proposing a clarifying amendment to Sec.
422.66(d)(1) regarding when seamless continuation coverage can be
elected and revisions to Sec. 422.66(d)(5) to reflect our proposal for
a new and simplified positive election process that would be available
to all MA organizations. Lastly, we are proposing revisions to Sec.
422.68(a) to ensure that ICEP elections made during or after the month
of entitlement to both Part A and Part B are effective the first day of
the calendar month following the month in which the election is made.
We invite comments in general on our proposal, as well as on the
alternatives presented. We recognize that our proposal narrows the
scope of default enrollments compared to what CMS approved under
section 1851(c)(3)(A) of the Act in the past. As we contemplated the
future of the seamless conversion mechanism, we considered retaining
processes similar to how the seamless conversion mechanism is outlined
currently in section 40.1.4 of Chapter 2 of the Medicare Managed Care
Manual and had been in practice through October 2016. We considered
proposing regulations to codify that guidance as follows--
Articulating the requirements for an MA organization's
proposal to use the seamless conversion mechanism, including
identifying eligible individuals in advance of Medicare eligibility;
Establishing timeframes for processing and the effective
date of the enrollment; and
Requiring notification to individuals at least 60 days
prior to the conversion of their right to opt-out or decline the
enrollment.
In considering this alternative, we contemplated adding additional
beneficiary protections, including the issuance of an additional notice
to ensure that individuals understood the implication of taking no
action. While this alternative would have led to increased use of the
seamless conversion enrollment mechanism than what had been used in the
past, the operational challenges, particularly in relation to the new
Medicare Beneficiary Identification number may be significant for MA
organizations to overcome at this time.
We also considered proposing regulations to limit the use of
default enrollment to only the aged population. While this alternative
would simplify a MA organization's ability to identify eligible
individuals, we have concerns about disparate treatment among newly
eligible individuals based on their reason for obtaining Medicare
entitlement.
We invite comments on our proposal and the alternate approaches,
including the following:
Codify the existing parameters for this type of seamless
conversion default enrollment such that all MA organizations would be
able to use this default enrollment process for newly eligible and
newly enrolled Medicare beneficiaries in the MA organization's non-
Medicare coverage.
Codify the existing parameters for this type of seamless
conversion default enrollment, as described previously, but allow that
use of default enrollment be limited to only the aged population.
If commenters recommend one or more alternate approaches, we ask
for suggested solutions that address the concerns noted in this
discussion, particularly related to the requirement that plans identify
commercial members who are approaching Medicare eligibility based on
disability, as well as how plans could confirm MA eligibility and
process enrollments without access to the individual's Medicare number.
[[Page 56369]]
8. Passive Enrollment Flexibilities To Protect Continuity of Integrated
Care for Dually Eligible Beneficiaries (Sec. 422.60(g))
Beneficiaries who are dually eligible for both Medicare and
Medicaid typically face significant challenges in navigating the two
programs, which include separate or overlapping benefits and
administrative processes. Fragmentation between the two programs can
result in a lack of coordination for care delivery, potentially
resulting in unnecessary, duplicative, or missed services. One method
for overcoming this challenge is through integrated care, which
provides dually eligible beneficiaries with the full array of Medicaid
and Medicare benefits for which they are eligible through a single
delivery system, thereby improving quality of care, beneficiary
satisfaction, care coordination, and reducing administrative burden.
Integrated care options are increasingly available for dually
eligible beneficiaries, which include a variety of integrated D-SNPs.
D-SNPs can provide greater integrated care than enrollees would
otherwise receive in other MA plans or Medicare Fee-For-Service (FFS),
particularly when an individual is enrolled in both a D-SNP and
Medicaid managed care organization offered by the same organization. D-
SNPs that meet higher standards of integration, quality, and
performance benchmarks--known as highly integrated D-SNPs--are able to
offer additional supplemental benefits to support integrated care
pursuant to Sec. 422.102(e). D-SNPs that are fully integrated--known
as Fully Integrated Dual-Eligible (FIDE) SNPs, as defined at Sec.
422.2 provide for a much greater level of integration and coordination
than non-integrated D-SNPs, providing all primary, acute, and long-term
care services and supports under a single entity.
While enrollment in integrated care options continues to grow,
there are instances in which beneficiaries may face disruptions in
coverage in integrated care plans. These disruptions can result from
numerous factors, including market forces that impact the availability
of integrated D-SNPs and state re-procurements of Medicaid managed care
organizations. Such disruptions can result in beneficiaries being
enrolled in two separate organizations for their Medicaid and Medicare
benefits, thereby losing the benefits of integration achieved when the
same entity offers both benefit packages. In an effort to protect the
continuity of integrated care for dually eligible beneficiaries, we are
proposing a limited expansion of our regulatory authority to initiate
passive enrollment for certain dually eligible beneficiaries in
instances where integrated care coverage would otherwise be disrupted.
Section 1851(c)(1) of the Act authorizes us to develop mechanisms
for beneficiaries to elect MA enrollment, and we have used this
authority to create passive enrollment. The current regulation at Sec.
422.60(g) limits the use of passive enrollment to two scenarios: (1) In
instances where there is an immediate termination of an MA contract; or
(2) in situations in which we determine that remaining enrolled in a
plan poses potential harm to beneficiaries. The passive enrollment
defined in Sec. 422.60(g) requires beneficiaries to be provided prior
notification and a period of time prior to the effective date to opt
out of enrollment from a plan. Current Sec. 422.60(g)(3) provides
every passively enrolled beneficiary with a special election period to
allow for election of different Medicare coverage: Selecting a
different managed care plan or opting out of MA completely and,
instead, receiving services through Original Medicare (a FFS delivery
system). A beneficiary who is offered a passive enrollment is deemed to
have elected enrollment in the designated plan if he or she does not
elect to receive Medicare coverage in another way.
Our proposal is a limited expansion of this regulatory authority to
promote continued enrollment of dually eligible beneficiaries in
integrated care plans to preserve and promote care integration under
certain circumstances. The proposal includes use of these existing opt-
out procedures and special election period. Therefore, we are proposing
to redesignate these requirements from (g)(1) through (3) to (g)(3)
through (g)(5) respectively, with minor revisions in proposed paragraph
(g)(5) to describe the application of special election period and in
proposed paragraph (g)(4) to make minor grammatical changes to the text
to improve its readability and clarity.
Our proposal is to add authority to passively enroll full-benefit
dually eligible beneficiaries who are currently enrolled in an
integrated D-SNP into another integrated D-SNP under certain
circumstances. We anticipate that these proposed regulations would
permit passive enrollments only when all the following conditions are
met:
When necessary to promote integrated care and continuity
of care;
Where such action is taken in consultation with the state
Medicaid agency;
Where the D-SNP receiving passive enrollment contracts
with the state Medicaid agency to provide Medicaid services; and
Where certain other conditions are met to promote
continuity and quality of care.
We expect that these factors would all occur in situations when
affected beneficiaries would otherwise be experiencing an involuntary
disruption in either their Medicare or Medicaid coverage. We anticipate
using this new proposed authority exclusively in such situations.
All individuals would be provided with a special election period
(which, as established in subregulatory guidance, lasts for 2 months),
as described in Sec. 422.62(b)(4), provided they are not otherwise
eligible for another SEP (for example, under proposed Sec.
423.38(c)(4)(ii)).
For illustrative purposes we have outlined two scenarios in which
this proposed regulatory authority could be used to promote continued
access to integrated care and maintain continuity of care for dually
eligible individuals:
State Re-Procurement of Medicaid Managed Care Contracts:
In several states, dually eligible beneficiaries receive Medicaid
services through managed care plans that the state selects through a
competitive procurement process. Some states also require that the
sponsors of Medicaid health plans also offer a D-SNP in the same
service area to promote opportunities for integrated care. Dually
eligible beneficiaries can face disruptions in coverage due to routine
state re-procurements of Medicaid managed care contracts. Individuals
enrolled in Medicaid managed care plans that are not renewed are
typically transitioned to a separate Medicaid managed care plan. In
such a scenario, dually eligible beneficiaries enrolled in the non-
renewing Medicaid managed care plan's corresponding D-SNP product would
now be enrolled in two separate organizations for their Medicaid and
Medicare services, resulting in non-integrated coverage. Under this
proposed regulation, CMS would have the ability, in consultation with
the state Medicaid agency that contracts with integrated D-SNPs, to
passively enroll dually eligible beneficiaries facing such a disruption
into an integrated D-SNP that corresponds with their new Medicaid
managed care plan, thereby promoting continuous enrollment in
integrated care.
[[Page 56370]]
Non-Renewal of D-SNP Contracts: Beneficiaries enrolled in
an integrated D-SNP that non-renews its MA contract at the end of the
contract year can face disruptions in integrated care coverage,
requiring them to actively select a new MA plan or default into
Original Medicare and a standalone prescription drug plan. While states
are permitted to passively enroll beneficiaries for Medicaid coverage
as defined in Sec. 438.54(c), CMS is not permitted to do so for
Medicare coverage when an MA plan non-renews at the end of the contract
year, as current authority for passive enrollment is limited to midyear
terminations. Rather, beneficiaries in the D-SNP that is non-renewing
its contract would need to actively select and enroll in an MA plan
that integrates their Medicare and Medicaid coverage in order to
continue the same level of integrated care. Permitting CMS the ability
to passively enroll D-SNP enrollees into other integrated D-SNP plans
in consultation with the state Medicaid agency would support
beneficiaries remaining in integrated care.
With a limited expansion of our passive enrollment regulatory
authority, we can better promote integrated care and continuity of care
for dually eligible beneficiaries. Therefore, we are proposing to
redesignate the introductory text in Sec. 422.60(g) as paragraph
(g)(1), with a new heading, technical revisions to the existing text
that specifies when passive enrollments may be implemented by CMS
designated as (g)(1)(i) and (ii), and a new paragraph (iii). This new
(g)(1)(iii) would authorize CMS to passively enroll certain dually
eligible individuals currently enrolled in an integrated D-SNP into
another integrated D-SNP, after consulting with the state Medicaid
agency that contracts with the D-SNP or other integrated managed care
plan, to promote continuity of care and integrated care.
We also propose to add a new paragraph (g)(2) to include a number
of requirements that an MA plan would have to meet in order to qualify
to receive passive enrollments under paragraph (g)(1)(iii). We also
propose to include in paragraph (g)(1)(iii) a reference to new
paragraph (g)(2) to make it clear that a contract with the state is
also necessary for a D-SNP to be eligible to receive these passive
enrollments. Specifically, we propose that in order to receive passive
enrollments under the new authority, MA plans must be highly
integrated, thereby restricting passive enrollment to those MA plans
that operate as a FIDE SNP or meet the integration standard for a
highly-integrated D-SNP, as defined in Sec. 422.2 and described in
Sec. 422.102(e) respectively. In an effort to ensure continuity of
care, acquiring MA plans would also be required to have substantially
similar provider and facility networks and Medicare- and Medicaid-
covered benefits as the integrated MA plan (or plans) from which
beneficiaries are passively enrolled. MA plans receiving passive
enrollment would also be required to not have any prohibition on new
enrollment imposed by CMS and have appropriate limits on premium and
cost-sharing for beneficiaries. If our proposed paragraphs (g)(1) and
(g)(2) are finalized, we would describe in subregulatory guidance the
procedure through which CMS would determine qualification for passive
enrollment. We also propose that to receive these passive enrollments,
that D-SNP must meet minimum quality standards based on MA Star
Ratings; we direct the reader to the proposal at section III.A.12. of
this rule regarding the MA Star Rating System. Our proposed regulation
text refers to a requirement to have a minimum overall MA Star Rating
of at least 3 stars, which represents average or above-average
performance. The rating for the year prior to receipt of passive
enrollment would be used in order to provide sufficient time for CMS,
states, and MAOs to prepare for the passive enrollment process. Low-
enrollment contracts or new plans without MA Star Ratings as defined in
Sec. 422.252 would also be eligible for passive enrollment under our
proposal, as long as the plan meets all other proposed requirements.
Our goal with this proposed requirement is to ensure that the D-SNP
plans receiving these passive enrollments provide high-quality care,
coverage and administration of benefits. As passive enrollments, in
some sense, are a benefit to a plan, by providing an enrollee and
associated payments without the plan having successfully marketed to
the enrollee, we believe that it is important that these enrollments
are limited to plans that have demonstrated commitment to quality.
Further, it is important to ensure that when we are making an
enrollment decision for a beneficiary who does not make an alternative
coverage choice that we are guided by the beneficiary's best interests,
which are likely served by a plan that is rated as having average or
above-average performance on the MA Stars Rating System. However, we
recognize that MA Star Ratings do not capture performance for those
services that would be covered under Medicaid, including community
behavioral health treatment and long-term services and supports. We
welcome comments on the process for determining qualification for
passive enrollment under this proposal and particularly on the minimum
quality standards. We request that commenters identify specific
measures and minimum ratings that would best serve our goals in this
proposal and are specific or especially relevant to coverage for dually
eligible beneficiaries.
In addition to the proposed minimum quality standards and other
requirements for a D-SNP to receive passive enrollments, we are
considering limiting our exercise of this proposed new passive
enrollment authority to those circumstances in which such exercise
would not raise total cost to the Medicare and Medicaid programs. We
seek comment on this potential further limitation on exercise of the
proposed passive enrollment regulatory authority to better promote
integrated care and continuity of care. In particular, we seek
stakeholder feedback how to calculate the projected impact on Medicare
and Medicaid costs from exercise of this authority.
The intent of the proposed passive enrollment regulatory authority
is to better promote integrated care and continuity of care--including
with respect to Medicaid coverage--for dually eligible beneficiaries.
As such, we would implement this authority in consultation with the
state Medicaid agencies that are contracting with these plan sponsors
for provision of Medicaid benefits.
We considered proposing new beneficiary notification requirements
for passive enrollments that occur under proposed paragraph
(g)(1)(iii). We considered requiring MA organizations receiving the
passive enrollment to provide two notifications to all potential
enrollees prior to their enrollment effective date. We acknowledge that
under the Financial Alignment Initiative demonstrations, states are
required to provide two passive enrollment notices. Under the passive
enrollment authority proposed here, we would continue to encourage, but
not require, a second notice or additional outreach to impacted
individuals. Given the existing beneficiary notifications that are
currently required under Medicare regulations and concerns regarding
the quantity of notifications sent to beneficiaries, we are not
proposing to modify the existing notification requirements, so these
existing standards would apply for existing passive enrollments and for
the newly proposed passive enrollment authority.
[[Page 56371]]
However, we solicit comment on alternatives regarding beneficiary
notices, including comments about the content and timing of such
notices. Our proposal redesignates the notice requirements to paragraph
(g)(4) with minor grammatical revisions.
Finally, we propose a technical correction to a citation in Sec.
422.60(g), which discusses situations involving an immediate
termination of an MA plan as provided in Sec. 422.510(a)(5). This
citation is outdated, as the regulatory language at Sec. 422.510(a)(5)
has been moved to Sec. 422.510(b)(2)(i)(B). We propose to replace the
current citation with a reference to Sec. 422.510(b)(2)(i)(B).
9. Part D Tiering Exceptions (Sec. Sec. 423.560, 423.578(a) and (c))
a. Background
Section 1860D-4(g)(2) of the Act specifies that a beneficiary
enrolled in a Part D plan offering prescription drug benefits for Part
D drugs through the use of a tiered formulary may request an exception
to the plan sponsor's tiered cost-sharing structure. The statute
requires such plan sponsors to have a process in place for making
determinations on such requests, consistent with guidelines established
by the Secretary. At the start of the Part D program, we finalized
regulations at Sec. 423.578(a) that require plan sponsors to establish
and maintain reasonable and complete exceptions procedures. These
procedures permit enrollees, under certain circumstances, to obtain a
drug in a higher cost-sharing tier at the more favorable cost-sharing
applicable to alternative drugs on a lower cost-sharing tier of the
plan sponsor's formulary. Such an exception is granted when the plan
sponsor determines that the non-preferred drug is medically necessary
based on the prescriber's supporting statement. The tiering exceptions
regulations establish the general scope of issues that must be
addressed under the plan sponsor's tiering exceptions process. Our goal
with the exceptions rules codified in the Part D final rule (70 FR
4352) was to allow plan sponsors sufficient flexibility in benefit
design to obtain pricing discounts necessary to offer optimal value to
beneficiaries, while ensuring that beneficiaries with a medical need
for a non-preferred drug are afforded the type of drug access and
favorable cost-sharing called for under the law.
At the start of the program, most Part D formularies included no
more than four cost-sharing tiers, generally with only one generic
tier. For the 2006 and 2007 plan years respectively, about 83 percent
and 89 percent of plan benefit packages (PBPs) that offered drug
benefits through use of a tiered formulary had 4 or fewer tiers. Since
that time, there have been substantial changes in the prescription drug
landscape, including increasing costs of some generic drugs, as well as
the considerable impact of high-cost drugs on the Part D program. Plan
sponsors have responded by modifying their formularies and PBPs,
resulting in the increased use of two generic-labeled drug tiers and
mixed drug tiers that include brand and generic products on the same
tiers. The flexibilities CMS permits in benefit design enable plan
sponsors to continue to offer comprehensive prescription drug coverage
with reasonable controls on out of pocket costs for enrollees, but
increasingly complex PBPs with more variation in type and level of
cost-sharing. For the 2017 plan year, about 91 percent of all Part D
PBPs offer drug benefits through use of a tiered formulary. Over 98
percent of those tiered PBPs use a formulary containing 5 or 6 tiers;
of those, about 98 percent contain two generic-labeled tiers.
These changes and increased complexities, and more than a decade of
program experience, lead us to believe that our current regulations are
no longer sufficient to ensure that tiering exceptions are understood
by beneficiaries and adjudicated by plan sponsors in the manner the
statute contemplates. For this reason, we propose to amend Sec. Sec.
423.560, 423.578(a) and 423.578(c) to revise and clarify requirements
for how tiering exceptions are to be adjudicated and effectuated.
While section 1860D-4(g)(2) of the Act uses the terms ``preferred''
and ``non-preferred'' drug, rather than ``brand'' and ``generic'', it
also gives the Secretary authority to establish guidelines for making a
determination with respect to a tiering exception request. The statute
further specifies that ``a non-preferred drug could be covered under
the terms applicable for preferred drugs'' (emphasis added) if the
prescribing physician determines that the preferred drug would not be
as effective or would have adverse effects for the individual. The
statute therefore contemplates that tiering exceptions must allow for
an enrollee with a medical need to obtain favorable cost-sharing for a
non-preferred product, but that such access be subject to reasonable
limitations. Establishing regulations that allow plans to impose
certain limitations on tiering exceptions helps ensure that all
enrollees have access to needed drugs at the most favorable cost-
sharing terms possible.
b. General Rules
We are proposing to revise Sec. 423.578(a)(2) to read as follows:
``Part D plan sponsors must establish criteria that provide for a
tiering exception consistent with paragraphs Sec. 423.578(a)(3)
through (a)(6) of this section.'' We believe that inserting a cross-
reference to paragraph (a)(6), which establishes allowable limitations
on tiering exceptions, and which we are also proposing to revise, would
streamline and clarify the requirements for such exceptions. The
proposed revisions would establish rules that more definitively base
eligibility for tiering exceptions on the lowest applicable cost
sharing for the tier containing the preferred alternative drug(s) for
treatment of the enrollee's health condition in relation to the cost
sharing of the requested, higher-cost drug, and not based on tier
labels.
c. Limitations on Tiering Exceptions
We are also proposing to revise the regulations at Sec.
423.578(a)(6) to specify when a Part D plan sponsor may limit tiering
exceptions. We believe the current text, which permits a plan sponsor
to exempt any dedicated generic tier from its tiering exceptions
procedures, is being applied in a manner that restricts tiering
exceptions more stringently than is appropriate. Specifically, Part D
sponsors have been considering any tier that is labeled ``generic'' to
be exempt from tiering exceptions even if the tier also contains brand
name drugs. This has become even more problematic with the increase in
the number of PBPs with more than one tier labeled ``generic''. Based
on an analysis of 2017 plan data entered into the Health Plan
Management System (HPMS), for all Part D plans using a tiered
formulary, 62 percent have indicated at least two tiers that contain
only generic drugs, and 7 percent have three such tiers. Combined with
the allowable exemption of a specialty tier (used by 99.8 percent of
tiered Part D plans in 2017), almost two-thirds of all tiered PBPs
could exempt 3 of their 5 or 6 tiers from tiering exceptions without
any consideration of medical need or placement of preferred alternative
drugs. To ensure appropriate enrollee access to tiering exceptions, we
are proposing to revise Sec. 423.578(a)(6) to specify that a Part D
plan sponsor would not be required to offer a tiering exception for a
brand name drug to a preferred cost-sharing level that applies only to
generic alternatives. Under this proposal, however, plans would be
required to approve tiering exceptions for non-preferred generic drugs
when
[[Page 56372]]
the plan determines that the enrollee cannot take the preferred generic
alternative(s), including when the preferred generic alternative(s) are
on tier(s) that include only generic drugs or when the lower tier(s)
contain a mix of brand and generic alternatives. In other words, plans
would not be permitted to exclude a tier containing alternative drug(s)
with more favorable cost-sharing from their tiering exceptions
procedures altogether just because that lower-cost tier is dedicated to
generic drugs. As described in the following paragraph, we are also
proposing at Sec. 423.578(a)(6) to establish specific tiering
exceptions policy for biological products.
Proposed Sec. 423.578(a)(6)(iii) would specify that, ``If a Part D
plan sponsor maintains a specialty tier, as defined in Sec. 423.560,
the sponsor may design its exception process so that Part D drugs and
biological products on the specialty tier are not eligible for a
tiering exception.'' We also propose to add the following definition to
Subpart M at Sec. 423.560:
Specialty tier means a formulary cost-sharing tier dedicated to
very high cost Part D drugs and biological products that exceed a cost
threshold established by the Secretary. We note that, while the
proposed definition of specialty tier does not refer to ``unique''
drugs as existing Sec. 423.578(a)(7) does, we do not intend to change
the criteria for the specialty tier, which has always been based on the
drug cost. This proposal would retain the current regulatory provision
that permits Part D plan sponsors to disallow tiering exceptions for
any drug that is on the plan's specialty tier. This policy is currently
codified at Sec. 423.578(a)(7), which would be revised and
redesignated as Sec. 423.578(a)(6)(iii). We believe that retaining the
existing policy limiting the availability of tiering exceptions for
drugs on the specialty tier is important because of the beneficiary
protection that limits cost-sharing for the specialty tier to 25
percent coinsurance (up to 33 percent for plans that have a reduced or
$0 Part D deductible), ensuring that these very high cost drugs remain
accessible to enrollees at cost sharing equivalent to the defined
standard benefit.
We also clarify that, if the specialty tier has cost sharing more
preferable than another tier, then a drug placed on such other non-
preferred tier is eligible for a tiering exception down to the cost
sharing applicable to the specialty tier if an applicable alternative
drug is on the specialty tier and the other requirements of Sec.
423.578(a) are met. In other words, while plans are not required to
allow tiering exceptions for drugs on the specialty tier to a more
preferable cost-sharing tier, the specialty tier is not exempt from
being considered a preferred tier for purposes of tiering exceptions.
We believe a shift in regulatory policy that establishes a
distinction between non-preferred branded drugs, biological products,
and non-preferred generic and authorized generic drugs, achieves needed
balance between limitations in plans' exceptions criteria and
beneficiary access, and aligns with how many plan sponsors already
design their tiering exceptions criteria. Accordingly, we are proposing
to revise Sec. 423.578(a)(6) to clarify and establish additional
limitations plans would be permitted to place on tiering exception
requests. First, we are proposing new paragraphs (i) and (ii), which
would permit plans to limit the availability of tiering exceptions for
the following drug types to a preferred tier that contains the same
type of alternative drug(s) for treating the enrollee's condition:
Brand name drugs for which an application is approved
under section 505(c) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355(c)), including an application referred to in section
505(b)(2) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355(b)(2)); and
Biological products, including follow-on biologics,
licensed under section 351 the Public Health Service Act.
With the proposed revisions, that approved tiering exceptions for
brand name drugs would generally be assigned to the lowest applicable
cost-sharing associated with brand name alternatives, and approved
tiering exceptions for biological products would generally be assigned
to the lowest applicable cost-sharing associated with biological
alternatives. Similarly, tiering exceptions for non-preferred generic
drugs would be assigned to the lowest applicable cost-sharing
associated with alternatives that are either brand or generic drugs
(see further discussion later in this section related to assignment of
cost-sharing for approved tiering exceptions to the lowest applicable
tier). Given the widespread use of multiple generic tiers on Part D
formularies, and the inclusion of generic drugs on mixed, higher-cost
tiers, we believe these changes are needed to ensure that tiering
exceptions for non-preferred generic drugs are available to enrollees
with a demonstrated medical need. Procedures that allow for tiering
exceptions for higher-cost generics when medically necessary promote
the use of generic drugs among Part D enrollees and assist them in
managing out of pocket costs.
We are also proposing at Sec. 423.578(a)(6)(i) to codify that
plans are not required to offer tiering exceptions for brand name drugs
or biological products at the cost-sharing level of alternative drug(s)
for treating the enrollee's condition, where the alternatives include
only the following drug types:
Generic drugs for which an application is approved under
section 505(j) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355(j)), or
Authorized generic drugs as defined in section 505(t)(3)
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(t)(3)).
As discussed in the Call Letter, CMS collects Part D plan formulary
data based on the National Library of Medicare RxNorm concept unique
identifier (RxCUI), and not at the manufacturer-specific National Drug
Code (NDC) level. This process does not allow us to clearly identify
whether a plan sponsor includes coverage of authorized generic NDCs or
not. We believe this position is consistent with how plans currently
administer their formularies. Under this regulatory proposal, a plan
sponsor could not completely exclude a lower tier containing only
generic and authorized generic drugs from its tiering exception
procedures, but would be permitted to limit the cost sharing for a
particular brand drug or biological product to the lowest tier
containing the same drug type. Plans would be required to grant a
tiering exception for a higher cost generic or authorized generic drug
to the cost sharing associated with the lowest tier containing generic
and/or authorized generic alternatives when the medical necessity
criteria is met.
d. Alternative Drugs for Treatment of the Enrollee's Condition
In response to the 2018 Call Letter and RFI, we received comments
from plan sponsors and PBMs requesting that CMS provide additional
guidance on how to determine what constitutes an alternative drug for
purposes of tiering exceptions, including establishment of additional
limitations on when such exceptions are approvable. The statutory
language for tiering and formulary exceptions at sections 1860D-4(g)(2)
and 1860D-4(h)(2) of the Act, respectively, specifically refers to a
preferred or formulary drug ``for treatment of the same condition.'' We
interpret this language to be referring to the condition as it affects
the enrollee--that is, taking into consideration the individual's
overall clinical condition,
[[Page 56373]]
including the presence of comorbidities and known relevant
characteristics of the enrollee and/or the drug regimen, which can
factor into which drugs are appropriate alternative therapies for that
enrollee. The Part D statute at Sec. 1860D-4(g)(2) requires that
coverage decisions subject to the exceptions process be based on the
medical necessity of the requested drug for the individual for whom the
exception is sought. We believe that requirement reasonably includes
consideration of alternative therapies for treatment of the enrollee's
condition, based on the facts and circumstances of the case.
e. Approval of Tiering Exception Requests
We are proposing to revise Sec. 423.578(c)(3) by renumbering the
provision and adding a new paragraph (ii) to codify our current policy
that cost sharing for an approved tiering exception request is assigned
at the lowest applicable tier when preferred alternatives sit on
multiple lower tiers. Under this proposal, assignment of cost sharing
for an approved tiering exception must be at the most favorable cost-
sharing tier containing alternative drugs, unless such alternative
drugs are not applicable pursuant to limitations set forth under
proposed Sec. 423.578(a)(6). We are also proposing to delete similar
language from existing (c)(3) that proposed new paragraph (c)(3)(ii)
would replace.
f. Additional Technical Changes and Corrections
Finally, we are proposing various technical changes and corrections
to improve the clarity of the tiering exceptions regulations and
consistency with the regulations for formulary exceptions.
Specifically, we are proposing the following:
Revise the introductory text of Sec. 423.578(a) to
clarify that a ``requested'' non-preferred drug for treatment of an
enrollee's health condition may be eligible for an exception.
Revise Sec. 423.578(a)(1) to include ``tiering'' when
referring to the exceptions procedures described in this subparagraph.
Revise Sec. 423.578(a)(4) by making ``conditions''
singular and by adding ``(s)'' to ``drug'' to account for situations
when there are multiple alternative drugs.
Revise Sec. 423.578(a)(5) by removing the text specifying
that the prescriber's supporting statement ``demonstrate the medical
necessity of the drug'' to align with the existing language for
formulary exceptions at Sec. 423.578(b)(6). The requirement that the
supporting statement address the enrollee's medical need for the
requested drug is already explained in the introductory text of Sec.
423.578(a).
Redesignate paragraphs Sec. 423.578(c)(3)(i) through
(iii) as paragraphs Sec. 423.578(c)(3)(i)(A) through (C),
respectively. This proposed change would improve consistency between
the regulation text for tiering and formulary exceptions.
We anticipate that the proposed changes to the tiering exceptions
regulations will make this process more accessible and transparent for
enrollees and less cumbersome for plan sponsors to administer. We also
believe that, by helping plan sponsors ensure their tiering exceptions
processes comply with CMS requirements, IRE overturn rates for tiering
exception requests will remain low.
10. Establishing Limitations for the Part D Special Election Period
(SEP) for Dually Eligible Beneficiaries (Sec. 423.38)
As discussed in section III.A.2 of this proposed rule, the MMA
added section 1860D-1(b)(3)(D) to the Act to establish a special
election period (SEP) for full-benefit dual eligible (FBDE)
beneficiaries under Part D. This SEP, codified at Sec. 423.38(c)(4),
was later extended to all other subsidy-eligible beneficiaries by
regulation (75 FR 19720). The SEP allows eligible beneficiaries to make
Part D enrollment changes (that is, enroll in, disenroll from, or
change Part D plans, including Medicare Advantage Prescription Drug
(MA-PD) plans) throughout the year, unlike other Part D enrollees who
generally may switch plans only during the annual enrollment period
(AEP) each fall.
The MMA sought to strike a balance of promoting beneficiary plan
choice, but also ensuring that FBDE beneficiaries who did not make an
active election would still have Part D coverage. The statute directed
the Secretary to enroll FBDE beneficiaries into a PDP if they did not
enroll in a Part D plan on their own. (As noted previously, CMS
extended the SEP through rulemaking to make it available to all other
subsidy-eligible beneficiaries.) When the automatic enrollment of
subsidy-eligible beneficiaries was originally proposed in rulemaking,
we noted that beneficiaries would have the option to use the SEP if
they determined there was a better plan option for them, and codified a
continuous SEP (that is, that was available monthly).
At the time, we did not know on what factors FBDE beneficiaries
would rely to make their plan choice. Now, with over 10 years of
programmatic experience, we have observed certain enrollment trends in
terms of FBDE and other LIS beneficiaries:
Most LIS beneficiaries do not make an active choice to
join a PDP. For plan year 2015, over 71 percent of LIS individuals in
PDPs were placed into that plan by CMS.
Once in a plan, whether it was a CMS-initiated enrollment
or a choice they made on their own, most LIS beneficiaries do not make
changes during the year. Of all LIS beneficiaries who were eligible for
the SEP in 2016, less than 10 percent utilized it. Overall, we have
seen slight growth of SEP usage over the past 5 years (for example,
less than 8 percent in 2012, approximately 9 percent in 2014).
A small subset (0.8 percent) of LIS beneficiaries use the
SEP to actively enroll in a plan of their choice and then disenroll
within 2 months.
While we know that the majority of LIS-eligible beneficiaries do
not take advantage of the SEP, we have seen the Medicare and Medicaid
environment evolve in such a way that it may be disadvantageous to
beneficiaries if they changed plans during the year, let alone if they
made multiple changes. States and plans have noted that they are best
able to provide or coordinate care if there is continuity of
enrollment, particularly if the beneficiary is enrolled in an
integrated product (as discussed later in this section). We now know
that in addition to choice, there are other critical issues that must
be considered in determining when and how often beneficiaries should be
able to change their Medicare coverage during the year, such as
coordination of Medicare-Medicaid benefits, beneficiary care
management, and public health concerns such as the national opioid
epidemic (and the drug management programs discussed in section
II.A.1). In addition, there are different care models available now
such as dual eligible special needs plans (D-SNPs), Fully Integrated
Dual Eligible (FIDE) SNPs, and Medicare-Medicaid Plans (MMPs) that are
discussed later in this section and specifically designed to meet the
needs of high risk, high needs beneficiaries.
Current enrollment trends demonstrate that while a majority of
subsidy-eligible beneficiaries still receive their Part D coverage
through standalone PDPs, an increasing percentage of beneficiaries are
enrolled in MA-PDs and other capitated managed care products, including
over one in three dually eligible beneficiaries. A smaller but rapidly
growing subset are enrolled in capitated
[[Page 56374]]
Medicare managed care products that also integrate Medicaid services.
For example:
The MMA established D-SNPs to provide coordinated care to
dually eligible beneficiaries. Between 2007 and 2016, growth in D-SNPs
has increased by almost 150 percent.
FIDE SNPs are a type of SNP created by the Affordable Care
Act (ACA) in 2010 designed to promote full integration and coordination
of Medicare and Medicare benefits for dually eligible beneficiaries by
a single managed care organization. In 2017, there are 39 FIDE SNPs
providing coverage to approximately 155,000 beneficiaries.
MMPs, which operate as part of a model test under Section
1115(A) of the Act, are fully-capitated health plans that serve dually
eligible beneficiaries though demonstrations under the Financial
Alignment Initiative. The demonstrations are designed to promote full
access to seamless, high quality integrated health care across both
Medicare and Medicaid. In 2017, there are 58 MMPs providing coverage to
nearly 400,000 beneficiaries.
The current SEP, especially in the context of these products that
integrate Medicare and Medicaid, highlights differences in Medicare and
Medicaid managed care enrollment policies. Bringing Medicare and
Medicaid enrollment policies into greater alignment, even partially, is
a mechanism to reduce complexity in the health care system and better
partner with states. Both are important priorities for CMS.
In addition, the application of the continuous SEP carries
different service delivery implications for enrollees of MA-PD plans
and related products than for standalone enrollees of PDPs. At the
outset of the Part D program, when drug coverage for dually eligible
beneficiaries was transitioned from Medicaid to Medicare, there were
concerns about how CMS would effectively identify, educate, and enroll
dually eligible beneficiaries. While processes (for example, auto-
enrollment, reassignment) were established to facilitate coverage, the
continuous SEP served as a fail-safe to ensure that the beneficiary was
always in a position to make a choice that best served their healthcare
needs. Unintended consequences have resulted from this flexibility,
including, as noted by the Medicare Payment Advisory Commission (MedPAC
\32\), opportunities for marketing abuses.
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\32\ Medicare Payment Advisory Commission, ``Report to Congress:
Medicare Payment Policy,'' March 2008.
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Among the key obstacles the SEP (and resulting plan movement) can
present are--
Interfering with the coordination of care among the
providers, health plans, and states;
Hindering the ability for beneficiaries to benefit from
case management and disease management;
Wasting the effort and resources needed to conduct
enrollee needs assessments and developing plans of care for services
covered by Medicare and Medicaid;
Limiting a plan's opportunity for continuous treatment of
chronic conditions; and
Diminishing incentives for plans to innovate and invest in
serving potentially high-cost members.
While we still support in the underlying principle that LIS
beneficiaries should have the ability to make an active choice, we find
that plan sponsors are better able to administer benefits to
beneficiaries, including coordination of Medicare and Medicaid
benefits, and maximize care management and positive health outcomes, if
dual and other LIS-eligible beneficiaries are held to the similar
election period requirements as all other Part D-eligible
beneficiaries. Therefore, we are proposing to amend Sec. 423.38(c)(4)
to make the SEP for FBDE and other subsidy-eligible individuals
available only in certain circumstances. These circumstances would be
considered separate and unique from one another, so there could be
situations where a beneficiary could still use the SEP multiple times
if he or she meets more than one of the conditions proposed as follows.
Specifically, we are proposing to revise to Sec. 423.38(c) to specify
that the SEP is available only as follows:
In new paragraph (c)(4)(i), eligible beneficiaries (that
is, those who are dual or other LIS-eligible and meet the definition of
at-risk beneficiary or potential at-risk beneficiary under proposed
Sec. 423.100) would be able to use the SEP once per calendar year.
In new paragraph (c)(4)(iii), eligible beneficiaries who
have been assigned to a plan by CMS or a State would be able to use the
SEP before that election becomes effective (that is, opt out and enroll
in a different plan) or within 2 months of their enrollment in that
plan.
In new paragraph (c)(9), dual and other LIS-eligible
beneficiaries who have a change in their Medicaid or LIS-eligible
status would have an SEP to make an election within 2 months of the
change, or of being notified of such change, whichever is later. This
SEP would be available to beneficiaries who experience a change in
Medicaid or LIS status regardless of whether they have been identified
as potential at-risk beneficiaries or at-risk beneficiaries under
proposed Sec. 423.100. In addition, we are also proposing to remove
the phrase ``at any time'' in the introductory language of Sec.
423.38(c) for the sake of clarity.
The onetime annual SEP opportunity would be able to be used at any
time of the year to enroll in a new plan or disenroll from the current
plan, provided that their eligibility for the SEP has not been limited
consistent with section 1860D-1(b)(3)(D) of the Act, as amended by CARA
(as discussed in section III.A.2. of this proposed rule). We believe
that the onetime annual SEP would still provide dually eligible
beneficiaries adequate opportunity to change their coverage during the
year if desired, but is also responsive to consistent feedback we have
received from States and plans that have noted that the current SEP,
which allows month-to-month movement, can disrupt continuity of care,
especially in integrated care plans. They specifically noted that
effective care management can best be achieved through continuous
enrollment.
Beneficiaries who have been enrolled in a plan by CMS or a state
(that is, through processes such as auto enrollment, facilitated
enrollment, passive enrollment, default enrollment (seamless
conversion), or reassignment), would be allowed a separate, additional
use of the SEP, provided that their eligibility for the SEP has not
been limited consistent with section 1860D-1(b)(3)(D) of the Act, as
amended by CARA. These beneficiaries would still have a period of time
before the election takes effect to opt out and choose their own plan
or they would be able to use the SEP to make an election within 2
months of the assignment effective date. Once a beneficiary has made an
election (either prior to or after the effective date) it would be
considered ``used'' and no longer would be available. If a beneficiary
wants to change plans after 2 months, he or she would have to use the
onetime annual election opportunity discussed previously, provided that
it has not been used yet. If that election has been used, the
beneficiary would have to wait until they are eligible for another
election period to make a change.
[[Page 56375]]
Under a new proposed SEP, individuals who have a change in their
Medicaid or LIS-eligible status would have an election opportunity that
is separate from, and in addition to, the two scenarios discussed
previously. (As discussed in section III.A.2. of this rule, and unlike
the other two conditions discussed previously, individuals identified
as ``at risk'' would be able to use this SEP.) This would apply to
individuals who gain, lose, or change Medicaid or LIS eligibility. We
believe that in these instances, it would be appropriate to give these
beneficiaries an opportunity to re-evaluate their Part D coverage in
light of their changing circumstances. Beneficiaries eligible for this
SEP would need to use it within 2 months of the change or of being
notified of the change, whichever is later.
We considered multiple alternatives related to the SEP proposal. We
describe two such alternatives in the following discussion:
Limit of two or three uses of the SEP per year. In 2016, 1.2
million beneficiaries used the SEP for FBDE or other subsidy-eligible
individuals, including over 27,000 who used the SEP three or more
times, and over 1,700 who used the SEP five or more times during the
year. These SEP changes are in addition to changes made during the AEP
and any other election periods for which a beneficiary may qualify. We
believe that any overuse of the SEP creates significant inefficiencies
and impedes meaningful continuity of care and care coordination. As
such, we considered applying a simple numerical limit to the number of
times the LIS SEP could be used by any beneficiary within each calendar
year. We specifically considered limits of either two or three uses of
the SEP per year.
Compared to our proposal to limit the use of the SEP to one time
per calendar year, this alternative would permit more opportunities for
midyear changes. However, it could still allow for a high level of
membership churning. Relative to our proposal, it would also be less
effective in limiting the opportunities for aggressive marketing to LIS
beneficiaries outside of the AEP. We welcome comments on this
alternative.
Limits on midyear MA-PD plan switching. We also considered a more
complex option, drawing heavily on earlier MedPAC recommendations.\33\
Under this alternative we would:
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\33\ Medicare Payment Advisory Commission, ``Report to Congress:
Medicare Payment Policy,'' March 2008.
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Modify the SEP to prohibit its use to elect a non-
integrated MA-PD plan. As such, the SEP would not be used for switching
between MA-PD plans, movement from integrated products to a non-
integrated MA-PD plan, or movement from Medicare FFS to an MA-PD plan.
Beneficiaries would still be able to select non-integrated MA-PD plans
during other enrollment periods, such as the AEP, the open enrollment
period (OEP) outlined in section III.C.2. of this proposed rule, and
any other SEP for which they may be eligible; and
Allow continuous use of the dual SEP to allow eligible
beneficiaries to enroll into FIDE SNPs or comparably integrated
products for dually eligible beneficiaries through model tests under
section 1115(A) of the Act.
This alternative would still permit continuous election of Medicare
FFS with a standalone PDP throughout the year and a continuous option
to change between standalone PDPs.
We believe this alternative would create greater stability among
plans and limit the opportunities for misleading and aggressive
marketing to dually-eligible individuals. It would also maintain the
opportunity for continuous enrollment into integrated products to
reflect our ongoing partnership with states to promote integrated care.
However, this alternative would be more complex to administer and
explain to beneficiaries, and it encourages enrollment into a limited
set of MA plans compared to all the plans available to the beneficiary
under the MA program. We welcome comments on this alternative.
We believe that our proposed approach to narrowing of the scope of
the SEP preserves a dual or other LIS-eligible beneficiary's ability to
make an active choice. As noted previously, less than 10 percent of the
LIS population used the dual SEP in 2016. We acknowledge that even
though this is a small percentage of the population, given the number
of beneficiaries who receive Extra Help, this equates to over a million
elections. We note, though, that of this group, the majority (74.5
percent) used the SEP one time. Under our proposal, this population
would still be able to make an election, thus, we believe that the
majority of beneficiaries would not be negatively impacted by these
changes. We opted for our proposed approach, as opposed to the
alternatives, because we believe it encourages continuity of enrollment
and care, without overcomplicating both beneficiary understanding of
how the SEP is available to them, as well as plan sponsor operational
responsibilities.
If the proposal is finalized, we would revise our messaging and
beneficiary education materials as necessary to ensure that dual and
other LIS-eligible beneficiaries understand that the SEP is no longer
an unlimited opportunity. We would also need to ensure that
beneficiaries who are assigned to a plan by CMS or the State understand
that they must use the SEP within 2 months after the new coverage
begins if they wish to change from the plan to which they were
assigned.
We note that other election periods, including the AEP, the new
OEP, or other SEPs (for example, when moving to a new service area),
would still be available to individuals. In addition, the proposed
limitations would also apply to the Part C SEP established in sub-
regulatory guidance for dual-eligible individuals or individuals who
lose their dual-eligibility.
We welcome public comment on this proposal and the considered
alternatives. Specifically, we seek input on the following areas:
Are there other limited circumstances where the dual SEP
should be available?
Are there special considerations CMS should keep in mind
if we finalize this policy?
Are there other alternative approaches we should consider
in lieu of narrowing the scope of the SEP?
In addition to CMS outreach materials, what are the best
ways to educate the affected population and other stakeholders of the
new proposed SEP parameters?
11. Medicare Advantage and Part D Prescription Drug Program Quality
Rating System
a. Introduction
We are committed to transforming the health care delivery system--
and the Medicare program--by putting a strong focus on person-centered
care, in accordance with the CMS Quality Strategy, so each provider can
direct their time and resources to each beneficiary and improve their
outcomes. As part of this commitment, one of our most important
strategic goals is to improve the quality of care for Medicare
beneficiaries. The Part C and D Star Ratings support the efforts of CMS
to improve the level of accountability for the care provided by health
and drug plans, physicians, hospitals, and other Medicare providers. We
currently publicly report the quality and performance of health and
drug plans on the Medicare Plan Finder tool on www.medicare.gov in the
form of summary and overall ratings for the contracts under which each
MA plan (including MA-PD plans) and Part D plan is offered, with drill
downs to
[[Page 56376]]
ratings for domains, ratings for individual measures, and underlying
performance data. We also post additional measures on the display page
\34\ at www.cms.gov for informational purposes. The goals of the Star
Ratings are to display quality information on Medicare Plan Finder for
public accountability and to help beneficiaries, families, and
caregivers make informed choices by being able to consider a plan's
quality, cost, and coverage; to incentivize quality improvement; to
provide information to oversee and monitor quality; and to accurately
measure and calculate scores and stars to reflect true performance. In
addition, CMS has started to incorporate efforts to recognize the
challenges of serving high risk, high needs populations while
continuing the focus on improving health care for these important
groups.
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\34\ https://go.cms.gov/partcanddstarratings (under the
downloads).
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In this rule as part of the Administration's efforts to improve
transparency, we propose to codify the existing Star Ratings System for
the MA and Part D programs with some changes. As noted later in this
section in more detail, the proposed changes include more clearly
delineating the rules for adding, updating, and removing measures and
modifying how we calculate Star Ratings for contracts that consolidate.
Although the rulemaking process will create a longer lead time for
changes, codifying the Star Ratings methodology will provide plans with
more stability to plan multi-year initiatives, because they will know
the measures several years in advance. We have received comments for
the past several years from MA organizations and other stakeholders
asking that CMS use Federal Register rulemaking for the Star Ratings
System; we discuss in section III.12.c. (regarding plans for the
transition period before the codified rules are used) how section
1832(b) authorizes CMS to establish and annually modify the Star
Ratings System using the Advance Notice and Rate Announcement process
because the system is an integral part of the policies governing Part C
payment. We think this is an appropriate time to codify the
methodology, because the rating system has been used for several years
now and is relatively mature so there is less need for extensive
changes every year; the smaller degree of flexibility in having
codified regulations rather than using the process for adopting payment
methodology changes may be appropriate. Further, by adopting and
codifying the rules that govern the Star Ratings System, we are
demonstrating a commitment to transparency and predictability for the
rules in the system so as to foster investment.
b. Background
We originally acted upon our authority to disseminate information
to beneficiaries as the basis for developing and publicly posting the
5-star ratings system (sections 1851(d) and 1852(e) of the Act). The MA
statute explicitly requires that information about plan quality and
performance indicators be provided to beneficiaries in an easy to
understand language to help them make informed plan choices. These data
are to include disenrollment rates, enrollee satisfaction, health
outcomes, and plan compliance with requirements.
The Part D statute (at section 1860D-1(c)) imposes a parallel
information dissemination requirement with respect to Part D plans, and
refers specifically to comparative information on consumer satisfaction
survey results as well as quality and plan performance indicators. Part
D plans are also required by regulation (Sec. 423.156) to make
Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey
data available to CMS and are required to submit pricing and
prescription drug event data under statutes and regulations specific to
those data. Regulations require plans to report on quality improvement
and quality assurance and to provide data which CMS can use to help
beneficiaries compare plans (Sec. Sec. 422.152 and 423.153). In
addition we may require plans to report statistics and other
information in specific categories (Sec. Sec. 422.516 and 423.514).
Currently, for similar reasons of providing information to
beneficiaries to assist them in plan enrollment decisions, we also
review and rate section 1876 cost plans on many of the same measures
and publish the results. We also propose to continue to include 1876
cost contracts in the MA and Part D Star Rating system to provide
comparative information to Medicare beneficiaries making plan choices.
We propose specific text, to be codified at Sec. 417.472(k), noting
that 1876 cost contracts must agree to be rated under the quality
rating system specified at subpart D of part 422. Cost contracts are
also required by regulation (Sec. 17.472(j)) to make CAHPS survey data
available to CMS. As is the case today, no quality bonus payments (QBP)
would be associated with the ratings for 1876 cost contracts.
In line with Sec. Sec. 422.152 and 423.153, CMS uses the
Healthcare Effectiveness Data and Information Set (HEDIS), Health
Outcomes Survey (HOS), CAHPS data, Part C and D Reporting requirements
and administrative data, and data from CMS contractors and oversight
activities to measure quality and performance of contracts. We have
been displaying plan quality information based on that and other data
since 1998.
Since 2007, we have published annual performance ratings for stand-
alone Medicare PDPs. In 2008, we introduced and displayed the Star
Ratings for Medicare Advantage Organizations (MAOs) for both Part C
only contracts (MA-only contracts) and Part C and D contracts (MA-PDs).
Each year since 2008, we have released the MA Star Ratings. An overall
rating combining health and drug plan measures was added in 2011, and
differential weighting of measures (for example, outcomes being
weighted 3 times the value of process measures) began in 2012. The
measurement of year to year improvement began in 2013, and an
adjustment (Categorical Adjustment Index) was introduced in 2017 to
address the within-contract disparity in performance revealed in our
research among beneficiaries that are dual eligible, receive a low
income subsidy, and/or are disabled.
The MA and Part D Star Ratings measure the quality of care and
experiences of beneficiaries enrolled in MA and Part D contracts, with
5 stars as the highest rating and 1 star as the lowest rating. The Star
Ratings provide ratings at various levels of a hierarchical structure
based on contract type, and all ratings are determined using the
measure-level Star Ratings. Contingent on the contract type, ratings
may be provided and include overall, summary (Part C and D), and domain
Star Ratings. Information about the measures, the hierarchical
structure of the ratings, and the methodology to generate the Star
Ratings is detailed in the annually updated Medicare Part C and D Star
Ratings Technical Notes, referred to as Technical Notes, available at
https://go.cms.gov/partcanddstarratings.
The MA and Part D Star Ratings System is designed to provide
information to the beneficiary that is a true reflection of the plan's
quality and encompasses multiple dimensions of high quality care. The
information included in the ratings is selected based on its relevance
and importance such that it can meet the data needs of beneficiaries
using it to inform plan choice. While encouraging improved health
outcomes of beneficiaries in an efficient, person centered, equitable,
and high quality manner is one of the
[[Page 56377]]
primary goals of the ratings, they also provide feedback on specific
aspects of care that directly impact outcomes, such as process measures
and the beneficiary's perspective. The ratings focus on aspects of care
that are within the control of the health plan and can spur quality
improvement. The data used in the ratings must be complete, accurate,
reliable, and valid. A delicate balance exists between measuring
numerous aspects of quality and the need for a small data set that
minimizes reporting burden for the industry. Also, the beneficiary or
his or her representative must have enough information to make an
informed decision without feeling overwhelmed by the volume of data.
The Patient Protection and Affordable Care Act (Pub. L. 111-148),
as amended by the Healthcare and Education Reconciliation Act (Pub. L.
111-152), provides for quality ratings, based on a 5-star rating system
and the information collected under section 1852(e) of the Act, to be
used in calculating payment to MA organizations beginning in 2012.
Specifically, sections 1853(o) and 1854(b)(1)(C) of the Act provide,
respectively, for an increase in the benchmark against which MA
organizations bid and in the portion of the savings between the bid and
benchmark available to the MA organization to use as a rebate. Under
the Act, Part D plan sponsors are not eligible for quality based
payments or rebates. We finalized a rule on April 15, 2011 to implement
these provisions and to use the existing Star Ratings System that had
been in place since 2007 and 2008. (76 FR 21485-21490).\35\ In
addition, the Star Ratings measures are tied in many ways to
responsibilities and obligations of MA organizations and Part D
sponsors under their contracts with CMS. We believe that continued poor
performance on the measures and overall and summary ratings indicates
systemic and wide-spread problems in an MA plan or Part D plan. In
April 2012, we finalized a regulation to use consistently low summary
Star Ratings--meaning 3 years of summary Star Ratings below 3 stars--as
the basis for a contract termination for Part C and Part D plans.
(Sec. Sec. 422.510(a)(14) and 423.509(a)(13)). Those regulations
further reflect the role the Star Ratings have had in CMS' oversight,
evaluation, and monitoring of MA and Part D plans to ensure compliance
with the respective program requirements and the provision of quality
care and health coverage to Medicare beneficiaries.
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\35\ The ratings were first used as part of the Quality Bonus
Payment Demonstration for 2012 through 2014 and then used for
payment purposes as specified in sections 1853(o) and 1854(b)(1)(C)
and the regulation at 42 CFR 422.258(d)(7).
