Medicare and Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly, 9002-9260 [2020-02085]

Agencies

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

[Federal Register Volume 85, Number 32 (Tuesday, February 18, 2020)]
[Proposed Rules]
[Pages 9002-9260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02085]



[[Page 9001]]

Vol. 85

Tuesday,

No. 32

February 18, 2020

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 and Medicaid Programs; Contract Year 2021 and 2022 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan 
Program, and Programs of All-Inclusive Care for the Elderly; Proposed 
Rule

Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / 
Proposed Rules

[[Page 9002]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 417, 422, 423, 455, and 460

[CMS-4190-P]
RIN 0938-AT97


Medicare and Medicaid Programs; Contract Year 2021 and 2022 
Policy and Technical Changes to the Medicare Advantage Program, 
Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare 
Cost Plan Program, and Programs of All-Inclusive Care for the Elderly

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise regulations for the Medicare 
Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) 
program, Medicaid program, Medicare Cost Plan program, and Programs of 
All-Inclusive Care for the Elderly to implement certain sections of the 
Bipartisan Budget Act of 2018, the Substance Use-Disorder Prevention 
that Promotes Opioid Recovery and Treatment for Patients and 
Communities Act, and the 21st Century Cures Act. This proposed rule 
would also enhance the Part C and D programs, codify several existing 
CMS policies, and implement other technical changes.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on April 6, 2020.

ADDRESSES: In commenting, please refer to file code CMS-4190-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. Comments, including mass comment 
submissions, must be submitted in one of the following three ways 
(please choose only one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to 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-4190-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-4190-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
Theresa Wachter, (410) 786-1157, or Cali Diehl, (410) 786-4053--General 
Questions.
Kimberlee Levin, (410) 786-2549--Part C Issues.
Lucia Patrone, (410) 786-8621--Part D Issues.
Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and Appeals 
Issues.
Stacy Davis, (410) 786-7813--Part C and D Payment Issues.
Sabrina Sparkman, (410) 786-3209--PACE Issues.
Debra Drew, (410) 786-6827--Program Integrity Issues.
Melissa Seeley, (212) 616-2329--D-SNP Issues.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website 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.

Acronyms

AE Actuarial Equivalent
AEP Annual Coordinated Enrollment Period
AIC Amount in Controversy
ANOC Annual Notice of Change
ARB At-Risk Beneficiaries
BBA Bipartisan Budget Act
BBP Base Beneficiary Premium
BLS Bureau of Labor Statistics
CAHPS Consumer Assessment of Healthcare Providers and Systems
CARA Comprehensive Addiction and Recovery Act
CDC Centers for Disease Control and Prevention
CEAC Counties with Extreme Access Considerations
CMS Centers for Medicare & Medicaid Services
COI Collection of Information
CON Certificate of Need
COPD Chronic Obstructive Pulmonary Disease
C-SNP Chronic Condition Special Needs Plan
DME Durable Medical Equipment
DMP Drug Management Program
D-SNP Dual Eligible Special Needs Plan
ED Emergency Department
EGWP Employer Group Waiver Plan
EHR Electronic Health Record
EOC Evidence of Coverage
eRx E-Prescribing
ESRD End-Stage Renal Disease
FAD Frequently Abused Drug
FAQ Frequently Asked Question
FFS Fee-for-Service
FIDE SNP Fully Integrated Dual Eligible Special Needs Plan
FMV Fair Market Value
HEDIS Healthcare Effectiveness Data and Information Set
HHS Department of Health and Human Services
HIDE SNP Highly Integrated Dual Eligible Special Needs Plan
HIPAA Health Insurance Portability and Accountability Act of 1996
HOS Health Outcomes Survey
HPMS Health Plan Management System
HSD Health Service Delivery
ICD International Classification of Diseases
ICR Information Collection Requirement
IDR Integrated Data Repository
IDT Interdisciplinary Team
IMF Illicitly Manufactured Fentanyl
IRE Independent Review Entity
IRMAA Income-Related Monthly Adjustment Amount
I-SNP Institutional Special Needs Plan
IT Information Technology
LPPO Local Preferred Provider Organization
MA Medicare Advantage
MACPAC Medicaid and CHIP Payment and Access Commission
MAGI Modified Adjusted Gross Income
MA-PD Medicare Advantage Prescription Drug
MCO Managed Care Organization
MCMG Medicare Communications and Marketing Guidelines
MCS Improving or Maintaining Mental Health
MedPAC Medicare Payment Advisory Commission
MIPPA Medicare Improvements for Patients and Providers Act
MLR Medical Loss Ratio
MMA Medicare Prescription Drug, Improvement, and Modernization Act
MMCM Medicare Managed Care Manual
MME Morphine Milligram Equivalent