---------------------------------------------------------------------------
The true potential of the use of the MA and Part D Star Ratings
System to reach our goals and to serve as a catalyst for change can
only be realized by working in tandem with our many stakeholders
including beneficiaries, industry, and advocates. The following guiding
principles have been used historically in making enhancements to the MA
and Part D Star Ratings:
Ratings align with the current CMS Quality Strategy.
Measures developed by consensus-based organizations are
used as much as possible.
Ratings are a true reflection of plan quality and enrollee
experience; the methodology minimizes risk of misclassification.
Ratings are stable over time.
Ratings treat contracts fairly and equally.
Measures are selected to reflect the prevalence of
conditions and the importance of health outcomes in the Medicare
population.
Data are complete, accurate, and reliable.
Improvement on measures is under the control of the health
or drug plan.
Utility of ratings is considered for a wide range of
purposes and goals.
++ Accountability to the public.
++ Enrollment choice for beneficiaries.
++ Driving quality improvement for plans and providers.
Ratings minimize unintended consequences.
Process of developing methodology is transparent and
allows for multi-stakeholder input.
We are using these goals to guide our proposal and how we interpret
and apply the proposed regulations once finalized. For each provision
we are proposing, we solicit comment on whether our specific proposed
regulation text best serves these guiding principles. We also solicit
comment on whether additional or other principles are better suited for
these roles in measuring and communicating quality in the MA and Part D
programs in a comparative manner.
As we continue to consider making changes to the MA and Part D
programs in order to increase plan participation and improve benefit
offerings to enrollees, we would also like to solicit feedback from
stakeholders on how well the existing stars measures create meaningful
quality improvement incentives and differentiate plans based on
quality. We welcome all comments on those topics, and will consider
them for changes through this or future rulemaking or in connection
with interpreting our regulations (once finalized) on the Star Rating
system measures. However, we are particularly interested in receiving
stakeholder feedback on the following topics:
Additional opportunities to improve measures so that they
further reflect the quality of health outcomes under the rated plans.
Whether CMS' current process for establishing the cut
points for Star Rating can be simplified, and if the relative
performance as reflected by the existing cut points accurately reflects
plan quality.
How CMS should measure overall improvement across the Star
Ratings measures. We are requesting input on additional improvement
adjustments that could be implemented, and the effect that these
adjustments could have on new entrants (that is, new MA organizations
and/or new plans offered by existing MA organizations).
Additional adjustments to the Star Ratings measures or
methodology that could further account for unique geographic and
provider market characteristics that affect performance (for example,
rural geographies or monopolistic provider geographies), and the
operational difficulties that plans could experience if such
adjustments were adopted.
In order to further encourage plan participation and new
market entrants, whether CMS should consider implementing a
demonstration to test alternative approaches for putting new entrants
(that is, new MA organizations) on a level playing field with renewing
plans from a Star Ratings perspective for a pre-determined period of
time.
Adding measures that evaluate quality from the perspective
of adopting new technology (for example, the percent of beneficiaries
enrolled through online brokers or the use of telemedicine) or
improving the ease, simplicity, and satisfaction of the beneficiary
experience in a plan.
Including survey measures of physicians' experiences.
(Currently, we measure beneficiaries' experiences with their health and
drug plans through the CAHPS survey.) Physicians also interact with
health and drug plans on a daily basis on behalf of their patients. We
are considering developing a survey tool for collecting standardized
information on physicians' experiences with health and drug plans and
their services, and we would welcome comments.
[[Page 56378]]
c. Basis, Purpose and Applicability of the Quality Star Ratings System
We propose to codify regulation text, at Sec. Sec. 422.160 and
423.180, that identifies the statutory authority, purpose, and
applicability of the Star Ratings System regulations we are proposing
to add to part 422 subpart D and part 423 subpart D. Under our
proposal, the existing purposes of the quality rating system--to
provide comparative information to Medicare beneficiaries pursuant to
sections 1851(d) and 1860D-1(c) of the Act, to identify and apply the
payment consequences for MA plans under sections 1853(o) and
1854(b)(1)(C) of the Act, and to evaluate and oversee overall and
specific performance by plans--would continue. To reflect how the Part
D ratings are used for MA-PD plan QBP status and rebate retention
allowances, we also propose specific text, to be codified at Sec.
423.180(b)(2), noting that the Part D Star Rating will be used for
those purposes.
We are proposing here, broadly stated, to codify the current
quality Star Ratings System uses, methodology, measures, and data
collection beginning with the measurement periods in calendar year
2019. We are proposing some changes, such as how we handle
consolidations from the current Star Ratings program, but overall the
proposal is to continue the Star Ratings System as it has been
developed and has stabilized. Data will be collected and performance
will be measured using these proposed rules and regulations for the
2019 measurement period; the associated quality Star Ratings will be
used to assign QBP ratings for the 2022 payment year and released prior
to the annual coordinated election period held in late 2020 for the
2021 contract year. Application of the final regulations resulting from
this proposal will determine whether the measures proposed in section
III.A.12.i. of the proposed rule (Table 2) are updated, transitioned to
or from the display page, and otherwise used in conjunction with the
2019 performance period.
Under our proposal, the current quality Star Ratings System and the
procedures for revising it will remain in place for the 2019 and 2020
quality Star Ratings. Section 1853(b) of the Act authorizes an advance
notice and rate announcement to announce and seek comment for proposed
changes to the MA payment methodology, which includes the Part C and D
Star Ratings program. The statute identifies specific notice and
comment timeframes, but that process does not require publication in
the Federal Register. We have used the draft and final Call Letter,
which are attachments to the Advance Notice and final Rate Announcement
respectively,\36\ to propose for comment and finalize changes to the
quality Star Ratings System since the ratings became a component of the
payment methodology for MA and MA-PD plans. (76 FR 214878 through 89).
Because the Star Ratings System has been integrated into the payment
methodology since the 2012 contract year (as a mechanism used to
determine how much a plan is paid, and not the mechanism by which (or a
rule about when) a plan is paid), the Star Ratings are part of the
process for setting benchmarks and capitation rates under section 1853,
and the process for announcing changes to the Star Ratings System falls
within the scope of section 1853(b). Although not expressly required by
section 1853(b), CMS has historically solicited comment on significant
changes to the ratings system using a Request for Comment process
before the Advance Notice and draft Call Letter are released; this
Request for Comment \37\ provides MAOs, Part D sponsors, and other
stakeholders an opportunity to request changes to and raise concerns
about the Star Ratings methodology and measures before CMS finalizes
its proposal for the Advance Notice. We intend to continue the current
process at least until the 2019 measurement period that we are
proposing as the first measurement period under these new regulations,
but we may discontinue that process at a later date as the rulemaking
process may provide sufficient opportunity for public input. In
addition, CMS issues annually the Technical Notes \38\ that describe in
detail how the methodology is applied from the changes in policy
adopted through the Advance Notice and Rate Announcement process. We
intend to continue the practice of publishing the Technical Notes
during the preview periods. Under our proposal, we would also continue
to use the draft and final Call Letters as a means to provide
subregulatory application), interpretation, and guidance of the final
version of these proposed regulations where necessary. Our proposed
regulation text does not detail these plans for continued use of the
current process and future for subregulatory guidance because we
believe such regulation text would be unnecessary. We propose to codify
the first performance period (2019) and first payment year (2022) to
which our proposed regulations would apply at Sec. 422.160(c) and
Sec. 423.180(c).
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\36\ Advance Notices and Rate Announcements are posted each year
on the CMS Web site at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html.
\37\ Requests for Comment are posted at https://go.cms.gov/partcanddstarratings under the downloads.
\38\ https://go.cms.gov/partcanddstarratings (under the
downloads) for the Technical Notes.
---------------------------------------------------------------------------
d. Definitions
There are a number of technical and other terms relevant to our
proposed regulations. Therefore, we propose the following definitions
for the respective subparts in part 422 and part 423 in paragraph (a)
of Sec. Sec. 422.162 and 423.182 respectively. Some proposed
definitions are discussed in more detail later in this preamble in
connection with other proposed regulation text related to the
definition.
CAHPS refers to a comprehensive and evolving family of
surveys that ask consumers and patients to evaluate the interpersonal
aspects of health care. CAHPS surveys probe those aspects of care for
which consumers and patients are the best or only source of
information, as well as those that consumers and patients have
identified as being important. CAHPS initially stood for the Consumer
Assessment of Health Plans Study, but as the products have evolved
beyond health plans the acronym now stands for Consumer Assessment of
Healthcare Providers and Systems.
Case-mix adjustment means an adjustment to the measure
score made prior to the score being converted into a Star Rating to
take into account certain enrollee characteristics that are not under
the control of the plan. For example age, education, chronic medical
conditions, and functional health status that may be related to the
enrollee's survey responses.
Categorical Adjustment Index (CAI) means the factor that
is added to or subtracted from an overall or summary Star Rating (or
both) to adjust for the average within-contract (or within-plan as
applicable) disparity in performance associated with the percentages of
beneficiaries who are dually eligible for Medicare and enrolled in
Medicaid, beneficiaries who receive a Low Income Subsidy or have
disability status in that contract (or plan as applicable).
Clustering refers to a variety of techniques used to
partition data into distinct groups such that the observations within a
group are as similar as possible to each other, and as dissimilar as
possible to observations in any other group. Clustering of the measure-
specific scores means that gaps that exist within the distribution of
the scores are identified to create groups (clusters) that are then
used to identify
[[Page 56379]]
the four cut points resulting in the creation of five levels (one for
each Star Rating), such that the scores in the same Star Rating level
are as similar as possible and the scores in different Star Rating
levels are as different as possible. Technically, the variance in
measure scores is separated into within-cluster and between-cluster sum
of squares components. The clusters reflect the groupings of numeric
value scores that minimize the variance of scores within the clusters.
The Star Ratings levels are assigned to the clusters that minimize the
within-cluster sum of squares. The cut points for star assignments are
derived from the range of measure scores per cluster, and the star
levels associated with each cluster are determined by ordering the
means of the clusters.
Consolidation means when an MA organization/Part D sponsor
that has at least two contracts for health and/or drug services of the
same plan type under the same parent organization in a year combines
multiple contracts into a single contract for the start of the
subsequent contract year.
Consumed contract means a contract that will no longer
exist after a contract year's end as a result of a consolidation.
Display page means the CMS Web site on which certain
measures and scores are publicly available for informational purposes;
the measures that are presented on the display page are not used in
assigning Part C and D Star Ratings.
Domain rating means the rating that groups measures
together by dimensions of care.
Dual Eligible (DE) means a beneficiary who is enrolled in
both Medicare and Medicaid.
HEDIS is the Healthcare Effectiveness Data and Information
Set which is a widely used set of performance measures in the managed
care industry, developed and maintained by the National Committee for
Quality Assurance (NCQA). HEDIS data include clinical measures
assessing the effectiveness of care, access/availability measures, and
service use measures.
Highest rating means the overall rating for MA-PDs, the
Part C summary rating for MA-only contracts, and the Part D summary
rating for PDPs.
Highly-rated contract means a contract that has 4 or more
stars for their highest rating when calculated without the improvement
measures and with all applicable adjustments (CAI and the reward
factor).
HOS means the Medicare Health Outcomes Survey which is the
first patient reported outcomes measure that was used in Medicare
managed care. The goal of the Medicare HOS program is to gather valid,
reliable, and clinically meaningful health status data in the Medicare
Advantage (MA) program for use in quality improvement activities, pay
for performance, program oversight, public reporting, and improving
health. All managed care organizations with MA contracts must
participate.
Low Income Subsidy (LIS) means the subsidy that a
beneficiary receives to help pay for prescription drug coverage (see
Sec. 423.34 for definition of a low-income subsidy eligible
individual).
Measurement period means the period for which data are
collected for a measure or the performance period that a measures
covers.
Measure score means the numeric value of the measure or an
assigned `missing data' message.
Measure star means the measure's numeric value is
converted to a Star Rating. It is displayed to the nearest whole star,
using a 1-5 star scale.
Overall Rating means a global rating that summarizes the
quality and performance for the types of services offered across all
unique Part C and Part D measures.
Part C Summary Rating means a global rating that
summarizes the health plan quality and performance on Part C measures.
Part D Summary Rating means a global rating of the
prescription drug plan quality and performance on Part D measures.
Plan Benefit Package (PBP) means a set of benefits for a
defined MA or PDP service area. The PBP is submitted by PDP sponsors
and MA organizations to CMS for benefit analysis, bidding, marketing,
and beneficiary communication purposes.
Reliability means a measure of the fraction of the
variation among the observed measure values that is due to real
differences in quality (``signal'') rather than random variation
(``noise''); it is reflected on a scale from 0 (all differences in plan
performance measure scores are due to measurement error) to 1 (the
difference in plan performance scores is attributable to real
differences in performance).
Reward factor means a rating-specific factor added to the
contract's summary or overall (or both) rating if a contract has both
high and stable relative performance.
Statistical significance assesses how likely differences
observed in performance are due to random chance alone under the
assumption that plans are actually performing the same. Although not
part of the proposed regulatory definition, we clarify that CMS uses
statistical tests (for example, t-test) to determine if a contract's
measure value is statistically different (greater than or less than
depending on the test) from the national mean for that measure, or
whether conversely, the observed differences from the national mean
could have arisen by chance.
Surviving contract means the contact that will still exist
under a consolidation, and all of the beneficiaries enrolled in the
consumed contract(s) are moved to the surviving contracts.
Traditional rounding rules mean that the last digit in a
value will be rounded. If rounding to a whole number, look at the digit
in the first decimal place. If the digit in the first decimal place is
0, 1, 2, 3 or 4, then the value should be rounded down by deleting the
digit in the first decimal place. If the digit in the first decimal
place is 5 or greater, then the value should be rounded up by 1 and the
digit in the first decimal place deleted.
e. Contract Ratings
Star Ratings and data reporting are at the contract level for most
measures. Currently, data for measures are collected at the contract
level including data from all PBPs under the contract, except for the
following Special Needs Plan (SNP)-specific measures which are
collected at the PBP level: Care for Older Adults--Medication Review,
Care for Older Adults--Functional Status Assessment, and Care for Older
Adults--Pain Assessment. The SNP-specific measures are rolled up to the
contract level by using an enrollment-weighted mean of the SNP PBP
scores. Subject to the discussion later in this section about the
feasibility and burden of collecting data at the PBP (plan) level and
the reliability of ratings at the plan level, we propose to continue
the practice of calculating the Star Ratings at the contract level and
all PBPs under the contract would have the same overall and/or summary
ratings.
However, beneficiaries select a plan, rather than a contract, so we
have considered whether data should be collected and measures scored at
the plan level. We have explored the feasibility of separately
reporting quality data for individual D-SNP PBPs, instead of the
current reporting level. For example, in order for CAHPS measures to be
reliably scored, the number of respondents must be at least 11 people
and reliability must be at least 0.60. Our current analyses show that,
at the PBP level, CAHPS measures could be reliably reported for only
about one-third of D-SNP PBPs due to sample size
[[Page 56380]]
issues, and HEDIS measures could be reliably reported for only about
one-quarter of D-SNP PBPs. If reporting were done at the plan level, a
significant number of D-SNP plans would not be rated and in lieu of a
Star Rating, Medicare Plan Finder would display that the plan is ``too
small to be rated.'' However, when enough data are available, plan
level quality reporting would better reflect the quality of care
provided to enrollees in that plan. Plan-level quality reporting would
also give states that contract with D-SNPs plan-specific information on
their performance and provide the public with data specific to the
quality of care for dual eligible (DE) beneficiaries enrolled in these
plans. For all plans as well as D-SNPs, reporting at the plan level
would significantly increase plan burden for data reporting and would
have to be balanced against the availability of additional clinical
information available at the plan level. Plan-level ratings would also
potentially increase the ratings of higher-performing plans when they
are in contracts that have a mix of high and low performing plans.
Similarly, plan-level ratings would also potentially decrease the
ratings of lower-performing plans that are currently in contracts with
a mix of high and low performing plans. Measurement reliability issues
due to small sample sizes would also decrease our ability to measure
true performance at the plan level and add complexities to the rating
system. We are soliciting comments on balancing the improved precision
associated with plan level reporting (relative to contract level
reporting) with the negative consequences associated with an increase
in the number of plans without adequate sample sizes for at least some
measures; we ask for comments about this for D-SNPs and for all plans
as we continue to consider whether rating at the plan level is feasible
or appropriate. In particular, we are interested in feedback on the
best balance and whether changing the level at which ratings are
calculated and reported better serves beneficiaries and our goals for
the Star Ratings System.
We are also exploring whether some measure data could be reported
at a higher level (parent organization versus contract) to ease and
simplify reporting and still remain useful (for example, call center
measures as we anticipate that parent organizations use a consolidated
call center to serve all contracts and plans) to incorporate into the
Star Ratings. Further, we are exploring if contract market area
reporting is feasible when a contract covers a large geographic area.
For example, when HEDIS reporting began in 1997, there were contract-
specific market areas that evolved into reporting by market area for
five states with large Medicare populations.\39\ We are planning to
continue work in this area to determine the best reporting level for
each measure that most accurately reflects performance and minimizes to
the extent possible plan reporting burden. As we consider alternative
reporting units, we welcome comments and suggestions about requiring
reporting at different levels (for example, parent organization,
contract, plan, or geographic area) by measure.
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\39\ The following states were divided into multiple market
areas: CA, FL, NY, OH, and TX.
---------------------------------------------------------------------------
We propose to continue at this time calculating the same overall
and/or summary Star Ratings for all PBPs offered under an MA-only, MA-
PD, or PDP contract. We propose to codify this policy in regulation
text at Sec. Sec. 422.162(b) and 423.182(b). We also propose a cost
plan regulation at Sec. 417.472(k) to require cost contracts to be
subject to the part 422 and part 423 Medicare Advantage and Part D
Prescription Drug Program Quality Rating System as they are measured
and rated like an MA plan. Specifically, we propose, at paragraph
(b)(1) that CMS will calculate overall and summary ratings at the
contract level and propose regulation text that cross-references other
proposed regulations regarding the calculation of measure scoring and
rating, and domain, summary and overall ratings. Further, we propose to
codify, at (b)(2) of each section, that data from all PBPs offered
under a contract will continue to be used to calculate the ratings for
the contract. For SNP specific measures collected at the PBP level, we
propose that the contract level score would be an enrollment-weighted
mean of the PBP scores using enrollment in each PBP as reported as part
of the measure specification, which is consistent with current
practice. The proposed text is explicit that domain and measure
ratings, other than the SNP-specific measures, are based on data from
all PBPs under the contract.
f. Contract Consolidations
We are proposing a change in how contract-level Star Ratings are
assigned in the case of contract consolidations. We have historically
permitted MAOs and Part D sponsors to consolidate contracts when a
contract novation occurs or to better align business practices. As
noted in MedPAC's March 2016 Report to Congress (https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs), there has been a continued
increase in the number of enrollees being moved from lower Star Rating
contracts that do not receive a QBP to higher Star Rating contracts
that do receive a QBP as part of contract consolidations, which
increases the size of the QBPs that are made to MAOs due to the large
enrollment increase in the higher rated, surviving contract. We are
worried that this practice results in masking low quality plans under
higher rated surviving contracts. This does not provide beneficiaries
with accurate and reliable information for enrollment decisions, and it
does not truly reward higher quality contracts. We propose here to
modify from the current policy the calculation of Star Ratings for
surviving contracts that have consolidated. Instead of assigning the
surviving contract the Star Rating that the contract would have earned
without regard to whether a consolidation took place, we propose to
assign and display on Medicare Plan Finder Star Ratings based on the
enrollment-weighted mean of the measure scores of the surviving and
consumed contract(s) so that the ratings reflect the performance of all
contracts (surviving and consumed) involved in the consolidation. Under
this proposal, the calculation of the measure, domain, summary, and
overall ratings would be based on these enrollment-weighted mean
scores. The number of contracts this would impact is small relative to
all contracts that qualify for QBPs. During the period from 1/1/2015
through 1/1/2017 annual consolidations for MA contracts ranged from a
low of 7 in 2015 to a high of 19 in 2016 out of approximately 500 MA
contracts. As proposed in Sec. Sec. 422.162(b)(3)(i)-(iii) and
423.182(b)(3)(i)-(iii), CMS will use enrollment-weighted means of the
measure scores of the consumed and surviving contracts to calculate
ratings for the first and second plan years following the contract
consolidations. We believe that use of enrollment-weighted means will
provide a more accurate snapshot of the performance of the underlying
plans in the new consolidated contract, such that both information to
beneficiaries and QBPs are not somehow inaccurate or misleading. We
also propose, however, that the process of weighting the enrollment of
each contract and applying this general rule would vary depending on
the specific types of measures involved in order to take into account
the measurement period and
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data collection processes of certain measures. Our proposal would also
treat ratings for determining quality bonus payment (QBP) status for MA
contracts differently than displayed Star Ratings for the first year
following the consolidation for consolidations that involve the same
parent organization and plans of the same plan type.
We propose to codify our new policy at Sec. Sec. 422.162(b)(3) and
423.182(b)(3). First, we propose generally, at paragraph (b)(3)(i) of
each regulation, that CMS will assign Star Ratings for consolidated
contracts using the provisions of paragraph (b)(3). We are proposing in
Sec. 422.162(b)(3) both a specific rule to address the QBP rating
following the first year after the consolidation and a rule for
subsequent years. As Part D plan sponsors are not eligible for QBPs,
the Part D regulation text is proposed without the QBP aspect. We
propose in Sec. 422.162(b)(3)(iv) and Sec. 423.182(b)(3)(ii) the
process for assigning Star Ratings for posting on the Medicare Plan
Finder for the first 2 years following the consolidation.
For the first contract year following a consolidation, as proposed
at paragraphs Sec. 422.162(b)(3)(iv) and Sec. 423.182(b)(3)(ii), we
propose to use the enrollment-weighted means as calculated below to set
Star Ratings for publication (and, in Sec. 422.162(b)(3)(iii), use of
certain enrollment-weighted means for establishing QBP status:
The Star Ratings measure scores for the consolidated
entity's first plan year would be based on enrollment-weighted measure
scores using the July enrollment of the measurement period of the
consumed and surviving contracts for all measures, except the survey-
based and call center measures.
The survey-based measures (that is, CAHPS, HOS, and HEDIS
measures collected through CAHPS or HOS) would use enrollment of the
surviving and consumed contracts at the time the sample is pulled for
the rating year. For example, for a contract consolidation that is
effective January 1, 2021 the CAHPS sample for the 2021 Star Ratings
would be pulled in January 2020 so enrollment in January 2020 would be
used. The call center measures would use mean enrollment during the
study period. We believe that these proposals for survey-based measures
are more nuanced and account for how the data underlying those measures
are gathered. By using the enrollment-weighted means we are reflecting
the true underlying performance of both the surviving and consumed
contracts.
For the second year following the consolidation, for all MA and
Part D Sponsors, the Star Ratings would be calculated as follows:
The enrollment-weighted measure scores using the July
enrollment of the measurement period of the consumed and surviving
contracts would be used for all measures except HEDIS, CAHPS, and HOS.
The current reporting requirements for HEDIS and HOS
already combine data from the surviving and consumed contract(s)
following the consolidation, so we are not proposing any modification
or averaging of these measure scores. For example, for HEDIS if an
organization consolidates one or more contracts during the change over
from measurement to reporting year, then only the surviving contract is
required to report audited summary contract-level data but it must
include data on all members from all contracts involved. For this
reason, we are proposing regulation text that HEDIS and HOS measure
data will be used as reported in the second year after consolidation.
The CAHPS survey sample that would be selected following
the consolidation would be modified to include enrollees in the sample
universe from which the sample is drawn from both the surviving and
consumed contracts. If there are two contracts (that is, Contract A is
the surviving contract and Contract B is the consumed contract) that
consolidate, and Contract A has 5,000 enrollees eligible for the survey
and Contract B has 1,000 eligible for the survey, the universe from
which the sample would be selected would be 6,000.
After applying these rules for calculating the measure scores in
the first and second year after consolidation, CMS would use the other
rules proposed in Sec. Sec. 422.166 and 423.186 to calculate the
measure, domain, summary, and overall Star Ratings for the consolidated
contract. In the third year after consolidation and subsequent years,
the performance period for all the measures would be after the
consolidation, so our proposal is limited to the Star Ratings issued
the first 2 years after consolidation.
When consolidations involve two or more contracts for health and/or
drug services of the same plan type under the same parent organization
combining into a single contract at the start of a contract year, we
propose to calculate the QBP rating for that first year following the
consolidation using the enrollment-weighted mean, using traditional
rounding rules, of what would have been the QBP ratings of the
surviving and consumed contracts using the contract enrollment in
November of the year the Star Ratings were released. In November of
each year following the release of the ratings on Medicare Plan Finder,
the preliminary QBP ratings are displayed in the Health Plan Management
System (HPMS) for the year following the Star Ratings year. For
example, the first year the consolidated entity is in operation is plan
year 2020; the 2020 QBP rating displayed in HPMS in November 2018 would
be based on the 2019 Star Ratings (which are released in October 2018)
and calculated using the weighted mean of the November 2018 enrollment
of the surviving and consumed contracts. Because the same parent
organization is involved in these situations, we believe that many
administrative processes and procedures are identical in the Medicare
health plans offered by the sponsoring organization, and using a
weighted mean of what would have been their QBP ratings accurately
reflects their performance for payment purposes. In subsequent years
after the first year following the consolidation, QBPs status would be
determined based on the consolidated entity's Star Rating posted on
Medicare Plan Finder. Under our proposal, the measure, domain, summary,
and in the case of MA-PD plans the overall Star Ratings posted on
Medicare Plan Finder for the second year following consolidation would
be based on the enrollment-weighted measure scores so would include
data from all contracts involved. Consequently, the ratings used for
QBP status determinations would reflect the care provided by both the
surviving and consumed contracts.
In conclusion, we are proposing a new set of rules regarding the
calculation of Star Ratings for consolidated contracts to be codified
at paragraphs (b)(3)(i) through (iv) of Sec. Sec. 422.162 and 423.182.
In most cases, we propose that the Star Ratings for the first and
second year following the consolidation to be an enrollment-weighted
mean of the scores at the measure level for the consumed and surviving
contracts. For the QBP rating for the first year following the
consolidation, we propose to use the enrollment-weighted mean of the
QBP rating of the surviving and consumed contracts (which would be the
overall or summary rating depending on the plan type) rather than
averaging measure scores. We solicit comment on this proposal and
whether our separate treatment of different measure types during the
first and second year adequately addresses the differences in how data
are collected (and submitted) for those measures during the different
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periods. We would also like to know whether sponsoring organizations
believe that the special rule for consolidations involving the same
parent organization and same plan types adequately addresses how those
situations are different from cases where an MA organization buys or
sells a plan or contract from or to a different entity and whether
these rules should be extended to situations where there are different
parent organizations involved. For commenters that support the latter,
we also request comment on how CMS should determine that the same
administrative processes are used and whether attestations from
sponsoring organizations or evidence from prior audits should be
required to support such determinations.
g. Data Sources
Under 1852(e) of the Act, MA organizations are required to collect,
analyze, and report data that permit measurement of health outcomes and
other indices of quality. The Star Ratings System is based on
information collected consistent with section 1852(e) of the Act.
Section 1852(e)(3)(B) of the Act prohibits the collection of data on
quality, outcomes, and beneficiary satisfaction other than the types of
data that were collected by the Secretary as of November 1, 2003; there
is a limited exception for SNPs to collect, analyze, and report data
that permit the measurement of health outcomes and other indicia of
quality. The statute does not require that only the same data be
collected, but that we do not change or expand the type of data
collected until after submission of a Report to Congress (prepared in
consultation with MA organizations and accrediting bodies) that
explains the reason for the change(s). We clarify here that the types
of data included under the Star Ratings System are consistent with the
types of data collected as of November 1, 2003. Since 1997, Medicare
managed care organizations have been required to annually report
quality of care performance measures through HEDIS. We have also been
conducting the CAHPS survey since 1997 to measure beneficiaries'
experiences with their health plans, and since 2007 we have been
measuring experiences with drug plans with CAHPS. HOS began in 1998 to
capture changes in the physical and mental health of MA enrollees. To
some extent, these surveys have been revised and updated over time, but
the same types of data--clinical measures, beneficiary experiences, and
changes in physical and mental health, respectively--have remained the
focus of these surveys. In addition, there are several measures in the
Stars Ratings System that are based on performance that address
telephone customer service, members' complaints, disenrollment rates,
and appeals; however these additional measures are not collected
directly from the sponsoring organizations for the primary purpose of
quality measurement. These additional measures are calculated from
information that CMS has gathered as part of the administration of the
Medicare program, such as information on appeals forwarded to the
Independent Review Entity under subparts M, enrollment, and compliance
and enforcement actions.
The Part D program was implemented in 2006, and while there is no
parallel provision regarding applicable Part D sources of data, we have
used similar datasets, for example CAHPS survey data, for
beneficiaries' experiences with prescription drug plans. Section 1860D-
4(d) of the Act specifically directs the administration and collection
of data from consumer surveys in a manner similar to those conducted in
the MA program. All of these measures reflect structure, process, and
outcome indices of quality that form the measurement set under Star
Ratings. Since 2007, we have publicly reported a number of measures
related to the drug benefit as part of the Star Ratings. For MA
organizations that offer prescription drug coverage, we have developed
a series of measures focusing on administration of the drug benefit.
Similar to MA measures of quality relative to health services, the Part
D measures focus on customer service and beneficiary experiences,
effectiveness, and access to care relative to the drug benefit. We
believe that the Part D Star Ratings are consistent with the limitation
expressed in section 1852(e) of the Act even though the limitation does
not apply to our collection of Part D quality data from Part D
sponsors.
We intend to continue to base the types of information collected in
the Part C Star Ratings on section 1852(e) of the Act, and we propose
at Sec. 422.162(c)(1) that the type of data used for Star Ratings will
be data consistent with the section 1852(e) limits and data gathered
from CMS administration of the MA program. In addition, we propose in
Sec. 422.162(c)(1) and in Sec. 423.182(c)(1) to include measures that
reflect structure, process, and outcome indices of quality, including
Part C measures that reflect the clinical care provided, beneficiary
experience, changes in physical and mental health, and benefit
administration, and Part D measures that reflect beneficiary
experiences and benefit administration. The measures encompass data
submitted directly by MA organizations (MAOs) and Part D sponsors to
CMS, surveys of MA and Part D enrollees, data collected by CMS
contractors, and CMS administrative data. We also propose, primarily so
that the regulation text is complete on this point, a regulatory
provision at Sec. Sec. 422.162(c)(2) and 423.182(c)(2) that requires
MA organizations and Part D plan sponsors to submit unbiased, accurate,
and complete quality data as described in paragraph(c)(1) of each
section. Our authority to collect quality data is clear under the
statute and existing regulations, such as section 1852(e)(3)(A) and
1860D-4(d) and Sec. Sec. 422.12(b)(2) and 423.156. We propose the
paragraph (c)(2) regulation text to ensure that the quality ratings
system regulations include a regulation on this point for readers and
to avoid confusion in the future about the authority to collect this
data. In addition, it is important that the data underlying the ratings
are unbiased, accurate, and complete so that the ratings themselves are
reliable. This proposed regulation text would clearly establish the
sponsoring organization's responsibility to submit data that can be
reliably used to calculate ratings and measure plan performance.
h. Adding, Updating, and Removing Measures
We are committed to continuing to improve the Part C and D Star
Ratings System by focusing on improving clinical and other outcomes. We
anticipate that new measures will be developed and that existing
measures will be updated over time. NCQA and the Pharmacy Quality
Alliance (PQA) continually work to update measures as clinical
guidelines change and develop new measures focused on health and drug
plans. To address these anticipated changes, we propose in Sec. Sec.
422.164 and 423.184 specific rules to govern the addition, update, and
removal of measures. We also propose to apply these rules to the
measure set proposed in this rulemaking, to the extent that there are
changes between the final rule and the Star Ratings based on the
performance periods beginning on or after January 2019.
As discussed in more detail in the following paragraphs, we propose
the following general rules to govern adding, updating, and removing
measures:
For data quality issues identified during the calculation
of the Star Ratings for a given year, we propose to continue our
current practice of
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removing the measure from the Star Ratings.
That new measures and substantive updates to existing
measures would be added to the Star Ratings System based on future
rulemaking but that prior to such a rulemaking, CMS would announce new
measures and substantive updates to existing measures and solicit
feedback using the process described for changes in and adoption of
payment and risk adjustment policies in section 1853(b) of the Act
(that is the Call Letter attachment to the Advance Notice and Rate
Announcement).
That existing measures (currently existing or existing
after a future rulemaking) used for Star Ratings would be updated with
regular updates from the measure stewards through the process described
for changes in and adoption of payment and risk adjustment policies in
section 1853(b) of the Act when the changes are not substantive.
That existing measures (currently existing or existing
after a future rulemaking) used for Star Ratings would be removed from
use in the Star Ratings when there has been a change in clinical
guidelines associated with the measure or reliability issues identified
in advance of the measurement period; CMS would announce the removal
using the process described for changes in and adoption of payment and
risk adjustment policies in section 1853(b) of the Act. Removal might
be permanent or temporary, depending on the basis for the removal.
We are proposing specific rules for updating and removal that would
be implemented through subregulatory action, so that rulemaking will
not be necessary for certain updates or removals. Under this proposal,
CMS would announce application of the regulation standards in the Call
Letter attachment to the Advance Notice and Rate Announcement process
under section 1853(b) of the Act.
First, we propose to codify, at Sec. Sec. 422.164(a) and
423.184(a), regulation text stating the general rule that CMS would
add, update, and remove measures used to calculate Star Ratings as
provided in Sec. Sec. 422.164 and 423.184. In each paragraph regarding
addition, updating, and removal of measures and the use of improvement
measures, we also propose rules to identify when these types of changes
would not involve rulemaking based on application of the standards and
authority in the regulation text. Under our proposal, CMS would solicit
feedback of its application of the rules using the draft and final Call
Letter each year.
Second, we propose, in paragraph (b) of these sections, that CMS
would review the quality of the data on which performance, scoring, and
rating of measures is done each year. We propose to continue our
current practice of reviewing data quality across all measures,
variation among organizations and sponsors, and measures' accuracy,
reliability, and validity before making a final determination about
inclusion of measures in the Star Ratings. The intent is to ensure that
Star Ratings measures accurately measure true plan performance. If a
systemic data quality issue is identified during the calculation of the
Star Ratings, we would remove the measure from that year's rating under
proposed paragraph (b).
Third, we propose to address the addition of new measures in
paragraph (c).
In identifying whether to add a measure, we will be guided by the
principles we listed in section III.A.12.b. of the proposed rule.
Measures should be aligned with best practices among payers and the
needs of the end users, including beneficiaries. Our strategy is to
continue to adopt measures when they are available, nationally
endorsed, and in alignment with the private sector, as we do today
through the use of measures developed by NCQA and the PQA, and the use
of measures that are endorsed by the National Quality Forum (NQF). We
propose to codify this standard for adopting new measures at Sec. Sec.
422.164(c)(1) and 423.184(c)(1). We do not intend this standard to
require that a measure be adopted by an independent measure steward or
endorsed by NQF in order for us to propose its use for the Star
Ratings, but that these are considerations that will guide us as we
develop such proposals. We also propose that CMS may develop its own
measures as well when appropriate to measure and reflect performance in
the Medicare program.
For the 2021 Star Ratings, we propose (at section III.A.12.) of the
proposed rule to have measures that encompass outcome, intermediate
outcome, patient/consumer experience, access, process, and improvement
measures. It is important to have a mix of different types of measures
in the Star Ratings program to understand how all of the different
facets of the provision of health and drug services interact. For
example, process measures are evidence-based best practices that lead
to clinical outcomes of interest. Process measures are generally easier
to collect, while outcome measures are sometimes more challenging
requiring in some cases medical record review and more sophisticated
risk-adjustment methodologies.
Over time new measures will be added and measures will be removed
from the Star Ratings program to meet our policy goals. As new measures
are added, our general guidelines for deciding whether to propose new
measures through future rulemaking will use the following criteria:
Importance: The extent to which the measure is important
to making significant gains in health care processes and experiences,
access to services and prescription medications, and improving health
outcomes for MA and Part D enrollees.
Performance Gap: The extent to which the measure
demonstrates opportunities for performance improvement based on
variation in current health and drug plan performance.
Reliability and Validity: The extent to which the measure
produces consistent (reliable) and credible (valid) results.
Feasibility: The extent to which the data related to the
measure are readily available or could be captured without undue burden
and could be implemented by the majority of MA and Part D contracts.
Alignment: The extent to which the measure or measure
concept is included in one or more existing federal, State, and/or
private sector quality reporting programs.
We would balance these criteria as part of our decision making
process so that each new measure proposed for addition to the Star
Ratings meets each criteria in some fashion or to some extent. We
intend to apply these criteria to identify and adopt new measures for
the Star Ratings, which will be done through future rulemaking that
includes explanations for how and why we propose to add new measures.
When we identify a measure that meets these criteria, we propose to
follow the process in our proposed paragraphs (c)(2) through (4) of
Sec. Sec. 422.164 and 423.184. We would initially solicit feedback on
any potential new measures through the Call Letter.
As new performance measures are developed and adopted, we propose,
at Sec. Sec. 422.164(c)(3) and (4) and 423.184(c)(3) and (4), that
they would initially be incorporated into the display page for at least
2 years but that we would keep a new measure on the display page for a
longer period if CMS finds there are reliability or validity issues
with the measure. As noted in the
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Introduction, the rulemaking process will create a longer lead time for
changes, in particular to add a new measure to the Star Ratings or to
make substantive changes to measures as discussed later in this
section. Here is an example timeline for adding a new measure to the
Star Ratings. In this scenario, the new measure has already been
developed by the NCQA and the PQA, and endorsed by the NQF. Otherwise,
that process may add an extra 3 to 5 years to the timeline.
January 2019: Solicit feedback on whether to add the new
measure in the draft 2020 Call Letter.
April 2019: Summarize feedback on adding the new measure
in the 2020 Call Letter.
2020/2021: Propose adding the new measure to the 2024 Star
Ratings (2022 measurement period) in a proposed rule; finalize through
rulemaking (for 1/1/2022 effective date).
2020: Performance period and collection of data for the
new measure and collection of data for posting on the 2022 display
page.
2021: Performance period and collection of data for the
new measure and collection of data for posting on the 2023 display
page.
Fall 2021: Publish new measure on the 2022 display page
(2020 measurement period).
January 1, 2022: Applicability date of new measure for
Star Ratings.
2022: Performance period and collection of data for the
new measure and collection of data for inclusion in the 2024 Star
Ratings.
Fall 2022: Publish new measure on the 2023 display page
(2021 measurement period).
Fall 2023: Publish new measure in the 2024 Star Ratings
(2022 measurement period).
2025: QBP status and rebate retention allowances are
determined for the 2025 payment year.
Fourth, at Sec. Sec. 422.164(d) and 423.184(d) we propose to
address updates to measures based on whether an update is substantive
or non-substantive. Since quality measures are routinely updated (for
example, when clinical codes are updated), we propose to adopt rules
for the incorporation of non-substantive updates to measures that are
part of the Star Ratings System without going through new rulemaking.
As proposed in paragraphs (d)(1) of Sec. Sec. 422.164 and 423.184, we
would only incorporate updates without rulemaking for measure
specification changes that do not substantively change the nature of
the measure.
Substantive changes (for example, major changes to methodology) to
existing measures would be proposed and finalized through rulemaking.
In paragraphs (d)(2) of Sec. Sec. 422.164 and 423.184, we propose to
initially solicit feedback on whether to make the substantive measure
update through the Call Letter prior to the measurement period for
which the update would be initially applicable. For example, if the
change announced significantly expands the denominator or population
covered by the measure (for example, the age group included in the
measures is expanded), the measure would be moved to the display page
for at least 2 years and proposed through rulemaking for inclusion in
Star Ratings. We intend this process for substantive updates to be
similar to the process we would use for adopting new measures under
proposed paragraph (c). As appropriate, the legacy measure may remain
in the Star Ratings while the updated measure is on the display page
if, for example, the updated measure expands the population covered in
the measure and the legacy measure would still be relevant and
measuring a critical topic to continue including in the Star Ratings
while the updated measure is on display. Adding the updated measure to
the Star Ratings would be proposed through rulemaking.
We propose to adopt rules to incorporate specification updates that
are non-substantive in paragraph (d)(1). Non-substantive updates that
occur (or are announced by the measure steward) during or in advance of
the measurement period will be incorporated into the measure and
announced using the Call Letter. We propose to use such updated
measures to calculate and assign Star Ratings without the updated
measure being placed on the display page. This is consistent with
current practice.
In paragraph (d)(1)(i-v) of Sec. Sec. 422.164 and paragraph
(d)(1)(i-v) of 423.184, we propose to codify a non-exhaustive list for
identifying non-substantive updates announced during or prior to the
measurement period and how we would treat them under our proposal. The
list includes updates in the following circumstances:
If the change narrows the denominator or population
covered by the measure with no other changes, the updated measure would
be used in the Star Ratings program without interruption. For example,
if an additional exclusion--such as excluding nursing home residents
from the denominator--is added, the change would be considered non-
substantive and would be incorporated automatically. In our view,
changes to narrow the denominator generally benefit Star Ratings of
sponsoring organizations and should be treated as non-substantive for
that reason.
If the change does not meaningfully impact the numerator
or denominator of the measure, the measure would continue to be
included in the Star Ratings. For example, if additional codes are
added that increase the number of numerator hits for a measure during
or before the measurement period, such a change would not be considered
substantive because the sponsoring organization would generally benefit
from that change. This type of administrative (billing) change has no
impact on the current clinical practices of the plan or its providers,
and thus would not necessitate exclusion from the Star Ratings System
of any measures updated in this way.
The clinical codes for quality measures (such as HEDIS
measures) are routinely revised as the code sets are updated. For
updates to address revisions to the clinical codes without change in
the intent of the measure and the target population, the measure would
remain in the Star Ratings program and would not move to the display
page. Examples of clinical codes that might be updated or revised
without substantively changing the measure include:
++ ICD-10-CM (``ICD-10'') code sets. Annually, there are new ICD 10
coding updates, which are effective from October 1 through September
30th of any given year.
++ Current Procedural Terminology (CPT) codes. These codes are
published and maintained by the American Medical Association (AMA) to
describe tests, surgeries, evaluations, and any other medical procedure
performed by a healthcare provider on a patient.
++ Healthcare Common Procedure Coding System (HCPCS) codes. These
codes cover items, supplies, and non-physician services not covered by
CPT codes.
++ National Drug Code (NDC). The PQA updates NDC lists biannually,
usually in January and July.
If the measure specification change is providing
additional clarifications such as the following, the measure would also
not move to the display page since this does not change the intent of
the measure but provides more information about how to meet the measure
specifications:
++ Adding additional tests that would meet the numerator
requirements.
++ Clarifying documentation requirements (for example, medical
record documentation).
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++ Adding additional instructions to identify services or
procedures that meet (or do not meet) the specifications of the
measure.
If the measure specification change is adding additional
data sources, the measure would also not move to the display page
because we believe such changes are merely to add alternative ways to
collect the data to meet the measure specifications without changing
the intent of the measure.
We solicit comment on our proposal to add non-substantive updates
to measures and using the updated measure (replacing the legacy
measure) to calculate Star Ratings. In particular, we are interested in
stakeholders' views whether only non-substantive updates that have been
adopted by a measure steward after a consensus-based or notice and
comment process should be added to the Star Ratings under this proposed
authority. Further, we solicit comment on whether there are other
examples or situations involving non-substantive updates that should be
explicitly addressed in the regulation text or if our proposal is
sufficiently extensive.
In addition to updates and additions of measures, we are proposing
rules to address the removal of measures from the Star Ratings to be
codified in Sec. Sec. 422.164(e) and 423.184(e). In paragraph (e)(1)
of each section, we propose the two circumstances under which a measure
would be removed entirely from the calculation of the Star Ratings. The
first circumstance would be changes in clinical guidelines that mean
that the measure specifications are no longer believed to align with or
promote positive health outcomes. As clinical guidelines change, we
would need the flexibility to remove measures from the Star Ratings
that are not consistent with current guidelines. We are proposing to
announce such subregulatory removals through the Call Letter so that
removals for this reason are accomplished quickly and as soon as the
disconnect with positive clinical outcomes is definitively identified.
We note that this proposal is consistent with our current practice. For
example, previously we retired the Glaucoma Screening measure for HEDIS
2015 after the U.S. Preventive Services Task Force concluded that the
clinical evidence is insufficient to assess the balance of benefits and
harms of screening for glaucoma in adults.
In addition to removal of measures because of changes in clinical
guidelines, we currently review measures continually to ensure that the
measure remains sufficiently reliable such that it is appropriate to
continue use of the measure in the Star Ratings. We propose, at
paragraph (e)(1)(ii), that we would also have authority to
subregulatorily remove measures that show low statistical reliability
so as to move swiftly to ensure the validity and reliability of the
Star Ratings, even at the measure level. We will continue to analyze
measures to determine if measure scores are ``topped out'' (that is,
showing high performance across all contracts decreasing the
variability across contracts and making the measure unreliable) so as
to inform our approach to the measure, or if measures have low
reliability. Although some measures may show uniform high performance
across contracts and little variation between them, we seek evidence of
the stability of such high performance, and we want to balance how
critical the measures are to improving care, the importance of not
creating incentives for a decline in performance after the measures
transition out of the Star Ratings, and the availability of alternative
related measures. If, for example, performance in a given measure has
just improved across all contracts, or if no other measures capture a
key focus in Star Ratings, a ``topped out'' measure which would have
lower reliability may be retained in Star Ratings. Under our proposal
to be codified at paragraph (e)(2), we would announce application of
this rule through the Call Letter in advance of the measurement period.
We request comment on these proposals regarding the processes to
add, update, and remove Star Ratings measures.
i. Measure Set for Performance Periods Beginning on or After January 1,
2019
We are proposing the measures included in Table 2 to be collected
for performance periods beginning on or after January 1, 2019 for the
2021 Part C and D Star Ratings. The CAHPS measure specification,
including case-mix adjustment, is described in the Technical Notes and
at ma-pdpcahps.org. The HOS measure specification, including case-mix
adjustment, is described at (https://hosonline.org/globalassets/hos-online/survey-results/hos_casemix_coefficient_tables_c17.pdf). These
specifications are part of our proposal.
We are not proposing to codify this list of measures and
specifications in regulation text in light of the regular updates and
revisions contemplated by our proposals at Sec. Sec. 422.164 and
423.184. We intend, as proposed in paragraph (a) of these sections,
that the Technical Notes for each year's Star Ratings would include the
applicable full list of measures.
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BILLING CODE 4120-01-C
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j. Improvement Measures
In the 2013 Part C and D Star Ratings, we implemented the Part C
and D improvement measures (CY2013 Rate Announcement, https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2013.pdf). The improvement measures address the overall
improvement or decline in individual measure scores from the prior to
the current year. We propose to continue the current methodology
detailed in the Technical Notes for calculating the improvement
measures and to codify it at Sec. Sec. 422.164(f) and 423.184(f). For
a measure to be included in the improvement calculation, the measure
must have numeric value scores in both the current and prior year and
not have had a substantive specification change during those years. In
addition, the improvement measure will not include any data on measures
that are already focused on improvement (for example, HOS measures
focused on improving or maintaining physical or mental health). The
Part C improvement measure includes only Part C measure scores, and the
Part D improvement measure includes only Part D measure scores. All
measures meeting these criteria would be included in the improvement
measures under our proposal at paragraph (f)(1)(i) through (iv) of
Sec. Sec. 422.164 and 423.184.
Annually, the subset of measures to be included in the improvement
measures following these criteria would be announced through the Call
Letter, similar to our proposal for regular updates and removal of
measures. Under our proposal, once the measures to be used for the
improvement measures are identified, CMS would determine which
contracts have sufficient data for purposes of applying and scoring the
improvement measure(s). Following current practices, the improvement
measure score would be calculated only for contracts that have numeric
measure scores for both years for at least half of the measures
identified for use in the improvement measure. We propose this standard
for determining contracts eligible for an improvement measure at
paragraph (f)(2).
We propose at part Sec. Sec. 422.164(f)(3) and (4) and
423.184(f)(3) and (4) the process for calculating the improvement
measure score(s) and a special rule for any identified improvement
measure for a contract that received a measure-level Star Rating of 5
in each of the 2 years examined, but whose associated measure score
indicates a statistically significant decline in the time period. The
improvement measure would be calculated in a series of distinct steps:
The improvement change score (the difference in the
measure scores in the 2-year period) would be determined for each
measure that has been identified as part of an improvement measure and
for which a contract has a numeric score for each of the 2 years
examined.
Each contract's improvement change score would be
categorized as a significant change or not by employing a two tailed t-
test with a level of significance of 0.05.
The net improvement per measure category (outcome, access,
patient experience, process) would be calculated by finding the
difference between the weighted number of significantly improved
measures and significantly declined measures, using the measure weights
associated with each measure category.
The improvement measure score would then be determined by
calculating the weighted sum of the net improvement per measure
category divided by the weighted sum of the number of eligible
measures.
The improvement measure score would be converted to a
measure-level Star Rating using the hierarchical clustering algorithm.
The improvement measure score cut points would be determined using
two separate clustering algorithms. Improvement measure scores of zero
and above would use the clustering algorithm to determine the cut
points for the Star Rating levels of 3 and above. Improvement measure
scores below zero would be clustered to determine the cut points for 1
and 2 stars. The Part D improvement measure thresholds for MA-PDs and
PDPs would be reported separately.
We propose a special rule in paragraph (f)(3) to hold harmless
sponsoring organizations that have 5-star ratings for both years on a
measure used for the improvement measure calculation. This hold
harmless provision was added in 2014 to avoid the unintended
consequence for contracts that score 5 stars on a subset of measures in
each of the 2 years. For any identified improvement measure for which a
contract received a rating of 5 stars in each of the years examined,
but for which the measure score demonstrates a statistically
significant decline based on the results of the significance testing
(at a level of significance of 0.05) on the change score, the measure
will be categorized as having no significant change. The measure will
be included in the count of measures used to determine eligibility for
the improvement measure and in the denominator of the improvement
measure score. The intent of the hold harmless provision for a contract
that receives a measure rating of 5 stars for each year is to prevent
the measure from lowering a contract's improvement measure when the
contract still demonstrates high performance. We propose in section
III.A.12. of this proposed rule another hold harmless provision to be
codified at Sec. Sec. 422.166(g)(1) and 423.186(g)(1).
We request comment on the methodology for the improvement measures,
including rules for determining which measures are included, the
conversion to a Star Rating, and the hold harmless provision for
individual measures that are used for the determination of the
improvement measure score.
k. Data Integrity
The data underlying a measure score and rating must be complete,
accurate, and unbiased for it to be useful for the purposes we have
proposed at Sec. Sec. 422.160(b) and 423.180(b). As part of the
current Star Ratings methodology, all measures and the associated data
have multiple levels of quality assurance checks. Our longstanding
policy has been to reduce a contract's measure rating if we determine
that a contract's measure data are incomplete, inaccurate, or biased.
Data validation is a shared responsibility among CMS, CMS data
providers, contractors, and Part C and D sponsors. When applicable (for
example, data from the IRE, PDE, call center), CMS expects sponsoring
organizations to routinely monitor their data and immediately alert CMS
if errors or anomalies are identified so CMS can address these errors.
We propose to codify at Sec. Sec. 422.164(g) and 423.184(g)
specific rules for the reduction of measure ratings when CMS identifies
incomplete, inaccurate, or biased data that have an impact on the
accuracy, impartiality, or completeness of data used for the impacted
measures. Data may be determined to be incomplete, inaccurate, or
biased based on a number of reasons, including mishandling of data,
inappropriate processing, or implementation of incorrect practices that
impacted specific measure(s). One example of such situations that give
rise to such determinations includes a contract's failure to adhere to
HEDIS, HOS, or CAHPS reporting requirements. Our modifications to
measure-specific ratings due to data integrity issues are separate from
any CMS compliance or enforcement actions related to a sponsor's
deficiencies. This policy and
[[Page 56395]]
these rating reductions are necessary to avoid falsely assigning a high
star to a contract, especially when deficiencies have been identified
that show we cannot objectively evaluate a sponsor's performance in an
area.
As a standard practice, we check for flags that indicate bias or
non-reporting, check for completeness, check for outliers, and compare
measures to the previous year to identify significant changes which
could be indicative of data issues. CMS has developed and implemented
Part C and Part D Reporting Requirements Data Validation standards to
assure that data reported by sponsoring organizations pursuant to
Sec. Sec. 422.516 and 423.514 satisfy the regulatory obligation.
Sponsor organizations should refer to specific guidance and technical
instructions related to requirements in each of these areas. For
example, information about HEDIS measures and technical specifications
is posted on: https://www.ncqa.org/HEDISQualityMeasurement/HEDISMeasures.aspx. Information about Data Validation of Reporting
Requirements data is posted on: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/PartCDDataValidation.html and https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxContracting_ReportingOversight.html.
We propose, in paragraphs (g)(1)(i) through (iii), rules for
specific circumstances where we believe a specific response is
appropriate. First, we propose a continuation of a current policy: To
reduce HEDIS measures to 1 star when audited data are submitted to NCQA
with an audit designation of ``biased rate'' or BR based on an
auditor's review of the data if a plan chooses to report; this proposal
would also apply when a plan chooses not to submit and has an audit
designation of ``non-report'' or NR. Second, we propose to continue to
reduce Part C and D Reporting Requirements data, that is, data required
pursuant to Sec. Sec. 422.514 and 423.516, to 1 star when a contract
did not score at least 95 percent on data validation for the applicable
reporting section or was not compliant with data validation standards/
sub-standards for data directly used to calculate the associated
measure. In our view, data that do not reach at least 95 percent on the
data validation standards are not sufficiently accurate, impartial, and
complete for use in the Star Ratings. As the sponsoring organization is
responsible for these data and submits them to CMS, we believe that a
negative inference is appropriate to conclude that performance is
likely poor. Third, we propose a new specific rule to authorize scaled
reductions in Star Ratings for appeal measures in both Part C and Part
D.
The data downgrade policy was adopted to address instances when the
data that would be used for specific measures are not reliable for
measuring performance due to their incompleteness or biased/erroneous
nature. For instances where the integrity of the data is compromised
because of the action or inaction of the sponsoring organization (or
its subcontractors or agents), this policy reflects the underlying
fault of the sponsoring organization for the lack of data for the
applicable measure. Without some policy for reduction in the rating for
these measures, sponsoring organizations could ``game'' the Star
Ratings and merely fail to submit data that illustrate poor
performance. We believe that removal of the measure from the ratings
calculation would unintentionally reward poor data compilation and
submission activities such that our only recourse is to reduce the
rating to 1 star for affected measures.
For verification and validation of the Part C and D appeals
measures, we propose to use statistical criteria to determine if a
contract's appeals measure-level Star Ratings would be reduced for
missing IRE data. The criteria would allow us to use scaled reductions
for the appeals measures to account for the degree to which the data
are missing. The completeness of the IRE data is critical to allow fair
and accurate measurement of the appeals measures. All plans are
responsible and held accountable for ensuring high quality and complete
data to maintain the validity and reliability of the appeals measures.
In response to stakeholder concerns about CMS' prior practice of
reducing measure ratings to one star based on any finding of data
inaccuracy, incompleteness, or bias, CMS initiated the Timeliness
Monitoring Project (TMP) in CY 2017.\40\ The first submission for the
TMP was for the measurement year 2016 related to Part C organization
determinations and reconsiderations and Part D coverage determinations
and redeterminations. The timeframe for the submitted data was
dependent on the enrollment of the contract with smaller contracts
submitting data from a three-month period, medium-sized contracts
submitting data from a two-month period, and larger contracts
submitting data from a one-month period.\41\
---------------------------------------------------------------------------
\40\ This project was discussed in the November 28, 2016 HPMS
memo, ``Industry-wide Appeals Timeliness Monitoring.'' https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/Downloads/Industry-wide-Timeliness-Monitoring.pdf, https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/Downloads/Industry-wide-Appeals-Timeliness-Monitoring-Memo-November-28-2016.pdf.
\41\ Contracts with a mean annual enrollment of less than 50,000
are required to submit data for a three-month time period. Contracts
with a mean enrollment of at least 50,000 but at most 250,000 are
required to submit data for a two-month time period. Contracts with
a mean enrollment greater than 250,000 are required to submit data
for a one-month period.
---------------------------------------------------------------------------
We propose to use multiple data sources whenever possible, such as
the TMP data or information from audits to determine whether the data
at the Independent Review Entity (IRE) are complete. Given the
financial and marketing incentives associated with higher performance
in Star Ratings, safeguards are needed to protect the Star Ratings from
actions that inflate performance or mask deficiencies.
CMS is proposing to reduce a contract's Part C or Part D appeal
measures Star Ratings for IRE data that are not complete or otherwise
lack integrity based on the TMP or audit information. The reduction
would be applied to the measure-level Star Ratings for the applicable
appeals measures. There are varying degrees of data issues and as such,
we are proposing a methodology for reductions that reflects the degree
of the data accuracy issue for a contract instead of a one-size fits
all approach. The methodology would employ scaled reductions, ranging
from a 1-star reduction to a 4-star reduction; the most severe
reduction for the degree of missing IRE data would be a 4-star
reduction which would result in a measure-level Star Rating of 1 star
for the associated appeals measures (Part C or Part D). The data source
for the scaled reduction is the TMP or audit data, however the specific
data used for the determination of a Part C IRE data completeness
reduction are independent of the data used for the Part D IRE data
completeness reduction. If a contract receives a reduction due to
missing Part C IRE data, the reduction would be applied to both of the
contract's Part C appeals measures. Likewise, if a contract receives a
reduction due to missing Part D IRE data, the reduction would be
applied to both of the contract's Part D appeals measures. We solicit
comment on this proposal and its scope; we are looking in particular
for comments related to how to use the process we are proposing
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in this proposal to account for data integrity issues discovered
through means other than the TMP and audits of sponsoring
organizations.
CMS' proposed scaled reduction methodology is a three-stage process
using the TMP or audit information to determine: First, whether a
contract may be subject to a potential reduction for the Part C or Part
D appeals measures; second, the basis for the estimate of the error
rate; and finally, whether the estimated error rate is significantly
greater than the cut points for the scaled reductions of 1, 2, 3, or 4
stars.
Once the scaled reduction for a contract is determined using this
methodology, the reduction would be applied to the contract's
associated appeals measure-level Star Ratings. The minimum measure-
level Star Rating is 1 star. If the difference between the associated
appeals measure-level Star Rating (before the application of the
reduction) and the identified scaled reduction is less than one, the
contract would receive a measure-level Star Rating of 1 star for the
appeals measure.
The error rate for the Part C and Part D appeals measures using the
TMP or audit data and the projected number of cases not forwarded to
the IRE for a 3-month period would be used to identify contracts that
may be subject to an appeals-related IRE data completeness reduction. A
minimum error rate is proposed to establish a threshold for the
identification of contracts that may be subject to a reduction. The
establishment of the threshold allows the focus of the possible
reductions on contracts with error rates that have the greatest
potential to distort the signal of the appeals measures. Since the
timeframe for the TMP data is dependent on the enrollment of the
contract, with smaller contracts submitting data from a three-month
period, medium-sized contracts submitting data from a 2-month period,
and larger contracts submitting data from a one-month period, the use
of a projected number of cases allows a consistent time period for the
application of the criteria proposed.
The calculated error rate formula (Equation 1) for the Part C
measures is proposed to be determined by the quotient of the number of
cases not forwarded to the IRE and the total number of cases that
should have been forwarded to the IRE. The number of cases that should
have been forwarded to the IRE is the sum of the number of cases in the
IRE during TMP or audit data collection period and the number of cases
not forwarded to the IRE during the same period.
[GRAPHIC] [TIFF OMITTED] TP28NO17.008
The calculated error rate formula (Equation 2) for the Part D
measures is proposed to be determined by the quotient of the number of
untimely cases not auto-forwarded to the IRE and the total number of
untimely cases.
[GRAPHIC] [TIFF OMITTED] TP28NO17.009
The projected number of cases not forwarded to the IRE in a 3-month
period would be calculated by multiplying the number of cases found not
to be forwarded to the IRE based on the TMP or audit data by a constant
determined by the TMP time period. Contracts with mean annual
enrollments greater than 250,000 that submitted data from 1-month
period would have their number of cases found not to be forwarded to
the IRE based on the TMP data multiplied by the constant 3.0. Contracts
with mean enrollments of 50,000 but at most 250,000 that submitted data
from a 2-month period would have their number of cases found not to be
forwarded to the IRE based on the TMP data multiplied by the constant
1.5. Small contracts with mean enrollments less than 50,000 that
submitted data for a 3-month period would have their number of cases
found not to be forwarded to the IRE based on the TMP data multiplied
by the constant 1.0.
Under this proposal, contract ratings would be subject to a
possible reduction due to lack of IRE data completeness if both
following conditions are met The calculated error rate is 20
percent or more.
The projected number of cases not forwarded to the IRE is
at least 10 in a 3-month period.
The requirement for a minimum number of cases is needed to address
statistical concerns with precision and small numbers. If a contract
meets only one of the conditions, the contract would not be subject to
reductions for IRE data completeness issues.
If a contract is subject to a possible reduction based on the
aforementioned conditions, a confidence interval estimate for the true
error rate for the contract would be calculated using a Score Interval
(Wilson Score Interval) at a confidence level of 95 percent.
The midpoint of the score interval would be determined using
Equation 3.
[GRAPHIC] [TIFF OMITTED] TP28NO17.010
The z score that corresponds to a level of statistical significance
of 0.05, commonly denoted as z[alpha]/2 but for ease of presentation
represented here as z. (The z value that will be used for the purpose
of the calculation of the interval is 1.959964.).
For the Part C appeals measures, the midpoint of the confidence
interval would be calculated using Equation 3 along with the calculated
error rate from the TMP, which is determined by Equation 1. The total
number of cases in Equation 3 is the number of cases that should have
been in the IRE for the Part C TMP data.
For the Part D appeals measures, the midpoint of the confidence
interval would be calculated using Equation 3 along with the calculated
error rate from the TMP, which is determined by Equation 2. The total
number of cases in
[[Page 56397]]
Equation 3 is the total number of untimely cases for the Part D appeals
measures.
Letting the calculated error rate be represented by and the total
number of cases represented as n, Equation 3 can be streamlined as
Equation 4:
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The lower bound of the confidence interval estimate for the error
rate is calculated using Equation 5 below:
[GRAPHIC] [TIFF OMITTED] TP28NO17.012
For each contract subject to a possible reduction, the lower bound
of the interval estimate of the error rate would be compared to each of
the thresholds in Table 3. If the contract's calculated lower bound is
higher than the threshold, the contract would receive the reduction
that corresponds to the highest threshold that is less than the lower
bound. In other words, the contract's lower bound is being employed to
determine whether the contract's error rate is significantly greater
than the thresholds of 20 percent, 40 percent, 60 percent, and 80
percent. The proposed scaled reductions are in Table 3, and would be
codified in narrative form at paragraph (g)(1)(iii)(D) of both
regulations.
The reductions due to IRE data completeness issues would be applied
after the calculation of the measure-level Star Rating for the appeals
measures. The reduction would be applied to the Part C appeals measures
and/or the Part D appeals measures.
It is important to note that a contract's lower bound could be
statistically significantly greater than more than one threshold. The
reduction would be determined by the highest threshold that the
contract's lower bound exceeds. For example, if the lower bound for a
contract is 64.560000 percent, the contract's estimated value is
significantly greater than the thresholds of 20 percent, 40 percent,
and 60 percent because the lower bound value 64.560000 percent is
greater than each of these thresholds. The lower bound for the
contract's confidence interval is not greater than 80 percent. The
contract would be subject to the reduction that corresponds to the 60
percent threshold, which is three stars.
Table 3--Appeals Measure Star Ratings Reductions by the Incomplete Data
Error Rate
------------------------------------------------------------------------
Reduction for
Proposed thresholds using the lower bound of confidence incomplete
interval estimate of the error rate (%) IRE data
(stars)
------------------------------------------------------------------------
20...................................................... 1
40...................................................... 2
60...................................................... 3
80...................................................... 4
------------------------------------------------------------------------
We propose regulation text at Sec. 422.164(g)(1)(iii)(A) through
(N) and Sec. 423.184(g)(1)(iii)(A) through (K) to codify these
parameters and formulas for the scaled reductions. We note that the
proposed text for the Part C regulation includes specific paragraphs
related to MA and MA-PD plans that are not included in the proposed
text for the Part D regulation but that the two are otherwise
identical.
In addition, we propose in Sec. Sec. 422.164(g)(2) and
423.184(g)(2) to authorize reductions in a Star Rating for a measure
when there are other data accuracy concerns (that is, those not
specified in paragraph (g)(1)). We propose an example in paragraph
(g)(2) of another circumstance where CMS would be authorized to reduce
ratings based on a determination that performance data are incomplete,
inaccurate, or biased. We also propose this other situation would
result in a reduction of the measure rating to 1 star.
We have taken several steps in past years to protect the integrity
of the data we use to calculate Star Ratings. However, we welcome
comments about alternative methods for identifying inaccurate or biased
data and comments on the proposed policies for reducing stars for data
accuracy and completeness issues. Further, we welcome comments on the
proposed methodology for scaled reductions for the Part C and Part D
appeals measures to address the degree of missing IRE data.
l. Measure-Level Star Ratings
We propose in Sec. Sec. 422.166(a) and 423.186(a) the methods for
calculating Star Ratings at the measure level. As part of the Part C
and D Star Ratings System, Star Ratings are currently calculated at the
measure level. To separate a distribution of scores into distinct
groups or star categories, a set of values must be identified to
separate one group from another group. The set of values that break the
distribution of the scores into non-overlapping groups is a set of cut
points. We propose to continue to determine cut points by applying
either clustering or a relative distribution and significance testing
methodology; we propose to codify this policy in paragraphs (a)(1) of
each section. We propose in paragraphs (a)(2) and (a)(3) of each
section that for non-CAHPS measures, we would use a clustering
methodology and that for CAHPS measures, we would use relative
distribution and significance testing. Measure scores would be
converted to a 5-star scale ranging from 1 to 5, with whole star
increments for the cut points. A rating of 5 stars would indicate the
highest Star Rating possible, while a rating of 1 star would be the
lowest rating on the scale. Consistent with current policy, we propose
to use the two methodologies described as follows to convert measure
scores to measure-level Star Ratings.
The clustering method would be applied to all Star Ratings
measures, except for the CAHPS measures. For each individual measure,
we would determine the measure cut points using all measure scores for
all contracts required to report that do not have missing, flagged as
biased, or erroneous data. For the Part D measures, we propose to
determine MA-PD and PDP cut points separately. The scores would
[[Page 56398]]
be grouped such that scores within the same rating (that is 1 star, 2
stars, etc.) are as similar as possible, and scores in different
ratings are as different as possible. The hierarchical clustering
algorithm and the associated tree and cluster assignments using SAS (a
statistical software package) are currently used to determine the cut
points for the assignment of the measure-level Star Ratings. We intend
to continue use of this software under this proposal, but improvements
in statistical analysis will not result in rulemaking or changes in
these proposed rules. Rather, we believe that the software used to
apply the clustering methodology is generally irrelevant.
Conceptually, the clustering algorithm identifies natural gaps
within the distribution of the scores and creates groups (clusters)
that are then used to identify the cut points that result in the
creation of a pre-specified number of categories. The Euclidean
distance between each pair of contracts' measure scores serves as the
input for the clustering algorithm. The hierarchical clustering
algorithm begins with each contract's measure score being assigned to
its own cluster. Ward's minimum variance method is used to separate the
variance of the measure scores into within-cluster and between-cluster
sum of squares components in order to determine which pairs of clusters
to merge. For the majority of measures, the final step in the algorithm
is done a single time with five categories specified for the assignment
of individual scores to cluster labels. The cluster labels are then
ordered to create the 1 to 5-star scale. The range of the values for
each cluster (identified by cluster labels) is examined and would be
used to determine the set of cut points for the Star Ratings. The
measure score that corresponds to the lower bound for the measure-level
ratings of 2 through 5 would be included in the star-specific rating
category for a measure for which a higher score corresponds to better
performance. For a measure for which a lower score is better, the
process would be the same except that the upper bound within each
cluster label would determine the set of cut points. The measure score
that corresponds to the cut point for the ratings of 2 through 5 would
be included in the star-specific rating category. In cases where
multiple clusters have the same measure score value range, those
clusters would be combined, leading to fewer than 5 clusters. Under our
proposal to use clustering to set cut points, we would not require the
same number of observations (contracts) within each rating and instead
would use a data-driven approach.
As proposed in paragraphs (a)(2)(ii) of each section the
improvement measures for Part C and Part D would require the clustering
algorithm to be done twice for the identification of the cut points
that would allow the conversion of the improvement measure scores to
the star scale. The Part D improvement measure score clustering for MA-
PDs and PDPs would be reported separately. Improvement scores of zero
or greater would be assigned at least 3 stars for the improvement Star
Rating, while improvement scores less than zero would be assigned
either 1 or 2 stars. The clustering would be conducted separately for
improvement measure scores greater than or equal to zero and those with
improvement measure scores less than zero. For contracts with
improvement scores greater than or equal to zero, the clustering
process would result in three clusters with measure-level Star Ratings
of 3, 4, or 5 with the lower bound of each cluster serving as the cut
point for the associated Star Rating. For those contracts with
improvement scores less than zero, the clustering algorithm would
result in two clusters with measure-level Star Ratings of 1 or 2.
We propose in paragraphs (a)(3) of each section to use percentile
standing relative to the distribution of scores for other contracts,
measurement reliability standards, and statistical significance testing
to determine star assignments for the CAHPS measures. This method would
combine evaluating the relative percentile distribution of scores with
significance testing and measurement reliability standards in order to
maximize the accuracy of star assignments based on scores produced from
the CAHPS survey. For CAHPS measures, contracts are first classified
into base groups by comparisons to percentile cut points defined by the
current-year distribution of case-mix adjusted contract means.
Percentile cut points would then be rounded to the nearest integer on
the 0-100 reporting scale, and each base group would include those
contracts whose rounded mean score is at or above the lower limit and
below the upper limit. Then, the number of stars assigned would be
determined by the base group assignment, the statistical significance
and direction of the difference of the contract mean from the national
mean, an indicator of the statistical reliability of the contract score
on a given measure (based on the ratio of sampling variation for each
contract mean to between-contract variation), and the standard error of
the mean score. Table 4, which we propose to codify at Sec. Sec.
422.166(a)(3) and 423.186(a)(3), details the CAHPS star assignment
rules for each rating. All statistical tests, including comparisons
involving standard error, would be computed using unrounded scores.
We propose that if the reliability of a CAHPS measure score is very
low for a given contract, less than 0.60, the contract would not
receive a Star Rating for that measure. For purposes of applying the
criterion for 1 star on Table 3, at item (c), low reliability scores
would be defined as those with at least 11 respondents and reliability
greater than or equal to 0.60 but less than 0.75 and also in the lowest
12 percent of contracts ordered by reliability. The standard error
would be considered when the measure score is below the 15th percentile
(in base group 1), significantly below average, and has low
reliability: In this case, 1 star would be assigned if and only if the
measure score is at least 1 standard error below the unrounded cut
point between base groups 1 and 2. Similarly, when the measure score is
at or above the 80th percentile (in base group 5), significantly above
average, and has low reliability, 5 stars would be assigned if and only
if the measure score is at least 1 standard error above the unrounded
cut point between base groups 4 and 5.
Table 4--CAHPS Star Assignment Rules
------------------------------------------------------------------------
Star Criteria for assigning star ratings
------------------------------------------------------------------------
1....................... A contract is assigned one star if both
criteria (a) and (b) are met plus at least
one of criteria (c) and (d):
(a) Its average CAHPS measure score is lower
than the 15th percentile; AND
(b) its average CAHPS measure score is
statistically significantly lower than the
national average CAHPS measure score;
(c) the reliability is not low; OR
(d) its average CAHPS measure score is more
than one standard error (SE) below the 15th
percentile.
[[Page 56399]]
2....................... A contract is assigned two stars if it does
not meet the one[dash]star criteria and meets
at least one of these three criteria:
(a) Its average CAHPS measure score is lower
than the 30th percentile and the measure does
not have low reliability; OR
(b) its average CAHPS measure score is lower
than the 15th percentile and the measure has
low reliability; OR
(c) its average CAHPS measure score is
statistically significantly lower than the
national average CAHPS measure score and
below the 60th percentile.
3....................... A contract is assigned three stars if it meets
at least one of these three criteria:
(a) Its average CAHPS measure score is at or
above the 30th percentile and lower than the
60th percentile, AND it is not statistically
significantly different from the national
average CAHPS measure score; OR
(b) its average CAHPS measure score is at or
above the 15th percentile and lower than the
30th percentile, AND the reliability is low,
AND the score is not statistically
significantly lower than the national average
CAHPS measure score; OR
(c) its average CAHPS measure score is at or
above the 60th percentile and lower than the
80th percentile, AND the reliability is low,
AND the score is not statistically
significantly higher than the national
average CAHPS measure score.
4....................... A contract is assigned four stars if it does
not meet the 5-star criteria and meets at
least one of these three criteria:
(a) Its average CAHPS measure score is at or
above the 60th percentile and the measure
does not have low reliability; OR
(b) its average CAHPS measure score is at or
above the 80th percentile and the measure has
low reliability; OR
(c) its average CAHPS measure score is
statistically significantly higher than the
national average CAHPS measure score and
above the 30th percentile.
5....................... A contract is assigned five stars if both
criteria (a) and (b) are met plus at least
one of criteria (c) and (d):
(a) Its average CAHPS measure score is at or
above the 80th percentile; AND
(b) its average CAHPS measure score is
statistically significantly higher than the
national average CAHPS measure score;
(c) the reliability is not low; OR
(d) its average CAHPS measure score is more
than one SE above the 80th percentile.
------------------------------------------------------------------------
We request comments on our proposed methods to determine cut
points. For certain measures, we previously published pre-determined 4-
star thresholds. If commenters recommend pre-determined 4-star
thresholds, we request suggestions on how to minimize generating Star
Ratings that do not reflect a contract's ``true'' performance,
otherwise referred to as the risk of ``misclassifying'' a contract's
performance (for example, scoring a ``true'' 4-star contract as a 3-
star contract, or vice versa, or creating ``cliffs'' in Star Ratings
and therefore, potential benefits between plans with nearly identical
Star Ratings on different sides of a fixed threshold), and how to
continue to create incentives for quality improvement. We also welcome
comments on alternative recommendations for revising the cut point
methodology. For example, we are considering methodologies that would
minimize year-to-year changes in the cut points by setting the cut
points so they are a moving average of the cut points from the two or
three most recent years or setting caps on the degree to which a
measure cut point could change from one year to the next. We welcome
comments on these particular methodologies and recommendations for
other ways to provide stability for cut points from year to year.
m. Hierarchical Structure of the Ratings
We propose to continue our existing policy to use a hierarchical
structure for the Star Ratings. The basic building block of the MA Star
Ratings System is, and under our proposal would continue to be, the
measure. Because the MA Star Ratings System consists of a large
collection of measures across numerous quality dimensions, the measures
would be organized in a hierarchical structure that provides ratings at
the measure, domain, Part C summary, Part D summary, and overall
levels. The regulation text at Sec. Sec. 422.166 and 423.186 is built
on this structure and provides for calculating ratings at each
``level'' of the system. The organization of the measures into larger
groups increases both the utility and efficiency of the rating system.
At each aggregated level, ratings are based on the measure-level stars.
Ratings at the higher level are based on the measure-level Star
Ratings, with whole star increments for domains and half-star
increments for summary and overall ratings; a rating of 5 stars would
indicate the highest Star Rating possible, while a rating of 1 star
would be the lowest rating on the scale. Half-star increments are used
in the summary and overall ratings to allow for more variation at the
higher hierarchical levels of the ratings system. We believe this
greater variation and the broader range of ratings provide more useful
information to beneficiaries in making enrollment decisions while
remaining consistent with the statutory direction in sections 1853(o)
and 1854(b) of the Act to use a 5-star system. These policies for the
assignment of stars would be codified with other rules for the ratings
at the domain, summary, and overall level. Domain ratings employ an
unweighted mean of the measure-level stars, while the Part C and D
summary and overall ratings employ a weighted mean of the measure-level
stars and up to two adjustments. We propose to codify these policies at
paragraphs (b)(2), (c)(1) and (d)(1) of Sec. Sec. 422.166 and 423.186.
n. Domain Star Ratings
Groups of measures that together represent a unique and important
aspect of quality and performance are organized to form a domain.
Domain ratings summarize a plan's performance on a specific dimension
of care. Currently the domains are used purely for purposes of
displaying data on Medicare Plan Finder to organize the measures and
help consumers interpret the data. We propose to continue this policy
at Sec. Sec. 422.166(b)(1)(i) and 423.186(b)(1)(i).
At present, there are nine domains--five for Part C measures for
MA-only and MA-PDs plans and four for Part D measures for MA-PDs. We
propose to continue to group measures for purposes of display on
Medicare Plan Finder and to continue use of the same domains as in
current practice in Sec. Sec. 422.166(b)(1)(i) and 423.196(b)(1)(i).
The current domains are listed in Tables 5 and 6.
Table 5--Part C Domains
------------------------------------------------------------------------
Domain
-------------------------------------------------------------------------
Staying Healthy: Screenings, Tests and Vaccines.
Managing Chronic (Long Term) Conditions.
Member Experience with Health Plan.
[[Page 56400]]
Member Complaints and Changes in the Health Plan's Performance.
Health Plan Customer Service.
------------------------------------------------------------------------
Table 6--Part D Domains
------------------------------------------------------------------------
Domain
-------------------------------------------------------------------------
Drug Plan Customer Service.
Member Complaints and Changes in the Drug Plan's Performance.
Member Experience with the Drug Plan.
Drug Safety and Accuracy of Drug Pricing.
------------------------------------------------------------------------
Currently, Star Ratings for domains are calculated using the
unweighted mean of the Star Ratings of the included measures. They are
displayed to the nearest whole star, using a 1-5 star scale. We propose
to continue this policy at paragraph (b)(2)(ii). We also propose that a
contract must have stars for at least 50 percent of the measures
required to be reported for that domain for that contract type to have
that domain rating calculated in order to have enough data to reflect
the contract's performance on the specific dimension. For example, if a
contract is rated only on one measure in Staying Healthy: Screenings,
Tests and Vaccines, that one measure would not necessarily be
representative of how the contract performs across the whole domain so
we do not believe it is appropriate to calculate and display a domain
rating. We propose to continue this policy by providing, at paragraph
(b)(2)(i), that a minimum number of measures must be reported for a
domain rating to be calculated.
o. Part C and D Summary Ratings
In the current rating system the Part C summary rating provides a
rating of the health plan quality and the Part D summary rating
provides a rating of the prescription drug plan quality. We are
proposing, at Sec. Sec. 422.166(c) and 423.186(c), to codify
regulation text governing the adoption of Part C summary ratings and
Part D summary ratings. An MA-only plan and a Part D standalone plan
would receive a summary rating only for, respectively, Part C measures
and Part D measures.
First, in paragraphs (c)(1) of each section, we propose the overall
formula for calculating the summary ratings for Part C and Part D.
Under current policy, the summary rating for an MA-only contract is
calculated using a weighted mean of the Part C measure-level Star
Ratings with up to two adjustments: The reward factor (if applicable)
and the categorical adjustment index (CAI); similarly, the current
summary rating for a PDP contract is calculated using a weighted mean
of the Part D measure-level Star Ratings with up to two adjustments:
The reward factor (if applicable) and the CAI. We propose in Sec. Sec.
422.166(c)(1) and 423.186(c)(1) that the Part C and Part D summary
ratings would be calculated as the weighted mean of the measure-level
Star Ratings with an adjustment to reward consistently high performance
(reward factor) and the application of the CAI, pursuant to paragraph
(f) (where we propose the specifics for these adjustments) for Parts C
and D, respectively.
Second, and also consistent with current policy, we propose an MA-
only contract and PDP would have a summary rating calculated only if
the contract meets the minimum number of rated measures required for
its respective summary rating: A contract must have scores for at least
50 percent of the measures required to be reported for the contract
type to have the summary rating calculated. The proposed regulation
text would be codified as paragraph (c)(2)(i) of Sec. Sec. 422.166 and
423.186. The same rules would be applied to both the Part C and Part D
summary ratings for the minimum number of rated measures and flags for
display. We would apply this regulation to require a MA-PD to have a
Part C and a Part D summary rating if the minimum requirement of rated
measures for each summary rating type is met. The improvement measures
are based on identified measures that are each counted towards meeting
the proposed requirement for the calculation of a summary rating. We
propose (at paragraph (c)(2)(ii)) that the improvement measures
themselves are not included in the count of minimum number of measures
for the Part C or Part D summary ratings.
Third, we propose a paragraph (c)(3) in both Sec. Sec. 422.166 and
423.186 to provide that the summary ratings are on a 1 to 5 star scale
in half-star increments. Traditional rounding rules would be employed
to round the summary rating to the nearest half-star. The summary
rating would be displayed in HPMS and Medicare Plan Finder to the
nearest half-star. As proposed in Sec. Sec. 422.166(h) and 423.186(h),
if a contract has not met the measure requirement for calculating a
summary rating, the display in HPMS (and on Medicare Plan Finder) for
the applicable summary rating would be the flag ``Not enough data
available'' or if the measurement period is less than 1 year past the
contract's effective date the flag would be ``Plan too new to be
measured''.
We welcome comments on the calculations for the Part C and D
summary ratings.
p. Overall Rating
The overall Star Rating is a global rating that summarizes the
plan's quality and performance for the types of services offered by the
plans under the rated contract. We propose at Sec. Sec. 422.166(d) and
423.186(d) to codify the standards for calculating and assigning
overall Star Ratings for MA-PD contracts. The overall rating for an MA-
PD contract is proposed to be calculated using a weighted mean of the
Part C and Part D measure level Star Ratings, respectively, with an
adjustment to reward consistently high performance described in
paragraph (f)(1) and the application of the CAI, pursuant to described
in paragraph (f)(2).
Consistent with current policy, we propose at paragraph (d)(2) that
an MA-PD would have an overall rating calculated only if the contract
receives both a Part C and Part D summary rating, and scores for at
least 50% of the measures are required to be reported for the contract
type to have the overall rating calculated. As with the Part C and D
summary ratings, the Part C and D improvement measures would not be
included in the count for the minimum number of measures for the
overall rating. Any measure that shares the same data and is included
in both the Part C and Part D summary ratings would be included only
once in the calculation for the overall rating; for example, Members
Choosing to Leave the Plan and Complaints about the Plan. As with
summary ratings, we propose that overall MA-PD ratings would use a 1 to
5 star scale in half-star increments; traditional rounding rules would
be employed to round the overall rating to the nearest half-star. These
policies are proposed as paragraphs (d)(2)(i) through (iv).
In accordance with our general proposed policy at Sec. Sec.
422.166(h) and 423.186(h), the overall rating would be posted on HPMS
and Medicare Plan Finder, with specific messages for lack of ratings
for certain reasons. Applying that rule, if an MA-PD contract has only
one of the two required summary ratings, the overall rating would not
be calculated and the display in HPMS would be the flag ``Not enough
data available.''
For QBP purposes, low enrollment contracts and new MA plans are
defined in Sec. 422.252. Low enrollment contract
[[Page 56401]]
means a contract that could not undertake Healthcare Effectiveness Data
and Information Set (HEDIS) and Health Outcomes Survey (HOS) data
collections because of a lack of a sufficient number of enrollees to
reliably measure the performance of the health plan; new MA plan means
a MA contract offered by a parent organization that has not had another
MA contract in the previous 3 years. Low enrollment contracts and new
plans do not receive an overall or summary rating because of the lack
of necessary data. However, they are treated as qualifying plans for
the purposes of QBPs. Section 1853(o)(3)(A)(ii)(II) of the Act, as
implemented at Sec. 422.258(d)(7), provides that for 2013 and
subsequent years, CMS shall develop a method for determining whether an
MA plan with low enrollment is a qualifying plan for purposes of
receiving an increase in payment under section 1853(o). This
determination is applied at the contract level and thus determines
whether a contract (meaning all plans under that contract) is a
qualifying contract. The statute, at section 1853(o)(3)(A)(iii) of the
Act, provides for treatment of new MA plans as qualifying plans
eligible for a specific QBP. We therefore propose, at Sec. Sec.
422.166(d)(3) and 423.186(d)(3), that low enrollment contracts (as
defined in Sec. 422.252 of this chapter) and new MA plans (as defined
in Sec. 422.252 of this chapter) do not receive an overall and/or
summary rating; they would be treated as qualifying plans for the
purposes of QBPs as described in Sec. 422.258(d)(7) of this chapter
and announced through the process described for changes in and adoption
of payment and risk adjustment policies in section 1853(b) of the Act.
This proposal would merely codify existing policy and practice.
q. Measure Weights
Prior to the 2012 Part C and D Plan Ratings (now known as Star
Ratings), all individual measures included in the program were weighted
equally, suggesting equal importance. Based on feedback from
stakeholders, including health and drug plans and beneficiary advocacy
groups, we moved to provide greater weight to clinical outcomes and
lesser weight to process measures. Patient experience and access
measures were also given greater weight than process measures, but not
as high as outcome measures. The differential weighting was implemented
to help create further incentives to drive improvement in clinical
outcomes, patient experience, and access. These differential weights
for measures were implemented for the 2012 Ratings following a May 2011
Request for Comments and adopted in the CY2013 Rate Announcement and
Final Call Letter.
In the Contract Year 2012 Final Rule for Changes to the Medicare
Advantage and the Medicare Prescription Drug Benefit Programs rule (79
FR 21486), we stated that scoring methodologies should also consider
improvement as an independent goal. To this end, we implemented in the
CY 2013 Rate Announcement the Part C and D improvement measures that
measure the overall improvement or decline in individual measure scores
from the prior to the current year. Given the importance of recognizing
quality improvement as an independent goal, for the 2015 Star Ratings,
we proposed and subsequently finalized through the 2015 Rate
Announcement and final Call Letter an increase in the weight of the
improvement measure from 3 times to 5 times that of a process measure.
This weight aligns the Part C and D Star Ratings program with value-
based purchasing programs in Medicare fee-for-service which heavily
weight improvement.
We are proposing in Sec. Sec. 422.166(e) and 423.186(e) to
continue the current weighting of measures in the Part C and D Star
Ratings program by assigning the highest weight (5) to improvement
measures, followed by outcome and intermediate outcome measures (weight
of 3), then by patient experience/complaints and access measures
(weight of 1.5), and finally process measures (weight of 1). We are
considering increasing the weight of the patient experience/complaints
and access measures and are interested in stakeholder feedback on this
potential change in order to reflect better the importance of these
issues in plan performance. If we were to increase the weight, we are
considering increasing it from a weight of 1.0 to between 1.5 and 3
similar to outcome measures. This increased weight would reflect CMS'
commitment to serve Medicare beneficiaries by putting the patients
first, including their assessments of the care received by plans. We
solicit comment on this point, particularly the potential change in the
weight of the patient experience/complaints and access measures.
Table 7 includes the proposed measure categories, the definitions
of the measure categories, and the weights. In calculating the summary
and overall ratings, a measure given a weight of 3 counts three times
as much as a measure given a weight of 1. In section III.A.12. of this
proposed rule, we propose (as Table 2) the measure set and include the
category and weight for each measure; those weight assignments are
consistent with this proposal. We propose that as new measures are
added to the Part C and D Star Ratings, we would assign the measure
category based on these categories and the regulation text proposed at
Sec. Sec. 422.166(e) and 423.186(e), subject to two exceptions. We
propose in paragraphs (e)(2) of each section as the first exception, to
assign new measures to the Star Ratings program a weight of 1 for their
first year in the Star Ratings. In subsequent years the weight
associated with the measure weighting category would be used. This is
consistent with current policy.
Table 7--Measure Categories, Definitions and Weights
----------------------------------------------------------------------------------------------------------------
Measure category Definition Weight
----------------------------------------------------------------------------------------------------------------
Improvement................................. Part C and Part D improvement measures are derived 5
through comparisons of a contract's current and
prior year measure scores.
Outcome and Intermediate Outcome............ Outcome measures reflect improvements in a 3
beneficiary's health and are central to assessing
quality of care. Intermediate outcome measures
reflect actions taken which can assist in
improving a beneficiary's health status.
Controlling Blood Pressure is an example of an
intermediate outcome measure where the related
outcome of interest would be better health status
for beneficiaries with hypertension.
Patient Experience/Complaints............... Patient experience measures reflect beneficiaries' 1.5
perspectives of the care and services they
received.
Access...................................... Access measures reflect processes and issues that 1.5
could create barriers to receiving needed care.
Plan Makes Timely Decisions about Appeals is an
example of an access measure.
[[Page 56402]]
Process..................................... Process measures capture the health care services 1
provided to beneficiaries which can assist in
maintaining, monitoring, or improving their
health status.
----------------------------------------------------------------------------------------------------------------
In addition, we propose (at Sec. Sec. 422.166(e)(3) and
423.186(e)(3)) a second exception to the general weighting rule for MA
and Part D contracts that have service areas that are wholly located in
Puerto Rico. We recognize the additional challenge unique to Puerto
Rico related to the medication adherence measures used in the Star
Ratings Program due to the lack of Low Income Subsidy (LIS). For the
2017 Star Ratings, we implemented a different weighting scheme for the
Part D medication adherence measures in the calculation of the overall
and summary Star Ratings for contracts that solely serve the population
of beneficiaries in Puerto Rico. We propose, at Sec. Sec.
422.166(e)(3) and 423.186(e)(3), to continue to reduce the weights for
the adherence measures to 0 for the summary and overall rating
calculations and maintain the weight of 3 for the adherence measures
for the improvement measure calculations for contracts that solely
serve the population of beneficiaries in Puerto Rico. We request
comment on our proposed weighting strategy for Measure Weights
generally and for Puerto Rico, including the weighting values
themselves.
r. Application of the Improvement Measure Scores
Consistent with current policy, we propose at Sec. Sec. 422.166(g)
and 423.186(g) a hold harmless provision for the inclusion or exclusion
of the improvement measure(s) for highly-rated contracts' highest
ratings. We are proposing, in paragraphs (g)(1)(i) through (iii), a
series of rules that specify when the improvement measure is included
in calculating overall and summary ratings.
MA-PDs would have the hold harmless provisions for highly-rated
contracts applied for the overall rating. For an MA-PD that receives an
overall rating of 4 stars or more without the use of the improvement
measures and with all applicable adjustments (CAI and the reward
factor), a comparison of the rounded overall rating with and without
the improvement measures is done. The overall rating with the
improvement measures used in the comparison would include up to two
adjustments, the reward factor (if applicable) and the CAI. The overall
rating without the improvement measures used in the comparison would
include up to two adjustments, the reward factor (if applicable) and
the CAI. The higher overall rating would be used for the overall
rating. For an MA-PD that has an overall rating of 2 stars or less
without the use of the improvement measure and with all applicable
adjustments (CAI and the reward factor), the overall rating would
exclude the improvement measure. For all others, the overall rating
would include the improvement measure.
MA-only and PDPs would have the hold harmless provisions for
highly-rated contracts applied for the Part C and D summary ratings,
respectively. For an MA-only or PDP that receives a summary rating of 4
stars or more without the use of the improvement measure and with all
applicable adjustments (CAI and the reward factor), a comparison of the
rounded summary rating with and without the improvement measure and up
to two adjustments, the reward factor (if applicable) and CAI, is done.
The higher summary rating would be used for the summary rating for the
contract's highest rating. For MA-only and PDPs with a summary rating
of 2 stars or less without the use of the improvement measure and with
all applicable adjustments (CAI and the reward factor), the summary
rating would exclude the improvement measure. For all others, the
summary rating would include the improvement measure. MA-PDs would have
their summary ratings calculated with the use of the improvement
measure regardless of the value of the summary rating.
In addition, at paragraph (g)(2), we also propose text to clarify
that summary ratings use only the improvement measure associated with
the applicable Part C or D performance.
We welcome comments on the hold harmless improvement provision we
propose to continue to use, particularly any clarifications in how and
when it should be applied.
s. Reward Factor (Formerly Referred to as Integration Factor)
In 2011, the integration factor was added to the Star Ratings
methodology to reward contracts that have consistently high
performance. The integration factor was later renamed the reward
factor. (The reference to either reward or integration factor refers to
the same aspect of the Star Ratings.) This factor is calculated
separately for the Part C summary rating, Part D summary rating for MA-
PDs, Part D summary rating for PDPs, and the overall rating for MA-PDs.
It is currently added to the summary (Part C or D) and overall rating
of contracts that have both high and stable relative performance for
the associated summary or overall rating. The contract's performance
will be assessed using its weighted mean relative to all rated
contracts without adjustments.
The contract's stability of performance will be assessed using its
weighted variance relative to all rated contracts at the same rating
level (overall, summary Part C, and summary Part D). The Part D summary
thresholds for MA-PDs are determined independently of the thresholds
for PDPs. We propose to codify the calculation and use of the reward
factor in Sec. Sec. 422.166(f)(1) and 423.186(f)(1).
Annually, we propose to update the performance and variance
thresholds for the reward factor based upon the data for the Star
Ratings year, consistent with current policy. A multistep process would
be used to determine the values that correspond to the thresholds for
the reward factors for the summary and/or overall Star Ratings for a
contract. The determination of the reward factors would rely on the
contract's ranking of its weighted variance and weighted mean of the
measure-level stars to the summary or overall rating relative to the
distribution of all contracts' weighted variance and weighted mean to
the summary and/or overall rating. A contract's weighted variance would
be calculated using the quotient of the following two values: (1) The
product of the number of applicable measures based on rating-type and
the sum of the products of the weight of each applicable measure and
its squared deviation \42\ and (2) the product of one less than the
number of applicable measures and the sum of the weights of the
applicable measures. A contract's weighted mean performance would be
[[Page 56403]]
found by calculating the quotient of the following two values: (1) The
sum of the products of the weight of a measure and its associated
measure-level Star Ratings of the applicable measures for the rating-
type and (2) the sum of the weights of the applicable measures for the
rating type. The thresholds for the categorization of the weighted
variance and weighted mean for contracts would be based upon the
distribution of the calculated values of all rated contracts of the
same type. Because highly-rated contracts may have the improvement
measure(s) excluded in the determination of their final highest rating,
each contract's weighted variance and weighted mean is calculated both
with and without the improvement measures.
---------------------------------------------------------------------------
\42\ A deviation is the difference between the performance
measure's Star Rating and the weighted mean of all applicable
measures for the contract.
---------------------------------------------------------------------------
A contract's weighted variance is categorized into one of three
mutually exclusive categories, identified in Table 8A, based upon the
weighted variance of its measure-level Star Ratings and its ranking
relative to all other contracts' weighted variance for the rating type
(Part C summary for MA-PDs and MA-only, overall for MA-PDs, Part D
summary for MA-PDs, and Part D summary for PDPs), and the manner in
which the highest rating for the contract was determined--with or
without the improvement measure(s). For an MA-PD's Part C and D summary
ratings, its ranking is relative to all other contracts' weighted
variance for the rating type (Part C summary, Part D summary) with the
improvement measure. Similarly, a contract's weighted mean is
categorized into one of three mutually exclusive categories, identified
in Table 8B, based on its weighted mean of all measure-level Star
Ratings and its ranking relative to all other contracts' weighted means
for the rating type (Part C summary for MA-PDs and MA-only, overall,
Part D summary for MA-PDs, and Part D summary for PDPs) and the manner
in which the highest rating for the contract was determined--with or
without the improvement measure(s). For an MA-PD's Part C and D summary
ratings, its ranking is relative to all other contracts' weighted means
for the rating type (Part C summary, Part D summary) with the
improvement measure. Further, the same threshold criterion is employed
per category regardless of whether the improvement measure was included
or excluded in the calculation of the rating. The values that
correspond to the thresholds are based on the distribution of all rated
contracts and are determined with and without the improvement
measure(s) and exclusive of any adjustments. Table 8A details the
criteria for the categorization of a contract's weighted variance for
the summary and overall ratings. Table 8B details the criteria for the
categorization of a contract's weighted mean (performance) for the
overall and summary ratings. The values that correspond to the cutoffs
are provided each year during the plan preview and are published in the
Technical Notes.
Table 8A--Categorization of a Contract Based on Its Weighted Variance Ranking
--------------------------------------------------------------------------------------------------------------------------------------------------------
Variance category Ranking
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low............................................. Below the 30th percentile.
Medium.......................................... At or above the 30th percentile to less than the 70th percentile.
High............................................ At or above the 70th percentile.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 8B--Categorization of a Contract Based on Weighted Mean (Performance) Ranking
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weighted mean (performance) category Ranking
--------------------------------------------------------------------------------------------------------------------------------------------------------
High............................................ At or above the 85th percentile.
Relatively High................................. At or above the 65th percentile to less than the 85th percentile.
Other........................................... Below the 65th percentile.
--------------------------------------------------------------------------------------------------------------------------------------------------------
These definitions of high, medium, and low weighted variance
ranking and high, relatively high, and other weighted mean ranking
would be codified in narrative form in paragraph (f)(1)(ii).
A contract's categorization for both weighted mean and weighted
variance determines the value of the reward factor. Table 9 shows the
values of the reward factor based on the weighted variance and weighted
mean categorization; these values would be codified, as a chart, in
paragraph (f)(i)(iii). The weighted variance and weighted mean
thresholds for the reward factor are available in the Technical Notes
and updated annually.
Table 9--Categorization of a Contract for the Reward Factor
------------------------------------------------------------------------
Weighted mean
Weighted variance (performance) Reward factor
------------------------------------------------------------------------
Low............................... High................ 0.4
Medium............................ High................ 0.3
Low............................... Relatively High..... 0.2
Medium............................ Relatively high..... 0.1
High.............................. Other............... 0.0
------------------------------------------------------------------------
We propose to continue the use of a reward factor to reward
contracts with consistently high and stable performance over time.
Further, we propose to continue to employ the methodology described in
this subsection to categorize and determine the reward factor for
contracts. As proposed in paragraphs (c)(1) and (d)(1), these reward
factor adjustments would be applied at the summary and overall rating
level.
[[Page 56404]]
t. Categorical Adjustment Index
A growing body of evidence links the prevalence of beneficiary-
level social risk factors with performance on measures included in
Medicare value-based purchasing programs, including MA and Part D Star
Ratings. With support from our contractors, we undertook research to
provide scientific evidence as to whether MA organizations or Part D
sponsors that enroll a disproportionate number of vulnerable
beneficiaries are systematically disadvantaged by the current Star
Ratings. In 2014, we issued a Request for Information to gather
information directly from organizations to supplement the data that CMS
collects, as we believe that plans and sponsors are uniquely positioned
to provide both qualitative and quantitative information that is not
available from other sources. In February and September 2015, we
released details on the findings of our research.\43\ We have also
reviewed reports about the impact of socio-economic status (SES) on
quality ratings, such as the report published by the NQF posted at
www.qualityforum.org/risk_adjustment_ses.aspx and the Medicare Payment
Advisory Commission's (MedPAC) Report to the Congress: Medicare Payment
Policy posted at https://www.medpac.gov/docs/default-source/reports/march-2016-report-to-the-congress-medicare-payment-policy.pdf?sfvrsn=0.
We have more recently been reviewing reports prepared by the Office of
the Assistant Secretary for Planning and Evaluation (ASPE \44\) and the
National Academies of Sciences, Engineering, and Medicine on the issue
of measuring and accounting for social risk factors in CMS' value-based
purchasing and quality reporting programs, and we have been considering
options on how to address the issue in these programs. On December 21,
2016, ASPE submitted a Report to Congress on a study it was required to
conduct under section 2(d) of the Improving Medicare Post-Acute Care
Transformation (IMPACT) Act of 2014. The study analyzed the effects of
certain social risk factors of Medicare beneficiaries on quality
measures and measures of resource use in nine Medicare value-based
purchasing programs. The report also included considerations for
strategies to account for social risk factors in these programs. A
January 10, 2017 report released by the National Academies of Sciences,
Engineering, and Medicine provided various potential methods for
measuring and accounting for social risk factors, including stratified
public reporting.\45\
---------------------------------------------------------------------------
\43\ The February release can be found at https://www.cms.gov/medicareprescription-drug-coverage/prescriptiondrugcovgenin/performancedata.html.
The September release can be found at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/Downloads/Research-on-the-Impact-of-Socioeconomic-Status-on-Star-Ratingsv1-09082015.pdf.
\44\ https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
\45\ National Academies of Sciences, Engineering, and Medicine.
2017. Accounting for social risk factors in Medicare payment.
Washington, DC: The National Academies Press--https://www.nap.edu/catalog/21858/accounting-for-social-risk-factors-in-medicare-payment-identifying-social.
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We have also engaged NCQA and the PQA to examine their measure
specifications used in the Star Ratings program to determine if re-
specification is warranted. The majority of measures used for the Star
Ratings program are consensus-based. Measure specifications can be
changed only by the measure steward (the owner and developer of the
measure). Thus, measure scores cannot be adjusted for differences in
enrollee case mix unless required by the measure steward. Measure re-
specification is a multiyear process. For example, NCQA has a standard
process for reviewing any measure and determining whether a measure
requires re-specification. NCQA's re-evaluation process is designed to
ensure any resulting measure updates have desirable attributes of
relevance, scientific soundness, and feasibility:
Relevance describes the extent to which the measure
captures information important to different groups, for example,
consumers, purchasers, policymakers. To determine relevance, NCQA
assesses issues such as health importance, financial importance, and
potential for improvement among entities being measured.
Scientific soundness captures the extent to which the
measure adheres to clinical evidence and whether the measure is valid,
reliable, and precise.
Feasibility captures the extent to which a measure can be
collected at reasonable cost and without undue burden. To determine
feasibility, NCQA also assesses whether a measure is precisely
specified and can be audited. The overall process for assessing the
value of re-specification emphasizes multi-stakeholder input, use of
evidence-based guidelines and data, and wide public input.
Beginning with 2017 Star Ratings, we implemented the CAI that
adjusts for the average within-contract disparity in performance
associated with the percentages of beneficiaries who receive a low
income subsidy and/or are dual eligible (LIS/DE) and/or have disability
status. We developed the CAI as an interim analytical adjustment while
we developed a long-term solution. The adjustment factor varies by a
contract's categorization into a final adjustment category that is
determined by a contract's proportion of LIS/DE and beneficiaries with
disabilities. By design, the CAI values are monotonic in at least one
dimension (LIS/DE or disability status) and thus, contracts with larger
LIS/DE and/or disability percentages realize larger positive
adjustments. MA-PD contracts can have up to three rating-specific CAI
adjustments--one for the overall Star Rating and one for each of the
summary ratings (Part C and Part D). MA-only contracts can have one
adjustment for the Part C summary rating. PDPs can have one adjustment
for the Part D summary rating. We propose to codify the calculation and
use of the reward factor and the CAI in Sec. Sec. 422.166(f)(2) and
423.186(f)(2), while we consider other alternatives for the future.
As is currently done today, the adjusted measure scores of a subset
of the Star Ratings measures would serve as the foundation for the
determination of the index values. Measures would be excluded as
candidates for adjustment if the measures are already case-mix adjusted
for SES (for example, CAHPS and HOS outcome measures), if the focus of
the measurement is not a beneficiary-level issue but rather a plan or
provider-level issue (for example, appeals, call center, Part D price
accuracy measures), if the measure is scheduled to be retired or
revised during the Star Rating year in which the CAI is being applied,
or if the measure is applicable to only Special Needs Plans (SNPs) (for
example, SNP Care Management, Care for Older Adults measures). We
propose to codify these paragraphs for determining the measures for CAI
values at paragraph (f)(2)(ii).The categorization of a beneficiary as
LIS/DE for the CAI would rely on the monthly indicators in the
enrollment file. For the determination of the CAI values, the
measurement period would correspond to the previous Star Ratings year's
measurement period. For the identification of a contract's final
adjustment category for its application of the CAI in the current
year's Star Ratings Program, the measurement period would align with
the Star Ratings year. If a beneficiary was designated as full or
partially dually eligible or receiving a LIS at any time during the
applicable measurement period, the
[[Page 56405]]
beneficiary would be categorized as LIS/DE. For the categorization of a
beneficiary as disabled, we would employ the information from the
Social Security Administration (SSA) and Railroad Retirement Board
(RRB) record systems. Disability status would be determined using the
variable original reason for entitlement (OREC) for Medicare. The
percentages of LIS/DE and disability per contract would rely on the
Medicare enrollment data from the applicable measurement year. The
counts of beneficiaries for enrollment and categorization of LIS/DE and
disability would be restricted to beneficiaries that are alive for part
or all of the month of December of the applicable measurement year.