[[Page 9003]]

MMP Medicare-Medicaid Plan
MOC Model of Care
MOOP Maximum Out-of-Pocket
MPF Medicare Plan Finder
MSA Medical Savings Account
NAICS North American Industry Classification System
NBI MEDIC National Benefit Integrity Medicare Drug Integrity 
Contractor
NCQA National Committee for Quality Assurance
NMM Network Management Module
NPPES National Provider and Plan Enumeration System
NQF National Quality Forum
OACT Office of the Actuary
OEP Open Enrollment Period
OIG Office of Inspector General
OMB Office of Management and Budget
OMHA Office of Medicare Hearings and Appeals
OMS Overutilization Management System
OUD Opioid Use Disorder
PA Prior Authorization
PACE Programs of All-Inclusive Care for the Elderly
PAD Peripheral Artery Disease
PARB Potential At-Risk Beneficiary
PBP Plan Benefit Package
PCS Improving or Maintaining Physical Health
PDE Prescription Drug Event
PDP Prescription Drug Plan
PFFS Private Fee-for-Service
PIM Program Integrity Manual
PMPM Per Member Per Month
POS Point-of-Sale
PQA Pharmacy Quality Alliance
PRA Paperwork Reduction Act
QBP Quality Bonus Payment
QIA Quality Improvement Activity
RFA Regulatory Flexibility Act
RI Rewards and Incentives
RPPO Regional Preferred Provider Organization
RTBT Real Time Benefit Tool
SAE Service Area Expansion
SAR Service Area Reduction
SB Summary of Benefits
SBA Small Business Administration
SCD Sickle Cell Disease
SEP Special Election Period
SET Supervised Exercise Therapy
SIU Special Investigations Unit
SMID Standardized Material Identification
SNP Special Needs Plan
SOA Scope of Appointment
SPAP State Pharmaceutical Assistance Program
SSA Social Security Administration
SSBCI Special Supplemental Benefits for the Chronically Ill
SUPD Statin Use in Persons with Diabetes
SUPPORT Substance Use-Disorder Prevention that Promotes Opioid 
Recovery and Treatment
TMP Timeliness Monitoring Project
UM Utilization Management
UMRA Unfunded Mandates Reform Act

I. Executive Summary

A. Executive Summary

1. Purpose
    The primary purpose of this proposed rule is to implement certain 
sections of the following federal laws related to the Medicare 
Advantage (MA or Part C) and Prescription Drug Benefit (Part D) 
programs:
     The Bipartisan Budget Act of 2018 (hereinafter referred to 
as the BBA of 2018)
     The Substance Use-Disorder Prevention that Promotes Opioid 
Recovery and Treatment (SUPPORT) for Patients and Communities Act 
(hereinafter referred to as the SUPPORT Act)
     The 21st Century Cures Act (hereinafter referred to as the 
Cures Act)
    The rule would also include a number of changes to strengthen and 
improve the Part C and D programs, codify in regulation several CMS 
interpretive policies previously adopted through the annual Call Letter 
and other sub-regulatory guidance documents, and implement other 
technical changes for contract year 2021 and 2022. In the fall of 2017, 
CMS launched the Patients over Paperwork initiative. The key focus of 
this initiative is to reduce ``red tape'' that depletes resources from 
our healthcare system and wastes the time clinicians and other 
healthcare workers need to perform their primary mission--caring for 
patients.
    In keeping with the success of this program, CMS continues to 
review its regulatory requirements and sub-regulatory policies to 
examine opportunities to prioritize the well-being of patients over the 
CMS requirements on the healthcare industry. In particular, the 
Patients over Paperwork initiative charges CMS to analyze the impact of 
existing requirements and remove unnecessary burdens. As part of this, 
CMS is streamlining and clarifying certain patient protections and 
codifying important sub-regulatory guidance in the Code of Federal 
Regulations. This provides an opportunity for the public to review and 
comment on proposed requirements and provides transparency into CMS's 
rules and guidance.
2. Summary of the Major Provisions
a. Mandatory Drug Management Programs (DMPs) (Sec.  423.153)
    Section 704 of the Comprehensive Addiction and Recovery Act of 2016 
(hereinafter referred to as CARA) included provisions permitting Part D 
sponsors to establish drug management programs (DMPs) for beneficiaries 
at-risk for misuse or abuse of frequently abused drugs (FADs). Under 
the DMPs in place today, Part D sponsors engage in case management of 
potential at-risk beneficiaries (PARBs) through contact with their 
prescribers to determine whether the beneficiary is at-risk for 
prescription drug misuse or abuse. If a beneficiary is determined to be 
at-risk, after notifying the beneficiary in writing, the sponsor may 
limit their access to coverage of opioids and/or benzodiazepines to a 
selected prescriber and/or network pharmacy(ies) and/or through a 
beneficiary-specific point-of-sale (POS) claim edit.
    While the majority of Part D sponsors have already voluntarily 
implemented DMPs, CMS is proposing the requirement of mandatory 
implementation of DMPs by Part D sponsors, for plan years beginning on 
or after January 1, 2022, as required under section 2004 of the SUPPORT 
Act.
b. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.100)
    A past overdose is the risk factor most predictive for another 
overdose or suicide-related event.\1\ In light of this fact, in section 
2006 of the SUPPORT Act, Congress required CMS to include Part D 
beneficiaries with a history of opioid-related overdose (as defined by 
the Secretary) as PARBs under a Part D plan's DMP. CMS is also required 
under this section to notify the sponsor of such identifications. In 
line with this requirement, we are proposing to modify the definition 
of ``potential at-risk beneficiary'' at Sec.  423.100 to include a Part 
D eligible individual who is identified as having a history of opioid-
related overdose, as we propose to define it. Inclusion of 
beneficiaries with a history of opioid-related overdose as PARBs in 
DMPs will allow Part D plan sponsors and providers to work together to 
closely assess these beneficiaries' opioid use and determine whether 
any additional action is warranted.
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    \1\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the US Veterans Health Administration. Addiction. 2017 
Jul;112(7):1193-1201. doi: 10.1111/add.13774.
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c. Automatic Escalation to External Review Under a Medicare Part D Drug 
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec.  423.153, 
423.590, and 423.600)
    CMS is proposing that, if on reconsideration a Part D sponsor 
affirms its denial of a DMP appeal, the case shall be automatically 
forwarded to the independent outside entity for review and resolution. 
We are proposing that a plan sponsor must forward the case to the 
independent outside entity by the expiration of the adjudication 
timeframe applicable to the plan level appeal. Finally, we are 
proposing conforming