Further, a beneficiary would be assigned to the contract based on the
December file of the applicable measurement period. We propose to
codify these paragraphs for determining the enrollment counts at
paragraph (f)(2)(i)(B).
Using the subset of the measures that meet the basic inclusion
requirements, we propose to select the measure set for adjustment based
on the analysis of the dispersion of the LIS/DE within-contract
differences using all reportable numeric scores for contracts receiving
a rating in the previous rating year. For the selection of the Part D
measures, MA-PDs and PDPs would be independently analyzed. For each
contract, the proportion of beneficiaries receiving the measured
clinical process or outcome for LIS/DE and non-LIS/DE beneficiaries
would be estimated separately, and the difference between the LIS/DE
and non-LIS/DE performance rates per contract would be calculated. CMS
would use a logistic mixed effects model for estimation purposes that
includes LIS/DE as a predictor, random effects for contract and an
interaction term of contract and LIS/DE.
Using the analysis of the dispersion of the within-contract
disparity of all contracts included in the modelling, the measures for
adjustment would be identified employing the following decision
criteria: (1) A median absolute difference between LIS/DE and non-LIS/
DE beneficiaries for all contracts analyzed is 5 percentage points or
more or \46\ (2) the LIS/DE subgroup performed better or worse than the
non-LIS/DE subgroup in all contracts. We propose to codify these
paragraphs for the selection criteria for the adjusted measures for the
CAI at paragraph (f)(2)(iii).
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\46\ The use of the word `or' in the decision criteria implies
that if one condition or both conditions are met, the measure would
be selected for adjustment.
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The Part D measures for PDPs would be analyzed separately. In order
to apply consistent adjustments across MA-PDs and PDPs, the Part D
measures would be selected by applying the selection criteria to MA-PDs
and PDPs independently and, then, selecting measures that met the
criteria for either delivery system. The measure set for adjustment of
Part D measures for MA-PDs and PDPs would be the same after applying
the selection criteria and pooling the Part D measures for MA-PDs and
PDPs. We propose to codify these paragraphs for the selection of the
adjusted measure set for the CAI for MA-PDs and PDPs at (f)(2)(iii)(C).
We also seek comment on the proposed methodology and criteria for the
selection of the measures for adjustment. Further, we seek comment on
alternative methods or rules to select the measures for adjustment for
future rulemaking.
Annually, while the CAI is being developed using the rules we are
proposing here, we would release on CMS.gov an updated analysis of the
subset of the Star Ratings measures identified for adjustment using
this rule as ultimately finalized. Basic descriptive statistics would
include the minimum, median, and maximum values for the within-contract
variation for the LIS/DE differences. The set of measures for
adjustment for the determination of the CAI would be announced in the
draft Call Letter.
We propose, at paragraph (f)(2)(iv) of each regulation, to
determine the adjusted measure scores for LIS/DE and disability status
from regression models of beneficiary-level measure scores that adjust
for the average within-contract difference in measure scores for MA or
PDP contracts. The approach employed to determine the adjusted measure
scores approximates case-mix adjustment using a beneficiary-level,
logistic regression model with contract fixed effects and beneficiary-
level indicators of LIS/DE and disability status, similar to the
approach currently used to adjust CAHPS patient experience measures.
However, unlike CAHPS case-mix adjustment, the only adjusters would be
LIS/DE and disability status.
The sole purpose of the adjusted measure scores is for the
determination of the CAI values. The adjusted measure scores would be
converted to a measure-level Star Rating using the measure thresholds
for the Star Ratings year that corresponds to the measurement period of
the data employed for the CAI determination.
All contracts would have their adjusted summary rating(s) and for
MA-PDs, an adjusted overall rating, calculated employing the standard
methodology proposed at Sec. Sec. 422.166 and 423.186 (which would
also be outlined in the Technical Notes each year), using the subset of
adjusted measure-level Star Ratings and all other unadjusted measure-
level Star Ratings. In addition, all contracts would have their summary
rating(s) and for MA-PDs, an overall rating, calculated using the
traditional methodology and all unadjusted measure-level Star Ratings.
For the annual development of the CAI, the distribution of the
percentages for LIS/DE and disabled using the enrollment data that
parallels the previous Star Ratings year's data would be examined to
determine the number of equal-sized initial groups for each attribute
(LIS/DE and disabled). The initial categories would be created using
all groups formed by the initial LIS/DE and disabled groups. The total
number of initial categories would be the product of the number of
initial groups for LIS/DE and the number of initial groups for the
disabled dimension.
The mean difference between the adjusted and unadjusted summary or
overall ratings per initial category would be calculated and examined.
The initial categories would then be collapsed to form the final
adjustment categories. The collapsing of the initial categories to form
the final adjustment categories would be done to enforce monotonicity
in at least one dimension (LIS/DE or disabled). The mean difference
within each final adjustment category by rating-type (Part C, Part D
for MA-PD, Part D for PDPs, or overall) would be the CAI values for the
next Star Ratings year.
The percentage of LIS/DE is a critical element in the
categorization of contracts into the final adjustment category to
identify a contract's CAI. Starting with the 2017 Star Ratings, we
applied an additional adjustment for contracts that solely serve the
population of beneficiaries in Puerto Rico to address the lack of LIS
in Puerto Rico. The adjustment results in a modified percentage of LIS/
DE beneficiaries that is subsequently used to categorize contracts into
the final adjustment category for the CAI.
We propose to continue this adjustment and to calculate the
contract-level modified LIS/DE percentage for Puerto Rico using the
following sources of information: The most recent data available at the
time of the development of the model of both the 1-year American
Community Survey (ACS) estimates for the percentage of people living
below the Federal Poverty Level (FPL) and the ACS 5-year estimates for
the percentage of people living below 150 percent of the FPL, and
[[Page 56406]]
the Medicare enrollment data from the same measurement period used for
the Star Ratings year.
The data to develop the model would be limited to the 10 states,
drawn from the 50 states plus the District of Columbia, with the
highest proportion of people living below the FPL as identified by the
1-year ACS estimates. Further, the Medicare enrollment data would be
aggregated from MA contracts that had at least 90 percent of their
enrolled beneficiaries with mailing addresses in the 10 highest poverty
states. A linear regression model would be developed using the known
LIS/DE percentage and the corresponding DE percentage from the subset
of MA contracts.
The estimated slope from the linear regression approximates the
expected relationship between LIS/DE for each contract in Puerto Rico
and its DE percentage. The intercept term is adjusted for use with
Puerto Rico contracts by assuming that the Puerto Rico model will pass
through the point (x, y) where x is the observed average DE percentage
in the Puerto Rico contracts based on the enrollment data, and y is the
expected average percentage of LIS/DE in Puerto Rico. The expected
average percentage of LIS/DE in Puerto Rico (the y value) is not
observable, but is estimated by multiplying the observed average
percentage of LIS/DE in the 10 highest poverty states by the ratio
based on the most recent 5-year ACS estimates of the percentage living
below 150 percent of the FPL in Puerto Rico compared to the
corresponding percentage in the set of 10 states with the highest
poverty level. (Further details of the methodology can be found in the
CAI Methodology Supplement available at https://go.cms.gov/partcanddstarratings.)
Using the model developed from this process, the estimated modified
LIS/DE percentage for contracts operating solely in Puerto Rico would
be calculated. The maximum value for the modified LIS/DE indicator
value per contract would be capped at 100 percent. All estimated
modified LIS/DE values for Puerto Rico would be rounded to 6 decimal
places when expressed as a percentage.
We propose to continue to employ the LIS/DE indicator for contracts
operating solely in Puerto Rico while the CAI is being used as an
interim analytical adjustment. Further, we propose that the modeling
results would continue to be detailed in the appendix of the Technical
Notes and the modified LIS/DE percentages would be available for
contracts to review during the plan previews.
We propose to continue the use of the CAI while the measure
stewards continue their examination of the measure specifications and
ASPE completes their studies mandated by the IMPACT Act and formalizes
final recommendations. Contracts would be categorized based on their
percentages of LIS/DE and disability using the data as outlined
previously. The CAI value would be the same for all contracts within
each final adjustment category. The CAI values would be determined
using data from all contracts that meet reporting requirements from the
prior year's Star Rating data. The CAI calculation for the PDPs would
be performed separately and use the PDP specific cut points. Under our
proposal, CMS would include the CAI values in the draft and final Call
Letter attachment of the Advance Notice and Rate Announcement each year
while the interim solution is applied. The values for the CAI value
would be displayed to 6 decimal places. Rounding would take place after
the application of the CAI value and if applicable, the reward factor;
standard rounding rules would be employed. (All summary and overall
Star Ratings are displayed to the nearest half-star.)
While we consider the recommendations from the ASPE report,
findings from measure developers, and work by NQF on risk adjustment
for quality measures, we are continuing to collaborate with
stakeholders. We are seeking to balance accurate measurement of genuine
plan performance, effective identification of disparities, and
maintenance of incentives to improve the outcomes for disadvantaged
populations. Keeping this in mind, we continue to seek public comment
on whether and how we should account for low SES and other social risk
factors in the Part C and D Star Ratings.
We look forward to continuing to work with stakeholders as we
consider the issue of accounting for LIS/DE, disability and other
social risk factors and reducing health disparities in CMS programs. As
we have stated previously, we are continuing to consider options to how
to measure and account for social risk factors in our Star Ratings
program. What we discovered though our research to date is, although a
sponsoring organization's administrative costs may increase as a result
of enrolling significant numbers of beneficiaries with LIS/DE status or
disabilities, the impacts of SES on the quality ratings are quite
modest, affect only a small subset of measures, and do not always
negatively impact the measures. However, CMS would like to better
understand whether, how, and to what extent a sponsoring organization's
administrative costs differ for caring for low-income beneficiaries and
we welcome comment on that topic. Administrative costs may include non-
medical costs such as transportation costs, coordination costs,
marketing, customer service, quality assurance and costs associated
with administering the benefit. We continue our commitment toward
ensuring that all beneficiaries have access to and receive excellent
care, and that the quality of care furnished by plans is assessed
fairly in CMS programs.
u. High and Low Performing Icons
Consistent with our current practice, we are proposing regulation
text to govern assignment of high and low performing icons at
Sec. Sec. 422.166(i) and 423.186(i). We propose to continue current
policy that a contract would receive a high performing icon as a result
of its performance on the Part C and D measures. The high performing
icon would be assigned to an MA-only contract for achieving a 5-star
Part C summary rating, a PDP contract for a 5-star Part D summary
rating, and an MA-PD contract for a 5-star overall rating.
We propose that a contract would receive a low performing icon as a
result of its performance on the Part C or Part D summary ratings. The
low performing icon would be calculated by evaluating the Part C and
Part D summary ratings for the current year and the past 2 years (for
example, the 2016, 2017, and 2018 Star Ratings). If the contract had
any combination of Part C and Part D summary ratings of 2.5 or lower in
all 3 years of data, it would be marked with a low performing icon. A
contract must have a summary rating in either Part C or Part D for all
3 years to be considered for this icon. These rules would be codified
at Sec. Sec. 422.166(i)(2)(i) and 423.186(i)(2)(i).
We also propose, at paragraph (i)(2)(ii), to continue our policy of
disabling the Medicare Plan Finder online enrollment function for
Medicare health and prescription drug plans with the low-performing
icon to ensure that beneficiaries are fully aware that they are
enrolling in a plan with low quality and performance ratings; we
believe this is an important beneficiary protection to ensure that the
decision to enroll in a low rated and low performing plan has been
thoughtfully considered. Beneficiaries who still want to enroll in a
low-performing plan or who may need to in order to get the benefits and
services they require (for example, in geographical areas with limited
plans) will be warned, via explanatory
[[Page 56407]]
messaging of the plan's poorly rated performance and directed to
contact the plan directly to enroll.
v. Plan Preview of Star Ratings
We propose in Sec. Sec. 422.166(i)(3) and 423.186(i)(3) that CMS
have plan preview periods before each Star Ratings release, consistent
with current practice. Part C and D sponsors can preview their Star
Ratings data in HPMS prior to display on the Medicare Plan Finder.
During the first plan preview, we expect Part C and D sponsors to
closely review the methodology and their posted numeric data for each
measure. The second plan preview would include any revisions made as a
result of the first plan preview. In addition, our preliminary Star
Ratings for each measure, domain, summary score, and overall score
would be displayed. During the second plan preview, we expect Part C
and D sponsors to again closely review the methodology and their posted
data for each measure, as well as their preliminary Star Rating
assignments. As part of this regulation, we are proposing that CMS
continue to offer plan preview periods, but are not codifying the
details of each period because over time the process has evolved to
provide more data to sponsors to help validate their data. We envision
it to continue to evolve in the future and do not believe that
codifying specific display content is necessary.
It is important that Part C and D sponsors regularly review their
underlying measure data that are the basis for the Part C and D Star
Ratings. For measures that are based on data reported directly from
sponsors, any issues or problems should be raised well in advance of
CMS' plan preview periods. A draft version of the Technical Notes would
be available during the first plan preview. The draft is then updated
for the second plan preview and finalized when the ratings data have
been posted to Medicare Plan Finder.
We welcome comments on the proposed plan preview process.
w. Technical Changes
We also propose a number of technical changes to other existing
regulations that refer to the quality ratings of MA and Part D plans;
we propose to make technical changes to refer to the proposed new
regulation text that provides for the calculation and assignment of
Star Ratings. Specifically, we propose:
In Sec. 422.258(d)(7), to revise paragraph (d)(7) to
read: Increases to the applicable percentage for quality. Beginning
with 2012, the blended benchmark under paragraphs (a) and (b) of this
section will reflect the level of quality rating at the plan or
contract level, as determined by the Secretary. The quality rating for
a plan is determined by the Secretary according to the 5-star rating
system (based on the data collected under section 1852(e) of the Act)
specified in subpart D of this part 422. Specifically, the applicable
percentage under paragraph (d)(5) of this section must be increased
according to criteria in paragraphs (d)(7)(i) through (v) of this
section if the plan or contract is determined to be a qualifying plan
or a qualifying plan in a qualifying county for the year.
In Sec. 422.260(a), to revise the paragraph to read:
Scope. The provisions of this section pertain to the administrative
review process to appeal quality bonus payment status determinations
based on section 1853(o) of the Act. Such determinations are made based
on the overall rating for MA-PDs and Part C summary rating for MA-only
contracts for the contract assigned pursuant to subpart 166 of this
part 422.
In Sec. 422.260(b), to revise the definition of ``quality
bonus payment (QBP) determination methodology'' to read: Quality bonus
payment (QBP) determination methodology means the quality ratings
system specified in subpart 166 of this part 422 for assigning quality
ratings to provide comparative information about MA plans and
evaluating whether MA organizations qualify for a QBP.
In Sec. 422.504(a)(18), to revise paragraph (a)(18) to
read: To maintain a Part C summary plan rating score of at least 3
stars pursuant to the 5-star rating system specified in subpart 166 of
this part 422. A Part C summary plan rating is calculated as provided
in Sec. 422.166.
In Sec. 423.505(b)(26), to revise paragraph (b)(26) to
read: Maintain a Part D summary plan rating score of at least 3 stars
pursuant to the 5-star rating system specified in subpart 186 of this
part 423. A Part D summary plan rating is calculated as provided in
Sec. 423.186.
We welcome comment on these technical changes and whether there are
additional changes that should be made to account for our proposal to
codify the Star Ratings methodology and measures in regulation text.
12. Any Willing Pharmacy Standards Terms and Conditions and Better
Define Pharmacy Types (Sec. Sec. 423.100, 423.505)
Section 1860D-4(b)(1)(A) of the Act and Sec. 423.120(a)(8)(i)
require a Part D plan sponsor to contract with any pharmacy that meets
the Part D plan sponsor's standard terms and conditions for network
participation. Section 423.505(b)(18) requires Part D plan sponsors to
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.
In the preamble to final rule published on January 28, 2005
(January 2005 final rule) (70 FR 4194) which implemented Sec.
423.120(a)(8)(i) and Sec. 423.505(b)(18), we indicated that standard
terms and conditions, particularly for payment terms, could vary to
accommodate geographic areas or types of pharmacies, so long as all
similarly situated pharmacies were offered the same terms and
conditions. We also stated that we viewed these standard terms and
conditions as a ``floor'' of minimum requirements that all similarly
situated pharmacies must abide by, but that Part D plans could modify
some standard terms and conditions to encourage participation by
particular pharmacies. We believe this approach strikes an appropriate
balance between the any willing pharmacy requirement at section 1860D-
4(b)(1)(A) of the Act and the provisions of section 1860D-4(b)(1)(B) of
the Act, which permits Part D plan sponsors to offer reduced cost
sharing at preferred pharmacies.
The balancing of these goals has led to the development of
preferred pharmacy networks in which certain pharmacies agree to
additional or different terms from the standard terms and conditions.
This has resulted in the development of ``standard'' terms and
conditions that in some cases has had the effect, in our view, of
circumventing the any willing pharmacy requirements and inappropriately
excluding pharmacies from network participation. This section is
intended to clarify or modify our interpretation of the existing
regulations to ensure that plan sponsors can continue to develop and
maintain preferred networks while fully complying with the any willing
pharmacy requirement.
First, we intend to clarify that the any willing pharmacy
requirement applies to all pharmacies, regardless of how they have
organized one or more lines of pharmacy business. Second, we propose to
revise the definition of retail pharmacy and define mail-order
pharmacy. Third, we propose to clarify our regulatory requirements for
what constitutes ``reasonable and relevant'' standard contract terms
and conditions. Finally, we propose to codify our existing guidance
with respect to when a pharmacy must be provided with a
[[Page 56408]]
Part D plan sponsor's standard terms and conditions.
a. Any Willing Pharmacy Required for All Pharmacy Business Models
With the pharmaceutical distribution and pharmacy practice
landscape evolving rapidly, and because pharmacies now frequently have
multiple lines of business, many pharmacies no longer fit squarely into
traditional pharmacy type classifications. For example, compounding
pharmacies and specialty pharmacies, including but not limited to
manufacturer-limited-access pharmacies, and those that may specialize
in certain drugs, disease states, or both, are increasingly common, and
Part D enrollees increasingly need access to their services. As noted
previously, in implementing the any willing pharmacy provision, we
indicated that standard terms and conditions could vary to accommodate
different types of pharmacies so long as all similarly situated
pharmacies were offered the same terms and conditions. In the original
rule to implement Part D (70 FR 4194, January 28, 2005), we defined
certain types of pharmacies (that is, retail, mail order, Long Term
Care (LTC)/institutional, and I/T/U [Indian Health Service, Indian
tribe or tribal organization, or urban Indian organization]) at Sec.
423.100 to operationalize various statutory provisions that
specifically mention these types of pharmacies (for example, section
1860D-4(b)(1)(C)(iv) of the Act). However, these definitions were never
intended to limit the scope of the any willing pharmacy requirement.
Nevertheless, we have anecdotal evidence that some Part D plan sponsors
have declined to permit willing pharmacies to participate in their
networks on the grounds that they do not meet the Part D plan sponsor's
definition of a pharmacy type for which it has developed standard terms
and conditions.
Section 1860D-4(b)(1)(A) of the Act requires Part D plan sponsors
to permit the participation of ``any pharmacy'' that meets the standard
terms and conditions. Accordingly, it is not appropriate for Part D
plan sponsors to offer standard terms and conditions for network
participation that are specific to only one particular type of
pharmacy, and then decline to permit a willing pharmacy to participate
on the grounds that it does not squarely fit into that pharmacy type.
Therefore, we are clarifying in this preamble that although Part D
sponsors may continue to tailor their standard terms and conditions to
various types of pharmacies, Part D plan sponsors may not exclude
pharmacies with unique or innovative business or care delivery models
from participating in their contracted pharmacy network on the basis of
not fitting in the correct pharmacy type classification. In particular,
we consider ``similarly situated'' pharmacies to include any pharmacy
that has the capability of complying with standard terms and conditions
for a pharmacy type, even if the pharmacy does not operate exclusively
as that type of pharmacy.
Thus, Part D plan sponsors must not exclude pharmacies from their
retail pharmacy networks solely on the basis that they, for example,
maintain a traditional retail business while also specializing in
certain drugs or diseases or providing home delivery service by mail to
surrounding areas. Or as another example, a Part D plan sponsor must
not preclude a pharmacy from network participation as a retail pharmacy
because that pharmacy also operates a home infusion book of business,
or vice versa. Later in this section we are proposing to codify our
requirements for when a Part D sponsor must provide a pharmacy with a
copy of its standard terms and conditions. These requirements, if
finalized, would apply to all pharmacies, regardless of whether they
fit into traditional pharmacy classifications or have unique or
innovative business or care delivery models.
b. Revise the Definition of Retail Pharmacy and Add a Definition of
Mail-Order Pharmacy
Since the inception of the Part D program, Part D statute,
regulations, and sub-regulatory guidance have referred to ``mail-
order'' pharmacy and services without defining the term ``mail order''.
Unclear references to the term ``mail order'' have generated confusion
in the marketplace over what constitutes ``mail-order'' pharmacy or
services. This confusion has contributed to complaints from pharmacies
and beneficiaries regarding how Part D plan sponsors classify
pharmacies for network participation, the Plan Finder, and Part D
enrollee cost-sharing expectations. Additionally, pharmacies that are
not mail-order pharmacies, but that may offer home delivery services by
mail (relative to that pharmacy's overall operation), have complained
because Part D plan sponsors classified them as mail-order pharmacies
for network participation and required them to be licensed in all
United States, territories, and the District of Columbia, as would be
required for traditional mail-order pharmacies providing a mail-order
benefit.
In creating the Part D program, the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173)
added the convenient access provision of section 1860D-4(b)(1)(C) of
the Act and the level playing field provision of section 1860D-
4(b)(1)(D) of the Act. The convenient access provisions, as codified at
Sec. 423.120(a)(1)-(7), require Part D plan sponsors to secure the
participation in their networks a sufficient number of pharmacies that
dispense (other than by mail order) drugs directly to patients to
ensure convenient access (consistent with rules established by the
Secretary) and includes special provisions for standards with respect
to Long Term Care (LTC) and I/T/U pharmacies (as defined at Sec.
423.100). The level playing field provision, as codified at Sec.
423.120(a)(10), requires Part D plan sponsors to permit enrollees to
receive the same benefits, including extended days' supplies, through a
pharmacy (other than a mail-order pharmacy) (that is, a retail
pharmacy), although the Part D plan sponsor may require the enrollee to
pay a higher level of cost-sharing to do so.
We currently define ``retail pharmacy'' at Sec. 423.100 to mean
``any licensed pharmacy that is not a mail-order pharmacy from which
Part D enrollees could purchase a covered Part D drug without being
required to receive medical services from a provider or institution
affiliated with that pharmacy.'' Although we did not define ``non-
retail pharmacy,'' Sec. 423.120(a)(3) provides that ``a Part D plan's
contracted pharmacy network may be supplemented by non-retail
pharmacies, ``including pharmacies offering home delivery via mail-
order and institutional pharmacies,'' provided the convenient access
requirements are met (emphasis added). In the preamble to our January
2005 final rule, we also stated, ``examples of non-retail pharmacies
include I/T/U, FQHC, Rural Health Center (RHC) and hospital and other
provider-based pharmacies, as well as Part D [plan]-owned and operated
pharmacies that serve only plan members'' (see 70 FR 4249). We also
stated ``home infusion pharmacies will not count toward Part D plans'
pharmacy access requirements (at Sec. 423.120(a)(1)) because they are
not retail pharmacies'' (see 70 FR 4250).
Since 2005, our regulation at Sec. 423.120(a) has included access
requirements for retail, home infusion, LTC, and I/T/U pharmacies.
While mail-order pharmacies could be considered
[[Page 56409]]
one of several subsets of non-retail pharmacies, we never defined the
term mail-order pharmacy in regulation, nor have we specified access or
service-level requirements at Sec. 423.120(a) for mail-order
pharmacies.
As discussed previously, our classifications of certain types of
pharmacies were never intended to limit or exclude participation of
pharmacies, such as pharmacies with multiple lines of business, that do
not fit into one of these classifications. Additionally, we have
recognized since our January 2005 final rule that pharmacies may have
multiple lines of business, including retail pharmacies that may offer
home delivery services (see 70 FR 4235 and 4255).
Nonetheless, despite this guidance and specific access requirements
for LTC and HI pharmacies at Sec. 423.120(a), some Part D plan
sponsors interpreted ``including pharmacies offering home delivery via
mail-order and institutional pharmacies'' at Sec. 423.120(a)(3) to
mean that any pharmacies, even retail pharmacies, that may offer home
delivery services by mail are mail-order pharmacies. Although Sec.
423.120(a)(3) specifically allows for access to non-retail pharmacies,
and we intended ``including pharmacies offering home delivery via mail-
order and institutional pharmacies'' to mean home infusion pharmacies,
mail-order pharmacies, long-term care pharmacies, or other non-retail
pharmacies that offer home delivery services by mail, some Part D plan
sponsors began to require any interested pharmacies, even retail
pharmacies, that may offer home delivery services by mail to contract
as mail-order pharmacies in order to participate in the plan's
contracted pharmacy network. Because Part D plan sponsors frequently
require contracted mail-order pharmacies to be licensed in all United
States, territories, and the District of Columbia, the classification
of any pharmacies that may offer home delivery services by mail as
mail-order pharmacies for purposes of contracting with Part D plan
sponsors as a network pharmacy, including licensure requirements, led
to complaints from beneficiaries and pharmacies, including retail,
specialty, and other pharmacies.
Although the language at Sec. 423.120(a)(3) is specific to non-
retail pharmacies, there is a great deal of confusion regarding mail-
order pharmacy in the Part D marketplace. We believe it is
inappropriate to classify pharmacies as ``mail-order pharmacies''
solely on the basis that they offer home delivery by mail. Because the
statute at section 1860D-4(b)(1)(D) of the Act discusses cost sharing
in terms of mail order versus other non-retail pharmacies, mail-order
cost sharing is unique to mail-order pharmacies, as we have proposed to
define the term. For example, while a non-retail home infusion pharmacy
may provide services by mail, cost-sharing is commensurate with retail
cost-sharing. Therefore, to clarify what a mail-order pharmacy is, we
propose to define mail-order pharmacy at Sec. 423.100 as a licensed
pharmacy that dispenses and delivers extended days' supplies of covered
Part D drugs via common carrier at mail-order cost sharing.
Although we propose to add the definition of mail-order pharmacy,
we also believe that our existing definition of retail pharmacy has
contributed, in part, to the confusion in the Part D marketplace. As
discussed previously, the existing definition of ``retail pharmacy'' at
Sec. 423.100 means ``any licensed pharmacy that is not a mail-order
pharmacy from which Part D enrollees could purchase a covered Part D
drug without being required to receive medical services from a provider
or institution affiliated with that pharmacy.'' This definition, given
the rapidly evolving pharmacy practice landscape, may be a source of
some confusion given that it expressly excludes mail-order pharmacies,
but not other non-retail pharmacies such as home infusion or specialty
pharmacies.
We note that Medicaid recently adopted a definition of ``retail
community pharmacy.'' Pursuant to section 1927(k)(10) of the Act, as
amended by section 2503 of the Affordable Care Act (ACA), for purposes
of Medicaid prescription drug coverage, CMS defines ``retail community
pharmacy'' at Sec. 447.504(a) as ``an independent pharmacy, a chain
pharmacy, a supermarket pharmacy, or a mass merchandiser pharmacy that
is licensed as a pharmacy by the state and that dispenses medications
to the walk-in general public at retail prices. Such term does not
include a pharmacy that dispenses prescription medications to patients
primarily through the mail, nursing home pharmacies, long-term care
facility pharmacies, hospital pharmacies, clinics, charitable or not-
for-profit pharmacies, government pharmacies, or pharmacy benefit
managers.'' Although this definition adds greater clarity about the
locations or practice settings where retail pharmacies may be found, we
were concerned that, for the purposes of the Part D program, the
mention of additional types of pharmacies in our regulation could
contribute to more confusion instead of less.
However, two aspects of this definition are similar to Part D
statutory language in section 1860D-4(b)(1)(C) and (D) of the Act. The
first is the concept that a retail pharmacy is open to dispense
prescription medications to the walk-in general public, which echoes
the requirement at section 1860D-4(b)(1)(C) of the Act that Part D plan
sponsors secure the participation in their networks a sufficient number
of pharmacies that dispense (other than mail order) drugs directly to
patients. The second is the concept that prescriptions are dispensed at
retail prices, or for the Part D program, retail cost-sharing, which
echoes the requirement at section 1860D-4(b)(1)(D) of the Act that Part
D plan sponsors permit enrollees to receive benefits (which may include
a 90-day supply of drugs or biologicals) through a pharmacy (other than
a mail-order pharmacy), with any differential in charge paid by such
enrollees. Because these concepts are consistent with the Part D
statute, we believe their inclusion in our definition of retail
pharmacy at Sec. 423.100 would be appropriate.
Therefore, to clarify what a retail pharmacy is, we propose to
revise the definition of retail pharmacy at Sec. 423.100. First, we
note that the existing definition of ``retail pharmacy'' is not in
alphabetical order, and we propose a technical change to move it such
that it would appear in alphabetical order. Second, we propose to
incorporate the concepts of being open to the walk-in general public
and retail cost-sharing such that the definition of retail pharmacy
would mean ``any licensed pharmacy that is open to dispense
prescription drugs to the walk-in general public from which Part D
enrollees could purchase a covered Part D drug at retail cost sharing
without being required to receive medical services from a provider or
institution affiliated with that pharmacy.''
Although we were originally unsure whether Part D enrollees would
need routine access to specialty drugs and specialty pharmacies beyond
our out-of-network requirements (see 70 FR 4250), as the Part D program
has evolved, the use of specialty drugs in the Part D program has grown
exponentially and will likely continue to do so. The June 2016 MedPAC
report (available at https://www.medpac.gov/docs/default-source/reports/chapter-6-improving-medicare-part-d-june-2016-report-.pdf) notes growth
in the use of specialty drugs in the Part D program is currently
outpacing other drugs and health spending, generally. Such drugs are
often high-cost and complex, for
[[Page 56410]]
diseases including, but not limited to, cancer, Hepatitis C, HIV/AIDS,
multiple sclerosis, and rheumatoid arthritis. The report also
highlights that each year since 2009, more than half of the United
States Food and Drug Administration (FDA) approvals have been for
specialty drugs. Because many specialty drugs can be self-administered
on an outpatient basis, even in the patient's home, and for chronic or
long-term use, increasing numbers of Part D enrollees need routine
access to specialty drugs and specialty pharmacies. Nonetheless,
because the pharmacy landscape is changing so rapidly, we believe any
attempt by us to define specialty pharmacy could prematurely and
inappropriately interfere with the marketplace, and we decline to
propose a definition of specialty pharmacy at this time.
Similar to specialty pharmacy, we also decline to further define
non-retail pharmacy. The pharmacy types that we define and propose to
modify and define in regulation describe functional lines of business
that an individual pharmacy may have, solely, or in combination.
However, unlike mail order, home infusion, I/T/U, FQHC, LTC, hospital,
other institutional, other provider-based, and ``members-only'' Part D
plan-owned and operated pharmacy types or lines of business that
comprise ``non-retail'', the term ``non-retail'' does not, itself,
define a unique pharmacy functional line of business, and does not lend
itself to a clear definition. Consistent with statutory any willing
pharmacy and preferred pharmacy provisions, mail-order pharmacies may
be preferred or non-preferred. Part D plan sponsors may establish
unique non-preferred mail-order cost-sharing, or may establish such
non-preferred mail-order cost sharing commensurate with those for
retail pharmacies.
We solicit comment on our proposed definition of mail-order
pharmacy and our proposed modification to the definition of retail
pharmacy. Specifically, we solicit comment regarding whether
stakeholders believe these definitions strike the right balance to
resolve confusion in the marketplace, afford Part D plan sponsor
flexibility, and incorporate recent innovations in pharmacy business
and care delivery models.
c. Treatment of Accreditation and Other Similar Any Willing Pharmacy
Requirements in Standard Terms and Conditions
As noted previously, since the beginning of the Part D program, we
have considered standard terms and conditions for network participation
to set a ``floor'' of minimum requirements by which all similarly
situated pharmacies must abide. We further believe it is reasonable for
a Part D plan sponsor to require additional terms and conditions beyond
those required in the standard contract for network participation for
pharmacies to have preferred status. Therefore, we implemented the
requirements of section 1860D-4(b)(1)(A) of the Act by requiring that
standard terms and conditions be ``reasonable and relevant,'' but
declined to further define ``reasonable and relevant'' in order to
provide Part D plans with maximum flexibility to structure their
standard terms and conditions.
We note that a pharmacy's ability to participate in a preferred or
specially labeled subset of the Part D plan sponsor's larger contracted
pharmacy network or to offer preferred cost sharing assumes that, at a
minimum, the pharmacy is able to participate in the network. Where
there are barriers to a pharmacy's ability to participate in the
network at all, it raises the question of whether the standard (that
is, entry-level) terms and conditions are reasonable and relevant.
It has been our longstanding policy that Part D plans cannot
restrict access to certain Part D drugs to specialty pharmacies within
their Part D network in such a manner that contravenes the convenient
access protections of section 1860D-4(b)(1)(C) of the Act and Sec.
423.120(a) of our regulations. (See Q&A at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/QASpecialtyAccess_051706.pdf). In 2006, we informed sponsors
they cannot restrict access to drugs on the ``specialty/high cost''
tier to a subset of network pharmacies, except when necessary to meet
FDA-mandated limited dispensing requirements (for example, Risk
Evaluation and Mitigation Strategies (REMS) processes) or to ensure the
appropriate dispensing of Part D drugs that require extraordinary
special handling, provider coordination, or patient education when such
extraordinary requirements cannot be met by a network pharmacy (that
is, a contracted network pharmacy that does not belong to the
restricted subset). Since 2006, it has been our general policy that
these types of special requirements for Part D plan sponsors to limit
dispensing of specialty drugs be directly linked to patient safety or
regulatory reasons.
As the specialty drug distribution market has grown, so has the
number of organizations competing to distribute or dispense specialty
drugs, such as pharmacy benefit managers (PBMs), health plans,
wholesalers, health systems, physician practices, retail pharmacy
chains, and small, independent pharmacies (see the URAC White Paper,
``Competing in the Specialty Pharmacy Market: Achieving Success in
Value-Based Healthcare,'' available at https://info.urac.org/specialtypharmacyreport). CMS is concerned that Part D plan sponsors
might use their standard pharmacy network contracts in a way that
inappropriately limits dispensing of specialty drugs to certain
pharmacies. In fact, we have received complaints from pharmacies that
Part D plan sponsors have begun to require accreditation of pharmacies,
including accreditation by multiple accrediting organizations, or
additional Part D plan-/PBM-specific credentialing criteria, for
network participation. We agree that there is a role in the Part D
program for pharmacy accreditation, to the extent pharmacy
accreditation requirements in network agreements promote quality
assurance. In particular, we support Part D plan sponsors that want to
negotiate an accreditation requirement in exchange for, for example,
designating a pharmacy as a specialty or preferred pharmacy in the Part
D plan sponsor's contracted pharmacy network. However, we do not
support the use of Part D plan sponsor- or PBM-specific credentialing
criteria, in lieu of, or in addition to, accreditation by recognized
accrediting organizations, apart from drug-specific limited dispensing
criteria such as FDA-mandated REMS or to ensure the appropriate
dispensing of Part D drugs that require extraordinary special handling,
provider coordination, or patient education when such extraordinary
requirements cannot be met by a network pharmacy (as discussed
previously). Moreover, we are especially concerned about anecdotal
reports that allege such standard terms and conditions for network
participation are waived, for example, when a Part D plan sponsor needs
a particular pharmacy in its network in order to meet convenient access
requirements, or even for certain pharmacies that received preferred
pharmacy status.
If the premise of accreditation or Part D plan sponsor- or PBM-
specific credentialing requirements is to ensure more stringent quality
standards, then there is no reasonable explanation for why a quality-
related standard term or condition could be waived for situations when
the Part D plan sponsor needs a particular pharmacy in its contracted
[[Page 56411]]
pharmacy network in order to meet the convenient access standards or to
designate a particular pharmacy with preferred pharmacy status. A term
or condition which can be dropped in such situations is by definition
not ``standard'' according to the plain meaning of the word. Waivers or
inconsistent application of such standard terms and conditions is an
explicit acknowledgement that such terms and conditions are not
necessary for the ability of a pharmacy to perform its core functions,
and are thus neither reasonable nor relevant for any willing pharmacy
standard terms and conditions.
It has been our longstanding policy to leave the establishment of
pharmacy practice standards to the states, and we do not intend to
change that now. We continue to believe pharmacy practice standards
established by the states provide applicable minimum standards for all
pharmacy practice standards, and Sec. 423.153(c)(1) requires
representation that network providers are required to comply with
minimum standards for pharmacy practice as established by the states.
Additionally, because a pharmacy's ability to dispense certain
medications is not dependent on it having the ability to dispense other
medications, it is not relevant for sponsors to require pharmacies to
dispense a particular roster of certain drugs or drugs for certain
disease states in order to receive standard terms and conditions for
network participation as a contracted network pharmacy for that Part D
plan sponsor. Consequently, consistent with our longstanding policy,
discussed previously, we would not expect Part D plan sponsors to limit
dispensing of certain drugs or drugs for certain disease states to a
subset of network pharmacies, except when necessary to meet FDA-
mandated limited dispensing requirements (for example, Risk Evaluation
and Mitigation Strategies (REMS) processes) or except as required by
applicable state law(s) if the contracted network pharmacy is capable
of and appropriately licensed under applicable state law(s) for doing
so. We solicit comment on this topic.
d. Timing of Contracting Requirements
CMS has received complaints over the years from pharmacies that
have sought to participate in a Part D plan sponsor's contracted
network but have been told by the Part D plan sponsor that its standard
terms are not available until the sponsor has completed all other
network contracting. In other instances, pharmacies have told us that
Part D plan sponsors delay sending them the requested terms and
conditions for weeks or months or require pharmacies to complete
extensive paperwork demonstrating their eligibility to participate in
the sponsor's network before the sponsor will provide a document
containing the standard terms and conditions. CMS believes such actions
have the effect of frustrating the intent of the any willing pharmacy
requirement, and as a result, we believe it is necessary to codify
specific procedural requirements for the delivery of pharmacy network
standard terms and conditions.
To this end, we propose to establish deadlines by which Part D plan
sponsors must furnish their standard terms and conditions to requesting
pharmacies. The first deadline we propose to establish is the date by
which Part D plan sponsors must have standard terms and conditions
available for pharmacies that request them. By mid-September of each
year, Part D plan sponsors have signed a contract with CMS committing
them to delivering the Part D benefit through an accessible pharmacy
network during the upcoming year and have provided information about
that network to CMS for posting on the Medicare Plan Finder Web site.
At that point, Part D plan sponsors should have had ample opportunity
to develop standard contract terms and conditions for the upcoming plan
year. Therefore, we propose to require at Sec. 423.505(b)(18)(i) that
Part D plan sponsors have standard terms and conditions readily
available for requesting pharmacies no later than September 15 of each
year for the succeeding benefit year.
The second deadline we propose concerns the promptness of Part D
plan sponsors' responses to pharmacy requests for standard terms and
conditions. As discussed previously, we propose to require all Part D
plan sponsors to have standard terms and conditions developed and ready
for distribution by September 15. Therefore, we propose to require at
Sec. 423.505(b)(18)(ii) that, after that date and throughout the
following plan year, Part D plan sponsors must provide the applicable
standard terms and conditions document to a requesting pharmacy within
two business days of receipt of the request. Part D plan sponsors would
be required to clearly identify for interested pharmacies the avenue
(for example, phone number, email address, Web site) through which they
can make this request. In instances where the Part D plan sponsor
requires a pharmacy to execute a confidentiality agreement with respect
to the terms and conditions, the Part D plan sponsor would be required
to provide the confidentiality agreement within two business days after
receipt of the pharmacy's request and then provide the standard terms
and conditions within 2 business days after receipt of the signed
confidentiality agreement. While Part D plan sponsors may ask
pharmacies to demonstrate that they are qualified to meet the Part D
plan sponsors' standard terms and conditions before executing the
contract, Part D plan sponsors would be required to provide the
pharmacy with a copy of the contract terms for its review within the
two-day timeframe. If finalized, this proposed requirement would permit
pharmacies to do their due diligence with respect to whether a Part D
plan sponsor's standard terms and conditions are acceptable at the same
time Part D plan sponsors are conducting their own review of the
qualifications of the requesting pharmacy. We specifically seek comment
on whether these timeframes are the right length to address our goal
but are operationally realistic. We also request examples of situations
where a longer timeframe might be needed.
13. Changes to the Days' Supply Required by the Part D Transition
Process
We promulgated regulations under the authority of section 1860D-
11(d)(2)(B) of the Act to require Part D sponsors to provide for an
appropriate transition process for enrollees prescribed Part D drugs
that are not on the prescription drug plan's formulary (including Part
D drugs that are on a sponsor's formulary but require prior
authorization or step therapy under a plan's utilization management
rules). These regulations are codified at Sec. 423.120(b)(3).
Specifically, these regulations require that a Part D sponsor ensure
certain enrollees access to a temporary supply of drugs within the
first 90 days under a new plan (including drugs that are on a plan's
formulary but require prior authorization or step therapy under a
plan's utilization management rules) by ensuring a temporary fill when
an enrollee requests a fill of a non-formulary drug during this time
period. In the outpatient setting, the supply must be for at least 30
days of medication, unless the prescription is written for less. In the
LTC setting, this supply must be for up to at least 91 days and may be
up to 98 days, consistent with the dispensing increment, unless a less
amount is prescribed.
We propose to make two changes to these regulations. First, we
propose to shorten the required transition days'
[[Page 56412]]
supply in the long-term care (LTC) setting to the same supply currently
required in the outpatient setting. Second, we propose a technical
change to the current required days' transition supply in the
outpatient setting to be a month's supply.
We provided our rationale for the transition fill days' supply
requirement in the LTC setting in CMS final rule CMS-4085-F published
on April 15, 2010 (75 FR 19678). In that final rule, we stated that for
a new enrollee in a LTC facility, the temporary supply may be for up to
31 days (unless the prescription is written for less than 31 days),
consistent with the dispensing practices in the LTC industry. We
further stated that, due to the often complex needs of LTC residents
that often involve multiple drugs and necessitate longer periods in
order to successfully transition to new drug regimens, we will require
sponsors to honor multiple fills of non-formulary Part D drugs, as
necessary during the entire length of the 90-day transition period.
Thus, we required a Part D sponsor to provide a LTC resident enrolled
in its Part D plan with at least a 31 day supply of a prescription with
refills provided, if needed, up to a 93 days' supply (unless the
prescription is written for less) (75 FR 19721). In a subsequent final
rule published on April 15, 2011, we changed the 93 days' supply to 91
to 98 days' supply, as noted previously, to acknowledge variations in
days' supplies that could result from the short-cycle dispensing of
brand drugs in the LTC setting (76 FR 21460 and 21526).
We received and responded to a comment in the April 2010 final rule
about transition and a longer timeframe in the LTC setting. We stated
that a number of commenters supported our proposal of requiring an
extended transition supply for enrollees residing in LTC facilities but
that commenters requested that we provide the same protections to
individuals requiring LTC in community-based settings. In our response
to the comment, we indicated that residents of LTC institutions were
more limited in access to prescribing physicians hired by LTC
facilities due to a limited visitation schedule and more likely to
require extended transition timeframes in order for the physician to
work with the facility and LTC pharmacies on transitioning residents to
formulary drugs. We further stated that we believed that community-
based enrollees, in contrast, were less limited in their access to
prescribing physicians and did not require an extended transition
period to work with their physicians to successfully transition to a
formulary drug. (75 FR 19721). Thus, the requirement to provide longer
transition fill days' supply in the LTC setting was a result of our
concerns that a longer timeframe would be needed in the LTC setting.
After more than 10 years of experience with Part D in LTC
facilities, we have not seen the concerns that we expressed in the 2010
final rule materialize. We are not aware of any evidence that
transition for a Part D beneficiary in the LTC setting necessarily
takes any longer than it does for a beneficiary in the outpatient
setting. We understand that it is common for Part D beneficiaries in
the LTC setting to be cared for by on-staff or consultant physicians
and other health professionals with prescriptive authority who are
under contract with the LTC facility. Additionally, we also understand
that Part D beneficiaries in the LTC setting are typically served by an
on-site pharmacy or one under contract to service the LTC facility.
Given this structure of the LTC setting, we understand that the LTC
prescribers and pharmacies are readily available to address transition
for Part D beneficiaries in the LTC setting. In addition, LTC
facilities now have many years' experience with the Medicare Part D
program generally and transition specifically.
While our concerns about the needed timeframe for transition in the
LTC setting do not seem to have materialized, we have continuing
concerns about drug waste and the costs associated with such waste in
the LTC setting. Some of these concerns have been addressed by our rule
requiring the short-cycle dispensing of brand drugs to Part D
beneficiaries in LTC facilities in the April 2011 final rule. That
rule, codified at 42 CFR 423.154, requires that all Part D sponsors
require all network pharmacies servicing LTC facilities to dispense
certain solid oral doses of covered Part D brand-name drugs to
enrollees in such facilities in no greater than 14-day increments at a
time to reduce drug waste. However, we now believe that CMS could
eliminate additional drug waste and cost by no longer requiring a
longer transition days' supply in the LTC setting. Therefore, we are
proposing that the transition days' supply in the LTC setting be the
same as it is in the outpatient setting.
Our second proposed change involves the current required 30 days'
transition supply in the outpatient setting, which is codified at Sec.
423.120(b)(3)(iii)(A). We have received a number of inquiries from Part
D sponsors regarding scenarios involving medications that do not easily
add up to a 30 days' supply when dispensed (for example, drugs that
typically are dispensed in 28-day packages). Historically, our response
to those inquiries has been that the regulation requires plans to
provide at least 30 days of medication, which requires plans to
dispense more than one package to comply with the text of the
regulation. However, the intent of the regulation was for the
transition fill in the outpatient setting to be for at least a month's
supply. For this reason, we are proposing a change to the regulation
from ``30 days'' to ``a month's supply.'' If finalized, this change
would mean that the regulation would require that a transition fill in
the outpatient setting be for a supply of at least a month of
medication, unless the prescription is written by the prescriber for
less. Therefore, the supply would have to be for at least the days'
supply that the applicable Part D prescription drug plans has approved
as its retail month's supply in its Plan Benefit Package submitted to
CMS for the relevant plan year, again, unless the prescription is
written by the prescriber for less.
Together, our two proposals--if finalized--would mean that Sec.
423.120 (b)(3)(iii)(A) would be consolidated into Sec. 423.120
(b)(3)(iii) to read that the transition process must ``[e]nsure the
provision of a temporary fill when an enrollee requests a fill of a
non-formulary drug during the time period specified in paragraph
(b)(3)(ii) of this section (including Part D drugs that are on a plan's
formulary but require prior authorization or step therapy under a
plan's utilization management rules) by providing a one-time, temporary
supply of at least a month's supply of medication, unless the
prescription is written by a prescriber for less than a month's supply
and requires the Part D sponsor to allow multiple fills to provide up
to a total of a month's supply of medication.'' Section
423.120(b)(3)(iii)(B) would be eliminated.
Please note that we also are proposing in II.A.15. Expedited
Substitutions of Certain Generics and Other Midyear Formulary Changes
to revise Sec. 423.120(b)(3)(i)(B) to state that the transition
process is not applicable in cases in which a Part D sponsor
substitutes a generic drug for a brand name drug as specified under
paragraph Sec. 423.120(b)(3)(iv) or Sec. 423.120(b)(6) of this
section.
[[Page 56413]]
14. Expedited Substitutions of Certain Generics and Other Midyear
Formulary Changes (Sec. Sec. 423.100, 423.120, and 423.128)
Section 1860D-4(b)(3)(E) of the Act requires Part D sponsors to
provide ``appropriate notice'' to the Secretary, affected enrollees,
authorized prescribers, pharmacists, and pharmacies regarding any
decision to either: (1) Remove a drug from its formulary, or (2) make
any change in the preferred or tiered cost-sharing status of a drug.
Section 423.120(b)(5) implements that requirement by defining
appropriate notice as that given at least 60 days prior to such change
taking effect during a given contract year. We have recognized that
both current and prospective enrollees of a prescription drug plan need
to have the most current formulary information by the time of the
annual election period described in Sec. 423.38(b) in order to enroll
in the Part D plan that best suits their particular needs. To this end,
Sec. 423.120(b)(6) prohibits Part D sponsors and MA organizations from
removing a covered Part D drug from a formulary or changing the
preferred or tiered cost-sharing status of a covered Part D drug
between the beginning of the annual election period described in Sec.
423.38(b)(2) and 60 days subsequent to the beginning of the contract
year associated with that annual election period. Our concern has been
to prevent situations in which Part D sponsors change their formularies
early in the contract year without providing appropriate notice as
described in Sec. 423.120(b)(5) to new enrollees. Thus, Sec.
423.120(b)(6) has required that all materials distributed during the
annual election period reflect the formulary the Part D sponsor will
offer at the beginning of the contract year for which it is enrolling
Part D eligible individuals. Lastly, under Sec. 423.128(d)(2)(iii),
Part D sponsors must also provide current and prospective Part D
enrollees with at least 60 days' notice regarding the removal or change
in the preferred or tiered cost-sharing status of a Part D drug on its
Part D plan's formulary. The general notice requirements and burden are
currently approved by OMB under control number 0938-0964 (CMS-10141).
MedPAC observed that the continuity of a plan's formulary is very
important to all beneficiaries in order to maintain access to the
medications that were offered by the plan at the time the beneficiaries
enrolled. While we agree with MedPAC's assertion, we acknowledge the
need to balance formulary continuity with requests from Part D sponsors
to provide greater flexibility to make midyear changes to formularies.
Indeed, MedPAC made its observation in a report that suggested that
CMS's rules regarding formulary changes warranted examination. There
MedPAC pointed out, among other things, that CMS could provide Part D
sponsors with greater flexibility to make changes such as adding a
generic drug and removing its brand name version without first
receiving agency approval. (MedPAC, Report to the Congress: Medicare
and the Health Care Delivery System, June 2016, page 192.)
This proposed rule would implement MedPAC's recommendation by
permitting generic substitutions without advance approval as specified
later in this section. We have also taken this opportunity to examine
our regulations to determine how to otherwise facilitate the use of
certain generics. Currently, Part D sponsors can add drugs to their
formularies at any time; however, there is no guarantee that enrollees
will switch from their brand name drugs to newly added generics.
Therefore, Part D sponsors seeking to better manage the Part D benefit
may choose to remove a brand name drug, or change its preferred or
tiered cost-sharing, and substitute or add its therapeutic equivalent.
But even this takes some time: Under current regulations, Part D
sponsors must submit formulary change requests to CMS and provide
specified notice before removing drugs or changing their cost-sharing
(except for unsafe drugs or those withdrawn from the market). As noted
earlier, the general notice requirements and burden are currently
approved by OMB under control number 0938-0964 (CMS-10141). Also, as
detailed previously, Sec. 423.120(b)(5)(i) requires 60 days' notice to
specified entities prior to the effective date of changes and 60 days'
direct notice to affected enrollees or a 60 day refill. The ability of
Part D sponsors to make generic substitutions as approved by CMS is
further limited by the fact that as detailed previously, under Sec.
423.120(b)(6), Part D sponsors generally cannot remove drugs or make
cost-sharing changes from the start of the annual election period (AEP)
until 2 months after the plan year begins.
We propose to provide Part D sponsors with more flexibility to
implement generic substitutions as follows: The proposed provisions
would permit Part D sponsors meeting all requirements to immediately
remove brand name drugs (or to make changes in their preferred or
tiered cost-sharing status), when those Part D sponsors replace the
brand name drugs with (or add to their formularies) therapeutically
equivalent newly approved generics--rather than having to wait until
the direct notice and formulary change request requirements have been
met. The proposed provisions would also allow sponsors to make those
specified generic substitutions at any time of the year rather than
waiting for them to take effect 2 months after the start of the plan
year. Related proposals would require advance general and retrospective
direct notice to enrollees and notice to entities; clarify online
notice requirements; except specified generic substitutions from our
transition policy; and conform our definition of ``affected
enrollees.'' Lastly, to address stakeholder requests for greater
flexibility to make midyear formulary changes in general, we are also
proposing to decrease the days of enrollee notice and refill required
when (aside from generic substitution and drugs deemed unsafe or
withdrawn from the market) drug removal or changes in cost-sharing will
affect enrollees.
Specifically, we propose to add a new paragraph (b)(5)(iv) to Sec.
423.120 to permit Part D sponsors to immediately remove, or change the
preferred or tiered cost-sharing of, brand name drugs and substitute or
add therapeutically equivalent generic drugs provided specified
requirements are met. The generic drug would need to be offered at the
same or a lower cost-sharing and with the same or less restrictive
utilization management criteria originally applied to the brand name
drug. The Part D sponsor could not have as a matter of timing been able
to previously request CMS approval of the change because the generic
drug had not yet been released to the market. Also, the Part D sponsor
must have previously provided prospective and current enrollees general
notice that certain generic substitutions could occur without
additional advance notice. As proposed, we would permit Part D sponsors
to substitute a generic drug for a brand name drug immediately rather
than make that change effective, for instance, at the start of the next
month. However, we solicit comment as to whether there would be a
reason to require such a delay, especially given the fact that we are
proposing not to require advance direct notice (rather, only advance
general notice) or CMS approval. The proposed regulation would also
require that, when generic drug substitutions occur, Part D sponsors
must provide direct notice to affected enrollees and other specified
notice to CMS and other entities. We also propose to specify in a
revision to
[[Page 56414]]
Sec. 423.120(b)(3)(i)(B) that the transition process is not applicable
in cases in which a Part D sponsor substitutes a generic drug for a
brand name drug under paragraph (b)(6) of this section.
A proposed exception to Sec. 423.120(b)(6) would permit Part D
sponsors to make the above specified changes (removing covered Part D
drugs from their formularies, or changing their cost-sharing, when
substituting or adding their generic equivalents) during any time of
the year. That section generally provides--with a current exception
only for unsafe drugs and drugs removed from the market--that Part D
sponsors generally cannot remove drugs or make cost-sharing changes
between the beginning of the AEP and 60 days after the plan year
begins. We believe that revising this provision would assist Part D
sponsors by permitting substitutions to take place effect during a
longer time period than is currently permitted. Given that the previous
exception would permit generic substitutions prior to the start of the
calendar year, we also propose to conform the definition of ``affected
enrollees'' to clarify that applicable changes must affect their access
to drugs during the current plan year.
We are aware that some may be concerned about not requiring advance
CMS approval or advance direct notice to enrollees prior to making the
permitted generic substitutions, or requiring a transition fill. But we
would only permit immediate substitution when the generics are deemed
therapeutically equivalent to the brand name drug being removed by the
Federal Drug and Food Administration (FDA) and meet other requirements
specified later in this section. This would not apply to follow-on
biological products under current FDA guidance. The FDA has, in fact
noted that, ``A generic drug is a medication created to be the same as
an existing approved brand-name drug in dosage form, safety, strength,
route of administration, quality, and performance characteristics.''
(``Generic Drug Facts,'' see FDA Web site, https://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/UnderstandingGenericDrugs/ucm167991.htm, accessed September 19, 2017,
hereafter FDA, ``Abbreviated New Drug Application (ANDA): Generics''.)
Additionally, immediate generic substitution has long been an
established bedrock of commercial insurance, and we are not aware of
any harm to the insured resulting from such policies.
Also, we do not believe a transition policy would be appropriate
for these situations: The purpose of the transition process is to make
sure that the medical needs of enrollees are safely accommodated in
that they do not go without their medications or face an abrupt change
in treatment. If the proposal to permit Part D sponsors to immediately
substitute generics for brand name drugs upon market release were
finalized, most enrollees in this situation would not have had an
opportunity to try the drug prior to the drug substitution to see how
it worked for them. In other words, an enrollee could not be certain
that a generic substitution would not work, would constitute an abrupt
change in treatment, or that the enrollee would be better served by
taking no medication rather than the generic unless he or she had
previously tried the generic drug.
Moreover, we have built beneficiary protections into the proposed
provisions. First, proposed Sec. 423.120(b)(5)(iv)(A) addresses safety
concerns by permitting Part D sponsors to add only therapeutically
equivalent generic drugs. This means the FDA must have approved the
generic drug in an abbreviated new drug application pursuant to section
505(j) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)),
and it must be listed with the innovator drug in the publication
``Approved Drug Products with Therapeutic Equivalence Evaluations''
(commonly known as the Orange Book) in which the FDA identifies drug
products approved on the basis of safety and effectiveness by the FDA,
and be considered by the FDA to be therapeutically equivalent to the
brand name drug.
Second, we share the concern that prospective enrollees could be
misled by Part D sponsors that deliberately offer brand name drugs
during open enrollment periods only to remove them or change their
cost-sharing as quickly as possible during the plan year. We believe
that our proposed provision would address such problems: Under proposed
Sec. 423.120(b)(5)(iv)(B), a Part D sponsor cannot substitute a
generic for a brand name drug unless it could not have previously
requested formulary approval for use of that drug. As a matter of
operations, CMS permits Part D sponsors to submit formularies, and
their respective change requests, only during certain windows. Under
proposed Sec. 423.120(b)(5)(iv)(B), a Part D sponsor could not remove
a brand name drug or change its preferred or tiered cost-sharing if
that Part D sponsor could have included its generic equivalent with its
initial formulary submission or during a later update window.
However, to be certain, that we have not missed practical or other
complications that would hinder the ability of Part D sponsors to
timely seek approval within the CMS timeframes, we solicit comment as
to whether we should consider immediate substitution, potentially in
limited circumstances, of specified generics for which Part D sponsors
could have previously requested formulary approval. At the same time,
we remain mindful of beneficiary protections and are hesitant to simply
permit substitution of any generics regardless of how long they have
been on the market. Accordingly, we welcome suggestions of any other
practical cut-offs, as well as information on possible effects on
beneficiaries that could result if we were to permit Part D sponsors to
substitute specified generics that have been on the market for longer
time periods.
Third, we believe the two-pronged approach of the proposed
provision would provide appropriate notice for this type of formulary
change. The general notice requirement of proposed Sec.
423.120(b)(iv)(C) would require that, before making any generic
substitutions, a Part D sponsor provide all prospective and current
enrollees with notice in the formulary and other applicable beneficiary
communication materials stating that the Part D sponsor can remove, or
change the preferred or tiered cost-sharing of, any brand name drug
immediately without additional advance notice (beyond the general
advance notice) when a new equivalent generic is added. This would, for
instance, include the Evidence of Coverage (EOC). Proposed Sec.
423.120(b)(iv)(C) would also require that this general notice advise
prospective and current enrollees that they will get direct notice
about any specific drug substitutions made that would affect them and
that the direct notice would advise them of the steps they could take
to request coverage determinations and exceptions. Therefore, the
general notice would advise enrollees about what might take place
before any changes occur.
When the Part D sponsor substitutes a generic for a brand name
drug, the proposed direct notice provision, Sec. 423.120(b)(5)(iv)(E),
would require the Part D sponsor to provide affected enrollees with
direct notice consistent with Sec. 423.120(b)(5)(ii). We currently
require Part D sponsors to provide this information 60 days before such
changes are made. Under the proposed changes, enrollees would receive
the same information they receive under the current regulation--the
only difference being that the notice could be provided
[[Page 56415]]
after the effective date of the generic substitution. As discussed
earlier, under the proposed provision Part D sponsors seeking to make
immediate substitutions would be newly required to have previously
provided general notice in beneficiary communication materials such as
formularies and EOCs that certain generic substitutions could take
place without additional advance notice.
We understand there may be concerns that the direct notice
identifying the specific drug substitution would arrive after the
formulary change has already taken place. As explained previously, we
believe generic substitutions pose no threat to enrollee safety. Also,
as noted earlier, we are proposing to revise Sec. 423.120(b)(6) to
permit generic substitutions to take place throughout the entire year.
This means that, under the proposed provision, a Part D sponsor meeting
all the requirements would be able to substitute a generic drug for a
brand name drug well before the actual start of the plan year (for
instance, if a generic drug became available on the market days after
the summer update). There is nothing in our regulation that would
prohibit advance notice and, in fact, we would encourage Part D
sponsors to provide direct notice as early as possible to any
beneficiaries who have reenrolled in the same plan and are currently
taking a brand name drug that will be replaced with a generic drug with
the start of the next plan year. We would also anticipate that Part D
sponsors will be promptly updating the formularies posted online and
provided to potential beneficiaries to reflect any permitted generic
substitutions--and at a minimum meeting any current timing requirements
provided in applicable guidance. At this time we are not proposing to
set a regulatory deadline by which Part D sponsors must update their
formularies before the start of the new plan year. However, if we were
to finalize this provision and thereafter find that Part D sponsors
were not timely updating their formularies, we would reexamine this
policy. And we would note, as regards timing, that Sec.
423.128(d)(2)(iii) requires that the current formulary posted online be
updated at least monthly.
In cases in which the Part D sponsor would necessarily have to send
notice after the fact, for example instances in which a drug is not
released to the market until after the beginning of the plan year and
the Part D sponsor then immediately makes a generic substitution, the
proposed general notice would have already advised enrollees that they
would receive information about any specific drug generic substitutions
that affected them and that they would still be able to request
coverage determinations and exceptions. While the timing would most
likely mean most enrollees would only be able to make such requests
after receiving a generic drug fill, in the vast majority of cases, an
enrollee could not be certain that a generic substitution would not
work unless he or she actually tried the generic drug. Additionally, we
are strongly encouraging Part D sponsors to provide the retrospective
direct notices of these generic substitutions (including direct notice
to affected enrollees and notice to entities including CMS) no later
than by the end of the month after which the change becomes effective.
While sponsors are required to report this information to both
enrollees and entities including CMS, we currently are not proposing to
codify the end of month timing requirement; however, if we were to
finalize this provision and thereafter find that Part D sponsors were
not timely providing retrospective notice, we would reexamine this
policy.
Fourth, enrollees would be protected from higher cost-sharing under
proposed paragraph (b)(5)(iv)(A), which would require Part D sponsors
to offer the generic with the same or lower cost-sharing and the same
or less restrictive utilization management criteria as the brand name
drug.
We also believe requirements and guidance regarding beneficiary
communications will continue to provide beneficiary protections.
Section 423.128(e)(5) currently requires Part D sponsors to furnish
directly to enrollees an explanation of benefits (EOB) that includes
any applicable formulary changes for which Part D plans are required to
provide notice as described in Sec. 423.120(b)(5). As noted
previously, Sec. 423.128(d)(2)(iii) currently requires Part D sponsors
to post at least 60 days' notice of removals and cost-sharing changes
online for current and prospective Part D enrollees. In light of our
proposal for generic substitutions described previously, we propose to
modify Sec. 423.128(d)(2)(iii) to require Part D sponsors to provide
``timely'' notice under 423.120(b)(5). This would mean that, under the
proposed provision, a Part D sponsor would need to provide at least 30
days' online notice to affected enrollees before removing drugs or
making cost-sharing changes except when adding a therapeutically
equivalent generic as specified, and as has currently been the
requirement, removing unsafe or withdrawn drugs. Part D sponsors could
provide online notice after the effective date of changes only in those
limited instances.
As regards content, Sec. 423.128(d)(2)(iii) requires--and would
continue to do so under the proposed revisions--that Part D sponsors
post online notice regarding any removal or change in the preferred or
tiered cost-sharing status of a Part D drug on its Part D plan's
formulary. Posting information online related to removing a specific
drug or changing its cost-sharing solely to meet the content
requirements of Sec. 423.128(d)(2)(iii) cannot replace general notice
under proposed Sec. 423.120(b)(5)(iv)(C); direct notice to affected
enrollees under Sec. 423.120(b)(5)(ii); or notice to CMS when required
under Sec. 423.120(b)(5). For instance, as noted in the January, 28,
2005 final rule (70 FR 4265), we view online notification under Sec.
423.128(d)(2)(iii) on its own as an inadequate means of providing
specific information to the enrollees who most need it, and we consider
it an additional way that Part D sponsors provide notice of formulary
changes to affected enrollees.
However, we do not mean to restrict or otherwise affect other rules
governing the provisions of materials online. For instance, if Part D
sponsors were able to fulfill CMS marketing and beneficiary
communications requirements by posting a specific document online
rather than providing it in paper, the fact the document was posted
online would not preclude it from providing general notice required
under our proposed provisions. In other words, if otherwise valid,
provision of general notice in a document posted online could suffice
as notice as regards that specified document under proposed Sec.
423.120(b)(5)(iv)(C). In contrast, we do not wish to suggest that
posting one type of notice online would necessarily suffice to meet
distinct notice requirements. For instance, providing the general
advance notice that would be required under Sec. 423.120(b)(5)(iv)(C)
in a document posted online could not meet the online content
requirements of Sec. 423.128(d)(2)(iii) related to providing
information about removing drugs or changing their cost-sharing. Nor,
as noted previously, could the opposite apply: Posting the content
required under Sec. 423.128(d)(2)(iii) online could not fulfill the
advance general notice requirements that would be required under
proposed Sec. 423.120(b)(5)(iv)(C) (or suffice to provide direct
notice to affected enrollees under Sec. 423.120(b)(5)(ii) or notice to
CMS under Sec. 423.120(b)(5)).
In addition to requiring the direct notice to affected enrollees
discussed previously, proposed Sec. 423.120(b)(iv)(D) would also
require Part D sponsors to provide the following entities with
[[Page 56416]]
notice of the generic substitutions consistent with Sec.
423.120(b)(5)(ii): CMS, State Pharmaceutical Assistance Programs (as
defined in Sec. 423.454), entities providing other prescription drug
coverage (as described in Sec. 423.464(f)(1)), authorized prescribers,
network pharmacies, and pharmacists. (To avoid repetition, we propose
to revise the provision to refer to all of these entities as ``CMS and
other specified entities'' for the purposes of Sec. 423.120(b).) Even
though, as proposed, a Part D sponsor that met all of the requirements
would be able to make the generic substitution immediately without
submitting any formulary change requests to CMS, the Part D sponsor
must include the generic substitution in the next available formulary
submission to CMS. We note that Part D plans can determine the most
effective means to communicate formulary change information to State
Pharmaceutical Assistance Programs, entities providing other
prescription drug coverage, authorized prescribers, network pharmacies,
and pharmacists and that, under our proposed provision, we would
consider online posting sufficient for those purposes.
Lastly as part of our reexamination of the need to generally
provide Part D sponsors greater flexibility in formulary changes, we
plan to decrease the amount of direct notice required in cases where
the removal of a drug or change in cost-sharing status will affect
enrollees currently taking the drug. (This would contrast proposed
notice requirements that would apply to immediate substitution of
specified generics. There we would also require advance general notice
that such changes can occur, and direct notice of the specific changes
could be provided after their effective date.) Section 423.120(b)(5)(i)
currently requires at least 60 days' notice to all entities prior to
the effective date of changes and at least 60 days' direct notice to
affected enrollees or a 60 day refill upon the request of an affected
enrollee. We propose to reduce the notice requirement in both instances
to at least 30 days and the refill requirement to a month.
Beneficiaries would be affected, and therefore receive the 30 days'
notice or a month refill, in cases in which, for instance, Part D
sponsors planned to add prior authorization requirements as a result of
new safety-related information or clinical guidelines. This proposal
would permit Part D sponsors to institute formulary changes in half the
time.
We are, again, aware that some may be concerned that we are
reducing the number of days advance notice afforded to enrollees in
these instances. But again, we believe current CMS requirements provide
the necessary beneficiary protections, and that 30 (rather than 60)
days' notice still will afford enrollees sufficient time to either
change to a covered alternative drug or to obtain needed prior
authorization or an exception for the drug affected by the formulary
change. Existing CMS regulations establish robust beneficiary
protections in the coverage and appeals process, including expedited
adjudication timeframes for exigent circumstances (maximum timeframe of
24 hours for coverage determinations and 72 hours for level 1 and 2
appeals), and a requirement that Part D plan sponsors automatically
forward all untimely coverage determinations and redeterminations to
the IRE for independent review. Further, while 60 days' notice is
currently required, we have no evidence to suggest that beneficiaries
are currently utilizing the full 60 days. The reduction to 30 days
would align these requirements with the timeframes for transition
fills. And, with over 11 years of program experience, we have no
evidence to suggest that 30 days has been an insufficient temporary
days supply for transition fills.
(Note we are also proposing to amend the refill amount to months
(namely a month) rather than days (it was 60 days previously) to
conform to a proposed revision to the transition policy regulations at
Sec. 423.120(b)(3).) For further discussion, see section III.A.15 of
this proposed rule, Changes to the Transition.)
Summary: The following provides a high level summary of notice
changes proposed in Sec. 423.120(b). Details on these requirements
appear in the preamble and proposed provisions. This summary does not
address other proposed changes (for instance, changes to transition
requirements); notice provisions we do not propose to change (for
instance, notice for safety edits); or other rules that may also apply
(for instance, marketing and beneficiary communications rules regarding
formulary updates).
Notice required for expedited substitutions of certain
generics: Part D sponsors that would otherwise be permitted to make
certain generic substitutions as specified under proposed Sec.
423.120(b)(5)(iv) would be required to provide the following types of
notice:
++ Advance general notice in the formulary and EOC and other
applicable beneficiary communications stating that such changes may
occur without notice.
++ Notice that identifies the specific drug substitution made--
which may be provided after the effective date of the change--as
follows:
--Direct notice to affected enrollees.
--Notice posted online for current and prospective enrollees.
--Notice to CMS.
--Notice to other entities.
Notice and refill required for certain other midyear
formulary changes: Part D sponsors that would be otherwise permitted to
remove or change the preferred or tiered cost-sharing status of drugs
would be required to provide the below types of notice and refills
under proposed Sec. 423.120(b)(5)(i) and (ii). However, these notice
requirements do not apply when removing drugs deemed unsafe by the FDA
or removed from the market by manufacturers (for applicable
requirements see Sec. 423.120(b)(5)(iii).)
For affected enrollees--
++ Advance direct written notice at least 30 days prior to the
effective date; or
++ Written notice of the change and a month supply of the brand
name drug under the same terms as provided before the change; and
For entities and other enrollees:
++ Advance notice identifying the specific drug changes to be made
at least 30 days prior to the effective date of the change as follows:
--Notice posted online for current and prospective enrollees;
--Notice to CMS; and
--Notice to other entities.
15. Treatment of Follow-On Biological Products as Generics for Non-LIS
Catastrophic and LIS Cost Sharing
Similar to the introduction of an abbreviated approval pathway for
generic drugs provided by the Hatch-Waxman Act in 1984 to spur more
competition through quicker approvals and introduction of lower cost
therapeutic alternatives in the marketplace, Congress enacted the
``Biologics Price Competition and Innovation Act of 2009'' to balance
innovation and consumer interests. Specifically, section 7002 of the
ACA amended section 351 of the Public Health Service Act (PHS Act) (42
U.S.C. 262), adding a subsection (k) to create an abbreviated licensure
pathway for follow-on biological products that are demonstrated to be
either ``biosimilar'' to or ``interchangeable'' with a United States
Food and Drug Administration (FDA) licensed reference biological
product. According to the FDA, ``a biosimilar product is a biological
product that is approved based on a showing that it is highly similar
to an FDA-approved biological product, known as a reference product,
and has
[[Page 56417]]
no clinically meaningful differences in terms of safety and
effectiveness from the reference product. Only minor differences in
clinically inactive components are allowable in biosimilar products.''
However, ``an interchangeable biological product is biosimilar to an
FDA-approved reference product and meets additional standards for
interchangeability. An interchangeable biological product may be
substituted for the reference product by a pharmacist without the
intervention of the health care provider who prescribed the reference
product.'' (See https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/) Biosimilar biological
products are, by definition, not interchangeable, and are not
substitutable without a new prescription. Follow-on biological products
are listed in the FDA's Purple Book: Lists of Licensed Biological
Products with Reference Product Exclusivity and Biosimilarity or
Interchangeability Evaluations, available at https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm411418.htm. Part D plan sponsors are also encouraged to monitor the
FDA's Web site for new biologic (BLA) approvals at https://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm?fuseaction=Reports.ReportsMenu.
Sections 1860D-2(b)(4) and 1860D-14(a)(1)(D)(ii-iii) of the Act
specify lower Part D maximum copayments for low-income subsidy (LIS)
eligible individuals for generic drugs and preferred drugs that are
multiple source drugs (as defined in section 1927(k)(7)(A)(i) of the
Act) than are available for all other Part D drugs. Currently the
statutory cost sharing levels are set at the maximums. CMS does not
interpret the statutory language to mean that each plan can establish
lower LIS cost sharing on drugs, but rather, that CMS, through
rulemaking, could establish lower cost sharing than the maximum amount,
and it would therefore be the same for all Part D plans.
For the Part D program, CMS defines a ``generic drug'' at Sec.
423.4 as a drug for which an application under section 505(j) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) is approved.
Biosimilar and interchangeable biological products do not meet the
section 1927(k)(7) definition of a multiple source drug or the CMS
definition of a generic drug at Sec. 423.4. Consequently, follow-on
biological products are subject to the higher Part D maximum copayments
for LIS eligible individuals and non-LIS Part D enrollees in the
catastrophic portion of the benefit applicable to all other Part D
drugs. While the statutory maximum LIS copayment amounts apply to all
phases of the Part D benefit, the statute only specifies non-LIS
maximum copayments for the catastrophic phase. CMS clarified the
applicable LIS and non-LIS catastrophic cost sharing in a March 30,
2015 Health Plan Management System (HPMS) memorandum. We advised that
additional guidance may be issued for interchangeable biological
products at a later date.
Nonetheless, treatment of follow-on biological products, which are
generally high-cost, specialty drugs, as brands for the purposes of
non-LIS catastrophic and LIS cost sharing generated a great deal
confusion and concern for plans and advocates alike, and CMS received
numerous requests to redefine generic drug at Sec. 423.4. Advocates
expressed concerns that LIS enrollees were required to pay the higher
brand copayment for biosimilar biological products. Stakeholders who
contacted us asserted treatment of biosimilar biological products as
brands for purposes of LIS cost-sharing creates a disincentive for LIS
enrollees to choose lower cost alternatives. Some of these stakeholders
also expressed similar concerns for non-LIS enrollees in the
catastrophic portion of the benefit.
We agree and propose to revise the definition of generic drug at
Sec. 423.4 to include follow-on biological products approved under
section 351(k) of the PHS Act (42 U.S.C. 262(k)) solely for purposes of
cost-sharing under sections 1860D-2(b)(4) and 1860D-14(a)(1)(D)(ii-iii)
of the Act. Lower cost sharing for lower cost alternatives will improve
enrollee incentives to choose follow-on biological products over more
expensive reference biological products, and will reduce costs to both
Part D enrollees and the Part D program.
While CMS generally seeks to encourage the utilization of lower
cost follow-on biological products, we propose to limit inclusion of
follow-on biological products in the definition of generic drug to
purposes of non-LIS catastrophic cost sharing and LIS cost sharing only
because we want to avoid causing any confusion or misunderstanding that
CMS treats follow-on biological products as generic drugs in all
situations. We do not believe that would be appropriate because the
same FDA requirements for generic drug approval (for example,
therapeutic equivalence) do not apply to biosimilar biological
products, currently the only available follow-on biological products.
Accordingly, CMS currently considers biosimilar biological products
more like brand name drugs for purposes of transition or midyear
formulary changes because they are not interchangeable. In these
contexts, treating biosimilar biological products the same as generic
drugs would incorrectly signal that CMS has deemed biosimilar
biological products (as differentiated from interchangeable biological
products) to be therapeutically equivalent. This could jeopardize Part
D enrollee safety and may generate confusion in the marketplace through
conflation with other provisions due to the many places in the Part D
statute and regulation where generic drugs are mentioned. Therefore, we
believe the proposed change to treat follow-on biological products as
generics should be limited to purposes of non-LIS catastrophic and LIS
cost sharing only.
We propose to modify the definition of generic drug at Sec. 423.4
as follows:
We propose to redesignate the existing definition as
paragraph (i).
We propose to add a new paragraph (ii) to state ``for
purposes of cost sharing under sections 1860D-2(b)(4) and 1860D-
14(a)(1)(D) of the Act only, a biological product for which an
application under section 351(k) of the Public Health Service Act (42
U.S.C. 262(k)) is approved.''
We solicit comment on this proposed change to the definition of
generic drug at Sec. 423.4.
16. Eliminating the Requirement To Provide PDP Enhanced Alternative
(EA) to EA Plan Offerings With Meaningful Differences (Sec. 423.265)
CMS has the authority under section 1857(e)(1) of the Act,
incorporated for Part D by section 1860D-12(b)(3)(D) of the Act, to
establish additional contract terms that CMS finds ``necessary and
appropriate,'' as well as authority under section 1860D-11(d)(2)(B) of
the Act to propose regulations imposing ``reasonable minimum
standards'' for Part D sponsors. Using this authority we previously
issued regulations to ensure that multiple plan offerings by Part D
sponsors represent meaningful differences to beneficiaries with respect
to benefit packages and plan cost structures. At that time, separate
meaningful difference rules were concurrently adopted for MA and stand-
alone PDPs. This section addresses proposed changes to our regulations
pertaining strictly to meaningful
[[Page 56418]]
differences in PDP plan offerings. One of the underlying principles in
the establishment of the Medicare Part D prescription drug benefit is
that both market competition and the flexibility provided to Part D
sponsors in the statute would result in the offering of a broad array
of cost effective prescription drug coverage options for Medicare
beneficiaries. We continue to support the concept of offering a variety
of prescription drug coverage choices for Medicare beneficiaries
consistent with our commitment to afford beneficiaries access to the
prescription drugs they need.
PDP sponsors must offer throughout a PDP region a basic plan that
consists of: Standard deductible and cost sharing amounts (or actuarial
equivalents); an initial coverage limit based on a set dollar amount of
claims paid on the beneficiary's behalf during the plan year; a
coverage gap phase; and finally, catastrophic coverage that applies
once a beneficiary's out-of-pocket expenditures for the year have
reached a certain threshold. Prior to our adopting regulations
requiring meaningful differences between each PDP sponsor's plan
offerings in a PDP Region, our guidance allowed sponsors that offered a
basic plan to offer additional basic plans in the same region, as long
as they were actuarially equivalent to the basic plan structure
described in the statute. These sponsors could also offer enhanced
alternative plans that provide additional value to beneficiaries in the
form of reduced deductibles, reduced copays, coverage of some or all
drugs while the beneficiary is in the gap portion of the benefit,
coverage of drugs that are specifically excluded as Part D drugs under
paragraph (2)(ii) of the definition of Part D drug under Sec. 423.100,
or some combination of those features. As we have gained experience
with the Part D program, we have made consistent efforts to ensure that
the number and type of plan benefit packages PDP sponsors may market to
beneficiaries are no more numerous than necessary to afford
beneficiaries choices from among meaningfully different plan options.
To that end, CMS sets differential out-of-pocket cost (OOPC) targets
each year, using an analysis performed on the previous year's bid
submissions, to ensure contracting organizations submit bids that
clearly offer differences in value to beneficiaries. Published annually
in the Call Letter, the threshold differentials are defined for a basic
and enhanced plan, as well as for two enhanced plans, when offered by a
parent organization in the same region. For example, in CY 2018, a
basic and enhanced plan are required at minimum to provide for a $20
out-of-pocket difference, while two enhanced plans are required to have
at least a $30 differential. Over the years, the thresholds have ranged
from $18 to $23 between basic and enhanced plans, and from $12 to $34
between two enhanced plans. We issued regulations in 2010, at Sec.
423.265(b)(2), that established our authority to deny bids that are not
meaningfully different from other bids submitted by the same
organization in the same service area. Our application of this
authority has eliminated PDP sponsors' ability to offer more than one
basic plan in a PDP region since all basic plan benefit packages must
be actuarially equivalent to the standard benefit structure discussed
in the statute, and in guidance we have also limited to two the number
of enhanced alternative plans that we approve for a single PDP sponsor
in a PDP region. As part of the same 2010 rulemaking, we also
established at Sec. 423.507(b)(1)(iii) our authority to terminate
existing plan benefit packages that do not attract a number of
enrollees sufficient to demonstrate their value in the Medicare
marketplace. Both of these authorities have been effective tools in
encouraging the development of a variety of plan offerings that provide
meaningful choices to beneficiaries.
We continue to be committed to maintaining benefit flexibility and
efficiency throughout both the MA and Part D programs. We wish to
continue the trend of using transparency, flexibility, program
simplification, and innovation to transform the MA and Part D programs
for Medicare enrollees to have options that fit their individual health
needs. In our April 2017 Request for Information (RFI), we offered
stakeholders the opportunity to submit their ideas on how to better
accomplish these goals. In response to the RFI, we received two
comments specific to the meaningful difference requirement for PDPs.
One commenter urged us to eliminate meaningful difference requirements
to allow market competition to determine the appropriate number and
type of plan offerings. Alternatively, it was suggested that if the
meaningful difference standard is retained, we should revise it to
allow plans to be treated as meaningfully different based on
differences in plan characteristics not previously considered by CMS.
The commenter contends that the meaningful difference requirement, as
currently applied, unfairly limits the number of plan offerings and
beneficiary choices. Specifically, it was argued that the meaningful
difference test does not recognize premiums as elements constituting
meaningful differences, despite this being an extremely important
factor for beneficiaries in making enrollment decisions. Another
commenter recommended that we lower the OOPC differentials between
basic and enhanced PDP offerings but at a minimum, we should lower the
OOPC differential between enhanced PDP offerings.
While we received relatively few comments related to meaningful
difference in response to the RFI, we did receive a number of comments
both in support of and opposing the proposed increase in the meaningful
difference threshold between enhanced PDP offerings we announced in the
Draft CY 2018 Call Letter. Those in favor of our proposal believe that
the increase would help to ensure that sponsors are offering
meaningfully different plans and would minimize beneficiary confusion.
Commenters opposed to the proposal argued that the increase would lead
to more expensive plans and would effectively limit plan choice. They
argued that expanding OOPC differentials would ultimately create more
beneficiary disruption as sponsors would have to consolidate plans that
do not meet the new threshold. This result would directly contradict
our request that plan sponsors consider options to minimize beneficiary
disruption. Commenters suggested that we should utilize OOPC estimates
as they were originally intended, to ensure that beneficiaries receive
a minimum additional value from enhanced plans. They added that steady
and reasonable OOPC thresholds will give beneficiaries more consistent
benefits and lower premiums.
We appreciate the importance of ensuring adequate plan choice for
beneficiaries and the value of multiple plan offerings with a diversity
of benefits, now and in the future. We agree with the argument that two
enhanced plans offered by a plan sponsor could vary with respect to
their plan characteristics and benefit design, such that they might
appeal to different subsets of Medicare enrollees, but in the end have
similar out-of-pocket beneficiary costs. We continue to believe however
that a meaningful difference, that takes into account out-of-pocket
costs, be maintained between basic and enhanced plans to ensure that
there is a meaningful value for beneficiaries given the supplemental
Part D premium associated with the enhanced plans. Therefore, effective
for
[[Page 56419]]
Contract Year (CY) 2019, we propose to revise the Part D regulations at
Sec. 423.265 (b)(2) to eliminate the PDP EA to EA meaningful
difference requirement, while maintaining the requirement that enhanced
plans be meaningfully different from the basic plan offered by a plan
sponsor in a service area. We believe these proposed revisions will
help us accomplish the balance we wish to strike with respect to
encouraging competition and plan flexibilities while still providing
PDP choices to beneficiaries that represent meaningful choices in
benefit packages. Anticipated impacts to this change include: (1) A
modest increase in the number of plans that would be offered by PDP
sponsors (if the EA to EA meaningful difference requirement was the
sole barrier to a PDP sponsors offering a second EA plan in a region)
and (2) a potential decrease in the average supplemental Part D
premium.
We also announce our future intent to reexamine, with the benefit
of additional information, how we define the meaningful difference
requirement between basic and enhanced plans offered by a PDP sponsor
within a service area. We recognize that the current OOPC methodology
is only one method for evaluating whether the differences between plan
offerings are meaningful, and will investigate whether the current OOPC
model or an alternative methodology should be used to evaluate
meaningful differences between PDP offerings. While we intend to
conduct our own analyses, we also seek stakeholder input on how to
define meaningful difference as it applies to basic and enhanced Part D
plans. CMS will continue to provide guidance for basic and enhanced
plan offering requirements in the annual Call Letter.
Beneficiaries can continue to rely on the many resources CMS makes
available, such as the Medicare Plan Finder (MPF), 1-800-MEDICARE and
the Medicare and You Handbook, to assist them and their caregivers in
making the best plan choices that meet their individual health needs.
To the extent that CMS finds its elimination results in potential
beneficiary confusion or harm, CMS will consider reinstating the
meaningful difference requirement through future rule making or
consider taking other action.
17. Request for Information Regarding the Application of Manufacturer
Rebates and Pharmacy Price Concessions to Drug Prices at the Point of
Sale
a. Introduction
Part D sponsors and their contracted PBMs have been increasingly
successful in recent years at negotiating price concessions from
pharmaceutical manufacturers, network pharmacies, and other such
entities. Between 2010 and 2015, the amount of all forms of price
concessions received by Part D sponsors and their PBMs increased nearly
24 percent per year, about twice as fast as total Part D gross drug
costs, according to the cost and price concession data Part D sponsors
submitted to CMS for payment purposes.
The data Part D sponsors submit to CMS as part of the annual
required reporting of direct or indirect remuneration (DIR) show that
manufacturer rebates, which comprise the largest share of all price
concessions received, have accounted for much of this growth.\47\ The
data also show that manufacturer rebates have grown dramatically
relative to total Part D gross drug costs each year since 2010. Rebate
amounts are negotiated between manufacturers and sponsors or their
PBMs, independent of CMS, and are often tied to the sponsor driving
utilization toward a manufacturer's product through, for instance,
favorable formulary tier placement and cost-sharing requirements.
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\47\ Sponsors report all DIR to CMS annually by category at the
plan level. DIR categories include: Manufacturer rebates,
administrative fees above fair market value, price concessions for
administrative services, legal settlements affecting Part D drug
costs, pharmacy price concessions, drug cost-related risk-sharing
settlements, etc.
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The DIR data show similar trends for pharmacy price concessions.
Pharmacy price concessions, net of all pharmacy incentive payments,
have grown faster than any other category of DIR received by sponsors
and PBMs and now buy down a larger share of total Part D gross drug
costs than ever before. Such price concessions are negotiated between
pharmacies and sponsors or their PBMs, again independent of CMS, and
are often tied to the pharmacy's performance on various measures
defined by the sponsor or its PBM.
When manufacturer rebates and pharmacy price concessions are not
reflected in the price of a drug at the point of sale, beneficiaries
might see lower premiums, but they do not benefit through a reduction
in the amount they must pay in cost-sharing, and thus, end up paying a
larger share of the actual cost of a drug. Moreover, given the increase
in manufacturer rebates and pharmacy price concessions in recent years,
the point-of-sale price of a drug that a Part D sponsor reports on a
PDE record as the negotiated price is rendered less transparent at the
individual prescription level and less representative of the actual
cost of the drug for the sponsor when it does not include such
discounts. Finally, variation in the treatment of rebates and price
concessions by Part D sponsors may have a negative effect on the
competitive balance under the Medicare Part D program, as explained
later in this section.
At the time the Part D program was established, we believed, as
discussed in the Part D final rule that appeared in the January 28,
2005 Federal Register (70 FR 4244), that market competition would
encourage Part D sponsors to pass through to beneficiaries at the point
of sale a high percentage of the manufacturer rebates and other price
concessions they received, and that establishing a minimum threshold
for the rebates to be applied at the point of sale would only serve to
undercut these market forces. However, actual Part D program experience
has not matched expectations in this regard. In recent years, only a
handful of plans have passed through a small share of price concessions
to beneficiaries at the point of sale. Instead, because of the
advantages that accrue to sponsors in terms of premiums (also an
advantage for beneficiaries), the shifting of costs, and plan revenues,
from the way rebates and other price concessions applied as DIR at the
end of the coverage year are treated under the Part D payment
methodology, sponsors may have distorted incentives as compared to what
we intended in 2005.
Therefore, in this request for information we discuss
considerations related to and solicit comment on requiring sponsors to
include at least a minimum percentage of manufacturer rebates and all
pharmacy price concessions received for a covered Part D drug in the
drug's negotiated price at the point of sale. Feedback received will be
used for consideration in future rulemaking on this topic.
b. Background
Section 1860D-2(d)(1) of the Act requires that a Part D sponsor
provide beneficiaries with access to negotiated prices for covered Part
D drugs. Under our current regulations at Sec. 423.100, the negotiated
price is the price paid to the network pharmacy or other network
dispensing provider for a covered Part D drug dispensed to a plan
enrollee that is reported to CMS at the point of sale by the Part D
sponsor. This point of sale price is used to calculate beneficiary
cost-sharing. More broadly, the negotiated price is the primary basis
by which the Part D benefit is adjudicated, and is used to determine
plan, beneficiary, manufacturer (in the
[[Page 56420]]
coverage gap), and government liability during the course of the
payment year, subject to final reconciliation following the end of the
coverage year.
Under current law, when not explicitly required to do so for
certain types of pharmacy price concessions, Part D sponsors can choose
whether to reflect various price concessions, including manufacturer
rebates, they or their intermediaries receive in the negotiated price.
Specifically, section 1860D-2(d)(1)(B) of the Act merely requires that
negotiated prices ``shall take into account negotiated price
concessions, such as discounts, direct or indirect subsidies, rebates,
and direct or indirect remunerations, for covered part D drugs . . .
.'' In other words, Part D sponsors are allowed, but generally not
currently required, to apply rebates and other price concessions at the
point of sale to lower the price upon which beneficiary cost-sharing is
calculated. To date, sponsors have elected to include rebates and other
price concessions in the negotiated price at the point-of-sale only
very rarely. All rebates and other price concessions that are not
included in the negotiated price must be reported to CMS as DIR at the
end of the coverage year and are used in our calculation of final plan
payments, which, under the statute, are required to be based on costs
actually incurred by Part D sponsors, net of all applicable DIR.
(1) Premiums and Plan Revenues
The main benefit to a Part D beneficiary of price concessions
applied as DIR at the end of the coverage year (and not to the
negotiated price at the point of sale) comes in the form of a lower
plan premium. A sponsor must factor into its plan bid an estimate of
the DIR expected to be generated--that is, it must lower its estimate
of plan liability by a share of the projected DIR--which has the effect
of reducing the price of coverage under the plan. Under the current
Part D benefit design, price concessions that are applied post-point-
of-sale, as DIR, reduce plan liability, and thus premiums, more than
price concessions applied at the point of sale. When price concessions
are applied to reduce the negotiated price at the point of sale, some
of the concession amount is apportioned to reduce beneficiary cost-
sharing, as explained in this section, instead of plan and government
liability; this is not the case when price concessions are applied
post-point-of-sale, where the majority of the concession amount accrues
to the plan, and the remainder accrues to the government. Therefore, to
the extent that plan bids reflect accurate DIR estimates, the rebates
and other price concessions that Part D sponsors and their PBMs
negotiate, but do not include in the negotiated price at the point of
sale, put downward pressure on plan premiums, as well as the
government's subsidies of those premiums. The average Part D basic
beneficiary premium has grown at an average rate of only about 1
percent per year between 2010 and 2015, and is projected to decline in
2018, due in part to sponsors' projecting DIR growth to outpace the
growth in projected gross drug costs each year. The average Medicare
direct subsidy paid by the government to cover a share of the cost of
coverage under a Part D plan has also declined, by an average of 8.1
percent per year between 2010 and 2015, partly for the same reason.
However, any DIR received that is above the projected amount
factored into a plan's bid contributes primarily to plan profits, not
lower premiums. The risk-sharing construct established under Part D by
statute allows sponsors to retain as plan profit the majority of all
DIR that is above the bid-projected amount.\48\ Our analysis of Part D
plan payment and cost data indicates that in recent years, DIR amounts
Part D sponsors and their PBMs actually received have consistently
exceeded bid-projected amounts.
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\48\ Medicare shares risk with Part D sponsors on the drug costs
for which they are liable using symmetrical risk corridors and
through the payment of 80 percent reinsurance in the catastrophic
phase of the benefit.
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To capture the relative premium and other advantages that price
concessions applied as DIR offer sponsors over lower point-of-sale
prices, sponsors sometimes opt for higher negotiated prices in exchange
for higher DIR and, in some cases, even prefer a higher net cost drug
over a cheaper alternative. This may put upward pressure on Part D
program costs and, as explained below, shift costs from the Part D
sponsor to beneficiaries who utilize drugs in the form of higher cost-
sharing and to the government through higher reinsurance and low-income
cost-sharing subsidies.
(2) Cost-Shifting
When manufacturer rebates and other price concessions are not
reflected in the negotiated price at the point of sale (that is,
applied instead as DIR at the end of the coverage year), beneficiary
cost-sharing, which is generally calculated as a percentage of the
negotiated price, becomes larger, covering a larger share of the actual
cost of a drug. Although this is especially true when a Part D drug is
subject to coinsurance, it is also true when a drug is subject to a
copay because Part D rules require that the copay amount be at least
actuarially equivalent to the coinsurance required under the defined
standard benefit design. For many Part D beneficiaries who utilize
drugs and thus incur cost-sharing expenses, this means, on average,
higher overall out-of-pocket costs, even after accounting for the
premium savings tied to higher DIR. For the millions of low-income
beneficiaries whose out-of-pocket costs are subsidized by Medicare
through the low income cost-sharing subsidy, those higher costs are
borne by the government. This potential for cost-shifting grows
increasingly pronounced as manufacturer rebates and pharmacy price
concessions increase as a percentage of gross drug costs and continue
to be applied outside of the negotiated price. Numerous research
studies further suggest that the higher cost-sharing that results can
impede beneficiary access to necessary medications, which leads to
poorer health outcomes and higher medical care costs for beneficiaries
and Medicare.49 50 51 These effects of higher beneficiary
cost-sharing under the current policies regarding the determination of
negotiated prices must be weighed against the impact on beneficiary
access to affordable drugs of the lower premiums that are currently
charged for Part D coverage.
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\49\ Michele Heisler et al., ``The Health Effects of Restricting
Prescription Medication Use Because of Cost,'' Medical Care, 626-634
(2004).
\50\ Peter Bach, ``Limits on Medicare's Ability to Control
Rising Spending on Cancer Drugs,'' The New England Journal of
Medicine, 360, 626-633 (2009).
\51\ Sonya Blesser Streeter et al., ``Patient and Plan
Characteristics Affecting Abandonment of Oral Oncolytic
Prescriptions,'' Journal of Oncology Practice, 7, no. 3S, 46S-51S
(2011).
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Moreover, beneficiaries progress through the four phases of the
Part D benefit as their total gross drug costs and cost-sharing
obligations increase. Because both of these values are calculated based
on the negotiated prices reported at the point of sale, when
manufacturer rebates and pharmacy price concessions are not applied at
the point of sale, the higher negotiated prices that result move Part D
beneficiaries more quickly through the Part D benefit. This, in turn,
shifts more of the total drug spend into the catastrophic phase, where
Medicare liability is highest (80 percent, paid as reinsurance) and
plan liability, after the closing of the coverage gap, is lowest (15
percent). Part D program experience further suggests that sponsors are
able to offset their already limited liability in the catastrophic
phase by capturing additional rebates from manufacturers,
[[Page 56421]]
the largest share of which, under current Part D rules, as explained
previously, are allocated to reduce plan liability. Consistent with
this benefit, we note that sponsors have negotiated more high price-
high rebate arrangements, especially in recent years, which has caused
the proportion of costs for which the plan sponsor is at risk to shrink
when those higher rebates are not passed on at the point of sale. Under
current rules, therefore, Part D sponsors may have weak incentives,
and, in some cases even, no incentive, to lower prices at the point of
sale or to choose lower net cost alternatives to high cost-highly
rebated drugs when available.
(3) Transparency and Differential Treatment
Given the significant growth in manufacturer rebates and pharmacy
price concessions in recent years, when such amounts are not reflected
in the negotiated price, at least to some degree, the true price of a
drug to the plan is not available to consumers at the point of sale,
nor is it reflected on the Medicare Prescription Drug Plan Finder (Plan
Finder) tool. Consequently, consumers cannot efficiently minimize both
their costs and costs to the taxpayers by seeking and finding the
lowest-cost drug or the lowest-cost drug and pharmacy combination.
The quality of information available to consumers is even less
conducive to producing efficient choices when rebates and other price
concessions are treated differently by different Part D sponsors; that
is, when they are applied to the point-of-sale price to differing
degrees and/or estimated and factored into plan bids with varying
degrees of accuracy. First, when some sponsors include price
concessions in negotiated prices while others treat them as DIR,
negotiated prices no longer have a consistent meaning across the Part D
program, undermining meaningful price comparisons and efficient choices
by consumers. Second, if a sponsor's bid is based on an estimate of net
plan liability that is understated because the sponsor has been
applying price concessions as DIR at the end of the coverage year
rather than using them to reduce the negotiated price at the point of
sale, it follows that the sponsor may be able to submit a lower bid
than a competitor that applies price concessions at the point of sale
or opts for lower net cost alternatives to high cost-highly rebated
drugs when available. This lower bid results in a lower plan premium
that must be paid by enrollees in the plan, which could allow the
sponsor to capture additional market share. The resulting competitive
advantage accruing to one sponsor over another in this scenario stems
only from a technical difference in how plan costs are reported to CMS.
Therefore, the opportunity for differential treatment of rebates and
price concessions could result in bids that are not comparable and in
premiums that are not valid indicators of relative plan efficiency.
c. Manufacturer Rebates to the Point of Sale
We are soliciting comment from stakeholders on how we might most
effectively design a policy requiring Part D sponsors to pass through
at the point of sale a share of the manufacturer rebates they receive,
in order to mitigate the effects of the DIR construct \52\ on costs to
both beneficiaries and Medicare, competition, and efficiency under Part
D. In this section, we put forth for consideration potential parameters
for such a policy and seek detailed comments on their merits, as well
as the merits of any alternatives that might better serve our goals of
reducing beneficiary costs and better aligning incentives for Part D
sponsors with the interests of beneficiaries and taxpayers. We
specifically seek comment on how this issue could be addressed without
increasing government costs and without reducing manufacturer payments
under the coverage gap discount program. We encourage all commenters to
provide quantitative analytical support for their ideas wherever
possible.
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\52\ We use the term ``DIR construct'' to refer to how DIR is
treated under current Part D payment rules and the advantages that
accrue to Part D sponsors when they apply rebates and other price
concessions as DIR at the end of the coverage year.
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Specifically, we are considering requiring, through future
rulemaking, Part D sponsors to include in the negotiated price reported
to CMS for a covered Part D drug a specified minimum percentage of the
cost-weighted average of rebates provided by drug manufacturers for
covered Part D drugs in the same therapeutic category or class. We will
refer to the rebate amount that we would require be included in the
negotiated price for a covered Part D drug as the ``point-of-sale
rebate.'' Under such a policy, sponsors could apply as DIR at the end
of the coverage year only those manufacturer rebates received in excess
of the total point-of-sale rebates. In the unlikely event that total
manufacturer rebate dollars received for a drug are less than the total
point-of-sale rebates, the difference would be reported at the end of
the coverage year as negative DIR.
(1) Specified Minimum Percentage
We are considering setting the minimum percentage of manufacturer
rebates that must be passed through at the point of sale at a point
less than 100 percent of the applicable average rebate amount for drugs
in the same drug category or class. For operational ease, we are
considering setting the same minimum percentage, which we would specify
in regulation, for all rebated drugs in all years--that is, the minimum
percentage would not change by drug category or class or by year.
It is important to note that we are not considering requiring that
100 percent of rebates be applied at the point of sale. As explained
earlier, the statutory definition of negotiated price in section 1860D-
2(d)(1)(B) of the Act requires that ``negotiated prices shall take into
account negotiated price concessions, such as discounts, direct or
indirect subsidies, rebates, and direct or indirect remunerations, for
covered part D drugs . . .'' (emphasis added). We believe this
language, particularly when read in the context of the requirement in
section 1860D-2(d)(2) of the Act that Part D sponsors report the
aggregate price concessions made available ``by a manufacturer which
are passed through in the form of lower subsidies, lower monthly
beneficiary prescription drug premiums, and lower prices through
pharmacies and other dispensers,'' contemplates that Part D sponsors
have some flexibility in determining how to apply manufacturer rebates
in order to reduce costs under the plan.
Furthermore, we are cognizant of the fact that while requiring that
a higher share of rebates be included in the negotiated price would
more meaningfully address the concerns highlighted earlier and lead to
larger cost-sharing savings for many beneficiaries, doing so would also
result in larger premium increases for all beneficiaries, as discussed
in greater detail later in this section, and lower flexibility for Part
D sponsors in regards to the treatment of manufacturer rebates, and
thus, for some sponsors, weaker incentives to participate in the Part D
program. We aim to set the minimum percentage of rebates that must be
applied at the point of sale at a point that allows an appropriate
balance between these outcomes and thus achieves the greatest possible
increase in beneficiary access to affordable drugs.
We are soliciting comment on the minimum percentage of manufacturer
rebates that should be reflected in the negotiated price in order to
achieve this balance. We are also seeking comment on how and how often,
if at all, that
[[Page 56422]]
minimum percentage should be updated by CMS, and what factors should be
considered in making any such change. We request that commenters
provide analytical justification for their ideas wherever possible. We
also are seeking comment on the effect that specifying a minimum
percentage of rebates that must be reflected in the negotiated price
would have on the competition for rebates under Part D and the total
rebate dollars received by Part D sponsors and PBMs.
(2) Applicable Average Rebate Amount
We are also particularly interested in stakeholder feedback
regarding the following methodology to calculate the applicable average
rebate amount, a specified minimum percentage of which would be
required to be applied at the point of sale:
Rebate Year: We are considering requiring that
point-of-sale rebate amounts be based on average manufacturer rebates
expected to be received for each drug category or class under the
manufacturer rebate agreements for the current payment year, not
historical rebate experience. To the extent that rebate agreements are
structured with contingencies that would be unclear at the point of
sale, sponsors would be required to base the point-of-sale rebate
amount on a good faith estimate of the rebates expected to be received.
We solicit comments on whether this approach would ensure that the
price available to beneficiaries at the point of sale reflects the
actual price of a drug at that time, or if an alternative approach
would do so more effectively.
Rebated Drugs: We are considering requiring that
the average rebate amount be calculated using only drugs for which
manufacturers provide rebates. We believe including non-rebated drugs
in this calculation would serve only to drive down the average
manufacturer rebates, which would dampen the intended effects of any
change.
Additionally, we would likely consider each drug product with a
unique 11-digit national drug code (NDC) separately for purposes of
calculating the average rebate amount. PDE and rebate data submitted to
CMS show that gross drug costs and rebate rates under a plan can vary
even for the same drugs produced by the same manufacturer that are
packaged differently and thus have different NDC-11 identifiers.
Therefore, we believe that the average rebate amounts are more likely
to be accurate when calculated based on the gross drug cost and rebate
data at the 11-digit NDC level. We solicit comment on whether
specifying such a requirement would also serve to ensure consistency in
how average rebates are calculated across sponsors, which would make
prices more comparable across Part D plans and enforcement easier.
Plan-Level Average: We are considering requiring
that average rebate amounts be calculated separately for each plan
(that is, calculated at the plan-benefit-package level). In other
words, the same average rebate amount would not apply to the point-of-
sale price for a covered drug across all plans under one contract, nor
across all contracts under one sponsor. We believe this approach would
result in the calculation of more accurate average rebates because the
PDE and rebate data that are submitted by sponsors demonstrate that
gross drug costs and rebate levels are not the same across all plans
under one contract, nor across all contracts under one sponsor. This
approach would also largely be consistent with how sponsors develop
cost estimates for their Part D bids because benefit designs, including
formulary structure, and assumptions about enrollee characteristics and
utilization vary by plan, even for multiple plans under one contract.
Similarly, final payments are calculated by CMS at the plan level,
based on the data submitted by the sponsor. We solicit comment on
whether the most appropriate approach for calculating the average
rebate amount for point-of-sale application would be to do so at the
plan level, using plan-specific information, given that moving a
portion of manufacturer rebates to the point of sale would impact plan
liability and payments, or if another approach would be more
appropriate.
Drug Category or Class: We are considering
requiring that the manufacturer rebate amount applied to the point-of-
sale price for a covered drug be based on the plan's average rebate
amount calculated for the rebated drugs in the same category or class.