[[Page 9004]]

revisions to the notices that are sent to beneficiaries.
d. Suspension of Pharmacy Payments Pending Investigations of Credible 
Allegations of Fraud and Program Integrity Transparency Measures 
(Sec. Sec.  405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)
    CMS proposes to undertake rulemaking to implement the provisions 
outlined in sections 2008 and 6063 of the SUPPORT Act, which are 
summarized in the following sections (1) and (2). Implementing these 
provisions will allow CMS, MA organizations and Medicare Part D plan 
sponsors (including MA organizations offering MA-PD plans) to share 
data and information regarding bad actors, take swift action based on 
such data and information, and achieve enhanced outcomes in our efforts 
to fight the opioid crisis. In addition, this regulation will provide 
the means for more effective referrals to law enforcement based on plan 
sponsor reporting, ultimately resulting in reduced beneficiary harm and 
greater savings for the Medicare program.
(1) Section 2008 of the SUPPORT Act
    Title XVIII of the Social Security Act (the Act) provides authority 
for CMS to suspend payments to Medicare fee-for-service (FFS) providers 
and suppliers pending an investigation of a credible allegation of 
fraud, unless a good cause exception applies. While Part D plan 
sponsors currently have the discretion to suspend payments to 
pharmacies in the plans' networks, section 2008 requires that plan 
sponsors' payment suspensions based on credible allegations of fraud be 
implemented in the same manner as CMS implements such payment 
suspensions. Under this provision, plan sponsors are required to notify 
the Secretary of the imposition of a payment suspension that is based 
on a credible allegation of fraud and may do so using a secure website 
portal. The reporting requirement applicable to plan sponsors will only 
apply to suspended payments based on credible allegations of fraud as 
required by section 2008 and will not extend to other payment 
suspensions for which plan sponsors already have authority. Section 
2008 also clarifies that a fraud hotline tip, without further evidence, 
is not considered a credible fraud allegation for payment suspension 
purposes.
(2) Section 6063 of the SUPPORT Act
    Section 6063 requires the Secretary to establish a secure internet 
website portal to enable the sharing of data among MA plans, 
prescription drug plans, and the Secretary, and referrals of 
``substantiated or suspicious activities'' of a provider of services 
(including a prescriber) or a supplier related to fraud, waste, or 
abuse to initiate or assist with investigations conducted by eligible 
entities with a contract under section 1893 of the Act, such as a 
Medicare program integrity contractor. The Secretary is also required 
to use the portal to disseminate information to all MA plans and 
prescription drug plans on providers and suppliers that were referred 
to CMS for fraud, waste, and abuse in the last 12 months; were excluded 
or the subject of a payment suspension; are currently revoked from 
Medicare; or, for such plans that refer substantiated or suspicious 
activities to CMS, whether the related providers or suppliers were 
subject to administrative action for similar activities. The Secretary 
is required to define what constitutes substantiated or suspicious 
activities. Section 6063 specifies that a fraud hotline tip without 
further evidence shall not be treated as sufficient evidence for 
substantiated fraud, waste, or abuse.
    Section 6063 also requires the Secretary to disseminate quarterly 
reports to MA plans and prescription drug plans on fraud, waste, and 
abuse schemes and suspicious activity trends reported through the 
portal. The Secretary's reports are to maintain the anonymity of 
information submitted by plans and to include administrative actions, 
opioid overprescribing information, and other data the Secretary, in 
consultation with stakeholders, determines important.
    Beginning with plan year 2021, section 6063 also requires Part D 
plan sponsors to submit to the Secretary information on investigations, 
credible evidence of suspicious activities of providers or suppliers 
related to fraud, and other actions taken by the plans related to 
inappropriate opioid prescribing. The Secretary is required to issue 
regulations that define the term inappropriate prescribing with respect 
to opioids, identify a method to determine if providers are 
inappropriately prescribing, and identify the information plan sponsors 
are required to submit.
e. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease 
(ESRD) Beneficiaries (Sec. Sec.  422.50, 422.52, and 422.110)
    The Cures Act (Pub. L. 114-255) amended sections 1851, 1852, and 
1853 of the Act to expand enrollment options for individuals with end 
stage renal disease (ESRD) and make associated payment and coverage 
changes to the MA and original Medicare programs. Specifically, since 
the beginning of the MA program, individuals with ESRD have not been 
able to enroll in MA plans subject to limited exceptions. Section 
17006(a) of the Cures Act removed this prohibition effective for plan 
years beginning on or after January 1, 2021. We are proposing to codify 
this change with revisions to Sec. Sec.  422.50(a)(2), 422.52, and 
422.110.
f. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney 
Acquisitions for Medicare Advantage (MA) Beneficiaries (Sec.  422.322)
    With this new enrollment option, the Cures Act also made several 
payment changes in the MA and original Medicare FFS programs. Section 
17006(c) of the Cures Act amended section 1852(a)(1)(B)(i) of the Act 
to exclude from the Medicare benefits an MA plan is required to cover 
for an MA enrollee coverage for organ acquisitions for kidney 
transplants, including as covered under section 1881(d) of the Act. 
Effective January 1, 2021, these costs will be covered under the 
original Medicare FFS program. Section 17006(c)(2) of the Cures Act 
also amended section 1851(i) of the Act, providing that CMS may pay an 
entity other than the MA organization that offers the plan in which the 
individual is enrolled for expenses for organ acquisitions for kidney 
transplants described in section 1852(a)(1)(B)(i) of the Act. We 
propose changes to our regulation at Sec.  422.322 to align with these 
new statutory requirements.
g. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) 
Benchmarks (Sec. Sec.  422.258 and 422.306)
    Since the original Medicare FFS program will cover costs of organ 
acquisitions for kidney transplants for individuals in an MA plan, 
section 17006(b) of the Cures Act also amended section 1853 of the Act 
to exclude these costs from the MA benchmarks used in determining 
payment to MA plans. Specifically, the Secretary, effective January 1, 
2021, is required to exclude the estimate of standardized costs for 
payments for organ acquisitions for kidney transplants from MA 
benchmarks and capitation rates. We propose changes to our regulations 
at Sec. Sec.  422.258(d) and 422.306 to align with these new statutory 
requirements.

[[Page 9005]]