We are considering requiring sponsors to determine the average rebate
amount at the therapeutic category or class level, rather than a drug-
specific rebate amount, in order to maintain the confidentiality of any
manufacturer-sponsor/PBM pricing relationship with respect to an
individual drug. Given that rebate rates are typically negotiated at
the individual drug level, we believe that the drug category/class-
average approach we are considering would help maintain fair
competition among drug manufacturers, as well as Part D sponsors, by
preventing competitors from reverse engineering the particulars of any
proprietary pricing arrangement. This approach would also increase
price transparency over the status quo, especially at the drug category
or class level, and improve market competition and efficiency under
Part D as a result. In addition to feedback on this general approach
and our rationale for it, we are seeking comment, in particular, on the
drug classification system that Part D sponsors should be required to
use to calculate their drug category/class-level average rebate amounts
and why that system would be most appropriate for use in such a point-
of-sale rebate policy. We also are seeking comment on the effect of
calculating average rebates at the drug category/class level on
competition and, in turn, on the total rebate dollars received.
We are also particularly interested in comments on how an average
rebate amount should be calculated for a drug that is the only rebated
drug in its drug category or class. An alternative approach would be
necessary in this case because the average rebate amount calculated
under the general approach we have described above would equal the
drug-specific rebate amount, which, if included in the negotiated
price, could result in the release of proprietary pricing information.
We ask that commenters explain how any alternative they suggest for the
only rebated drug scenario would address this concern and comment on
the level of price transparency that would be achieved under the
suggested alternative.
Weighting: We are considering requiring that
when calculating the applicable average rebate amount for a particular
drug category, the manufacturer rebate amount for each individual drug
in that category be weighted by the total gross drug costs incurred for
that drug, under the plan, over the most recent month, quarter, year,
or another time period to be specified in future rulemaking for which
cost data is available. We believe a weighted average is more accurate
than a simple average because sponsors do not receive the same level of
rebates for all drugs in a particular drug category or class, and thus,
contrary to the assumption underlying a simple average, not all drugs
contribute equally to the final average rebate percentage for a drug
category or class received by the sponsor under a plan at the end of a
payment year. A gross drug cost-weighted average ensures that drugs
with higher utilization, higher costs, or both will be more important
to the final average rebate rate realized for the drug category or
class than lower utilization, lower cost, or lower cost-lower
utilization drugs in the category or class.
[[Page 56423]]
In the case of a drug with less time on the market than the time
period for which cost data would be required under this weighting
approach or of a plan that has not been active in the Part D program
for the time period required under the weighting approach, we are
considering requiring that the drug's rebate amount be weighted by a
sponsor's projection of total gross drug costs for the plan that takes
into account any plan-specific cost experience already available. If no
plan-specific cost experience is available when calculating average
rebate amounts, such as at the beginning of a payment year for a new
plan, are considering requiring sponsors to use the same drug cost
projections on which they base their Part D bids. Further, for
operational ease, it appears the manufacturer rebates used in the
calculation of the average rebate amount would need to include all
manufacturer rebates received for the drug, including all point-of-sale
rebates. Then, in order not to double count the point-of-sale rebates,
the total gross drug costs used to weight the average under this
methodology would have to be based on the drug's price at the point of
sale before it is lowered by any manufacturer rebates or other price
concessions applied at the point of sale. We are interested in
stakeholder feedback on these considerations.
For an illustration of how the weighted-average rebate amount for a
particular drug category or class would be calculated, see the point-
of-sale rebate example later in this section.
Timing: We are considering requiring Part D
sponsors to recalculate the applicable average rebate amount every
month, quarter, year, or another time period to be specified in future
rulemaking, in order to ensure that the average reflects current cost
experience and manufacturer rebate information. We believe that a
requirement to recalculate the average rebate amount should balance the
need to sustain a level of price transparency throughout the entire
year with the additional burden on sponsors associated with more
frequent updates. We are seeking comment on how often the applicable
cost-weighted drug category/class-average rebate amount, and thus the
point-of-sale rebate for any drug, should be recalculated.
(3) Point-of-Sale Rebate Drugs
We are considering limiting the application of any point-of-sale
rebate requirement to only rebated drugs. Under this approach, the
calculated average rebate amount would only be required to be applied
to the point-of-sale prices for drugs that are rebated, with each drug
identified by its unique NDC-11 identifier. The alternative would
result in a manufacturer that provides no rebates for a particular drug
benefiting from a direct competitor's rebate, as the competitor's
rebate would be used to lower the negotiated price and thereby
potentially increasing sales of the non-rebated drug. However, to be
clear, under this potential approach, sponsors would maintain their
flexibility to include in the negotiated price for any drug, including
a non-rebated drug, manufacturer rebates and other price concessions
above those required to be included in the negotiated price for rebated
drugs under a point-of-sale rebate policy such as the one we describe
here.
Moreover, in order to limit the impact on premiums for all
beneficiaries of adopting a requirement that sponsors include a portion
of manufacturer rebates in the negotiated price at the point of sale,
we are also seeking comment on the merits or limitations of, a more
targeted version of the policy approach that would require sponsors to
pass through a minimum percentage of rebates at the point of sale only
for specific drugs or drug categories or classes. Under this
alternative approach, the point-of-sale rebate policy would apply only
for drugs or drug categories or classes that most directly contribute
to increasing Part D drug costs in the catastrophic phase of coverage
or drugs with high price-high rebate arrangements; such drugs or drug
categories or classes are likely to have the most significant impact on
beneficiary costs and serve to increase program costs overall, as
discussed previously. We are interested in stakeholder feedback on
whether targeting the rebate requirement in such a way would
effectively address the misaligned sponsor incentives and market
inefficiencies that exist under Part D today as a result of the DIR
construct. In addition to general comments on the alternative, more
targeted policy approach, we are particularly interested in
recommendations for the criteria that we might use to determine which
drugs or drug categories or classes to target under such an alternative
approach.
(4) Point-of-Sale Rebate Example
To illustrate how the weighted-average rebate amount for a
particular drug class would be calculated under a point-of-sale rebate
requirement that includes the features described earlier, we provide
the following example: suppose drugs A, B, and C are the only three
rebated drugs on the plan's formulary in a particular drug class. The
negotiated prices, before application of the point-of-sale rebates, for
the three drugs in the current time period are $200, $100, and $75,
respectively. The manufacturer rebates expected by the plan in this
payment year, given the information available in the current period,
for drugs A, B, and C equal 20, 10, and 5 percent, respectively, of the
drugs' pre-rebate negotiated prices. Over the previous time period,
total gross drug costs incurred under the plan for drug A equaled $2
million, for drug B equaled $750,000, and for drug C equaled $150,000.
Therefore, the gross drug cost-weighted average rebate rate for this
drug class in the current time period is calculated as the following:
[($2 million x 20 percent) + ($750,000 x 10 percent) + ($150,000 x 5
percent)]/($2 million + $750,000 + $150,000), or 16.64 percent. If we
were to require that a minimum 50 percent of the average rebate be
applied at the point of sale for all rebated drugs in this drug class
(and the plan only applies the minimum required percentage), the final
negotiated prices for drugs A, B, and C, now equal to $183.36, $91.68,
and $68.76, respectively, would be 8.32 percent (50 percent of 16.64
percent) lower than the pre-rebated prices.
For each of the three drugs in this example, beneficiary out-of-
pocket costs would be lower under the approach we are considering than
under the status quo. Assuming, for instance, these drugs are subject
to a 25 percent coinsurance, the enrollee's costs for the three drugs
under this approach would be $45.84 (25 percent of $183.36) for drug A,
$22.92 (25 percent of $91.68) for drug B, and $17.19 (25 percent of
$68.76) for drug C. Under the status quo, the enrollee's costs would be
$50 for drug A ($4.16 higher), $25 for drug B ($2.08 higher), and
$18.75 for drug C ($1.56 higher).
Any difference between the rebates applied at the point of sale and
those actually received would be captured as DIR through reporting at
the end of the coverage year. Assume, for instance, that total gross
drug costs for drugs A, B, and C equal $1.5 million, $1 million, and
$200,000, respectively, in this period. The actual manufacturer rebates
received, therefore, will equal $300,000, $100,000, and $10,000,
respectively, for drugs A, B, and C in this period, based on the plan's
expected rebate rates of 20, 10, and 5 percent, respectively, for the
three drugs in this payment year. Based on the point-of-sale rebate
rate calculated above for the applicable drug class and the total gross
drug cost assumptions provided for the three drugs, we calculate the
total point-of-
[[Page 56424]]
sale rebates in this period to be $124,786.48 (8.32 percent of $1.5
million) for drug A, $83,189.66 (8.32 percent of $1 million) for drug
B, and $16,637.93 (8.32 percent of $200,000) for drug C. Therefore, the
manufacturer rebates applied by the plan as DIR at the end of the
coverage year for the three drugs, respectively, would be $175,215.52,
$16,810.34, and -$6,637.93 and total $185,387.93 across the drug class.
(5) Additional Considerations
Under the policy approach that we are considering here for moving
manufacturer rebates to the point of sale, the responsibility for
calculating the appropriate point-of-sale rebate amount over the course
of the year would fall on Part D sponsors given their role in
administering the Medicare drug benefit. We would leverage existing
reporting mechanisms to review the sponsors' calculations, as we do
with other cost data required to be reported. Specifically, we would
likely use the estimated rebates at point-of-sale field on the PDE
record to collect point-of-sale rebate information, and the
manufacturer rebates fields on the Summary and Detailed DIR Reports to
collect final manufacturer rebate information at the plan and NDC
levels. Differences between the manufacturer rebate amounts applied at
the point of sale and rebates actually received would become apparent
when comparing the data collected through those means at the end of the
coverage year.
Additionally, we note that in accordance with Sec. 423.505(k) of
the Part D regulations, a Part D sponsor is required to certify the
accuracy, completeness, and truthfulness of all data related to
payment, including the PDE data and information on allowable costs that
it submits for purposes of risk corridor and reinsurance payment. A
Part D sponsor certifies its Part D cost data by signing and submitting
attestations to CMS. By signing the attestations, the Part D sponsor
certifies (based on best knowledge, information, and belief) that the
PDE data, DIR data, and any other information provided for the purposes
of determining payment to the plan for the applicable contract year are
accurate, complete, and truthful. If we were to move forward with a
point-of-sale rebate policy, we would also consider amending Sec.
423.505(k) to add a new requirement that the CEO, CFO, or COO attest
(based on best knowledge, information, and belief) to the accuracy,
completeness, and truthfulness of the average rebate amount included in
the negotiated price and reported on the PDE. The submission of
accurate, complete, and truthful data regarding the average rebate
amount included in the negotiated price would be necessary to ensure
accurate reinsurance and risk corridor payments.
Under the approach we are considering, if a Part D sponsor
discovers errors after the certification has been made (that is, after
the attestation has been signed), the Part D sponsor would submit
corrected PDE data, and, under most circumstances, CMS would reconcile
the error through the reopening process described at Sec. 423.346. All
reopenings are at the discretion of CMS. CMS performs a global
reopening approximately 4 years after the initial reconciliation for
that contract year. A Part D sponsor's reopening request resulting from
errors in PDE data discovered after the global reopening for the
contract year in which the error occurred would be evaluated by CMS on
a case by case basis. Any errors in the calculation of the average
rebate amount that result in overpayments would be required to be
reported and returned consistent with Sec. 423.360 and the applicable
subregulatory guidance on overpayments.
We note that prior to the submission of the attestation, and more
specifically, prior to the PDE submission deadline for the initial
reconciliation for a contract year, if a Part D sponsor discovers an
issue with the average rebate amount included in the negotiated price
and reported on the PDE, all affected PDEs would need to be adjusted or
deleted in accordance with applicable CMS guidance. As of the
publication of this request for information, the applicable guidance is
October 6, 2011 CMS memorandum, Revision to Previous Guidance Titled
``Timely Submission of Prescription Drug Event (PDE) Records and
Resolution of Rejected PDEs.''
We encourage stakeholders to comment on what other enforcement and
oversight mechanisms should be instituted to ensure compliance with any
potential point-of-sale rebate requirement. We are particularly
interested in stakeholder feedback on how we might ensure accurate
rebate amounts are applied at the point of sale when rebate agreements
are structured with contingencies that would be unclear at the point of
sale.
We also seek stakeholder comment on what, if any, special
considerations should be taken into account in the design of a point-
of-sale rebate policy, for Part D employer group waiver plans (EGWPs).
We are also interested in feedback on what particular effects requiring
Part D sponsors to apply some manufacturer rebates at the point of sale
would have on the EGWP market, as well as on how such a requirement
might impact the retiree drug subsidy program.
Finally, we note that the negotiated price is also the basis by
which manufacturer liability for discounts in the coverage gap is
determined. Under section 1860D-14A(g)(6) of the Act, the negotiated
price used for coverage gap discounts is based on the definition of
negotiated price in the version of Sec. 423.100 that was in effect as
of the passage of the Patient Protection and Affordable Care Act
(PPACA). Under this definition, the negotiated price is ``reduced by
those discounts, direct or indirect subsidies, rebates, other price
concessions, and direct or indirect remuneration that the Part D
sponsor has elected to pass through to Part D enrollees at the point of
sale'' (emphasis added). Because this definition of negotiated price
only references the price concessions that the Part D sponsor has
elected to pass through at the point of sale, we are uncertain as to
whether we would have the authority to require sponsors include in the
negotiated price the weighted-average rebate amounts that would be
required to be passed through under any potential point-of-sale rebate
policy, for purposes of determining manufacturer coverage gap
discounts. We intend to consider this issue further and will address it
in any future rulemaking regarding the requirements for determining the
negotiated price that is available at the point of sale.
(6) Impacts of Applying Manufacturer Rebates at the Point of Sale
Under a point-of-sale rebate policy designed as we have described
in this comment solicitation, beneficiaries would see lower prices at
the pharmacy point-of-sale, and on Plan Finder, beginning immediately
in the year the policy takes effect. Lower point-of-sale prices would
result directly in lower cost-sharing costs for non-low income
beneficiaries, especially for those who use drugs in highly
competitive, highly-rebated categories or classes. For low income
beneficiaries whose out-of-pocket costs are subsidized through
Medicare's low-income cost-sharing subsidy, cost-sharing savings
resulting from lower point-of-sale prices would accrue to the
government. Plan premiums would likely increase as a result of such a
point-of-sale rebate policy--if some rebates are required to be passed
through to beneficiaries at the point of sale, fewer such concessions
could be apportioned to reduce plan liability, which would have the
effect of
[[Page 56425]]
increasing the cost of coverage under the plan. At the same time, the
reduction in cost-sharing obligations for the average beneficiary would
likely be large enough to lower their overall out-of-pocket costs. The
increasing cost of coverage under Part D plans as a result of rebates
being applied at the point of sale likely would have a more significant
impact on government costs, which would increase overall due to the
significant growth in Medicare's direct subsidies of plan premiums and
low income premium subsidies.
Partially offsetting the increase in direct subsidy and low income
premium subsidy costs for the government would be decreases in
Medicare's reinsurance and low income cost-sharing subsidies. Decreases
in Medicare's reinsurance subsidy result when lower negotiated prices
slow down the progression of beneficiaries through the Part D benefit
and into the catastrophic phase, and when the government's 80 percent
reinsurance payments for allowable drug costs incurred in the
catastrophic phase are based on lower negotiated prices. Similarly, low
income cost-sharing subsidies would decrease if beneficiary cost-
sharing obligations decline due to the reduction in prices at the point
of sale. Finally, the slower progression of beneficiaries through the
Part D benefit would also have the effect of reducing manufacturer gap
discount payments as fewer beneficiaries would enter the coverage gap
phase or progress entirely through it.
The following tables summarize the 10-year impacts we have modeled
for when 33, 66, 90, and 100 percent of all manufacturer rebates are
applied at the point of sale: \53\
---------------------------------------------------------------------------
\53\ Assumptions: (1) For purposes of calculating impacts only,
we assume that total rebates will equal about 20 percent of
allowable Part D drug costs projected for each year modeled, and
that rebates are perfectly substituted with the point-of-sale
discount in all phases of the Part D benefit, including the coverage
gap phase.
(2) Used 2016 distribution of costs by benefit phase to form
assumptions.
(3) Assumed no other behavioral changes by sponsors,
beneficiaries, or others.
Table 10A--Total Impacts for 2019 Through 2028
[In $billions]
----------------------------------------------------------------------------------------------------------------
33% 66% 90% 100%
----------------------------------------------------------------------------------------------------------------
Beneficiary Costs............................... -$19.6 -$39.1 -$53.2 -$56.9
Cost-Sharing................................ -28.8 -57.8 -78.9 -85.2
Premium..................................... 9.2 18.7 25.7 28.3
Government Costs................................ 27.3 55.1 75.5 82.1
Direct Subsidy.............................. 62.8 128.1 177.4 200.0
Reinsurance................................. -21.7 -44.7 -62.2 -73.1
LI Cost-Sharing Subsidy..................... -16.6 -34.2 -47.7 -53.7
LI Premium Subsidy.......................... 2.9 5.9 8.1 8.9
Manufacturer Gap Discount....................... -9.7 -19.4 -26.4 -29.4
----------------------------------------------------------------------------------------------------------------
Table 10B--2019-2028 Per Member-Per Month Impacts
----------------------------------------------------------------------------------------------------------------
33% 66% 90% 100%
----------------------------------------------------------------------------------------------------------------
Beneficiary Costs............................... -$30.33 -$60.58 -$82.42 -$88.13
Cost-Sharing................................ -44.61 -89.50 -122.26 -131.97
Premium..................................... 14.29 28.92 39.83 43.84
Government Costs................................ 42.38 85.40 117.01 127.22
Direct Subsidy.............................. 97.45 198.93 275.43 310.58
Reinsurance................................. -33.76 -69.57 -96.84 -113.75
LI Cost-Sharing Subsidy..................... -25.80 -53.06 -74.11 -83.42
LI Premium Subsidy.......................... 4.49 9.10 12.53 13.81
Manufacturer Gap Discount....................... -15.01 -30.02 -40.93 -45.48
----------------------------------------------------------------------------------------------------------------
Table 10C--2019-2028 Impacts--Percent Change
----------------------------------------------------------------------------------------------------------------
33% 66% 90% 100%
----------------------------------------------------------------------------------------------------------------
Beneficiary Costs............................... -3 -5 -7 -8
Cost-Sharing................................ -6 -12 -16 -17
Premium..................................... 4 7 10 11
Government Costs................................ 2 4 5 6
Direct Subsidy.............................. 24 49 67 76
Reinsurance................................. -3 -7 -9 -11
LI Cost-Sharing Subsidy..................... -4 -9 -12 -14
LI Premium Subsidy.......................... 4 8 11 12
Manufacturer Gap Discount....................... -7 -13 -18 -20
----------------------------------------------------------------------------------------------------------------
While we did not account for behavioral changes when modeling these
impacts, requiring rebates to be applied at the point of sale might
induce changes in sponsor behavior related to drug pricing that would
further reduce the cost of the Part D program for beneficiaries and
taxpayers. Specifically, requiring that at least a minimum percentage
of manufacturer rebates be used to lower the price at the point of sale
could limit the potential for sponsors to leverage the benefits that
accrue to them when price concessions are applied as DIR at the end of
the
[[Page 56426]]
coverage year rather than as discounts at the point of sale, and thus
potentially better align sponsors' incentives with those of
beneficiaries and taxpayers. For example, we believe such an approach
could reduce the incentive for sponsors to favor high cost-highly
rebated drugs to lower net cost alternatives, when such alternatives
are available, and also potentially increase the incentive for sponsors
and PBMs to negotiate lower prices at the point of sale instead of
higher DIR. We seek comment on the extent to which a point-of-sale
rebate policy might be expected to further align the incentives for
beneficiaries, sponsors, and taxpayers.
Finally, we believe requiring that some manufacturer rebates be
applied at the point of sale as we are considering doing would improve
price transparency and limit the opportunity for differential reporting
of costs and price concessions, which may have a positive effect on
market competition and efficiency. We solicit comment on whether basing
the rebate applied at the point of sale on average rebates at the drug
category/class level, as described previously, would meaningfully
increase price transparency over the status quo by ensuring a
consistent percentage of the rebates received are reflected in the
price at the point of sale, while also protecting the details of any
manufacturer-sponsor pricing relationship.
d. Pharmacy Price Concessions to Point of Sale
In recent years, a growing proportion of Part D sponsors and their
contracted PBMs have entered into payment arrangements with Part D
network pharmacies in which a pharmacy's reimbursement for a covered
Part D drug is adjusted after the point of sale based on the pharmacy's
performance on various measures defined by the sponsor or its PBM.
Furthermore, we understand that the share of pharmacies' reimbursements
that is contingent upon their performance under such arrangements has
also grown steadily each year. As a result, sponsors and PBMs have been
recouping increasing sums from network pharmacies after the point of
sale (pharmacy price concessions) for ``poor performance'' relative to
standards defined by the sponsor or PBM. These sums are far greater
than those paid to network pharmacies after the point of sale (pharmacy
incentive payments) for ``high performance.'' We refer to pharmacy
price concessions and incentive payments collectively as pharmacy
payment adjustments. These findings are largely based on the aggregate
pharmacy payment adjustment data submitted to CMS by Part D sponsors as
part of the annual required reporting of DIR, which show that
performance-based pharmacy price concessions, net of all pharmacy
incentive payments, increased most dramatically after 2012.
In order to address the effects of the DIR construct, as it relates
to pharmacy payment adjustments, on cost, competition, and efficiency
under Part D, in the Part C and Part D final rule that appeared in the
May 23, 2014 Federal Register (79 FR 29844), we amended the definition
of ``negotiated prices'' at Sec. 423.100 to require Part D sponsors to
include in the negotiated price at the point of sale all pharmacy price
concessions and incentive payments to pharmacies, with an exception,
which was intended to be narrow, allowed for contingent pharmacy
payment adjustments that cannot reasonably be determined at the point
of sale (the reasonably determined exception). However, when we
formulated these requirements in 2014, the most recent year for which
DIR data was available was 2012 and we did not anticipate the growth of
performance-based pharmacy payment arrangements that we have observed
in subsequent years. We now understand that the reasonably determined
exception we currently allow applies more broadly than we had initially
envisioned because of the shift by Part D sponsors and their PBMs
towards these types of contingent pharmacy payment arrangements, and,
as a result, this exception prevents the current policy from having the
intended effect on price transparency, consistency, and beneficiary
costs.
Specifically, we have heard from several stakeholders that have
suggested that the reasonably determined exception applies to all
performance-based pharmacy payment adjustments. The amount of these
adjustments, by definition, is contingent upon performance measured
over a period that extends beyond the point of sale and, thus, cannot
be known in full at the point of sale. Therefore, performance-based
pharmacy payment adjustments cannot ``reasonably be determined'' at the
point of sale as they cannot be known in full at the point of sale. We
initially proposed, in a September 29, 2014 memorandum entitled Direct
and Indirect Remuneration (DIR) and Pharmacy Price Concessions, that if
the amount of the post-point of sale pharmacy payment adjustment could
be reasonably approximated at the point of sale, the adjustment should
be reflected in the negotiated price, even if the actual amount of the
payment adjustment was subject to later reconciliation and thus not
known in full at the point of sale. However, we did not finalize that
interpretation because we determined that it was inconsistent with the
existing regulation given that it would have effectively eliminated the
reasonably determined exception from inclusion in the negotiated price
for all pharmacy price concessions, as we stated in our follow-up
memorandum of the same name released on November 5, 2014.
Given the predominance of performance-contingent pharmacy payment
arrangements, we do not believe that the existing requirement that
pharmacy price concessions be included in the negotiated price can be
implemented in a manner that achieves meaningful price transparency,
ensures that all pharmacy payment adjustments are taken into account
consistently by all Part D sponsors, and prevents the shifting of costs
onto beneficiaries and taxpayers. Therefore, we are soliciting comment
from stakeholders on how we might update the requirements governing the
determination of negotiated prices, to better reflect current pharmacy
payment arrangements, so as to ensure that the reported price at the
point of sale includes all pharmacy price concessions. In this section,
we put forth for consideration one potential approach for doing so and
seek comments on its merits, as well as the merits of any alternatives
that might better serve our goals of reducing beneficiary costs and
better aligning incentives for Part D sponsors with the interests of
beneficiaries and taxpayers. We encourage all commenters to provide
quantitative analytical support for their ideas wherever possible.
(1) All Pharmacy Price Concessions
We are considering revising the definition of negotiated price at
Sec. 423.100 to remove the reasonably determined exception and to
require that all price concessions from pharmacies be reflected in the
negotiated price that is made available at the point of sale and
reported to CMS on a PDE record, even when such concessions are
contingent upon performance by the pharmacy. We believe we have the
discretion to require that all pharmacy price concessions be applied at
the point of sale, and not just a share of the amounts as we discussed
earlier for manufacturer rebates. Such a requirement would preserve the
flexibilities provided under section 1860D-2(d)(1)(B) of the Act with
respect to the treatment of manufacturer rebates, while also allowing
for greater
[[Page 56427]]
transparency and consistency in the reporting of pharmacy price
concessions. First, section 1860D-2(d)(2) of the Act, which provides
the context critical to our interpretation that sponsors are granted
flexibility in how to apply manufacturer rebates, does not contemplate
price concessions from sources other than manufacturers, such as
pharmacies, being passed through in various ways. Second, even when all
price concessions from pharmacies are required to be applied at the
point of sale, sponsors would retain the flexibility to determine how
to apply manufacturer rebates and other price concessions received from
sources other than pharmacies in order to reduce costs under the plan.
Finally, we believe that requiring that all pharmacy price concessions
be applied at the point of sale would ensure that negotiated prices
``take into account'' at least some price concessions and, therefore,
would be consistent with the plain language of section 1860D-2(d)(1)(B)
of the Act. We are considering requiring all, and not only a share of,
pharmacy price concessions be included in the negotiated price in order
to maximize the level of price transparency and consistency in the
determination of negotiated prices and bids and meaningfully reduce the
shifting of costs from sponsors to beneficiaries and taxpayers.
(2) Lowest Possible Reimbursement
In order to effectively capture all pharmacy price concessions at
the point of sale consistently across sponsors, we are considering
requiring the negotiated price to reflect the lowest possible
reimbursement that a network pharmacy could receive from a particular
Part D sponsor for a covered Part D drug. Under this approach, the
price reported at the point of sale would need to include all price
concessions that could potentially flow from network pharmacies, as
well as any dispensing fees, but exclude any additional contingent
amounts that could flow to network pharmacies and increase prices over
the lowest reimbursement level, such as incentive fees. That is, if a
performance-based payment arrangement exists between a sponsor and a
network pharmacy, the point-of-sale price of a drug reported to CMS
would need to equal the final reimbursement that the network pharmacy
would receive for that prescription under the arrangement if the
pharmacy's performance score were the lowest possible. If a pharmacy is
ultimately paid an amount above the lowest possible contingent
incentive reimbursement (such as in situations where a pharmacy's
performance under a performance-based arrangement triggers a bonus
payment or a smaller penalty than that assessed for the lowest level of
performance), the difference between the negotiated price reported to
CMS on the PDE record and the final payment to the pharmacy would need
to be reported as negative DIR. For an illustration of how negotiated
prices would be reported under such an approach, see the example
provided later in this section.
We are interested in public comment on whether requiring the
negotiated price at the point of sale to reflect the lowest possible
pharmacy reimbursement would effectively address recent developments in
industry practices, that is, the growing prevalence of performance-
based pharmacy payment arrangements, and ensure that all pharmacy price
concessions are included in the negotiated price, and thus shared with
beneficiaries, in a consistent manner by all Part D sponsors. By
requiring that sponsors assume the lowest possible pharmacy performance
when reporting the negotiated price, we would be prescribing a
standardized way for Part D sponsors to treat the unknown (final
pharmacy performance) at the point of sale under a performance-based
payment arrangement, which many Part D sponsors and PBMs have
identified as the most substantial operational barrier to including
such concessions at the point of sale. We are also interested in public
comment on whether requiring the negotiated price to be the lowest
possible pharmacy reimbursement would serve to maximize the cost-
sharing savings accruing to beneficiaries by passing through all
potential pharmacy price concessions at the point of sale.
Further, we are interested in public comment on whether this
approach would be clearer for Part D sponsors to follow than the
requirements in place today, which require Part D sponsors to assess
which types of pharmacy payment adjustments fall under the reasonably
determined exception. We are interested in public comment on whether
providing such additional clarity and thus limiting the need for
interpretation of the requirements by Part D sponsors would improve
consistency in the application of the requirements regarding pharmacy
price concessions across sponsors, as well as reducing sponsor burden
in terms of the resources necessary to ensure compliance in the absence
of clear guidance. In addition, we welcome feedback on whether the
change we describe here would improve the quality of pricing
information available across Part D plans and thus improve market
competition and cost-efficiency under Part D.
Requiring the negotiated price to reflect the lowest possible
pharmacy reimbursement, would move the negotiated price closer to the
final reimbursement for most network pharmacies under current pharmacy
payment arrangements and thus closer to the actual cost of the drug for
the Part D sponsor. We are interested in public comment on whether such
an outcome would help us to achieve meaningful price transparency. We
have learned from the DIR data reported to CMS and feedback from
numerous stakeholders that pharmacies rarely receive an incentive
payment above the original reimbursement rate for a covered claim. We
gather that performance under most arrangements dictates only the
magnitude of the amount by which the original reimbursement is reduced,
and most pharmacies do not achieve performance scores high enough to
qualify for a substantial, if any, reduction in penalties. Therefore,
we seek comment on whether a requirement that the negotiated price
reflect the lowest possible reimbursement to a network pharmacy,
including all potential pharmacy price concessions, is likely to
capture the actual price of the drug at a network pharmacy, or at least
move closer to it.
Finally, we are considering requiring that all contingent incentive
payments be excluded from the negotiated price because including the
actual amount of any contingent incentive payments to pharmacies in the
negotiated price would make drug prices appear higher at a ``high
performing'' pharmacy, which receives an incentive payment, than at a
``poor performing'' pharmacy, which is assessed a penalty. This pricing
differential could potentially create a perverse incentive for
beneficiaries to choose a lower performing pharmacy for the advantage
of a lower price. We seek comment on whether such an approach would
prevent this unintended consequence and thus avoid reducing the
competitiveness of high performing pharmacies by increasing the
negotiated price charged to the beneficiary at those pharmacies.
(3) Lowest Possible Reimbursement Example
To illustrate how Part D sponsors and their intermediaries would
report costs under the approach we are considering, we provide the
following example: Suppose that under a performance-based payment
arrangement between a
[[Page 56428]]
Part D sponsor and its network pharmacy, the sponsor will: (1) Recoup 5
percent of its total Part D-related payments to the pharmacy at the end
of the contract year for the pharmacy's failure to meet performance
standards; (2) recoup no payments for average performance; or (3)
provide a bonus equal to 1 percent of total payments to the pharmacy
for high performance. For a drug that the sponsor has agreed to pay the
pharmacy $100 at the point of sale, the pharmacy's final reimbursement
under this arrangement would be: (1) $95 for poor performance; (2) $100
for average performance; or (3) $101 for high performance. However,
under all performance scenarios, the negotiated price reported to CMS
on the PDE at the point of sale for this drug would be $95, or the
lowest reimbursement possible under the arrangement. Thus, if a plan
enrollee were required to pay 25 percent coinsurance for this drug,
then the enrollee's costs under all scenarios would be 25 percent of
$95, or $23.75, which is less than the $25 the enrollee would pay today
(when the negotiated price is likely to be reported as $100). Any
difference between the reported negotiated price and the pharmacy's
final reimbursement for this drug would be reported as DIR at the end
of the coverage year. The sponsor would report $0 as DIR under the poor
performance scenario ($95 minus $95), - $5 as DIR under the average
performance scenario ($95 minus $100), and - $6 as DIR under the high
performance scenario ($95 minus $101), for every covered claim for this
drug purchased at this pharmacy.
(4) Additional Considerations
As with the policy approach that we described previously for moving
manufacturer rebates to the point of sale, we would leverage existing
reporting mechanisms to confirm that sponsors are appropriately
applying pharmacy price concessions at the point of sale, as we do with
other cost data required to be reported. Specifically, we would likely
use the estimated rebates at point-of-sale field on the PDE record to
also collect point-of-sale pharmacy price concessions information, and
fields on the Summary and Detailed DIR Reports to collect final
pharmacy price concession information at the plan and NDC levels.
Differences between the amounts applied at the point of sale and
amounts actually received, therefore, would become apparent when
comparing the data collected through those means at the end of the
coverage year.
Finally, as noted previously, the negotiated price is also the
basis by which manufacturer liability for discounts in the coverage gap
determined. Under section 1860D-14A(g)(6) of the Act, the definition of
negotiated price used for coverage gap discounts is based on the
regulatory definition of the negotiated price in the version of Sec.
423.100 that was in effect as of the passage of the PPACA. As discussed
previously, this definition of negotiated price only references the
price concessions that the Part D sponsor has elected to pass through
at the point of sale. As such, we are uncertain as to whether we would
have the authority to require sponsors include pharmacy price
concessions in the negotiated price for purposes of determining
manufacturer coverage gap discounts. We intend to consider this issue
further and will address it in any future rulemaking regarding the
requirements for determining the negotiated price that is available at
the point of sale.
(5) Impacts for Applying Pharmacy Price Concessions at the Point of
Sale
Requiring that all pharmacy price concessions that sponsors and
PBMs receive be used to lower the price at the point of sale, as we
described earlier, would affect beneficiary, government, and
manufacturer costs largely in the same manner as discussed previously
in regards to moving manufacturer rebates to the point of sale. The
difference is in the magnitude of the impacts given that sponsors and
PBMs receive significantly higher sums of manufacturer rebates than of
pharmacy price concessions. The following table summarizes the 10-year
impacts we have modeled for moving all pharmacy price concessions to
the point of sale: \54\
---------------------------------------------------------------------------
\54\ Assumptions: (1) For purposes of calculating impacts only,
we assume that pharmacy price concession will equal about 3 percent
of allowable Part D costs projected for each year modeled, and that
the concession amounts are perfectly substituted with the point-of-
sale discount in all phases of the Part D benefit, including the
coverage gap phase.
(2) Used 2016 distribution of costs by benefit phase to form
assumptions.
(3) Assumed no other behavioral changes by sponsors,
beneficiaries, or others.
Table 11--2019-2028 Point-of-Sale Pharmacy Price Concessions Impacts
----------------------------------------------------------------------------------------------------------------
Total Per member-per
(billions) month Percent change
----------------------------------------------------------------------------------------------------------------
Beneficiary Costs............................................... -$10.4 -$16.09 -1
Cost-Sharing................................................ -16.1 -24.89 -3
Premium..................................................... 5.7 8.79 2
Government Costs................................................ 16.6 25.65 1
Direct Subsidy.............................................. 33.5 51.89 13
Reinsurance................................................. -8.8 -13.74 -1
LI Cost-Sharing Subsidy..................................... -9.9 -15.23 -3
LI Premium Subsidy.......................................... 1.8 2.73 2
Manufacturer Gap Discount....................................... -5.0 -7.69 -3
----------------------------------------------------------------------------------------------------------------
Moreover, while not accounted for when modeling these impacts, we
seek comment on whether requiring that all pharmacy price concessions
be included in the negotiated price, as we have described, would also
lead to prices and Part D bids and premiums being more accurately
comparable and reflective of relative plan efficiencies, with no unfair
competitive advantage accruing to one sponsor over another based on a
technical difference in how costs are reported. We are further
interested in comments on whether this outcome could make the Part D
market more competitive and efficient.
B. Improving the CMS Customer Experience
1. Restoration of the Medicare Advantage Open Enrollment Period
(Sec. Sec. 422.60, 422.62, 422.68, 423.38 and 423.40)
Section 4001 of the Balanced Budget Act of 1997 (BBA), added
section
[[Page 56429]]
1851(e) of the Act establishing specific parameters in which elections
can be made and/or changed during open enrollment and disenrollment
periods under the Medicare Advantage (MA) program. In addition, section
1851(e)(6) of the Act permits MA organizations, at their discretion, to
choose not to accept enrollment requests during the open enrollment
period (that is, choose to be closed to accept enrollments for all or a
portion of the enrollment period). The Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) amended section
1851(e)(2) of the Act to further establish open enrollment periods
during which MA-eligible individuals were limited to a single election
to (that is, enroll, disenroll, or change MA plans) during such period.
From 2007 to 2010, the Act outlined an Open Enrollment Period
(OEP)--referred to hereafter as the ``old OEP''--which provided MA-
eligible individuals one opportunity to make an enrollment change
between January 1 and March 31. It permitted new enrollment into an MA
plan from Original Medicare, switches between MA plans, and
disenrollment from a MA plan to Original Medicare. During this old OEP,
individuals were not allowed to make changes to their Part D coverage.
Hence, an individual who had Part D coverage through a Medicare
Advantage Prescription Drug plan (MA-PD plan) could only use the old
OEP to switch to (1) another MA-PD plan; or (2) Original Medicare with
a Prescription Drug Plan (PDP). This old OEP did not permit someone
enrolled in either an MA-only plan or Original Medicare without a PDP
to enroll in Part D coverage through this enrollment opportunity. The
old OEP was codified at Sec. 422.62(a)(5) in 2005 (see 70 FR 4587).
In 2010, section 3204 of the Patient Protection and Affordable Care
Act modified section 1851(e)(2)(C) of the Act to no longer offer the
old OEP and instead provide a different enrollment period for MA
enrollees to leave the MA program and return to Original Medicare in
the first 45 days of the calendar year. The statute further permitted
individuals who utilized this disenrollment opportunity to enroll in a
Part D plan upon their return to Original Medicare. On April 15, 2011,
we amended Sec. 422.62(a)(5) and codified Sec. Sec. 422.62(a)(7) and
423.38(d) to conform with this statutory change and to establish the
current Medicare Advantage Disenrollment Period (MADP) with its
coordinating Part D enrollment period. These changes were effective for
the 2011 plan year (76 FR 21442 and43).
Section 17005 of the 21st Century Cures Act (the Cures Act)
modified section 1851(e)(2) of the Act to eliminate the MADP and to
establish, beginning in 2019, a new OEP--hereafter referred to as the
``new OEP''--to be held from January 1 to March 31 each year. Subject
to the MA plan being open to enrollees as provided under Sec.
422.60(a)(2), this new OEP allows individuals enrolled in an MA plan to
make a one-time election during the first 3 months of the calendar year
to switch MA plans or to disenroll from an MA plan and obtain coverage
through Original Medicare. In addition, this provision affords newly
MA-eligible individuals (those with Part A and Part B) who enroll in a
MA plan, the opportunity to also make a one-time election to change MA
plans or drop MA coverage and obtain Original Medicare. Newly eligible
MA individuals can only use this new OEP during the first 3 months in
which they have both Part A and Part B. Similar to the old OEP,
enrollments made using the new OEP are effective the first of the month
following the month in which the enrollment is made, as outlined in
Sec. 422.68(c). In addition, an MA organization has the option under
section 1851(e)(6) of the Act to voluntarily close one or more of its
MA plans to OEP enrollment requests. If an MA plan is closed for OEP
enrollments, then it is closed to all individuals in the entire plan
service area who are making OEP enrollment requests. All MA plans must
accept OEP disenrollment requests, regardless of whether or not it is
open for enrollment.
There are a few key differences between the old OEP and the new OEP
as authorized by the Cures Act. Unlike the old OEP, this new OEP
permits changes to Part D coverage for individuals who, prior to the
change in election during the new OEP, were enrolled in an MA plan. As
eligibility to use the new OEP is available only for MA enrollees, the
ability to make changes to Part D coverage is limited to any individual
who uses the OEP; however, the new OEP does not provide enrollment
rights to any individual who is not enrolled in an MA plan during the
applicable 3-month period. Individuals who use the new OEP to make
changes to their MA coverage may also enroll in or disenroll from Part
D coverage. For example, an individual enrolled in an MA-PD plan may
use the new OEP to switch to: (1) Another MA-PD plan; (2) an MA-only
plan; or (3) Original Medicare with or without a PDP. The new OEP would
also allow an individual enrolled in an MA-only plan to switch to--(1)
another MA-only plan; (2) an MA-PD plan; or (3) Original Medicare with
or without a PDP. However, this enrollment period does not allow for
Part D changes for individuals enrolled in Original Medicare, including
those with enrollment in stand-alone PDPs.
In addition, individuals with enrollment in Original Medicare or
other Medicare health plan types, such as cost plans, are not able use
the new OEP to enroll in an MA plan, regardless of whether or not they
have Part D. We note that the inability for an individual enrolled in
Original Medicare to use the new OEP is a significant difference from
the old OEP. Furthermore, and significantly different from the old OEP,
unsolicited marketing is prohibited by statute during this period.
To implement the changes required by the Cures Act, we propose the
following revisions:
Amend current Sec. 422.62(a)(5) and add Sec. Sec.
423.38(e) and 423.40(e) to establish the new OEP starting 2019 and the
corresponding limited Part D enrollment period.
Amend Sec. Sec. 422.62(a)(7), 422.68(f), 423.38(d) and
423.40(d) to end the MADP at the end of 2018.
Remove current regulations in Sec. 422.62(a)(3) and
(a)(4) that outline historical OEPs which have not been in existence
for more than a decade. As these past enrollment periods are no longer
relevant to the current enrollment periods available to MA-eligible
individuals, we are proposing to delete these paragraphs and renumber
the enrollment periods which follow them. As such, we propose that
Sec. 422.62 (a)(5) become Sec. 422.62 (a)(3), and both Sec. Sec.
422.62 (a)(6) and (a)(7) be renumbered as Sec. Sec. 422.62(a)(4) and
(a)(5), respectively.
Amend new redesignated paragraph (a)(4) (proposed to be
redesignated from (a)(6)) to make two technical changes to replace the
phrase ``as defined by CMS'' with ``as defined in Sec. 422.2'' and to
capitalize ``original Medicare.''
As noted previously, and discussed in section III.C.7,
Sec. Sec. 422.2268 and 423.2268 would be revised to prohibit marketing
to MA enrollees during the OEP.
Conforming technical edits to update cross references in
Sec. Sec. 422.60(a)(2), 422.62(a)(5)(iii), and 422.68(c).
2. Reducing the Burden of the Compliance Program Training Requirements
(Sec. Sec. 422.503 and 423.504)
Sections 1857(e) and 1860D-12(b)(3)(D) of the Act specify that
contracts with MA organizations and
[[Page 56430]]
Part D sponsors shall contain other terms and conditions that the
Secretary may find necessary and appropriate. We have previously
established that all Part C and Part D contracting organizations must
have the necessary administrative and management arrangements to have
an effective compliance program, as reflected in Sec.
422.503(b)(4)(vi) and Sec. 423.504(b)(4)(vi). Effective compliance
programs are those designed and implemented to prevent, detect and
correct Medicare non-compliance, fraud waste and abuse and address
improper conduct in a timely and well-documented manner. Medicare non-
compliance may include inaccurate and untimely payment or delivery of
items or medical services, complaints from providers and enrollees,
illegal activities and unethical behavior. While there is no ``one-size
fits all'' program for every contracting organization, there are seven
core elements that must exist to have an effective compliance program
that is tailored to the organization's unique operations, compliance
risks, resources and circumstances. These 7 core elements are codified
in current regulations at Sec. Sec. 422.503(b)(4)(vi)(A) through (G)
and 423.504(b)(4)(vi)(A) through (G). One of the 7 core elements is
training and education. Compliance programs for Part C and Part D
organizations must include training and education between the
compliance officer and the sponsoring organization's employees, senior
administrators, governing body members as well as their first-tier,
downstream and related entities (FDRs).
FDRs have long complained of the burden of having to complete
multiple sponsoring organizations' compliance trainings and the amount
of time it can take away from providing care to beneficiaries. We
attempted to resolve this burden by developing our own web-based
standardized compliance program training modules and establishing, in a
May 23, 2014 final rule (79 FR 29853 and 29855), which was effective
January 1, 2016, that FDRs were required to complete the CMS training
to satisfy the compliance training requirement. The mandatory use of
the CMS training by FDRs was a means to ensure that FDRs would only
have to complete the compliance training once on an annual basis. The
FDRs could then provide the certificate of completion to all Part C and
Part D contracting organizations they served, hence, eliminating the
prior duplication of effort that so many FDRs stated was creating a
huge burden on their operation.
However, CMS continues to receive hundreds of inquiries and
concerns from sponsors and FDRs regarding their difficulties with
adopting CMS' compliance training to satisfy the compliance program
training requirement. While CMS' previous market research indicated
that this provision would mitigate the problems raised by FDRs who held
contracts with multiple sponsors and who completed repetitive trainings
for each sponsor with which they contract, in practice, we learned that
the problems persisted. Many sponsors are unwilling to accept
completion of the CMS training as fulfillment of the training
requirement and identify which critical positions within the FDR are
subject to the training requirement. As a result, FDRs are still being
subjected to multiple sponsors' specific training programs. FDRs have
the additional burden of taking CMS training and reporting completion
back to the sponsor or sponsors with which they contract. Furthermore,
the industry has indicated that the requirement has increased the
burden for various Part C and Part D program stakeholders, including
hospitals, suppliers, health care providers, pharmacists and
physicians, all of which may be considered FDRs. Since the
implementation of the mandatory CMS-developed training has not achieved
the intended efficiencies in the administration of the Part C and Part
D programs, we propose to delete the provisions from the Part C and
Part D regulations that require use of the CMS-developed training.
Additionally we propose to restructure Sec. 422.503(b)(4)(vi)(C)(1)
(with the proposed revisions) into two paragraphs (that is, paragraph
(C)(1) and (C)(2)) to separate the scope of the compliance training
from the frequency with which the training must occur, as these are two
distinct requirements. With this proposed revision, the organization of
Sec. 422.503(b)(4)(vi)(C) will mirror that of Sec.
423.504(b)(4)(vi)(C). Further, we propose to revise the text in Sec.
423.504(b)(4)(vi)(C)(2) to track the phrasing in Sec.
422.503(b)(4)(vi)(C)(2), as reorganized. The technical changes in the
text eliminate any potential ambiguity created by different phrasing in
what we intend to be identical requirements as to the timing
requirements for the training. We believe these technical changes make
the requirements easier to understand.
Furthermore, we believe that the broader requirement that plan
sponsors provide compliance training to their FDRs no longer promotes
the effective and efficient administration of the Medicare Advantage
and Prescription Drug programs. Part C and Part D sponsoring
organizations have evolved greatly and their compliance program
operations and systems are well established. Many of these
organizations have developed effective training and learning models to
communicate compliance expectations and ensure that employees and FDRs
are aware of the Medicare program requirements. Also, the attention
focused on compliance program effectiveness by CMS' Part C and Part D
program audits has further encouraged sponsors to continually improve
their compliance operations.
CMS does not generally interfere in private contractual matters
between sponsoring organizations and their FDRs. Our contract is with
the sponsoring organization, and sponsoring organizations are
ultimately responsible for compliance with all applicable statutes,
regulations and sub-regulatory guidance, regardless who is performing
the work. Additionally, delegated entities range in size, structure,
risks, staffing, functions, and contractual arrangements which
necessitates the sponsoring organization have discretion in its method
of oversight to ensure compliance with program requirements. This may
be accomplished through routine monitoring and implementing corrective
action, which may include training or retraining as appropriate, when
non-compliance or misconduct is identified.
We will continue to hold MA organizations and Part D sponsors
accountable for the failures of their FDRs to comply with Medicare
program requirements, even with these proposed changes. Existing
regulations at Sec. 422.503(b)(4)(vi) and Sec. 423.504(b)(4)(vi)
require that every sponsor's contract must specify that FDRs must
comply with all applicable federal laws, regulations and CMS
instructions. Additionally, we audit sponsors' compliance programs when
we conduct routine program audits, and our audit process includes
evaluations of sponsoring organizations' monitoring and auditing of
their FDRs as well as FDR oversight. Our audits also evaluate formulary
administration and processing of coverage and appeal requests in the
Part C and Part D programs. FDRs often perform some or all of these
functions for sponsors, so if they are non-compliant, it will come to
light during the program audit and the sponsoring organization is
ultimately held responsible for the FDRs' failure to comply with
program requirements.
Given that compliance programs are very well established and have
grown more sophisticated since their inception, coupled with the
industry's desire to perform well on audit, the
[[Page 56431]]
CMS training requirement is not the driver of performance improvement
or FDR compliance with key CMS requirements. Given this accumulated
program experience and the growing sophistication of the industry's
compliance operations, as well as our continuing requirements on
sponsors for oversight and monitoring of FDRs, we are proposing to
delete not just the regulatory provision requiring acceptance of CMS'
training as meeting the compliance training requirements, but also the
reference to FDRs in the compliance training requirements codified at
Sec. Sec. 422.503(b)(4)(vi)(C) and 423.504(b)(4)(vi)(C). Specifically,
we propose to remove the phrases in paragraphs (C)(1) and (C)(2) that
refer to first tier, downstream and related entities and remove the
paragraphs specific to FDR training at Sec. Sec.
422.503(b)(4)(vi)(C)(2) and (3) and 423.504(b)(4)(vi)(C)(3) and (4); we
are also proposing technical revisions to restructure Sec.
422.503(b)(4)(vi)(C)(1) into two paragraphs and ensure that the
remaining text is grammatically correct and consistent with Office of
the Federal Register style. Compliance training would still be required
of MA and Part D sponsors, their employees, chief executives or senior
administrators, managers, and governing body members. This change will
allow sponsoring organizations, and the FDRs with which they contract,
the maximum flexibility in developing and meeting training requirements
associated with effective compliance programs. We invite comments
concerning this proposal and suggestions on other options we can
implement to accomplish the desired outcome.
3. Medicare Advantage Plan Minimum Enrollment Waiver (Sec. 422.514(b))
Under section 1857(b) of the Act, CMS may not enter into a contract
with a MA organization unless the organization complies with the
minimum enrollment requirement. Under the basic rule at Sec.
422.514(a), to provide health care benefits under the MA program, MA
organizations must demonstrate that they have the capability to enroll
at least 5,000 individuals, and provider sponsored organizations (PSOs)
must demonstrate that they have the capability to enroll at least 1,500
individuals. If an MA organization intends to offer health care
benefits outside urbanized areas as defined in Sec. 422.62(f), then
the minimum enrollment level is reduced to 1,500 for MA organizations
and to 500 for PSOs. The statute permits CMS to waive this requirement
in the first 3 years of the contract for an MA contract applicant. We
have codified this authority at Sec. 422.514(b) and limited it to
circumstances where the MA contract applicant is capable of
administering and managing an MA contract and is able to manage the
level of risk required under the contract. We are proposing to revise
Sec. 422.514 regarding the minimum enrollment requirements to improve
program efficiencies.
Currently, MA organizations, including PSOs, with an approved
minimum enrollment waiver for their first contract year have the option
to resubmit the waiver request for CMS in the second and third year of
the contract. In conjunction with the waiver request, the MA
organization must continue to demonstrate the organization's ability to
operate and demonstrate that it has and uses an effective marketing and
enrollment system, despite continued failure to meet the minimum
enrollment requirement. In addition, the current regulation limits our
authority to grant the waiver in the third year to situations where the
MA organization has at least attained a projected number of enrollees
in the second year. Since 2012, we have not received any waiver to the
minimum enrollment requirement during the second and third year of the
contract. Rather, we only received minimum enrollment waiver requests
through the initial application process.
We believe the current requirement to resubmit the waiver in the
second and third year of the contract is unnecessary. The statute does
not require a reevaluation of the minimum enrollment standard each year
and plainly authorizes a waiver ``during the first 3 contract years
with respect to an organization.'' The current minimum enrollment
waiver review in the initial MA contract application provides CMS the
confidence to determine whether an MA organization may operate for the
first 3 years of the contract without meeting the minimum enrollment
requirement. CMS currently monitors low enrollment at the plan benefit
package (PBP) level. We note that a similar provision in current Sec.
422.506(b)(1)(iv) permits CMS to terminate an MA contract (or terminate
a specific plan benefit package) if the MA plan fails to maintain a
sufficient number of enrollees to establish that it is a viable
independent plan option for existing or new enrollees. In addition,
compliance with Sec. 422.514 is required under Sec. 422.503(a)(13).
If an organization's PBP does not achieve and maintain enrollment
levels in accordance with the applicable low and minimum enrollment
policies in existing regulations, CMS may move to terminate the PBP
absent an approved waiver from CMS during the first 3 years of the
contract pursuant to Sec. 422.510(a).
Under our proposal, we would only review and approve waivers
through the MA application process as opposed to the current practice
of reviewing annual requests and, potentially, requests from existing
MA organizations that fail to maintain enrollment in the second or
third year of operation.
We are proposing to revise the text in Sec. 422.514(b) to provide
that the waiver of the minimum enrollment requirement may be in effect
for the first 3 years of the contract. Further, we are proposing to
delete all references to ``MA organizations'' in paragraph (b) to
reflect our proposal that we would only review and approve waiver
requests during the contract application process. We also propose to
delete current paragraphs (b)(2) and (b)(3) in their entirety to remove
the requirement for MA organizations to submit an additional minimum
enrollment waiver annually for the second and third years of the
contract. Finally, the proposed text also includes technical changes to
redesignate paragraphs (b)(1)(i) through (iii) as (b)(1) through (3),
consistent with regulation style requirements of the Office of the
Federal Register.
4. Revisions to Timing and Method of Disclosure Requirements
(Sec. Sec. 422.111 and 423.128)
As provided in sections 1852(c)(1) and 1860D-4(a)(1)(A) of the Act,
Medicare Advantage (MA) organizations and Part D sponsors must disclose
detailed information about the plans they offer to their enrollees ``at
the time of enrollment and at least annually thereafter.'' This
detailed information is specified in section 1852(c)(1) of the Act,
with additional information specific to the Part D benefit also
required under section 1860D-4(a)(1)(B) of the Act. Under Sec.
422.111(a)(3), CMS requires MA plans to disclose this information to
each enrollee ``at the time of enrollment and at least annually
thereafter, 15 days before the annual coordinated election period.'' A
similar rule for Part D sponsors is found at Sec. 423.128(a)(3).
Additionally, Sec. 417.427 directs 1876 cost plans to follow the
disclosure requirements in Sec. 422.111 and Sec. 423.128. In making
the changes proposed here, we will also affect 1876 cost plans, though
it is not necessary to change the regulatory text at Sec. 417.427.
Sections 422.111(b) and 423.128(b) of the Part C and Part D program
regulations, respectively, describe the information plans must
disclose. The content listed in Sec. 422.111(b) is found in
[[Page 56432]]
an MA plan's Evidence of Coverage (EOC) and provider directory. The
content listed in Sec. 423.128(b) is found in a Part D Sponsor's EOC,
formulary, and pharmacy directory. Section 422.111(h)(2)(i) requires
that plans must maintain an internet Web site that contains the
information listed in Sec. 422.111(b) and also states that posting the
EOC, Summary of Benefits, and provider network information on the
plan's Web site ``does not relieve the MA organization of its
responsibility under Sec. 422.111(a) to provide hard copies to
enrollees.''
We propose two changes to the disclosure requirements. First, we
propose to revise Sec. Sec. 422.111(a)(3) and 423.128(a)(3) to require
MA plans and Part D Sponsors to provide the information in paragraph
(b) of the respective regulations by the first day of the annual
enrollment period, rather than 15 days before. In addition, we propose
to modify the sentence in Sec. 422.111(h)(2)(ii) which states that
posting the EOC, Summary of Benefits, and provider network information
on the plan's Web site does not relieve the plan of responsibility to
provide hard copies to enrollees. We propose to revise the sentence
slightly and add ``upon request'' to the existing regulatory language
to make it clear when any document that is required to be delivered
under paragraph (a) in a manner that includes provision of a hard copy
upon request, posting the document on the Web site (whether that
document is the EOC, SB, directory information or other materials) does
not relieve the MA organizations of a responsibility to deliver hard
copies upon request. We intend these proposals to provide CMS with the
flexibility to permit delivery other than through mailing hard copies
(which is the requirement today for all materials and information
covered by Sec. 422.111(a)), including through electronic delivery or
posting on the Web site in conjunction with delivery of a hard copy
notice describing how the information and materials are available. We
believe this proposal will ultimately provide additional flexibility to
plans to take advantage of technological developments and reduce the
amount of mail enrollees receive from plans.
Prior to the 2009 contract year, Sec. Sec. 422.111(a) and
423.128(a) required the provision of the materials in their respective
paragraphs (b) at the time of enrollment and at least annually
thereafter, but did not specify a deadline. In the September 18, 2008,
final rule, CMS required MA organizations to send this material to
current enrollees 15 days before the annual coordinated election period
(AEP) (73 FR 54216). The rationale for this requirement was to provide
beneficiaries with comprehensive information prior to the AEP so that
they could make informed enrollment decisions.
However, we have found through consumer testing that the large size
of these mailings overwhelmed enrollees. In particular, the EOC is a
long document that enrollees found difficult to navigate. Enrollees
were more likely to review the Annual Notice of Change (ANOC), a
shorter document summarizing any changes to plan benefits beginning on
January 1 of the upcoming year, if it was separate from the EOC.
Sections 422.111(d) and 423.128(g)(2) require MA organizations and Part
D sponsors to provide the ANOC to all enrollees at least 15 days before
the AEP.
The ANOC is intended to convey all of the information essential to
an enrollee's decision to remain enrolled in the same plan for the
following year or choose another plan during the AEP. CMS's research
and experience have indicated that the ANOC is particularly useful to
and used by enrollees. Therefore, we are not proposing to change the
Sec. Sec. 422.111(d) and 423.128(g) requirements that the ANOC be
received 15 days prior to AEP.
Unlike the ANOC, the EOC is a document akin to a contract that
provides enrollees with exhaustive information about their medical
coverage and rights and responsibilities as members of a plan. The
provider directory, pharmacy directory, and formulary also contain
information necessary to access care and benefits. As such, CMS
requires MA organizations and Part D sponsors to make these documents
available at the start of the AEP, so CMS proposes to amend Sec. Sec.
422.111(a)(3) and 423.128(a)(3) to remove the current deadline and
insert ``by the first day of the annual coordinated election period.''
To the extent that enrollees find the EOC, provider directory, pharmacy
directory, and formulary useful in making informed enrollment
decisions, CMS believes that receipt of these documents by the first
day of the AEP is sufficient. Any changes in the plan rules reflected
in these documents for the next year should be adequately described in
the ANOC, which will be provided earlier.
This change would also provide an additional 2 weeks for MA
organizations and Part D plan sponsors to prepare, review, and ensure
the accuracy of the EOC, provider directory, pharmacy directory, and
formulary documents. CMS considers the additional time for the EOC
important due to the high number errors plans self-identify in the
document through errata sheets they submit to CMS and mail to
beneficiaries. In 2017, plans submitted 166 ANOC/EOC errata, which
identified 221 ANOC errors and 553 EOC errors. Additional time to
produce the EOC will give plans more time to conduct quality assurance
and improve accuracy and result in fewer errata sheets in the future.
In addition to the proposed changes in Sec. Sec. 422.111(a)(3) and
423.128(a)(3), we also propose to give plans more flexibility to
provide the materials specified in Sec. 422.111(b) electronically. The
language in Sec. 422.111(h)(2)(ii) requiring hard copies of the
specified documents first appeared in the January 28, 2005, final rule
(70 FR 4587) in Sec. 422.111(f)(12). At that time, MA plans were not
required to maintain a Web site, but if they chose to they were
required to include the EOC, Summary of Benefits, and provider network
information on the Web site. However, plans were prohibited from
posting these documents online as a substitute for providing hard
copies to enrollees. A subsequent final rule, published April 15, 2011,
established that MA plans are required to maintain an internet Web site
at Sec. 422.111(h)(2) and moved the requirement that posting documents
on the plan Web site did not substitute for hard copies from Sec.
422.111(f)(12) to Sec. 422.111(h)(2)(ii) (76 FR 21502).
There is no parallel to Sec. 422.111(h)(2)(ii) in Sec. 423.128.
Instead, Sec. 423.128(a) states that Part D sponsors must disclose the
information in paragraph (b) in the manner specified by CMS. Section
423.128(d)(2)(i) requires Part D sponsors to maintain an internet Web
site that includes information listed in Sec. 423.128(b). CMS sub-
regulatory guidance has instructed plans to provide the EOC in hard
copy, but we believe that the regulatory text would permit delivery by
notifying enrollees of the internet posting of the documents, subject
to the right to request hard copies.\55\ As explained previously
regarding the changes to Sec. 422.111, we intend for plans to have the
flexibility to provide documents such as the Summary of Benefits, the
EOC, and the provider network information in electronic format. We
intend to change the relevant sub-regulatory guidance to coincide with
this as well.
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\55\ Medicare Marketing Guidelines, section 60.6, issued July
20, 2017, https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY-2018-Medicare-Marketing-Guidelines_Final072017.pdf.
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In the preamble to the 2005 final rule, we noted that the
prohibition on
[[Page 56433]]
substituting electronic posting on the MA plan's internet site for
delivery of hardcopy documents was in response to comments recommending
this change (70 FR 4623). At the time, we did not think enough Medicare
beneficiaries used the internet to permit posting the documents online
in place of mailing them.
In the 12 years since the rule was finalized, research indicates
that internet use has increased significantly among Medicare
beneficiaries. Drawing on nationally representative surveys, the Pew
Research Center found that 67 percent of American adults age 65 and
older use the internet. Half of seniors have broadband available at
home. Internet use increases even more among seniors age 65-69, of
which 82 percent use the internet and 66 percent have broadband at
home.\56\ Electronic documents include advantages such as word search
tools, the ability to magnify text, screen reader capabilities, and
bookmarks or embedded links, all of which make documents easier to
navigate. Given that the younger range of Medicare beneficiaries have a
higher rate of internet access, we believe the number of beneficiaries
who ``use the internet'' will only continue to grow with time. Posted
electronic documents can also be accessed from anywhere the internet is
available.
---------------------------------------------------------------------------
\56\ Pew Research Center, May 2017, ``Tech Adoption Climbs Among
Older Adults'', https://www.pewinternet.org/2017/05/17/tech-adoption-climbs-among-older-adults/.
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As mentioned previously, the EOC sometimes contains errors. To
correct these, MA and Part D plans currently have to mail errata sheets
and post an updated version online. The hardcopy version of the EOC is
then out-of-date. Beneficiaries either have to refer to errata sheets
in addition to the hardcopy EOC or go online to access a corrected EOC.
Increasing beneficiary use of the electronic EOC ensures that
beneficiaries are using the most accurate information. Under this
proposal to permit flexibility for us to approve non-hard-copy delivery
in some cases, we intend to continue requiring hardcopy mailings of any
ANOC or EOC errata.
Plans have also continued to request CMS give plans the flexibility
to provide the EOC electronically. They have frequently cited the
expense of printing and mailing large documents. Medicaid managed care
plans already have the flexibility to provide directories, formularies,
and member handbooks (similar to the EOC) electronically, per
Sec. Sec. 438.10(h)(1), 438.10(h)4)(i), and 438.10(g)(3) respectively.
To begin addressing this, in the Medicare Marketing Guidelines
released July 2, 2015, CMS notified plans that they could mail either a
hardcopy provider and/or pharmacy directory or a hardcopy notice to
enrollees instructing them where to find the directories online and how
to request a hard copy. That guidance has been moved to Chapter 4,
section 110.2.3, of the Medicare Managed Care Manual. If plans choose
to mail a notice with the location of the online directory rather than
a hard copy, the notice must include: A direct link to the online
directory, the customer service number to call and request a hard copy,
and if available the email address to request a hard copy. The notice
must be distinct, separate, and mailed with the ANOC/EOC.\57\ Section
60.4 of the Medicare Marketing Guidelines released July 20, 2017,
extends the same flexibility to formularies, with the same required
content in the notice identifying the location of the online formulary.
As CMS has received few complaints from any source about this new
process, allowing plans the option to use a similar strategy for
additional materials is appropriate.
---------------------------------------------------------------------------
\57\ Medicare Managed Care Manual Chapter 4--Benefits and
Beneficiary Protections, Rev. 121, issued April 22, 2016, https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c04.pdf.
---------------------------------------------------------------------------
Upon finalizing this rule, we would issue sub-regulatory guidance
to identify permissible manners of disclosure; we expect that guidance
would be similar to the current guidance for the provider directory,
pharmacy directory, and formulary regarding dissemination of the EOC.
Importantly, this provision does not eliminate the requirement for
plans to provide accessible formats of required documents. As
recipients of federal funding, plans are obligated to provide materials
in accessible formats upon request, at no cost to the individual, to
individuals with disabilities, under Section 504 of the Rehabilitation
Act of 1973 and to take reasonable steps to provide meaningful access,
including translation services, to individuals who have limited English
proficiency under Title VI of the Civil Rights Act of 1964.
To create this flexibility, CMS proposes modifying the sentence,
``Such posting does not relieve the MA organization of its
responsibility under Sec. 422.111(a) to provide hard copies to
enrollees,'' to include ``upon request'' in Sec. 422.111(h)(2)(ii) and
to revise Sec. 422.111(a) by inserting ``in the manner specified by
CMS.'' These changes will align Sec. Sec. 422.111(a) and 423.128(a) to
authorize CMS to provide flexibility to MA plans and Part D sponsors to
use technology to provide beneficiaries with information. CMS intends
to use this flexibility to provide sponsoring organizations with the
ability to electronically deliver plan documents (for example, the
Summary of Benefits) to enrollees while maintaining the protection of a
hard copy for any enrollee who requests such hard copy. As the current
version of Sec. 422.111(a) and (h)(2) require hard copies, we believe
this proposal will ultimately result in reducing burden and providing
more flexibility for sponsoring organizations.
5. Revisions to Sec. Sec. 422 and 423 Subpart V, Communication/
Marketing Materials and Activities
Section 1851(h) of the Act prohibits Medicare Advantage (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. Further, in section 1851(j), the Secretary is authorized
to adopt standards regarding marketing activities, and the statute
identifies certain prohibited activities. 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 umbrella
term ``marketing.'' Sections 1806D-1(d)(3)(B)(iv) and 1860D-4(l) of the
Act provide similar restrictions on use of marketing and enrollment
materials and activities to promote enrollment in Part D plans.
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 plan 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. As delegated this
authority by the Secretary, CMS reviews all such material submitted and
disapproves such material upon determination that the material is
materially inaccurate or misleading or otherwise makes a material
misrepresentation. Similar to 1851(h) of the Act, section 1876(c)(3)(C)
of the Act focuses more on the review and approval of materials as
opposed to providing an exhaustive list of materials that would qualify
as marketing or promotional information and materials.
[[Page 56434]]
As part of the implementation of section 1876(c)(3)(C) of the Act, the
regulation governing cost plans at Sec. 417.428(a) refers to Subpart V
of part 422 for marketing guidance. Throughout this proposal, the
changes discussed for MA organizations/MA plans and prescription drug
plan (PDP) sponsors/Part D plans applies as well to cost plans subject
to the same requirements as a result of this cross-reference.
Section 422.2260(1)-(4) of the Part C program regulations currently
identifies marketing materials as any materials that: (1) Promote the
MA organization, or any MA plan offered by the MA organization; (2)
inform Medicare beneficiaries that they may enroll, or remain enrolled
in, an MA plan offered by the MA organization; (3) explain the benefits
of enrollment in an MA plan, or rules that apply to enrollees; and (4)
explain how Medicare services are covered under an MA plan, including
conditions that apply to such coverage. Section 423.2260(1)-(4) applies
identical regulatory provisions to the Part D program.
Sections 422.2260(5) and 423.2260(5) provide specific examples of
materials under the ``marketing materials'' definition, which include:
General audience materials such as general circulation brochures,
newspapers, magazines, television, radio, billboards, yellow pages, or
the internet; marketing representative materials such as scripts or
outlines for telemarketing or other presentations; presentation
materials such as slides and charts; promotional materials such as
brochures or leaflets, including materials for circulation by third
parties (for example, physicians or other providers); membership
communication materials such as membership rules, subscriber
agreements, member handbooks and wallet card instructions to enrollees;
letters to members about contractual changes; changes in providers,
premiums, benefits, plan procedures etc.; and membership activities
(for example, materials on rules involving non-payment of premiums,
confirmation of enrollment or disenrollment, or no claim specific
notification information). Finally, Sec. Sec. 422.2260(6) and
423.2260(6) provide a list of materials that are not considered
marketing materials, including materials that are targeted to current
enrollees; are customized or limited to a subset of enrollees or apply
to a specific situation; do not include information about the plan's
benefit structure; and apply to a specific situation or cover claims
processing or other operational issues.
We are proposing several changes to Subpart V of the part 422 and
423 regulations. To better outline these proposed changes, they are
addressed in four areas of focus: (1) Including ``communication
requirements'' in the scope of Subpart V or parts 422 and 423, which
will include new definitions for ``communications'' and ``communication
materials;'' (2) amending Sec. Sec. 422.2260 and 423.2260 to add (at a
new paragraph (b)) a definition of ``marketing'' in place of the
current definition of ``marketing materials'' and to provide lists
identifying marketing materials and non-marketing materials; (3) adding
new regulation text to prohibit marketing during the Open Enrollment
Period proposed in section III.B.1 of this proposed rule; (4) technical
changes to other regulatory provisions as a result of the changes to
Subpart V. To the extent necessary, CMS relies on its authority to add
regulatory and contract requirements to the cost plan, MA, and Part D
programs to propose and (ultimately) adopt these changes. We note as
well that sections 1851(h) and (j) of the Act (cross-referenced in
sections 1860D-1 and 1860D-4(l)) of the Act address activities and
direct that the Secretary adopt standards limiting marketing
activities, which CMS interprets as permitting regulation of
communications about the plan that do not rise to the level of
activities and materials that specifically promote enrollment.
a. Revising the Scope of Subpart V To Include Communications and
Communications Materials
The current version of Subpart V of parts 422 and 423 regulation
focuses on marketing materials, as opposed to other materials currently
referred to as ``non-marketing'' in the sub-regulatory Medicare
Marketing Guidelines. This leaves a regulatory void for the
requirements that pertain to those materials that are not considered
marketing. Historically, the impact of not having regulatory guidance
for materials other than marketing has been muted because the current
regulatory definition of marketing is so broad, resulting in most
materials falling under the definition. The overall effect of this
combination--no definition of materials other than marketing and a
broad marketing definition--is that marketing and communications with
enrollees became synonymous.
With this CMS proposal to narrow the marketing definition, we
believe there is a need to continue to apply the current standards to
and develop guidance for those materials that fall outside of the
proposed definition. We propose changing the title of each Subpart V by
replacing the term ``Marketing'' with ``Communication.'' We propose to
define in Sec. Sec. 422.2260(a) and 423.2260(a) definitions of
``communications'' (activities and use of materials to provide
information to current and prospective enrollees) and ``communications
materials'' (materials that include all information provided to current
members and prospective beneficiaries). We propose that marketing
materials (discussed later in this section) would be a subset of
communications materials. In many ways, the proposed definition of
communications materials is similar to the current definition of
marketing materials; the proposed definition has a broad scope and
would include both mandatory disclosures that are primarily informative
and materials that are primarily geared to encourage enrollment.
CMS also proposes, through revisions to Sec. Sec. 422.2268 and
423.2268, to apply some of the current standards and prohibitions
related to marketing to all communications and to apply others only to
marketing. Marketing and marketing materials would be subject to the
more stringent requirements, including the need for submission to and
review by CMS. Under this proposal, those materials that are not
considered marketing, per the proposed definition of marketing, would
fall under the less stringent communication requirements.
In addition to these proposals related to defined terms and
revising the scope of Subparts V in parts 422 and 423, we are proposing
changes to the current regulations at Sec. Sec. 422.2264 and 423.2264
and Sec. Sec. 422.2268 and 423.2268 that are related to our proposal
to distinguish between marketing and communications.
With regard to Sec. Sec. 422.2264 and 423.2264, we are proposing
the following changes:
Deletion of paragraph (a)(3), which currently provides for
an adequate written explanation of the grievance and appeals process to
be provided as part of marketing materials. In our view grievance and
appeals communications would not be within the scope of marketing as
proposed in this rule.
Deletion of paragraph (a)(4), which provides for CMS to
determine that marketing materials include any other information
necessary to enable beneficiaries to make an informed decision about
enrollment. The intent of this section was to ensure that materials
which include measuring or ranking mechanisms such as Star Ratings were
a part of CMS's marketing review. We
[[Page 56435]]
propose deleting this section as the exclusion list to be codified at
Sec. 422.2260(c)(2)(ii) ensures materials that include measuring or
ranking standards will be considered marketing, thus making Sec. Sec.
422.2264(a)(4) and Sec. 423.2264(a)(4) duplicative.
Deletion of paragraph (e), which requires sponsoring
organizations to provide translated materials in certain areas where
there is a significant non-English speaking population. We propose to
recodify these requirement as a general communication standard in
Sec. Sec. 422.2268 and 423.2268, at new paragraph (a)(7). As part of
the redesignation of this requirement as a standard applicable to all
communications and communication materials, we are also proposing
revisions. First, we are proposing to revise the text so that it is
stated as a prohibition on sponsoring organizations: For markets with a
significant non-English speaking population, provide materials, as
defined by CMS, unless in the language of these individuals. We propose
adding the statement of ``as defined by CMS'' to the first sentence to
allow the agency the ability to define the significant materials that
would require translation. We propose deleting the word ``marketing''
so the second sentence now reads as ``materials'', to make it clear
that the updated section applies to the broader term of communications
rather than the more narrow term of marketing.
In addition, we are proposing to revise Sec. Sec. 422.2262(d) and
423.2262(d) to delete the term ``ad hoc'' from the heading and
regulation text in favor of referring to ``communication materials'' to
conform to the addition of communication materials under Subpart V.
Current regulations at Sec. Sec. 422.2268 and 423.2268 list
prohibited marketing activities. These activities include items such as
providing meals to potential enrollees, soliciting door to door, and
marketing in provider settings. With the proposal to distinguish
between overall communications and marketing activities, we are
proposing to break out the prohibitions into categories: those
applicable to all communications (activities and materials) and those
that are specific to marketing and marketing materials. In reviewing
the various standards under the current regulations to determine if
they would apply to communications or marketing, we looked at the each
standard as it applied to the new definitions under Subpart V.
Prohibitions that offer broader beneficiary protections and are
currently applicable to a wide variety of materials are proposed here
to apply to communications activities and communication materials; this
list of prohibitions is proposed as paragraph (a) Conversely,
prohibitions that are currently targeted to activities and materials
that are within the narrower scope of marketing and marketing materials
are proposed at paragraph (b) as prohibitions on marketing. We are not
proposing to expand the list of prohibitions but are proposing to
notate which prohibitions are applicable to which category. The only
substantive change is in connection with paragraph (a)(7), which we
discuss earlier in this section. We welcome comment on our proposed
distinctions between these types of prohibitions and whether certain
standards or prohibitions from current Sec. Sec. 422.2268 and 423.2268
should apply more narrowly or broadly than we have proposed.
b. Amending the Regulatory Definition of Marketing and Marketing
Materials
In conjunction with adding new proposed communication requirements,
we also propose a definition of ``marketing'' be codified in Sec. Sec.
422.2260(b) and 423.2260(b). Under this proposal, we would delete the
current text in that section defining only ``marketing materials'' to
add a new definition of ``marketing'' and lists of materials that are
``marketing materials'' and that are not. Specifically, the term
``marketing'' would be defined as the use of materials or activities by
the sponsoring organization (that is, the MA organization, Part D
Sponsor, or cost plan, depending on the specific part) or downstream
entities that are intended to draw a beneficiary's attention to the
plan or plans and influence a beneficiary's decision making process
when making a plan selection; this last criterion would also be met
when the intent is to influence an enrollee's decision to remain in a
plan (that is, retention-based marketing).
The current regulations address both prohibited marketing
activities and marketing materials. The prohibited activities are
directly related to marketing activities, but the current definition of
``marketing materials'' is overly broad and has resulted in a
significant number of documents being classified as marketing
materials, such as materials promoting the sponsoring organization as a
whole (that is, brand awareness) rather than materials that promote
enrollment in a specific Medicare plan. We believe that Congress'
intent was to target those materials that could mislead or confuse
beneficiaries into making an adverse enrollment decision. Since the
original adoption of Sec. Sec. 422.2260 and 423.2260, CMS has reviewed
thousands of marketing materials, tracked and resolved thousands of
beneficiary complaints through the complaints tracking module (CTM),
conducted secret shopping programs of MA plan sales events, and
investigated numerous marketing complaints. These efforts have provided
CMS insight into the types of plan materials that present the greatest
risk of misleading or confusing beneficiaries. Based on this
experience, we believe that the current regulatory definition of
marketing materials is overly broad. As a result, materials that pose
little to no threat of a detrimental enrollment decision fall under the
current broad marketing definition. As such, the materials are also
required to follow the associated marketing requirements, including
submission to CMS for potential review under limited statutory
timeframes. CMS believes that the level of scrutiny required on
numerous documents that are not intended to influence an enrollment
decision, combined with associated burden to sponsoring organizations
and CMS, is not justified. By narrowing the materials that fall under
the scope of marketing, this proposal will allow us to better focus its
review on those materials that present the greatest likelihood for a
negative beneficiary experience.
We propose to more appropriately implement the statute by narrowing
the definition of marketing to focus on materials and activities that
aim to influence enrollment decisions. We believe this is consistent
with Congress's intent. Moreover, the new definition differentiates
between factually providing information about the plan or benefits
(that is, the Evidence of Coverage (EOC)) versus persuasively conveying
information in a manner designed to prompt the beneficiary to make a
new plan decision or to stay with their current plan (for example, a
flyer that touts a low monthly premium). As discussed later, the
majority of member materials would no longer fall within the definition
of marketing under this proposal. The EOC, subscriber agreements, and
wallet card instructions are not developed nor intended to influence
enrollment decisions. Rather, they are utilized for current enrollees
to understand the full scope of and the rules associated with their
plan. We believe the proposed new marketing definition appropriately
safeguards potential and current enrollees while not placing an undue
burden on sponsoring organizations. Moreover, those materials that
would be
[[Page 56436]]
excluded from the marketing definition would fall under the proposed
definition of communication materials, with what we believe are more
appropriate requirements. CMS notes that enrollment and mandatory
disclosure materials continue to be subject to requirements in
Sec. Sec. 422.60(c), 422.111, 423.32(b), and 423.128.
Second, we propose to revise the list of marketing materials,
currently codified at Sec. Sec. 422.2260(5) and 423.2260(5), and to
include it in the proposed new Sec. Sec. 422.2260(c)(1) and
423.2260(c)(1). The current list of examples includes: brochures;
advertisements in newspapers and magazines, and on television,
billboards, radio, or the internet, and billboards; social media
content; marketing representative materials, such as scripts or
outlines for telemarketing or other presentations; and presentation
materials such as slides and charts. In conjunction with the proposed
new definition of marketing, we are proposing to remove from the list
of examples items such as membership communication materials,
subscriber agreements, member handbooks, and wallet card instructions
to enrollees, as they would no longer fall under the proposed
regulatory definition of marketing. The proposed text complements the
new definition by providing a concise non-exhaustive list of example
material types that would be considered marketing.
Third, we propose to revise the list of exclusions from marketing
materials, currently codified at Sec. Sec. 422.2260(6) and
423.2260(6), and to include it in the proposed new Sec. Sec.
422.2260(c)(2) and 423.2260(c)(2) to identify the types of materials
that would not be considered marketing. 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) will be excluded from marketing. In addition,
materials that do mention benefits or cost sharing, but do not meet the
definition of marketing as proposed here, would also be excluded from
marketing. We also propose that required materials in Sec. 422.111 and
Sec. 423.128 not be considered marketing, unless otherwise specified.
Lastly, we are proposing to exclude materials specifically designated
by us as not meeting the definition of the proposed marketing
definition based on their use or purpose. The purpose of this proposed
revision of the list of exclusions from marketing materials, as with
the proposed marketing definition and proposed non-exhaustive list of
marketing materials, is to maintain the current beneficiary protections
that apply to marketing materials but to narrow the scope to exclude
materials that are unlikely to lead to or influence an enrollment
decision.
In the proposed changes to the exclusions from marketing materials,
we intend to exclude materials that do not include information about
the plan's benefit structure or cost-sharing. We believe that materials
that do not mention benefit structure or cost sharing would not be used
to make an enrollment decision in a specific Medicare plan, rather they
would be used to drive beneficiaries to request additional information
that would fall under the new definition of marketing. Similarly, we
want to be sure it is clear that the use of measuring or ranking
standards, such as the CMS Star Ratings, even when not accompanied by
other plan benefit structure or cost sharing information, could lead a
beneficiary to make an enrollment decision. It should be noted that our
authority for similar requirements can be found under the current
Sec. Sec. 422.2264(a)(4) and 423.2264(a)(4). We believe this is
clearer and more appropriately housed under the regulatory definition
of marketing. As such, together with the proposed update to excluded
materials, we will make the technical change to remove (a)(4) from
Sec. Sec. 422.2264 and 423.2264. In addition, we propose to exclude
materials that mention benefits or cost sharing but do not meet the
proposed definition of marketing. 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. An example is
a monthly newsletter to current enrollees reminding them of preventive
services at $0 cost sharing.
In addition, we note the proposal excludes those materials required
under Sec. 422.111 (for MA plans) and Sec. 423.128 (for Part D
sponsors), unless otherwise specified by CMS because of their use or
purpose. This proposal is intended to exclude post-enrollment materials
that we require be disclosed and distributed to enrollees, such as the
EOC. Such materials convey important plan information in a factual
manner rather than to entice a prospective enrollee to choose a
specific plan or an existing enrollee to stay in a specific plan. In
addition, either these materials use model formats and text developed
by us or are developed by plans based on detailed instructions on the
required content from us; this high level of standardization by us on
the front-end provides the necessary beneficiary protections and
negates the need for our review of these materials before distribution
to enrollees.
The proposed changes do not release cost plans, MA organizations,
or Part D sponsors from the requirements in sections 1876(c)(3)(C),
1851(h), and 1860D-1(b)(1)(B)(vi) of the Act to have application forms
reviewed by CMS as well. To clarify this requirement, we are proposing
to revise Sec. 417.430(a)(1) and Sec. 423.32(b), which pertain to
application and enrollment processes, to add a cross reference to
Sec. Sec. 422.2262 and 423.2262, respectively. The cross references
directly link enrollment applications back to requirements related to
review and distribution of marketing materials. These proposed changes
update an old cross-reference, codify existing practices, and are
consistent with language already in Sec. 422.60(c).
c. Prohibition of Marketing During the Open Enrollment Period
The 21st Century Cures Act (the Cures Act) amended section
1851(e)(2) of the Act by adding a new continuous open enrollment and
disenrollment period (OEP) for MA and certain PDP members. See section
III.A.X for CMS's other proposal related to that provision. As part of
establishing this OEP, the Cures Act prohibits unsolicited marketing
and mailing marketing materials to individuals who are eligible for the
new OEP. We are proposing to add a new paragraph (b)(9) to both
proposed Sec. Sec. 422.2268 and 423.2268 to apply this prohibition on
marketing. However, we request comment on how the agency could
implement this statutory requirement. The new OEP is not available for
enrollees in Medicare cost plans; therefore, these limitations would
apply to MA enrollees and to any PDP enrollee who was enrolled in an MA
plan the prior year. CMS is concerned that it may be difficult for a
sponsoring organization to limit marketing to only those individuals
who have not yet enrolled in a plan during the OEP. One mechanism could
be to limit marketing entirely during that period, but we are concerned
that such a prohibition would be too broad We believe that using a
``knowing'' standard will both effectuate the statutory provision and
avoid against overly broad implementation. We welcome comment on how a
sponsoring organization could appropriately control who would or should
be marketed to during the new OEP, such as through as mailing campaigns
aimed at a more general audience.
[[Page 56437]]
d. Technical Changes to Other Regulatory Provisions as a Result of the
Changes to Subpart V
As previously stated, because of the broad regulatory definition of
marketing, the term marketing and communication became synonymous. With
the proposed updates to Subpart V in both part 422 and part 423, a
definition of the broader term communication would be added and the
definition of marketing, as well as the materials that fall within the
scope of that definition, would be narrowed. As a result, a number of
technical changes will be needed to update certain sections of the
regulation that use the term marketing. Accordingly, we propose the
following technical changes in Part C:
In Sec. 422.54, we propose to update paragraphs (c)(1)(i)
and (d)(4)(ii) to replace ``marketing materials'' with ``communication
materials.''
In Sec. 422.62, we propose to update paragraph
(b)(3)(B)(ii) by replacing ``in marketing the plans to the individual''
with ``in communication materials.''
In Sec. 422.102(d), we propose to use ``supplemental
benefits packaging'' instead of ``marketing of supplemental benefits.''
In Sec. 422.206(b)(2)(i), we propose to replace ``Sec.
422.80 (concerning approval of marketing materials and election
forms)'' with ``all applicable requirements under subpart V''.
In Sec. 422.503(b)(4)(ii), we propose to replace the term
``marketing'' with the term ``communication.''
In Sec. 422.510(a)(4)(iii), we propose to remove the word
``marketing'' so that the reference is to the broader Subpart V.
CMS has had longstanding authority to initiate ``marketing
sanctions'' in conjunction with enrollment sanctions as a means of
protecting beneficiaries from the confusion that stems from receiving
information provided by a plan that is--as a result of enrollment
sanctions--unable to accept enrollments. In this rulemaking, CMS is
proposing to replace the term ``marketing'' with ``communications'' in
Sec. 422.750 and 422.752 to reflect its proposal for Subpart V. The
intent of this proposal to change the terminology is not to expand the
scope of CMS's authority with respect to sanction regulations. Rather,
CMS intends to preserve the existing reach of its sanction authority it
currently has--to prohibit any communications under the current broad
definition of ``marketing materials'' from being issued by a sponsoring
organization while that entity is under sanction. For this reason, CMS
is proposing the following changes to Sec. Sec. 422.750 and 422.752:
In Sec. 422.750, we propose to revise paragraph (a)(3) to
refer to suspension of ``communication activities.''
In Sec. 422.752, we propose to replace the term
``marketing'' in paragraph (a)(11) and the heading for paragraph (b)
with the term ``communications.''
We are not proposing any changes to the use of the term
``marketing'' in Sec. Sec. 422.384, 422.504(a)(17), 422.504(d)(2)(vi),
or 422.514, as those regulations use the term in a way that is
consistent with the proposed definition of the term ``marketing,'' and
the underlying requirements and standards do not need to be extended to
all communications from an MA organization.
We also propose the following technical changes in Part D:
In Sec. 423.38(c)(8)(i)(C), we propose to revise the
paragraph to read: ``The organization (or its agent, representative, or
plan provider) materially misrepresented the plan's provisions in
communication materials.''
In Sec. 423.504(b)(4)(ii), we propose to replace
``marketing'' with ``communications'' to reflect the change to Subpart
V.
For the reasons explained in connection with our proposal to revise
the Part C sanction regulations, we also propose the following changes:
In Sec. 423.505(b)(25), we propose to replace
``marketing'' with ``communications'' to reflect the change to Subpart
V.
In Sec. 423.509(a)(4)(V)(A), we propose to delete the
word ``marketing'' and instead simply refer to Subpart V.
We are not proposing any changes to the use of the term
``marketing'' in Sec. Sec. 423.505(d)(2)(vi), 423.871(c), or
423.756(c)(3)(ii), as those regulations use the term in a way that is
consistent with the proposed definition of the term ``marketing,'' and
the underlying requirements and standards do not need to be extended to
all communications from a PDP sponsor.
We solicit comment on the proposed technical changes, particularly
whether a proposed revision here would be more expansive than
anticipated or have unintended consequences for sponsoring
organizations or for CMS's oversight and monitoring of the MA and Part
D programs.
In conclusion, we believe that our proposal here--the proposed
definitions of ``communications,'' ``communications materials,''
``marketing,'' and ``marketing materials;'' and the various proposed
changes to Subpart V; to distinguish between prohibitions applicable to
communications and those applicable to marketing; and to conform Sec.
417.430(a)(1) and Sec. 423.32(b) to Sec. 422.60(c) and reflect the
statutory direction regarding enrollment materials; all maintain the
appropriate level of beneficiary protection. These proposals will
facilitate and focus our oversight of marketing materials, while
appropriately narrowing the scope of what is considered marketing. We
believe beneficiary protections are further enhanced by adding
communication materials and associated standards under Subpart V. These
changes allow us to focus its oversight efforts on plan marketing
materials that have the highest potential for influencing a beneficiary
to make an enrollment decision that is not in the beneficiary's best
interest. We solicit comment on these proposals and whether the
appropriate balance is achieved with the proposed regulation text.
6. Lengthening Adjudication Timeframes for Part D Payment
Redeterminations and IRE Reconsiderations (Sec. Sec. 423.590 and
423.636)
Sections 1860D-4(g) and (h) of the Act require the Secretary to
establish processes for initial coverage determinations and appeals
similar to those used in the Medicare Advantage program. In accordance
with section 1860D-4(g) of the Act, Sec. 423.590 establishes Part D
plan sponsors' responsibilities for processing redeterminations,
including adjudication timeframes. Pursuant to section 1860D-4(h) of
the Act, Sec. 423.600 sets forth the requirements for an independent
review entity (IRE) for processing reconsiderations.
We are proposing changes to the adjudication timeframe for Part D
standard redetermination requests for payment at Sec. 423.590(b) and
the related effectuation provision Sec. 423.636(a)(2). Specifically,
we are proposing to change the timeframe for issuing decisions on
payment redeterminations from 7 calendar days from the date the plan
sponsor receives the request to 14 calendar days from the date the plan
sponsor receives the request. This proposed 14-day timeframe for
issuing a decision related to a payment request would also apply to the
IRE reconsideration pursuant to Sec. 423.600(d). We are not proposing
to make changes to the existing requirements for making payment. When
applicable, the Part D plan sponsor must make payment no later than 30
days from receipt of the request
[[Page 56438]]
for redetermination, or the IRE reconsideration notice, respectively.
Some of the feedback received from the RFI published in the 2018
Call Letter related to simplifying and establishing greater consistency
in Part D coverage and appeals processes. The proposed change to a 14
calendar day adjudication timeframe for payment redeterminations, which
would also apply to payment requests at the IRE reconsideration level
of appeal, will establish consistency in the adjudication timeframes
for payment requests throughout the plan level and IRE processes, as
Sec. 423.568(c) requires a plan sponsor to notify the enrollee of its
determination no later than 14 calendar days after receipt of the
request for payment. We believe affording more time to adjudicate
payment redetermination requests (including obtaining necessary
documentation to support the request) will ease burden on plan sponsors
because it could reduce the need to deny payment redeterminations due
to missing information. We also expect the proposed change to the
payment redetermination timeframe would reduce the volume of untimely
payment redeterminations that must be auto-forwarded to the IRE.
In addition, having more time to gather information and process
these requests could be beneficial to enrollees because decisions will
be more fully informed, potentially resulting in fewer decisions having
to undergo further appeal. While we acknowledge that some enrollees
would have to wait longer for a decision, we note that the proposed
changes are limited to payment requests where the enrollee has already
received the drug, ensuring any delay would not adversely affect the
enrollee's health. As noted previously, when coverage is approved, the
plan would remain obligated to remit payment to affected enrollees
within 30 days. Allowing plan sponsors and the IRE additional time to
process payment appeal requests may assist these adjudicators in
allocating resources in a manner that is most efficient and enrollee
friendly, for example, ensuring adequate resources are directed to
processing more time-sensitive pre-service requests where the enrollee
has not yet obtained the drug, particularly during periods of increased
case volume.
7. Elimination of Medicare Advantage Plan Notice for Cases Sent to the
IRE (Sec. 422.590)
Section 1852(g) of Act requires MA organizations to have a
procedure for making timely determinations regarding whether an
enrollee is entitled to receive a health service and any amount the
enrollee is required to pay for such service. Under this statutory
provision, the MA plan also is required to provide for reconsideration
of that determination upon enrollee request.
In accordance with section 1852(g) of the Act, our current
regulations at Sec. Sec. 422.578, 422.582, and 422.584 provide MA
enrollees with the right to request reconsideration of a health plan's
initial decision to deny Medicare coverage. Pursuant to Sec. 422.590,
when the MA plan upholds initial payment or service denials, in whole
or in part, it must forward member case files to an independent review
entity (IRE) that contracts with CMS to review plan-level appeals
decisions; that is, plans are required to automatically forward to the
IRE any reconsidered decisions that are adverse or partially adverse
for an enrollee without the enrollee taking any action.
Currently, MA plans are required to notify enrollees upon
forwarding cases to the IRE, as set forth at Sec. 422.590(f). CMS sub-
regulatory guidance, set forth in Chapter 13 of the Medicare Managed
Care Manual, specifically directs plans to mail a notice to the
enrollee informing the individual that the plan has upheld its decision
to deny coverage, in whole or in part, and thus is forwarding the
enrollee's case file to the IRE for review. We have made a model notice
available for plans to use for this purpose. (See Medicare Managed Care
Manual, Chapter 13, Sec. 10.3.3, 80.3, and Appendix 10.) In addition,
the Part C IRE is required, under its contract with CMS, to notify the
enrollee when the IRE receives the reconsidered decision for review. We
are proposing to revise Sec. 422.590 to remove paragraph (f) and
redesignate the existing paragraphs (g) and (h) as (f) and (g),
respectively. The Part C IRE is contractually responsible for notifying
an enrollee that the IRE has received and will be reviewing the
enrollee's case; thus, we believe the plan notice is duplicative and
nonessential. Under this proposal, the IRE would be responsible for
notifying enrollees upon forwarding all cases--including both standard
and expedited cases. We will continue to closely monitor the
performance of the IRE and beneficiary complaints related to timely and
appropriate notification that the IRE has received and will be
reviewing the enrollee's case.
We received feedback in response to the Request for Information
included in the 2018 Call Letter related to simplifying and
streamlining appeals processes. To that end, we believe this proposed
change will help further these goals by easing burden on MA plans
without compromising informing the beneficiary of the progress of his
or her appeal. If this proposal is finalized, and plans are no longer
required to notify an enrollee that his or her case has been sent to
the IRE, we would expect plans to redirect resources previously
allocated to issuing this notice to more time-sensitive activities such
as review of pre-service and post-service coverage requests, improved
efficiency in appeals processing, and provision of health benefits in
an optimal, effective, and efficient manner.
8. E-Prescribing and the Part D Prescription Drug Program; Updating
Part D E-Prescribing Standards
a. Legislative Background
Section 101 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended title XVIII
of the Act to establish a voluntary prescription drug benefit program
at section 1860D-4(e) of the Act. Among other things, these provisions
required the adoption of Part D e-prescribing standards. Prescription
Drug Plan (PDP) sponsors and Medicare Advantage (MA) organizations
offering Medicare Advantage-Prescription Drug Plans (MA-PD) are
required to establish electronic prescription drug programs that comply
with the e-prescribing standards that are adopted under this authority.
There is no requirement that prescribers or dispensers implement e-
prescribing. However, prescribers and dispensers who electronically
transmit prescription and certain other information for covered drugs
prescribed for Medicare Part D eligible beneficiaries, directly or
through an intermediary, are required to comply with any applicable
standards that are in effect.
For a further discussion of the statutory basis for this proposed
rule and the statutory requirements at section 1860D-4(e) of the Act,
please refer to section I. (Background) of the E-Prescribing and the
Prescription Drug Program proposed rule, published February 4, 2005 (70
FR 6256).
b. Regulatory History
Transaction standards are periodically updated to take new
knowledge, technology and other considerations into account. As CMS
adopted specific versions of the standards when it adopted the
foundation and final e-prescribing standards, there was a need to
establish a process by which the standards could be updated or replaced
[[Page 56439]]
over time to ensure that the standards did not hold back progress in
the industry. We discussed these processes in the November 7, 2005
final rule (70 FR 67579).
The discussion noted that the rulemaking process will generally be
used to retire, replace or adopt a new e-prescribing standard, but it
also provided for a simplified ``updating process'' when a non-HIPAA
standard could be updated with a newer ``backward-compatible'' version
of the adopted standard. In instances in which the user of the later
version can accommodate users of the earlier version of the adopted
non-HIPAA standard without modification, however, it noted that notice
and comment rulemaking could be waived, in which case the use of either
the new or old version of the adopted standard would be considered
compliant upon the effective date of the newer version's incorporation
by reference in the Federal Register. We utilized this streamlined
process when we published an interim final rule with comment on June
23, 2006 (71 FR 36020). That rule recognized NCPDP SCRIPT 8.1 as a
backward compatible update to the NCPDP SCRIPT 5.0 for the specified
transactions, thereby allowing for use of either of the two versions in
the Part D program. Then, on April 7, 2008, we used notice and comment
rulemaking (73 FR 18918) to finalize the identification of the NCPDP
SCRIPT 8.1 as a backward compatible update of the NCPDP SCRIPT 5.0,
and, effective April 1, 2009, retire NCPDP SCRIPT 5.0 and adopt NCPDP
SCRIPT 8.1 as the official Part D e-prescribing standard for the
specified transactions. On July 1, 2010, CMS utilized the streamlined
process to recognize NCPDP SCRIPT 10.6 as a backward compatible update
of NCPDP SCRIPT 8.1 in an interim final rule (75 FR 38026).
We finalized the NCPDP SCRIPT 10.6 as a Backward Compatible Version
of NCPDP SCRIPT 8.1, and retired NCPDP SCRIPT 8.1 and adopted the NCPDP
SCRIPT 10.6 as the official Part D e-Prescribing Standard for the
specified transactions in the CY 2013 Physician Fee Schedule, effective
November 1, 2013. For a more detailed discussion, see the CY 2013 PFS
final rule (77 FR 69329 through 69333).
c. Proposed adoption of NCPDP SCRIPT version 2017071 as the
official Part D E-Prescribing Standard for certain specified
transactions, retirement of NCPDP SCRIPT 10.6, proposed conforming
changes elsewhere in 423.160, and correction of a historic
typographical error in the regulatory text which occurred when NCPDP
SCRIPT 10.6 was initially adopted.
The National Council for Prescription Drug Programs (NCPDP) is a
not-for-profit ANSI-Accredited Standards Development Organization (SDO)
consisting of more than 1,600 members who are interested in electronic
standardization within the pharmacy services sector of the healthcare
industry. NCPDP provides a forum wherein our diverse membership can
develop solutions, including ANSI-accredited standards, and guidance
for promoting information exchanges related to medications, supplies,
and services within the healthcare system.
NCPDP has developed the NCPDP SCRIPT standard for use by
prescribers, dispensers, pharmacy benefit managers (PBMs), payers and
other entities who wish to electronically transmit information about
prescriptions and prescription-related information. NCPDP has
periodically updated its SCRIPT standard over time, and three separate
versions of the NCPDP SCRIPT standard, versions 5.0, 8.1 and most
recently 10.6 have been adopted by CMS for the part D e-prescribing
program through the notice and comment rulemaking process. We believe
that our current proposal to adopt the NCPDP SCRIPT 2017071 as the
official part D e-prescribing standard for certain specified
transactions, and to retire the current standard for those transactions
would, among other things, improve communications between the
prescriber and dispensers, and we welcome public comment on these
proposals.
Our actions were, in part, precipitated by a May 24, 2017, letter
from the NCPDP that requested our adoption of NCPDP SCRIPT Standard
Version 2017071. This version was balloted and approved July 28, 2017.
The letter noted the considerable amount of time that had passed since
the last update to the current adopted standard (NCPDP SCRIPT 10.6),
and that there were many changes to the NCPDP SCRIPT Standard version
2017071 that would benefit its users.
CMS reviewed the specifications for NCPDP SCRIPT Standard Version
2017071 and found that this version would allow users substantial
improvements in efficiency. Version 2017071 supports communications
regarding multi-ingredient compounds, thereby allowing compounded
medication to be prescribed electronically. Previously prescriptions
for compounds were handwritten and sent via fax to the dispenser, which
often required follow up communications between the prescriber and
pharmacy. The ability to process prescriptions for compounds
electronically in lieu of relying on more time intensive interpersonal
interactions would be expected to improve efficiency.
While we do not propose mandating its use at this time, one
transaction supported by the proposed version of NCPDP SCRIPT would
also provide interested users with a Census transaction functionality
which is designed to service beneficiaries residing in long term care.
The Census feature would trigger timely notification of a beneficiary's
absence from a long term care facility, which would enable
discontinuation of daily medication dispensing when a leave of absence
occurs, thereby preventing the dispensing of unneeded medications.
Version 2017071 also contains an enhanced Prescription Fill Status
Notification that allows the prescriber to specify if/when they want to
receive the notifications from the dispenser. It now supports data
elements for diabetic supply prescriptions and includes elements which
could be required for the pharmacy during the dispensing process which
may be of value to prescribers who need to closely monitor medication
adherence.
We therefore believe that the functionalities offered by NCPDP
SCRPT 2017071 could offer efficiencies to the industry, and believe
that it would be an appropriate e-prescribing standard for the
transactions currently covered by the Medicare Part D program.
Furthermore, NCPDP SCRIPT 2017071 supports transactions new to the part
D e-prescribing program that we believe would prove beneficial to the
industry. Therefore, in addition to the transactions for which prior
versions of NCPDP SCRIPT were adopted (as reflected in the current
regulations at 423.160(b)), we propose to require use of NCPDP SCRPT
2017071 for the following transactions:
Prescription drug administration message,
New prescription requests,
New prescription response denials,
Prescription transfer message,
Prescription fill indicator change,
Prescription recertification,
Risk Evaluation and Mitigation Strategy (REMS) initiation
request,
REMS initiation response, REMS request, and
REMS response.
We believe that transitioning to the new 2017071 versions of the
transactions already covered by the current part D e-prescribing
standard (version 10.6 of the NCPDP SCRIPT) will impose deminimus cost
on the
[[Page 56440]]
industry as the burden in using the updated standards is anticipated to
be the same as using the old standards for the transactions currently
covered by the program. We are also proposing adoption of version
2017071 of the NCPDP SCRIPT standards for the nine new transactions to
replace manual processes that currently occur. Reducing the manual
processes currently used to support these transactions will improve
efficiency, accuracy, and user satisfaction with the system. While
system implementation may result in minimal expenses, we believe that
these minimal expenses will be more than offset by rendering these
manual transactions obsolete. That is, we believe that prescribers and
dispensers that are now e-prescribing largely invested in the hardware,
software, and connectivity necessary to e-prescribe. We do not
anticipate that the retirement of NCPDP SCRIPT 10.6 in favor of NCPDP
SCRIPT 2017071 will result in significant costs.
As such, we are proposing to revise Sec. 423.160(b)(1)(iv) so as
to limit its application to transactions before January 1, 2019 and add
a new Sec. 423.160(b)(1)(v). The requirement at Sec. 423.160(b)(1)(v)
would identify the standards that will be in effect on or after January
1, 2019, for those that conduct e-prescribing for part D covered drugs
for part D eligible beneficiaries. If finalized, those individuals and
entities would be required to use NCPDP SCRIPT 2017071 to convey
prescriptions and prescription-related information for the following
transactions:
Get message transaction.
Status response transaction.
Error response transaction.
New prescription request transaction.
Prescription change request transaction.
Prescription change response transaction.
Refill/Resupply prescription request transaction.
Refill/Resupply prescription response transaction.
Verification transaction.
Password change transaction.
Cancel prescription request transaction.
Cancel prescription response transaction.
Fill status notification.
Prescription drug administration message.
New prescription requests.
New prescription response denials.
Prescription transfer message.
Prescription fill indicator change.
Prescription recertification.
Risk Evaluation and Mitigation Strategy (REMS) initiation
request.
REMS initiation response, REMS request
REMS initiation response.
REMS request.
REMS response.
We are also proposing to adopt NCPDP SCRIPT 2017071 as the official
part D e-prescribing standard for the medication history transaction at
Sec. 423.160(b)(4). As a result, we are also proposing to retire NCPDP
SCRIPT versions 8.1 and 10.6 for medication history transactions
transmitted on or after January 1, 2019.
Furthermore, we propose to amend Sec. 423.160(b)(1) by modifying
Sec. 423.160(b)(1)(iv) to limit usage of NCPDP SCRIPT version 10.6 to
transactions before January 1, 2019.
In addition, we propose to add Sec. 423.160(b)(1)(v) to provide
that NCPDP Version 2017071 must be used to conduct the covered
transactions on or after January 1, 2019. Furthermore, we are proposing
to amend Sec. 423.160(b)(2) by adding Sec. 423.160(b)(2)(iv) to name
NCPDP SCRIPT Version 2017071 for the applicable transactions. Finally,
we propose to incorporate NCPDP SCRIPT version 2017071 by reference in
our regulations. We seek comment regarding our proposed retirement of
NCPDP SCRIPT version 10.6 on December 31, 2018 and adoption of NCPDP
SCRIPT Version 2017071 on January 1, 2019 as the official Part D e-
prescribing standard for the e-prescribing functions outlined in our
proposed Sec. 423.160(b)(1)(v) and (b)(2)(v), and for medication
history as outlined in our proposed Sec. 423.160(b)(4), effective
January 1, 2019. We are also soliciting comments regarding the impact
of these proposed effective dates on industry and other interested
stakeholders.
We are also proposing a technical correction of a prior regulation.
On July 30, 2012, we published regulation (CMS-1590-P), which
established version 10.6 as the Part D e-prescribing standard effective
March 1, 2015 for certain electronic transactions that convey
prescription or prescription related information, as listed in Sec.