h. Medicare Advantage (MA) and Part D Prescription Drug Program Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.252, 423.182, 
423.184, and 423.186)
    In the Medicare Program; Contract Year 2019 Policy and Technical 
Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-
for-Service, the Medicare Prescription Drug Benefit Programs, and the 
PACE Program Final Rule (hereinafter referred to as the April 2018 
final rule), we codified the methodology for the Star Ratings system 
for the MA and Part D programs, respectively, at Sec. Sec.  422.160 
through 422.166 and Sec. Sec.  423.180 through 423.186. We will propose 
through rulemaking any changes to the methodology for calculating the 
ratings, the addition of new measures, and substantive measure changes.
    At this time, in addition to routine measure updates and technical 
clarifications, we are proposing to further increase the weight of 
patient experience/complaints and access measures from a weight of 2 to 
4. We are also proposing to directly remove outliers prior to 
calculating the cut points to further increase the predictability and 
stability of the Star Ratings system. We are also proposing to clarify 
some of the current rules around assigning Quality Bonus Payment (QBP) 
ratings and to codify existing policy for assigning QBP ratings for new 
contracts under existing parent organizations. Unless otherwise stated, 
data would be collected and performance measured using these proposed 
rules and regulations for the 2021 measurement period and the 2023 Star 
Ratings.
i. Permitting a Second, ``Preferred'', Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)
    We are proposing to allow Part D sponsors to establish up to two 
specialty tiers and design an exceptions process that exempts drugs on 
these tiers from tiering exceptions to non-specialty tiers. We propose 
that Part D sponsors would have the flexibility to determine which Part 
D drugs are placed on either specialty tier, subject to the ingredient 
cost threshold established according to the methodology we are 
proposing and the requirements of the CMS formulary review and approval 
process under Sec.  423.120(b)(2). To maintain Part D enrollee 
protections, we are proposing to codify a maximum allowable cost 
sharing that would apply to the higher cost-sharing specialty tier. 
Further, we propose to require that if there are two specialty tiers, 
one must be a ``preferred'' tier that offers lower cost sharing than 
the proposed maximum allowable specialty tier cost sharing.
    We note that we are not proposing any revisions to Sec.  
423.578(c)(3)(ii), which requires Part D sponsors to provide coverage 
for a drug for which a tiering exception was approved at the cost 
sharing that applies to the preferred alternative. Because we propose 
that the exemption from tiering exceptions for specialty tier drugs 
would apply only to tiering exceptions to non-specialty tiers, our 
proposal would require Part D sponsors to permit tiering exception 
requests for drugs on the higher-cost specialty tier to the lower-cost 
specialty tier.
    To improve transparency, we propose to codify current methodologies 
for cost sharing and calculations relative to the specialty tier, with 
some modifications. First, we propose to codify a maximum allowable 
cost sharing permitted for the specialty tiers of between 25 percent 
and 33 percent, depending on whether the plan includes a deductible, as 
described further in section V.F.4. of this proposed rule. We also 
propose to determine the specialty-tier cost threshold--meaning whether 
the drug has costs high enough to qualify for specialty tier 
placement--based on a 30-day equivalent supply. Additionally, we 
propose to base the determination of the specialty-tier cost threshold 
on the ingredient cost reported on the prescription drug event (PDE). 
We also propose to maintain a specialty-tier cost threshold for both 
specialty tiers that is set at level that, in general, reflects drugs 
with monthly ingredient costs that are in the top one percent, as 
described further in section V.F.6. of this proposed rule. Finally, we 
propose to adjust the threshold, in an increment of not less than ten 
percent, rounded to the nearest $10, when an annual analysis of PDE 
data shows that an adjustment is necessary to recalibrate the threshold 
so that it only reflects drugs with the top one percent of monthly 
ingredient costs. We propose to determine annually whether the 
adjustment would be triggered and announce the specialty-tier cost 
threshold annually.
j. Beneficiary Real Time Benefit Tool (RTBT) (Sec.  423.128)
    This rule proposes to require that Part D plan sponsors implement, 
no later than January 1, 2022, a beneficiary real-time benefit tool 
(RTBT). This tool would allow enrollees to view a plan-defined subset 
of the information included in the prescriber RTBT system, which will 
include accurate, timely, and clinically appropriate patient-specific 
real-time formulary and benefit information (including cost, formulary 
alternatives and utilization management requirements). Plans would be 
permitted to use existing secure patient portals to fulfill this 
requirement, to develop a new portal, or use a computer application. 
Plans would be required to make this information available to enrollees 
who call the plans' customer service call center.
    In order to encourage enrollees to use the beneficiary RTBT, we 
propose to allow plans to offer rewards and incentives (RI) to their 
enrollees who log onto the beneficiary RTBT or seek to access this 
information via the plan's customer service call center.
k. Medical Loss Ratio (MLR) (Sec. Sec.  422.2420, 422.2440, and 
423.2440)
    We are proposing to amend the MA medical loss ratio (MLR) 
regulation at Sec.  422.2420 so that the incurred claims portion of the 
MLR numerator includes all amounts that an MA organization pays 
(including under capitation contracts) for covered services. Currently, 
incurred claims in the MLR numerator include direct claims paid to 
providers for covered services furnished to all enrollees under an MA 
contract. This proposal would include in the incurred claims portion of 
the MLR numerator amounts paid for covered services to individuals or 
entities that do not meet the definition of ``provider'' as defined at 
Sec.  422.2.
    We are also proposing to codify in the regulations at Sec. Sec.  
422.2440 and 423.2440 the definitions of partial, full, and non-
credibility and the credibility factors that CMS published in the 
Medicare Program; Medical Loss Ratio Requirements for the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs Final 
Rule (78 FR 31284) (hereinafter referred to as the May 2013 Medicare 
MLR final rule). We believe that it is more consistent with the policy 
and principles articulated in Executive Order 13892 on Promoting the 
Rule of Law Through Transparency and Fairness in Civil Administrative 
Enforcement and Adjudication (October 9, 2019) that we define and 
publish the definitions of partial, full, and non-credibility and the 
credibility factors in the Federal Register, and that we codify these 
definitions and factors in the Code of Federal Regulations, as opposed 
to using the annual Advance Notice and Rate Announcement process, as 
specified in current Sec. Sec.  422.2440 and 423.2440.
    Additionally, we are proposing to amend Sec.  422.2440 to provide 
for the application of a deductible factor to the

[[Page 9006]]

MLR calculation for MA medical savings account (MSA) contracts that 
receive a credibility adjustment. The proposed deductible factor would 
serve as a multiplier on the applicable credibility adjustment. This 
additional adjustment for MA MSAs is intended to recognize that the 
variability of claims experience is greater under health insurance 
policies with higher deductibles than under policies with lower 
deductibles, with high cost or outlier claims representing a larger 
portion of the overall claims experience of plans with high 
deductibles. The proposed deductible factor would reduce the risk that 
an MSA contract will fail to meet the MLR requirement as a result of 
random variations in claims experience. We are proposing to adopt the 
same deductible factors that apply under the commercial MLR regulations 
at 45 CFR part 158.
l. Medicare Advantage (MA) and Cost Plan Network Adequacy (Sec. Sec.  
417.416 and 422.116)
    We are proposing to strengthen network adequacy rules for MA plans 
by codifying our existing network adequacy methodology and standards 
(with some modifications); we are also seeking comment on refining 
standards related to telehealth, maximum time and distance standards, 
and whether there are additional changes we should consider to improve 
MA plan access in all county types, such as to address the effect of 
Certificate of Need (CON) requirements, or whether there more specific 
changes we should consider to increase plan choice in more rural 
counties. The authorization of additional telehealth benefits pursuant 
to the BBA of 2018 incentivizes new ways for beneficiaries to access 
health care beginning in 2020. As a result, CMS has been examining its 
network adequacy standards overall to determine how contracted 
telehealth providers should be considered when evaluating the adequacy 
of an MA plan network. We propose to allow MA plans to receive a 10 
percent credit towards the percentage of beneficiaries residing within 
published time and distance standards when they contract with 
telehealth providers in the following provider specialty types: 
dermatology, psychiatry, cardiology, otolaryngology and neurology. We 
also are soliciting comment regarding whether we should expand this 
credit to other specialty provider types, such as nephrology for home 
dialysis and if this percentage ``credit'' should vary by county type.
    Additionally, in order to expand access to MA plans where network 
development can be challenging, we propose to modify the current 
network adequacy standards by codifying a reduced standard for the 
percentage of beneficiaries that must reside within the maximum time 
and distance standards in non-urban counties (Micro, Rural, and 
Counties with Extreme Access Considerations (CEAC) county type 
designations) for an MA plan to comply with the network adequacy 
standards. We also solicit comment about whether and how much of a 
percentage reduction would likely be required to incentivize MA 
penetration and whether the reduction should apply to all county types, 
or just non-urban counties.
m. Special Election Periods (SEPs) for Exceptional Conditions 
(Sec. Sec.  422.62 and 423.38)
    Sections 1851(e)(4) and 1860D-1(b)(3) of the Act establish special 
election periods (SEPs) during which, if certain circumstances exist, 
an individual may request enrollment in, or disenrollment from, MA and 
Part D plans. The Secretary also has the authority to create SEPs for 
individuals who meet other exceptional conditions. We are proposing to 
codify a number of SEPs that we have adopted and implemented through 
subregulatory guidance as exceptional circumstances SEPs. Codifying our 
current policy for these SEPs will provide transparency and stability 
to the MA and Part D programs by ensuring that the SEPs are known and 
changed only through additional rulemaking. Among the proposed SEPs are 
the SEP for Individuals Affected by a FEMA-Declared Weather-Related 
Emergency or Major Disaster, the SEP for Employer/Union Group Health 
Plan (EGHP) elections, and the SEP for Individuals Who Disenroll in 
Connection with a CMS Sanction. We are also proposing to establish two 
additional SEPs for exceptional circumstances: the SEP for Individuals 
Enrolled in a Plan Placed in Receivership and the SEP for Individuals 
Enrolled in a Plan that has been identified by CMS as a Consistent Poor 
Performer.
n. Service Delivery Request Processes Under PACE (Sec. Sec.  460.104 
and 460.121)
    Currently, PACE participants or their designated representatives 
may request to initiate, eliminate or continue a service, and in 
response, the PACE organization must process this request under the 
requirements at Sec.  460.104(d)(2). These requests are commonly 
referred to by CMS and the industry as ``service delivery requests.'' 
In response to feedback from PACE organizations and advocacy groups, 
and based on our experience monitoring PACE organizations' compliance 
with our current requirements, we are proposing to move the 
requirements for processing service delivery requests from Sec.  
460.104(d)(2) and add them to a new Sec.  460.121 in order to increase 
transparency for participants and reduce confusion for PACE 
organizations. We are also proposing to modify these provisions in 
order to reduce unnecessary burden on PACE organizations and eliminate 
unnecessary barriers for participants who have requested services that 
a PACE organization would be able to immediately approve. Specifically, 
we are proposing to more clearly define what constitutes a service 
delivery request, and provide transparent requirements for how those 
requests would be processed by the PACE organization, including who can 
make a request, how a request can be made, and the timeframe for 
processing a service delivery request. We are also proposing to allow 
the interdisciplinary team (IDT) to bypass the full processing of a 
service delivery request under the new proposed requirements under 
Sec.  460.121 when the request can be approved in full by an IDT member 
at the time it is made. For all other service delivery requests that 
are brought to the IDT, we are proposing to maintain the requirement 
that an in-person reassessment must be conducted prior to a service 
delivery request being denied, but we are proposing to eliminate the 
requirement that a reassessment (either in-person or through remote 
technology) be conducted when a service delivery request can be 
approved. Lastly, we are proposing to add participant protections; 
specifically, we are proposing to increase notification requirements in 
order to ensure participants understand why their request was denied, 
and we are proposing to add reassessment criteria in order to ensure 
reassessments are meaningful to the service delivery request, and that 
the IDT takes them into consideration when rendering a decision.
o. Beneficiaries With Sickle Cell Disease (SCD) (Sec.  423.100)
    Beneficiaries with active cancer-related pain, residing in a long-
term care facility, or receiving hospice, palliative, or end-of-life 
care currently meet the definition of ``exempt individuals'' with 
respect to DMPs in Sec.  423.100. Section 1860D-4(c)(5)(C)(ii)(III) of 
the Act provides the Secretary with the authority to elect to treat 
other beneficiaries as exempted from DMPs.