423.160(b)(2)(iii). However, despite the regulation clearly noting
adoption of NCPDP SCRIPT 10.6 as the part D e-prescribing standard for
the listed transactions, due to a typographical error, Sec.
423.160(b)(1)(iv) references (b)(2)(ii) (NCPDP SCRIPT 8.1), rather than
(b)(2)(iii) (NCPDP SCRIPT 10.6). We propose a correction of this
typographical error by changing the reference at Sec. 423.160
(b)(1)(iv) to reference (b)(2)(iii) instead of (b)(2)(ii).
In proposing updates to the Part D E-Prescribing Standards CMS has
reviewed specification documents developed by the National Council for
Prescription Drug Programs (NCPDP). The Office of the Federal Register
(OFR) has regulations concerning incorporation by reference. 1 CFR part
51. For a proposed rule, agencies must discuss in the preamble to the
NPR ways that the materials the agency proposes to incorporate by
reference are reasonably available to interested persons or how the
agency worked to make the materials reasonably available. In addition,
the preamble to the proposed rule must summarize the materials.
Consistent with those requirements CMS has established procedures
to ensure that interested parties can review and inspect relevant
materials. The proposed update to the Part D prescribing standards has
relied on the NCPDP SCRIPT Implementation Guide Version 2017071
approved July 28, 2017. Members of the NCPDP may access these materials
through the member portal at www.ncpdp.org; non- NCPDP members may
obtain these materials for information purposes by contacting the
Centers for Medicare & Medicaid Services (CMS), 7500 Security
Boulevard, Baltimore, Maryland 21244, Mailstop C1-26-05, or by calling
(410) 786- 3694.
9. Reduction of Past Performance Review Period for Applications
Submitted by Current Medicare Contracting Organizations (Sec. Sec.
422.502 and 423.503)
In April 2010, we clarified our authority to deny contract
qualification applications from organizations that have failed to
comply with the requirements of a Medicare Advantage or Part D plan
sponsor contract they currently hold, even if the submitted application
otherwise demonstrates that the organization meets the relevant program
requirements. As part of that rulemaking, we established, at Sec.
422.502(b)(1) and Sec. 423.503(b)(1), that we would review an
applicant's prior contract performance for the 14-month period
preceding the application submission deadline (see 75 FR 19684 through
19686). We conduct that review in accordance with a methodology we
publish each year \58\ and use to score each applicant's performance by
assigning weights based on the severity of its non-compliance in
several
[[Page 56441]]
performance categories. Under the annual contract qualification
application submission and review process we conduct, organizations
must submit their application by a date, usually in mid-February,
announced by us. We now propose to reduce the past performance review
period from 14 months to 12 months.
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\58\ https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/Downloads/Final_2018_Application_Cycle_Past_Performance_Methodology.pdf.
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We originally established the 14-month review period because it
covered the time period from the start of the preceding contract year
through the date on which CMS receives contract applications for the
upcoming contract year. We believed at the time that the combination of
the most recent complete contract year and the 2 months preceding the
application submission provided us with the most complete picture of
the most relevant information about an applicant's past contract
performance. Our application of this authority since its publication
has prompted comments from contracting organizations that the 14-month
period is too long and is unfair as it is applied. In particular,
organizations have noted that non-compliance that occurs during January
and February of a given year is counted against an organization in 2
consecutive past performance review cycles while non-compliance
occurring in all other months is counted in only one review cycle. The
result is that some non-compliance is ``double counted'' based solely
on the timing of the non-compliance and can, depending on the severity
of the non-compliance, prevent an organization from receiving CMS
approval of their application for 2 consecutive years.
Rather than creating a gap in the look-back period, as we were
concerned in 2010, 75 FR 19685, we now believe a 12-month look-back
period provides a more accurate period to consider. We believe it is
still important to capture in each review cycle an applicant's most
recent contract performance. Therefore, we propose to revise Sec.
422.502(b)(1) and Sec. 423.503(b)(1) to reduce the review period from
14 to 12 months. This would effectively establish a new review period
for every application review cycle of March 1 of the year preceding the
application submission deadline through February 28 (February 29 in
leap years) of the year in which the application is submitted and would
eliminate the counting of instances of non-compliance in January and
February of each year in 2 separate application cycles. We also propose
to have this review period change reflected consistently in the Part C
and D regulation by revising the provisions of Sec. 422.502(b)(2) and
Sec. 423.503(b)(2) to state that CMS may deny an application from an
existing Medicare Advantage or Part D plan sponsor in the absence of a
record of at least 12, rather than 14, months of Medicare contract
performance by the applicant. We do not intend to change any other
aspect of our consideration of past performance in the application
process.
10. Preclusion List--Part D Provisions
a. Background
(1) 2014 Final Rule
On May 23, 2014, we published a final rule in the Federal Register
titled ``Medicare Program; Contract Year 2015 Policy and Technical
Changes to the Medicare Advantage and the Medicare Prescription Drug
Benefit Programs'' (79 FR 29844). Among other things, this final rule
implemented section 6405(c) of the Affordable Care Act, which provides
the Secretary with the authority to require that prescriptions for
covered Part D drugs be prescribed by a physician enrolled in Medicare
under section 1866(j) of the Act (42 U.S.C. 1395cc(j)) or an eligible
professional as defined at section 1848(k)(3)(B) of the Act (42 U.S.C.
1395w-4(k)(3)(B)). More specifically, the final rule revised Sec.
423.120(c)(5) and added new Sec. 423.120(c)(6), the latter of which
stated that for a prescription to be eligible for coverage under the
Part D program, the prescriber must have (1) an approved enrollment
record in the Medicare fee for service program (that is, original
Medicare); or (2) a valid opt out affidavit on file with a Part A/Part
B Medicare Administrative Contractor (A/B MAC).
The purpose of this change was to help ensure that Part D drugs are
prescribed only by qualified prescribers. In a June 2013 report titled
``Medicare Inappropriately Paid for Drugs Ordered by Individuals
Without Prescribing Authority'' (OEI-02-09-00608), the Office of
Inspector General (OIG) found that the Part D program improperly paid
for drugs prescribed by persons who did not appear to have the
authority to prescribe. We also noted in the final rule the reports we
received of prescriptions written by physicians with suspended licenses
having been covered by the Part D program. These reports raised
concerns within CMS about the propriety of Part D payments and the
potential for Part D beneficiaries to be prescribed dangerous or
unnecessary drugs by individuals who lack the authority or
qualifications to prescribe medications. Given that the Medicare FFS
provider enrollment process, as outlined in 42 CFR part 424, subpart P,
collects identifying information about providers and suppliers who wish
to enroll in Medicare, we believed that forging a closer link between
Medicare's coverage of Part D drugs and the provider enrollment process
would enable CMS to confirm the qualifications of the prescribers of
such drugs. That is, requiring Part D prescribers to enroll in Medicare
would provide CMS with sufficient information to determine whether a
physician or eligible professional is qualified to prescribe Part D
drugs.
We stated in the May 23, 2014 final rule that the compliance date
for our revisions to new Sec. 423.120(c)(6) would be June 1, 2015. We
believed that this delayed date would give physicians and eligible
professionals who would be affected by these provisions adequate time
to enroll in or opt-out of Medicare. It would also allow CMS, A/B MACs,
Medicare beneficiaries, and other impacted stakeholders sufficient
opportunity to prepare for these requirements.
(2) 2015 Interim Final Rule
On May 6, 2015, we published in the Federal Register an interim
final rule with comment period (IFC) titled ``Medicare Program; Changes
to the Requirements for Part D Prescribers'' (80 FR 25958). This IFC
made changes to certain requirements outlined in the May 23, 2014 final
rule related to beneficiary access to covered Part D drugs.
First, we changed the compliance date of Sec. 423.120(c)(6) from
June 1, 2015 to January 1, 2016. This was designed to give all affected
parties more time to prepare for the additional provisions included in
the IFC before Part D drugs prescribed by individuals who are neither
enrolled in nor opted-out of Medicare are no longer covered.
Second, we revised paragraph Sec. 423.120(c)(6)(ii) to address a
gap in Sec. 423.120(c)(6) regarding certain types of prescribers; such
prescribers included pharmacists who may be authorized under state law
to prescribe medications but are ineligible to enroll in Medicare and
thus, under Sec. 423.120(c)(6), would not have their prescriptions
covered. Revised paragraph (c)(6)(ii) stated that pharmacy claims and
beneficiary requests for reimbursement for Part D prescriptions written
by prescribers other than physicians and eligible professionals who are
nonetheless permitted by state or other applicable law to prescribe
medications (defined in Sec. 423.100 as ``other authorized
prescribers'') will not be rejected or denied, as applicable, by the
pharmacy benefit manager (PBM) if all other requirements are met. This
meant that
[[Page 56442]]
the enrollment requirement specified in Sec. 423.120(c)(6) would not
apply to other authorized prescribers--that is, to individuals who are
ineligible to enroll in or opt out of Medicare because they do not meet
the statutory definition of ``physician'' or ``eligible professional''
yet who are otherwise legally authorized to prescribe drugs.
Third, and to help ensure that beneficiaries would not experience a
sudden lapse in Part D prescription coverage upon the January 1, 2016
effective date, we added a new paragraph Sec. 423.120(c)(6)(v). This
provision stated that a Part D sponsor or its PBM must, beginning on
January 1, 2016 and upon receipt of a pharmacy claim or beneficiary
request for reimbursement for a Part D drug that a Part D sponsor or
PBM would otherwise be required to reject or deny, as applicable, under
Sec. 423.120(c)(6):
Provide the beneficiary with:
++ A 3-month provisional supply of the drug (as prescribed by the
prescriber and if allowed by applicable law); and
++ Written notice within 3 business days after adjudication of the
claim or request in a form and manner specified by CMS; and
Ensure that reasonable efforts are made to notify the
prescriber of a beneficiary who was sent the notice referred to in the
previous paragraph.
The 3-month provisional supply and written notice were intended to
(1) notify beneficiaries that a future prescription written by the same
prescriber would not be covered unless the prescriber enrolled in or
opted-out of Medicare, and (2) give beneficiaries time to make
arrangements to continue receiving the prescription if the prescriber
of the medication did not intend to enroll in or opt-out of Medicare.
(3) Preparations for Enforcement of Part D Prescriber Enrollment
Requirement
Immediately after the publication of the previously mentioned May
23, 2014 final rule, we undertook major efforts to educate affected
stakeholders about the forthcoming enrollment requirement. Particular
focus was placed on reaching out to Part D prescribers with information
regarding (1) the overall purpose of the enrollment process; (2) the
important program integrity objectives behind Sec. 423.120(c)(6); (3)
the mechanisms by which prescribers may enroll in Medicare (for
example, via the Internet based Provider Enrollment, Chain and
Ownership System (PECOS); and (4) how to complete an enrollment
application. Numerous prescribers have, in preparation for the
enforcement of Sec. 423.120(c)(6), enrolled in or opted out of
Medicare, and we are appreciative of their cooperation in this effort.
However, based on internal CMS data, as of July 2016 approximately
420,000 prescribers--or 35 percent of the total 1.2 million prescribers
of Part D drugs--whose prescriptions for Part D drugs would be affected
by the requirements of Sec. 423.120(c)(6) have yet to enroll or opt
out. Of these prescribers, 32 percent are dentists, 11 percent are
student trainees, 7 percent are nurse practitioners, 6 percent are
pediatric physicians, and 5 percent are internal medicine physicians.
Several provider organizations, moreover, have expressed concerns
about the enrollment requirements. They have contended that (1) most
prescribers pose no risk to the Medicare program; and (2) certain types
of physicians and eligible professionals prescribe Part D drugs only
very infrequently. Their general position, in short, is that the burden
to the prescriber community would outweigh the payment safeguard
benefits of Sec. 423.120(c)(6). After the publication of the IFC, and
based on our desire to give prescribers and other stakeholders more
time to prepare for the enrollment requirements, we announced a phased-
in enforcement of the enrollment requirements and stated that full
enforcement would be delayed until January 1, 2019. (Information was
posted at the following link: https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/Prescriber-Enrollment-Information.html.) However, the concerns of these provider
organizations remain.
We do recognize these concerns. We wish to reduce as much burden as
possible for providers without compromising our program integrity
objectives. In addition, over 400,000 prescribers remain unenrolled
and, as a consequence, approximately 4.2 million Part D beneficiaries
(based on analysis performed on 2015 and 2016 PDE data) could lose
access to needed prescriptions when full enforcement of the enrollment
requirement begins on January 1, 2019 unless their prescriber enrolls
or opt outs or they change prescribers. We believe that an appropriate
balance is possible between burden reduction and the need to protect
Medicare beneficiaries and the Trust Funds. To this end, we propose
several changes to Sec. 423.120(c)(6).
b. Proposed Provisions
In accordance with section 1871 of the Act, within 3 years of the
publication of the May 6, 2015 IFC, we must either publish a final rule
or publish a notice of a different timeline. If we finalize the
proposals described in this notice of proposed rulemaking, we would not
finalize the provisions of the IFC. Instead, the proposals described in
this publication would supersede our earlier rulemaking.
The effective date of our proposed provisions in Sec.
423.120(c)(5) would be 60 days after the publication of a final rule.
The effective date of our proposed revisions to Sec. 423.120(c)(6)
would be January 1, 2019.
(1) Prescriber NPI Validation on Part D Claims
(a) Provisions of Sec. 423.120(c)(5)
Section 423.120(c)(5) states that before January 1, 2016, the
following are applicable:
In paragraph (c)(5)(i), we state that a Part D sponsor
must submit to CMS only a prescription drug event (PDE) record that
contains an active and valid individual prescriber NPI.
In paragraph (c)(5)(ii), we state that a Part D sponsor
must ensure that the lack of an active and valid individual prescriber
NPI on a network pharmacy claim does not unreasonably delay a
beneficiary's access to a covered Part D drug, by taking the steps
described in paragraph (c)(5)(iii) of this section.
In paragraph (c)(5)(iii), we state that the sponsor must
communicate at point-of-sale whether or not a submitted NPI is active
and valid in accordance with this paragraph (c)(5)(iii).
++ In paragraph (c)(5)(iii)(A), we state that if the sponsor
communicates that the NPI is not active and valid, the sponsor must
permit the pharmacy to (1) confirm that the NPI is active and valid; or
(2) correct the NPI.
++ In paragraph (c)(5)(iii)(B), we state that if the pharmacy:
++ Confirms that the NPI is active and valid or corrects the NPI,
the sponsor must pay the claim if it is otherwise payable; or
++ Cannot or does not correct or confirm that the NPI is active and
valid, the sponsor must require the pharmacy to resubmit the claim
(when necessary), which the sponsor must pay, if it is otherwise
payable, unless there is an indication of fraud or the claim involves a
prescription written by a foreign prescriber (where permitted by State
law).
In paragraph (c)(5)(iv), we state that a Part D sponsor
must not later recoup payment from a network pharmacy for a claim that
does not contain an active and valid individual prescriber NPI on the
basis that it does not contain one, unless the sponsor--
++ Has complied with paragraphs (c)(5)(ii) and (iii) of this
section;
[[Page 56443]]
++ Has verified that a submitted NPI was not in fact active and
valid; and
++ The agreement between the parties explicitly permits such
recoupment.
In paragraph (c)(5)(v), we state that with respect to
requests for reimbursement submitted by Medicare beneficiaries, a Part
D sponsor may not make payment to a beneficiary dependent upon the
sponsor's acquisition of an active and valid individual prescriber NPI,
unless there is an indication of fraud. If the sponsor is unable to
retrospectively acquire an active and valid individual prescriber NPI,
the sponsor may not seek recovery of any payment to the beneficiary
solely on that basis.
These provisions, which focus on NPI submission and validation, are
no longer effective because the January 1, 2016 end-date for their
applicability has passed. Since that time, however, and as explained in
detail in section (b)(1)(b) below, congressional legislation requires
us to revisit some of the provisions in former paragraph (c)(5) and, as
warranted, to re-propose them in what would constitute a new paragraph
(c)(5). We believe that these new provisions would not only effectively
implement the legislation in question but also enhance Part D program
integrity by streamlining and strengthening procedures for ensuring the
identity of prescribers of Part D drugs. This would be particularly
important in light of our preclusion list proposals.
(b) Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
MACRA was signed into law on April 16, 2015, just before the IFC
was finalized. Section 507 of MACRA amends section 1860D-4(c) of the
Act (42 U.S.C. 1395w-104(6)) by requiring that pharmacy claims for
covered Part D drugs include prescriber NPIs that are determined to be
valid under procedures established by the Secretary in consultation
with appropriate stakeholders, beginning with plan year 2016.
In light of the enactment of MACRA, on June 1, 2015, we issued a
guidance memo, ``Medicare Prescriber Enrollment Requirement Update''
(memo). The memo noted that Sec. 423.120(c)(5) would no longer be
applicable beginning January 1, 2016 due to the IFC we had just
published, but that its provisions reflected certain existing Part D
claims procedures established by the Secretary in consultation with
stakeholders through the National Council for Prescription Drug
Programs (NCPDP) that would comply with section 507 of MACRA, except
one.
The provisions in Sec. 423.120(c)(5) that reflected the procedures
that would comply with section 507 of MACRA are the following:
Paragraph (c)(5)(iii).
Paragraph (c)(5)(iii)(A).
Paragraph (c)(5)(iii)(B)(1). (Note that paragraph
(c)(5)(iii)(B)(2) would not comply with section 507 because the sponsor
has no evidence that the NPI is active or valid.)
Paragraph (c)(5)(iv).
Paragraph (c)(5)(v).
Given this, we are proposing to include these provisions in new
paragraph (c)(5). They would be enumerated as, respectively, new
paragraphs (c)(5)(ii), (c)(5)(ii)(A), (c)(5)(ii)(B), (c)(5)(iii), and
(c)(5)(iv). Current paragraphs (c)(5)(i), (c)(5)(ii), and
(c)(5)(iii)(B)(2) would not be included in new paragraph (c)(5).
We also note that in the May 6, 2015 IFC, we revised Sec.
423.120(c)(6)(i) to require a Part D plan sponsor to reject, or require
its pharmaceutical benefit manager (PBM) to reject, a pharmacy claim
for a Part D drug, unless the claim contains the NPI of the prescriber
who prescribed the drug. This provision, too, reflects existing Part D
claims procedures and policies that comply with section 507 of MACRA.
We thus propose to retain this provision and seek comment on associated
burdens or unintended consequences and alternative approaches. However,
we wish to move it from paragraph (c)(6) to paragraph (c)(5) so that
most of the NPI provisions in Sec. 423.120 are included in one
subsection. We believe this would improve clarity.
(2) Targeted Approach to Part D Prescribers
We believe that the most effective means of reducing the burden of
the Part D enrollment requirement on prescribers, Part D plan sponsors,
and beneficiaries without compromising our payment safeguard aims would
be to concentrate our efforts on preventing Part D coverage of
prescriptions written by prescribers who pose an elevated risk to
Medicare beneficiaries and the Trust Funds. In other words, rather than
require the enrollment of Part D prescribers regardless of the possible
level of risk posed, we propose to focus on preventing payment for Part
D drugs prescribed by demonstrably problematic prescribers.
There is precedent for such a risk based approach. For instance,
consistent with Sec. 424.518, A/B MACs are required to screen
applications for enrollment in accordance with a CMS assessment of risk
and assignment to a level of ``limited,'' ``moderate,'' or ``high.''
Applications submitted by provider and supplier types that have
historically posed higher risks to the Medicare program are subjected
to a more rigorous screening and review process than those that present
limited risks. Moreover, Sec. 424.518 states that providers and
suppliers that have had certain adverse actions imposed against them,
such as felony convictions or revocations of enrollment, are placed
into the highest and most rigorous screening level. We recognize that
the risk based approach in Sec. 424.518 applies to enrollment
application screening rather than payment denials. However, we believe
that using a risk-based approach would enable CMS to focus on
prescribers who pose threats to the Medicare program and its
beneficiaries, while minimizing the burden on those who do not. The
process we envision and propose, which would replace the prescriber
enrollment requirement outlined in Sec. 423.120(c)(6) with a claims
payment-oriented approach, would consist of the following components:
Step 1: We would research our internal systems and other
relevant data for prescribers who have engaged in behavior for which
CMS:
++ Has revoked the prescriber's enrollment and the prescriber is
under a reenrollment bar; or
++ Could have revoked the prescriber (to the extent applicable) if
he or she had been enrolled in Medicare.
Concerning revocations, we have the authority to revoke a
provider's or supplier's Medicare enrollment for any of the applicable
reasons listed in Sec. 424.535(a). There are currently 14 such
reasons. When revoked, the provider or supplier is barred under Sec.
424.535(c) from reenrolling in Medicare for a period of 1 to 3 years,
depending upon the severity of the underlying behavior. We have an
obligation to protect the Trust Funds from providers and suppliers that
engage in activities that could threaten the Medicare program, its
beneficiaries, and the taxpayers. In light of the significance of
behavior that could serve as grounds for revocation, we believe that
prescribers who have engaged in inappropriate activities should be the
focus of our Part D program integrity efforts under Sec.
423.120(c)(6).
Step 2--We would review, on a case-by-case basis, each
prescriber who--
++ Is currently revoked from Medicare and is under a reenrollment
bar. We would examine the reason for the prescriber's revocation.
++ Has engaged in behavior for which CMS could have revoked the
[[Page 56444]]
prescriber to the extent applicable if he or she had been enrolled in
Medicare.
The prescribers to be reviewed would be those who, according to PDE
data and CMS' internal systems, are eligible to prescribe drugs covered
under the Part D program. That is, our review would not be limited to
those persons who are actually prescribing Part D drug, but would
include those that potentially could prescribe drugs. We believe that
the inclusion of these individuals in our review would help further
protect the integrity of the Part D program.
We are also seeking comment on an alternative by which we would
first identify, through PDE data, those providers who are prescribing
drugs to Medicare beneficiaries. This would significantly reduce the
universe of prescribers who are on the preclusion list and reduce the
government's surveillance of prescribers. We anticipate that this could
create delays in our ability to screen providers due to data lags and
may introduce some program integrity risks. We are particularly
interested in hearing from the public on the potential risks this could
pose to beneficiaries, especially in light of our efforts to address
the opioids epidemic.
Step 3--Based on the results of Steps 1 and 2, we would
compile a ``preclusion list'' of prescribers who fall within either of
the following categories:
++ Are currently revoked from Medicare, are under a reenrollment
bar, and CMS determines that the underlying conduct that led to the
revocation is detrimental to the best interests of the Medicare
program.
++ Have engaged in behavior for which CMS could have revoked the
prescriber to the extent applicable if he or she had been enrolled in
Medicare, and CMS determines that the underlying conduct that would
have led to the revocation is detrimental to the best interests of the
Medicare program.
We propose to adopt this preclusion list approach as an alternative
to enrollment in part to reflect the more indirect connection of
prescribers in the Medicare Part D program. We seek comment on whether
some of the bases for revocation should not apply to the preclusion
list in whole or in part and whether the final regulation (or future
guidance) should specify which bases are or are not applicable and
under what circumstances.
(i) Preclusion List
Considering the program integrity risk that the two previously
mentioned sets of prescribers present, we must be able to accordingly
protect Medicare beneficiaries and the Trust Funds. We thus propose to
revise Sec. 423.120(c)(6), as further specified in this proposed rule,
to require that a Part D plan sponsor must reject, or must require its
PBM to reject, a pharmacy claim (or deny a beneficiary request for
reimbursement) for a Part D drug prescribed by an individual on the
preclusion list. We believe we have the legal authority for such a
provision because sections 1102 and 1871 of the Act provide general
authority for the Secretary to prescribe regulations for the efficient
administration of the Medicare program; also, section 1860D-12(b)(3)(D)
of the Act authorizes the Secretary to add additional Part D contract
terms as necessary and appropriate, so long as they are not
inconsistent with the Part D statute. We note also that our proposal is
of particular importance when considering the current nationwide opioid
crisis. We believe that the inclusion of problematic prescribers on the
preclusion list could reduce the amount of opioids that are improperly
or unnecessarily prescribed by persons who pose a heightened risk to
the Part D program and Medicare beneficiaries.
All grounds for revocation under Sec. 424.535(a) reflect behavior
or circumstances that are of concern to us. However, considering the
variety of factual scenarios that CMS may come across, we believe it is
necessary for CMS to have the flexibility to take into account the
specific circumstances involved when determining whether the underlying
conduct is detrimental to the best interests of the Medicare program.
Accordingly, CMS would consider the following factors in making this
determination:
The seriousness of the conduct involved;
The degree to which the prescriber's conduct could affect
the integrity of the Part D program; and
Any other evidence that CMS deems relevant to its
determination.
We emphasize that in situations where the prescriber was enrolled
and then revoked, CMS' determination would not negate the revocation
itself. The prescriber would remain revoked from Medicare.
We also recognize that unique circumstances behind the potential or
actual inclusion of a particular prescriber on the preclusion list
could exist. Of foremost importance would be situations pertaining to
beneficiary access to Part D drugs. We believe that we should have the
discretion not to include (or, if warranted, to remove) a particular
individual on the preclusion list (who otherwise meets the standards
for said inclusion) should exceptional circumstances exist pertaining
to beneficiary access to prescriptions. This could include
circumstances similar to those described in section 1128(c)(3)(B) of
the Act, whereby the Secretary may waive an OIG exclusion under section
1128(a)(1), (a)(3), or (a)(4) of the in the case of an individual or
entity that is the sole community physician or sole source of essential
specialized services in a community. In making a determination as to
whether such circumstances exist, we would take into account-- (1) the
degree to which beneficiary access to Part D drugs would be impaired;
and (2) any other evidence that CMS deems relevant to its
determination.
With respect to the foregoing, we solicit comment on the following
issues:
++ Whether the actions referenced in Sec. 424.535(a) are
appropriate grounds for inclusion on the preclusion list.
++ Whether actions other than those referenced in Sec. 424.535(a)
should constitute grounds for inclusion on the preclusion and, if so,
what those specific grounds are.
++ Suggestions for means of monitoring abusive prescribing
practices and appropriate processes for including such prescribers on
the preclusion list.
(b) Replacement of Enrollment Requirement With Preclusion List
Requirement
We are proposing to delete the current regulations that require
prescribers to enroll in or opt out of Medicare for a pharmacy claim
(or beneficiary request for reimbursement) for a Part D drug prescribed
by a physician or eligible professional to be covered. We also propose
to generally streamline the existing regulations because, given that we
would no longer be requiring certain prescribers to enroll or opt out,
we would no longer need an exception for ``other authorized
providers,'' as defined in Sec. 423.100, for there would be no
enrollment requirement from which to exempt them. Instead, we would
require plan sponsors to reject claims for Part D drugs prescribed by
prescribers on the preclusion list. We believe this latter approach
would better facilitate our dual goals of reducing prescriber burden
and protecting the Medicare program and its beneficiaries from
prescribers who could present risks.
(ii) Updates to Preclusion List
The preclusion list would be updated on a monthly basis.
Prescribers would be added or removed from the list based on CMS'
internal data that indicate, for instance: (1) Prescribers who have
recently been convicted of a felony that,
[[Page 56445]]
consistent with Sec. 424.535(a)(33), CMS determines to be detrimental
to the best interests of the Medicare program, and (2) prescribers
whose reenrollment bars have expired. As a particular prescriber's
status with respect to the preclusion list changes, the applicable
provisions of Sec. 423.120(c)(6) would control. To illustrate, suppose
a prescriber in March 2020 is convicted of a felony that CMS deems
detrimental to Medicare's best interests. Pharmacy claims for
prescriptions written by the individual would thus be rejected by Part
D sponsors or their PBMs upon the prescriber being added to the
preclusion list. Conversely, a prescriber who was revoked under Sec.
424.535(a)(4) but whose reenrollment bar has expired would be removed
from the preclusion list; claims for prescriptions written by the
individual would therefore no longer be rejected based solely on his or
her inclusion on the preclusion list. CMS would regularly review the
preclusion list to determine whether certain individuals should be
added to or removed therefrom based on changes to their status.
Consistent with our application of a reenrollment bar to providers
and suppliers that are enrolled in and then revoked from Medicare, we
propose to keep an unenrolled prescriber on the preclusion list for the
same length of time as the reenrollment bar that we could have imposed
on the prescriber had he or she been enrolled and then revoked. For
example, suppose an unenrolled prescriber engaged in behavior that, had
he or she been enrolled, would have warranted a 2-year reenrollment
bar. The prescriber would remain on the preclusion list for that same
period of time. We note that in establishing such a time period, we
would use the same criteria that we do in establishing reenrollment
bars.
Prescribers who were revoked from Medicare or, for unenrolled
prescribers, engaged in behavior that could serve as a basis for an
applicable revocation prior to the effective date of this rule (if
finalized) could, if the requirements of Sec. 423.120(c)(6) are met,
be added to the preclusion list upon said effective date even though
the underlying action (for instance, felony conviction) occurred prior
to that date. However, the Part D claim rejections by Part D sponsors
and their PBMs under Sec. 423.120(c)(6) would only apply to claims for
Part D prescriptions filled or refilled on or after the date he or she
was added to the preclusion list; that is, sponsors and PBMs would not
be required to retroactively reject claims based on the effective date
of the revocation or, for unenrolled prescribers, the date of the
behavior that could serve as a basis for an applicable revocation
regardless of whether that date occurred before or after the effective
date of this rule.
We do seek comment on a reasonable time period for Part D sponsors/
PBMs to incorporate the preclusion list into their claims adjudication
systems, and whether and how our proposed regulatory text needs to be
modified to accommodate such a time period. We wish to avoid a
situation where a Part D sponsor/PBM pays for prescriptions written by
individuals on the preclusion list before the sponsors/PBMs have
incorporated the list but later are unable to submit their PDEs, which
CMS typically edits based on date of service.
(3) Provisional Coverage
The current text of Sec. 423.120(c)(6)(v) states that a Part D
sponsor or its PBM must, upon receipt of a pharmacy claim or
beneficiary request for reimbursement for a Part D drug that a Part D
sponsor would otherwise be required to deny in accordance with Sec.
423.120(c)(6), furnish the beneficiary with (a) a provisional supply of
the drug (as prescribed by the prescriber and if allowed by applicable
law); and (b) written notice within 3 business days after adjudication
of the claim or request in a form and manner specified by CMS. The
purpose of this provisional supply requirement is to give beneficiaries
notice that there is an issue with respect to future Part D coverage of
a prescription written by a particular prescriber.
Although CMS' proposed changes to Sec. 423.120(c)(6) would
significantly reduce the number of affected prescribers and, by
extension, the number of impacted beneficiaries, we remain concerned
that beneficiaries who receive prescriptions written by individuals on
the preclusion list might suddenly no longer have access to these
medications without provisional coverage and without notice, which
gives beneficiaries time to find a new prescriber. Therefore, we
propose to maintain the provisional coverage requirement consistent
with what was finalized in the IFC, but with a modification.
Additionally, many commercial plans are pursuing policies to address
the opioid epidemic, such as limiting the amount of initial opioid
prescriptions. Given the opioid epidemic, we are considering other
solutions for when a beneficiary tries to fill an opioid prescription
from a provider on the preclusion list. We seek comment as to what
limits or other guardrails CMS should set with respect to number of
doses, initial dosing, and type of product for opioid prescriptions for
particular clinical presentations (including acute pain, chronic pain,
hospice setting and so forth).
An alternative method of ensuring beneficiaries have access to
opioids as necessary would be to require the sponsor immediately
provide a transfer to a new provider when the first provider is on the
preclusion list. The new provider should be able to make an assessment
and either provide appropriate SUD treatment or continue the opioid or
pain management regimen, as medically appropriate. We are interested to
hear from commenters how to operationalize this and whether there is a
better method to ensure appropriate medication is provided without
transferring the beneficiary to a new provider. We are proposing a 90-
day provisional coverage period in lieu of a 3-month drug supply/90-day
time period established in existing Sec. 423.120(c)(6), which was
described on page 6 in the Technical Guidance on Implementation of the
Part D Prescriber Enrollment Requirement (Technical Guidance) issued on
December 29, 2015.\59\ Under the existing regulation (which, as noted
above, we have not enforced), a sponsor or MA-PD must track a separate
90-day consecutive time period for each drug covered as a provisional
supply from the initial date-of-service; the sponsor or MA-PD must not
reject a claim or deny a beneficiary's request for reimbursement until
the 90-day time period has passed or a 3-month supply has been
dispensed, whichever comes first. Under our proposal, however, a
beneficiary would have one 90-day provisional coverage period with
respect to an individual on the preclusion list. Accordingly, a
sponsor/PBM would track one 90-day time period from the date the first
drug is dispensed to the beneficiary pursuant to a prescription written
by the individual on the preclusion list. This dispensing event would
trigger a written notice and a 90-day time period for the beneficiary
to fill any prescriptions from that particular precluded prescriber and
to find another prescriber during that 90-day time period.
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\59\ See https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/Downloads/Technical-Guidance-on-Implementation-of-the-Part-D-Prescriber-Enrollment-Requirement.pdf.
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Our rationale for this change is that individuals on the preclusion
list are demonstrably problematic. This has negative implications not
only for the Trust Funds but also for beneficiary safety. Thus, it is
imperative that a beneficiary switch to a new prescriber who is not on
the preclusion list as soon as practicable. Under the current
[[Page 56446]]
prescriber enrollment requirement, the vast majority of prescribers who
are not enrolled in or opted-out of Medicare likely do not pose a risk
to the beneficiary or the Trust Funds, and therefore we can allow a 3-
month provisional supply/90-day time period for each prescription
written by such a prescriber. In addition, our proposed policy would
eliminate the difficulty sponsors and PBMs have under the current ``per
drug'' provisional supply policy in determining whether the beneficiary
already received a provisional supply of a drug. We seek specific
comment on the modifications we are proposing as to the provisional
coverage and time period.
With respect to beneficiaries who would also be entitled to a
transition, we are not proposing any change to the current policy. If a
Part D sponsor determines when adjudicating a pharmacy claim that a
beneficiary is entitled to provisional coverage because the prescriber
is on the preclusion list, but the drug is off-formulary and the
transition requirements set forth in Sec. 423.120(b)(3) are also
triggered, the beneficiary would not receive more than the applicable
transition supply of the drug, unless a formulary exception is
approved. We note that we considered proposing that the transition
requirements would not apply during the provisional supply period in
order to simplify the policy for situations when both apply to reduce
beneficiary confusion. We seek comment on this or other alternatives
for these situations.
We intend to allow the normal Part D rules (for example, edits,
prior authorization, quantity limits) to apply during the 90-day
provisional coverage period, but solicit comment on whether different
limits should apply when opioids are involved, particularly when the
reason for precluding the provider/prescriber relates to opioid
prescribing.
(4) Appeals
In our revisions to Sec. 423.120(c)(6), we propose to permit
prescribers who are on the preclusion list to appeal their inclusion on
this list in accordance with 42 CFR part 498. We believe that given the
aforementioned pharmacy claim rejections that would be associated with
a prescriber's appearance on the preclusion list, due process warrants
that the prescriber have the ability to challenge this via appeal. Any
appeal under this proposed provision, however, would be limited
strictly to the individual's inclusion on the preclusion list. The
proposed appeals process would neither include nor affect appeals of
payment denials or enrollment revocations, for there are separate
appeals processes for these actions. In addition, wewould send written
notice to the prescriber of his or her inclusion on the preclusion
list. The notice would contain the reason for the inclusion and would
inform the prescriber of his or her appeal rights. This is to ensure
that the prescriber is duly notified of the action, why it was taken,
and his or her ability to challenge our determination.
Consistent with our proposed provision in Sec. 423.120(c)(6)
regarding appeal rights, we propose to update several other regulatory
provisions regarding appeals:
We propose to revise Sec. 498.3(b) to add a new paragraph
(20) stating that a CMS determination to include a prescriber on the
preclusion list constitutes an initial determination. This revision
would help enable prescribers to utilize the appeals processes
described in Sec. 498.5.
In Sec. 498.5, we propose to add a new paragraph (n) that
would state as follows:
++ In paragraph (n)(1), we propose that any prescriber dissatisfied
with an initial determination or revised initial determination that he
or she is to be included on the preclusion list may request a
reconsideration in accordance with Sec. [thinsp]498.22(a).
++ In paragraph (n)(2), we propose that if CMS or the prescriber
under paragraph (n)(1) is dissatisfied with a reconsidered
determination under Sec. 498.5(n)(1), or a revised reconsidered
determination under Sec. 498.30, CMS or the prescriber is entitled to
a hearing before an administrative law judge (ALJ).
++ In paragraph (n)(3), we propose that if CMS or the prescriber
under paragraph (n)(2) is dissatisfied with a hearing decision as
described in paragraph (n)(2), CMS or the prescriber may request review
by the Departmental Appeals Board (DAB) and the prescriber may seek
judicial review of the DAB's decision.
These revisions are designed to include preclusion list
determinations within the scope of appeal rights described in Sec.
498.5. However, we solicit comment on whether a different appeals
process is warranted and, if so, what its components should be.
In addition, given that a beneficiary's access to a drug may be
denied because of the application of the preclusion list to his or her
prescription, we believe the beneficiary should be permitted to appeal
alleged errors in applying the preclusion list.
c. Specific Regulatory Changes
Given the foregoing discussion, we propose the following regulatory
changes:
In Sec. 423.100, we propose to delete the definition of
``other authorized prescriber'' and add the following:
++ Preclusion List means a CMS compiled list of prescribers who:
(1) Meet all of the following requirements: (A) The prescriber is
currently revoked from the Medicare program under Sec. 424.535.
(B) The prescriber is currently under a reenrollment bar under
Sec. 424.535(c).
(C) CMS determines that underlying conduct that led to the
revocation is detrimental to the best interests of the Medicare
program. In making this determination under this paragraph, CMS
considers the following factors:
(i) The seriousness of the conduct underlying the prescriber's
revocation;
(ii) The degree to which the prescriber's conduct could affect the
integrity of the Part D program; and
(iii) Any other evidence that CMS deems relevant to its
determination; or
(2) Meet both of the following requirements:
(i) The prescriber has engaged in behavior for which CMS could have
revoked the prescriber to the extent applicable if he or she had been
enrolled in Medicare.
(ii) CMS determines that the underlying conduct that would have led
to the revocation is detrimental to the best interests of the Medicare
program. In making this determination under this paragraph, CMS
considers the following factors:
(i) The seriousness of the conduct involved.
(ii) The degree to which the prescriber's conduct could affect the
integrity of the Part D program; and
(iii) Any other evidence that CMS deems relevant to its
determination
In paragraph (c)(5)(i), we propose that a Part D plan
sponsor must reject, or must require its pharmacy benefit manager (PBM)
to reject, a pharmacy claim for a Part D drug unless the claim contains
the active and valid National Provider Identifier (NPI) of the
prescriber who prescribed the drug. This requirement is consistent with
existing policy.
In paragraph (c)(5)(ii), we propose that the sponsor must
communicate at point-of sale whether or not a submitted NPI is active
and valid in accordance with this paragraph (c)(5)(ii).
In paragraph (c)(5)(ii)(A), we propose that if the sponsor
communicates that the NPI is not active and valid, the sponsor must
permit the pharmacy to--
[[Page 56447]]
++ Confirm that the NPI is active and valid; or
++ Correct the NPI.
In paragraph (c)(5)(ii)(B), we propose that if the
pharmacy confirms that the NPI is active and valid or corrects the NPI,
the sponsor must pay the claim if it is otherwise payable.
In paragraph (iii), we propose that a Part D sponsor must
not later recoup payment from a network pharmacy for a claim that does
not contain an active and valid individual prescriber NPI on the basis
that it does not contain one, unless the sponsor--
++ Has complied with paragraph (ii) of this section;
++ Has verified that a submitted NPI was not in fact active and
valid; and
++ The agreement between the parties explicitly permits such
recoupment.
In paragraph (iv), we propose that with respect to
requests for reimbursement submitted by Medicare beneficiaries, a Part
D sponsor may not make payment to a beneficiary dependent upon the
sponsor's acquisition of an active and valid individual prescriber NPI,
unless there is an indication of fraud. If the sponsor is unable to
retrospectively acquire an active and valid individual prescriber NPI,
the sponsor may not seek recovery of any payment to the beneficiary
solely on that basis.
In paragraph (c)(6)(i), we propose to state: ``Except as
provided in paragraph (c)(6)(iv) of this section, a Part D sponsor must
reject, or must require its PBM to reject, a pharmacy claim for a Part
D drug if the individual who prescribed the drug is included on the
preclusion list, defined in Sec. 423.100.'' This would help ensure
that Part D sponsors comply with our proposed requirement that claims
involving prescribers who are on the preclusion list should not be
paid.
In paragraph (c)(6)(ii), we propose to state as follows:
``Except as provided in paragraph (c)(6)(iv) of this section, a Part D
sponsor must deny, or must require its PBM to deny, a request for
reimbursement from a Medicare beneficiary if the request pertains to a
Part D drug that was prescribed by an individual who is identified by
name in the request and who is included on the preclusion list, defined
in Sec. 423.100.'' As with paragraph (c)(6)(i), this would help ensure
that Part D sponsors comply with our proposed requirement that payments
not be made for prescriptions written by prescribers who are on the
preclusion list.
In paragraph (c)(6)(iii), we propose to state: ``A Part D
plan sponsor may not submit a prescription drug event (PDE) record to
CMS unless it includes on the PDE record the active and valid
individual NPI of the prescriber of the drug, and the prescriber is not
included on the preclusion list, defined in Sec. 423.100, for the date
of service.'' This is to help ensure that-- (1) the prescriber can be
properly identified, and (2) prescribers who are on the preclusion list
are not included in PDEs.
In paragraph (c)(6)(iv), we propose to address the
provisional coverage period and notice provisions as follows:
``(iv)(A) A Part D sponsor or its PBM must not reject a pharmacy
claim for a Part D drug under paragraph (c)(6)(i) of this section or
deny a request for reimbursement under paragraph (c)(6)(ii) of this
section unless the sponsor has provided the provisional coverage of the
drug and written notice to the beneficiary required by paragraph
(c)(6)(iv)(B) of this section.
(B) Upon receipt of a pharmacy claim or beneficiary request for
reimbursement for a Part D drug that a Part D sponsor would otherwise
be required to reject or deny in accordance with paragraphs (c)(6)(i)
or (ii) of this section, a Part D sponsor or its PBM must do the
following: (1) Provide the beneficiary with the following, subject to
all other Part D rules and plan coverage requirements:
(i) A 90-day provisional supply coverage period during which the
sponsor must cover all drugs dispensed to the beneficiary pursuant to
prescriptions written by the individual on the preclusion list. The
provisional supply period begins on the date-of-service the first drug
is dispensed pursuant to a prescription written by the individual on
the preclusion list.
(ii) Written notice within 3 business days after adjudication of
the first claim or request for the drug in a form and manner specified
by CMS.
(2) Ensure that reasonable efforts are made to notify the
prescriber of a beneficiary who was sent a notice under paragraph
(c)(6)(iv)(B)(1)(ii) of this section.''
In new Sec. 423.120(c)(6)(v), we propose that CMS would
send written notice to the prescriber via letter of his or her
inclusion on the preclusion list. The notice would contain the reason
for the inclusion on the preclusion list and would inform the
prescriber of his or her appeal rights. A prescriber may appeal his or
her inclusion on the preclusion list in accordance with 42 CFR part
498.
In new Sec. 423.120(c)(6)(vi), we propose that CMS has
the discretion not to include a particular individual on (or, if
warranted, remove the individual from) the preclusion list should it
determine that exceptional circumstances exist regarding beneficiary
access to prescriptions. In making a determination as to whether such
circumstances exist, CMS would take into account--(1) the degree to
which beneficiary access to Part D drugs would be impaired; and (2) any
other evidence that CMS deems relevant to its determination.
In Sec. 498.3(b), we propose to add a new paragraph (20)
stating that a CMS determination that a prescriber is to be included on
the preclusion list constitutes an initial determination.
In Sec. 498.5, we propose to add a new paragraph (n) that
would state as follows:
++ In paragraph (n)(1), we propose that any prescriber dissatisfied
with an initial determination or revised initial determination that he
or she is to be included on the preclusion list may request a
reconsideration in accordance with Sec. [thinsp]498.22(a).
++ In paragraph (n)(2), we propose that if CMS or the prescriber
under paragraph (n)(1) is dissatisfied with a reconsidered
determination under Sec. 498.5(n)(1), or a revised reconsidered
determination under Sec. 498.30, CMS or the prescriber is entitled to
a hearing before an ALJ.
++ In paragraph (n)(3), we propose that if CMS or the prescriber
under paragraph (n)(2) is dissatisfied with a hearing decision as
described in paragraph (n)(2), CMS or the prescriber may request review
by the DAB and the prescriber may seek judicial review of the DAB's
decision.
11. Preclusion List--Part C/Medicare Advantage Cost Plan and PACE
Provisions
a. Background
(1) 2016 Final Rule
On November 15, 2016, CMS published a final rule in the Federal
Register 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 80169).
This rule contained a number of requirements related to provider
enrollment, including, but not limited to, the following:
We added a new Sec. 422.222 to require providers and
suppliers that furnish health care items or services to
[[Page 56448]]
a Medicare enrollee who receives his or her Medicare benefit through an
MA organization to be enrolled in Medicare and be in an approved status
no later than January 1, 2019. (The term ``MA organization'' refers to
both MA plans and MA plans that provide drug coverage, otherwise known
as MA-PD plans.) We also updated Sec. Sec. 417.478, 460.70, and 460.71
to reflect this requirement.
We added a requirement in new Sec. 422.204(b)(5) that
required MA organizations to comply with the provider and supplier
enrollment requirements referenced in Sec. 422.222. A similar
requirement was added to Sec. 422.504.
We revised Sec. Sec. 422.510, 422.752, 460.40, and 460.50
to state that organizations and programs that do not ensure that
providers and suppliers comply with the provider and supplier
enrollment requirements may be subject to sanctions and termination.
We revised Sec. 422.501 to require that MA organization
applications include documentation demonstrating that all applicable
providers and suppliers are enrolled in Medicare in an approved status.
We believed that these new requirements, as they pertained to MA, were
necessary to help ensure that Medicare enrollees receive items or
services from providers and suppliers that are fully compliant with the
requirements for Medicare enrollment. We also believed it would assist
our efforts to prevent fraud, waste, and abuse, and to protect Medicare
enrollees, by allowing us to carefully screen all providers and
suppliers (especially those that potentially pose an elevated risk to
Medicare) to confirm that they are qualified to furnish Medicare items
and services. Indeed, although Sec. 422.204(a) requires MA
organizations to have written policies and procedures for the selection
and evaluation of providers and suppliers that conform with the
credentialing and recredentialing requirements in Sec. 422.204(b), CMS
has not historically had direct oversight over all network providers
and suppliers under contract with MA organizations. While there are CMS
regulations governing how and when MA organizations can pay for covered
services, those are tied to statutory provisions. We concluded that
requiring Medicare enrollment in addition to the existing MA
credentialing requirements would permit a closer review of MA providers
and suppliers, which could, as warranted, involve rigorous screening
practices such as risk-based site visits and, in some cases,
fingerprint-based background checks, an approach we already take in the
Medicare Part A and Part B provider and supplier enrollment arenas. The
fact that CMS also has access to information and data not available to
MA organizations was also relevant to our decision.
(2) Preparations for Part C Enrollment
As with our Part D enrollment requirement, we promptly commenced
outreach efforts after the publication of the November 15, 2016 final
rule. We communicated with Part C provider associations and MA
organizations regarding, among other things, the general purpose of the
enrollment process, the rationale for Sec. 422.222, and the mechanics
of completing and submitting an enrollment application. According to
recent CMS internal data, approximately 933,000 MA providers and
suppliers are already enrolled in Medicare and meeting the MA provider
enrollment requirements. However, roughly 120,000 MA-only providers and
suppliers remain unenrolled in Medicare, and concerns have been raised
by the MA community over the enrollment requirement, principally over
the burden involved in enrolling in Medicare while having to also
undergo credentialing by their respective health plans.
We understand and share these concerns. We believe that the
Medicare enrollment requirement could result in a duplication of effort
and, consequently, impose a burden on MA providers and suppliers as
well as MA organizations and beneficiaries in the form of limiting
access to providers. While we maintain that Medicare enrollment, in
conjunction with MA credentialing, is the most thorough means of
confirming a provider's compliance with Medicare requirements and of
verifying the provider's qualifications to furnish services and items,
we believe that an appropriate balance can be achieved between this
program integrity objective and the desire to reduce the burden on the
provider and supplier communities. Given this, we propose to utilize
the same ``preclusion list'' concept in MA that we are proposing for
Part D (described in section III.B.9.) and to eliminate the current
enrollment requirement in Sec. 422.222. We believe this approach would
allow us to concentrate our efforts on preventing MA payment for items
and services furnished by providers and suppliers that could pose an
elevated risk to Medicare beneficiaries and the Trust Funds, an
approach, as previously mentioned, similar to the risk-based process in
Sec. 424.518. This would, we believe, minimize the burden on MA
providers and suppliers.
b. Proposed Provisions
(1) Process
The process we envision and propose would, similar to the proposed
Part D process, consist of the following components:
Step 1: We would research our internal systems and other
relevant data for individuals and entities that have engaged in
behavior for which CMS:
++ Has revoked the individual's or entity's enrollment and the
individual or entity is under a reenrollment bar; or
++ Could have revoked the individual or entity to the extent
applicable if they had been enrolled in Medicare.
In light of the significance of any activity that would result in a
revocation under Sec. 424.535(a), we believe that individual and
entities that have engaged in inappropriate behavior should be the
focus of our Part C program integrity efforts.
Step 2--CMS would review, on a case-by-case basis, each
individual and entity that:
++ Is currently revoked from Medicare and is under a reenrollment
bar. We would examine the reason for the revocation.
++ Has engaged in behavior for which CMS could have revoked the
individual or entity to the extent applicable if he or she had been
enrolled in Medicare.
Similar to our approach with Part D and for the same reason, the
individuals and entities to be reviewed would be those that-- according
to CMS' internal systems MA organization data, state board information,
and other relevant data for individuals and entities who are or who
could become eligible to furnish health care services or items. To
avoid confusion, we refer to such parties in our proposed Part C
preclusion list provisions as ``individuals'' and ``entities'' rather
than ``providers'' and ``suppliers.'' This is because the latter two
terms could convey the impression that the party in question must be
actively furnishing health care services or items to be included on the
preclusion list.
Similar to the Part D approach, we are also seeking comment on an
alternative by which CMS would first identify through encounter data
those providers or suppliers furnishing services or items to Medicare
beneficiaries. This would significantly reduce the universe of
prescribers who are on the preclusion list and reduce the government's
surveillance of prescribers. We
[[Page 56449]]
anticipate that this could create delays in CMS' ability to screen
providers or suppliers due to data lags and may introduce some program
integrity risks. We are particularly interested in hearing from the
public on the potential risks this could pose to beneficiaries.
Based on the results of Steps 1 and 2, we would compile a
preclusion list of individuals and entities that fall within either of
the following categories:
++ Are currently revoked from Medicare, are under a reenrollment
bar, and CMS determines that the underlying conduct that led to the
revocation is detrimental to the best interests of the Medicare
program.
++ Have engaged in behavior for which CMS could have revoked the
individual or entity to the extent applicable if they had been enrolled
in Medicare, and CMS determines that the underlying conduct that would
have led to the revocation is detrimental to the best interests of the
Medicare program.
We propose to update Sec. 422.2 to add a definition of
``preclusion list'' consistent with both the foregoing discussion as
well as our proposed definition of the same term for the Part D
program.
We propose to adopt this preclusion list approach as an alternative
to enrollment in part to reflect the more indirect connection of
providers and suppliers in Medicare Advantage. We seek comment on
whether some of the bases for revocation should not apply to the
preclusion list in whole or in part and whether the final regulation
(or future guidance) should specify which bases are or are not
applicable and under what circumstances.
In addition, we note that while there would be separate regulatory
provisions for Part C and Part D, there would not be two separate
preclusion lists: one for Part C and one for Part D. Rather, there
would be a single preclusion list that includes all affected
individuals and entities. Having one joint list, we believe, would make
the preclusion list process easier to administer.
(2) Denial of Payment
Section 422.222(a) currently states that providers or suppliers
that are types of individuals or entities that can enroll in Medicare
in accordance with section 1861 of the Act, must be enrolled in
Medicare and be in an approved status in Medicare in order to provide
health care items or services to a Medicare enrollee who receives his
or her Medicare benefit through an MA organization. This requirement
applies to all of the following providers and suppliers:
Network providers and suppliers.
First-tier, downstream, and related entities (FDR).