[[Page 9007]]

Due to concerns of misapplication of opioid restrictions in the sickle 
cell disease (SCD) patient population, CMS is proposing that, starting 
in plan year 2021, beneficiaries with SCD are classified as exempt 
individuals.
    3. Summary of Costs and Benefits
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BILLING CODE 4120-01-C

II. Implementation of Certain Provisions of the Bipartisan Budget Act 
of 2018

A. Special Supplemental Benefits for the Chronically Ill (SSBCI) (Sec.  
422.102)

    The BBA of 2018 (Pub. L. 115-123) was signed into law on February 
9, 2018. The law included new authorities concerning supplemental 
benefits that may be offered to chronically ill enrollees in Medicare 
Advantage (MA) plans, specifically amending section 1852(a)(3) of the 
Act to add a new subparagraph (D) authorizing a new category of 
supplemental benefits that may be offered by MA plans. We discussed 
this new authority in the April 2018 final rule (83 FR 16481 through 
16483).\2\ We propose to codify the existing guidance (April 2019 
Health Plan Management System (HPMS) Memo \3\ and the 2020 Call Letter) 
\4\ and parameters for these special supplemental benefits for 
chronically ill enrollees at Sec.  422.102(f) to implement section 
1852(a)(3)(D) of the Act.
---------------------------------------------------------------------------

    \2\ https://www.govinfo.gov/content/pkg/FR-2018-04-16/pdf/2018-07179.pdf.
    \3\ https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/Supplemental_Benefits_Chronically_Ill_HPMS_042419.pdf.
    \4\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

    Specifically, the BBA of 2018 amended section 1852(a)(3) of the Act 
to: (1) Authorize MA plans to provide additional supplemental benefits 
that have a reasonable expectation of improving or maintaining the 
health or overall function of the chronically ill enrollee to 
chronically ill enrollees; (2) permit those additional supplemental 
benefits to be not primarily health related; (3) define ``chronically 
ill enrollee'' to limit eligibility for these additional supplemental 
benefits; and (4) authorize CMS to waive uniformity requirements in 
connection with this for eligible chronically ill enrollees. We refer 
to these benefits hereafter as Special Supplemental Benefits for the 
Chronically Ill (SSBCI). The heading for new subparagraph (D) of 
section 1852(a)(3) of the Act, as added by the BBA, states, ``Expanding 
supplemental benefits to meet the needs of chronically ill enrollees.'' 
Consistent with this text, this new category of supplemental benefits 
is intended to enable MA plans to better tailor benefit offerings, 
address gaps in care, and improve health outcomes for the chronically 
ill population. Section 1852(a)(3)(D)(ii) of the Act, as amended, 
defines a chronically ill enrollee as an individual who--
     Has one or more comorbid and medically complex chronic 
conditions that is life threatening or significantly limits the overall 
health or function of the enrollee;
     Has a high risk of hospitalization or other adverse health 
outcomes; and
     Requires intensive care coordination.
    Thus, with respect to SSBCI benefits, we propose at Sec.  
422.102(f)(1)(i), to codify this definition of a chronically ill 
enrollee. Section 1859(f)(9) of the Act requires us to convene a panel 
of

[[Page 9012]]

clinical advisors to establish and update a list of conditions that 
meet the definition of a severe or disabling chronic condition under 
section 1859(b)(6)(B)(iii) of the Act, which provides how having such a 
condition is an eligibility criterion for a chronic care special needs 
plan. The standard for severe or disabling chronic condition under 
section 1859(b)(6)(B)(iii) of the Act is substantially similar to the 
criterion used in defining ``chronically ill enrollee'' for purposes of 
SSBCI eligibility. Under our proposal, MA plans may consider any 
enrollee with a condition identified on this list to meet the statutory 
criterion of having one or more comorbid and medically complex chronic 
conditions that is life threatening or significantly limits the overall 
health or function of the enrollee. Further, an MA plan may consider 
any chronic condition not identified on this list if that condition is 
life threatening or significantly limits the overall health or function 
of the enrollee. CMS wishes to allow plans the flexibility to continue 
to innovate around providing care for their specific plan populations. 
This includes targeted chronic conditions. We recognize that there may 
be some conditions and/or a subset of conditions in a plan population 
that may meet the statutory definition of a chronic condition, but may 
not be present on the list. We encourage plans to identify needs within 
their unique plan population and do not wish to prevent a plan from 
addressing a condition or need in their population that may not be on 
the list. To reflect this policy, we are proposing at Sec.  
422.102(f)(1)(i)(B), regulation text indicating our intent to publish a 
non-exhaustive list of medically complex chronic conditions as 
determined by the panel as described in section 1859(b)(6)(B)(iii) to 
be life threatening or significantly limit the overall health or 
function of an individual.
    MA plans are not required to submit to CMS the processes used to 
identify chronically ill enrollees that meet the three pronged 
definition of chronically ill enrollee. However, all three criteria 
must be met for an enrollee to be eligible for the SSBCI authorized 
under section 1852(a)(3)(D) of the Act. In subregulatory guidance 
(April 2019 HPMS Memo and the 2020 Call Letter), CMS noted that we 
expect MA plans to document their determinations about an enrollee's 
eligibility for SSBCI based on the statutory definition. We propose to 
codify this as a requirement at Sec.  422.102(f)(3)(ii). In addition, 
we are also proposing at Sec.  422.102(f)(3)(ii) to require plans to 
make information and documentation (for example, copies of the internal 
policies used to make the determinations, etc.) related to determining 
enrollee eligibility as a chronically ill enrollee available to CMS 
upon request.
    We are proposing at paragraph (f)(1)(ii) the definition of SSBCI. 
In addition to limiting the class of enrollees who may be eligible to 
receive the new SSBCI benefits to the chronically ill, section 
1852(a)(3)(D) of the Act requires that the specific supplemental 
benefit provided under this authority have a reasonable expectation of 
improving or maintaining the health or overall function of the 
enrollee. We propose to codify this statutory requirement as part of 
the definition of SSBCI at Sec.  422.102(f)(1)(ii). Because SSBCI are 
supplemental benefits, they must also comply with the criteria for 
supplemental benefits that we are proposing to codify at Sec.  
422.100(c)(2)(ii), which is discussed in detail in section VI.F. of 
this proposed rule. We considered whether the regulation for SSBCI 
should explicitly reference the requirements in Sec.  422.100(c)(2)(ii) 
to make this clear and solicit comment on this point. Traditionally, 
CMS has defined supplemental benefits as benefits that: (1) Are 
primarily health related; (2) require the MA plan to incur a non-zero 
medical cost; and (3) are not covered under Medicare Parts A, B or D. 
In light of the authority in section 1852(a)(3)(D) of the Act for 
SSBCI, we are proposing to modify some aspects of this longstanding 
policy in this context. First, as the statute provides that SSBCI may 
be not primarily health related, we are proposing specific text on this 
point in both Sec. Sec.  422.100(c)(2)(ii) and 422.102(f)(1)(ii). 
Second, we are proposing to clarify in Sec.  422.100(c)(2)(ii)(B) that 
the MA organization incur a non-zero direct medical cost for all 
supplemental benefits applies in the context of SSBCI that are not 
primarily health related; in such cases, the MA organization must incur 
a non-zero direct non-administrative cost for the SSBCI. MA rules 
require plans to incur a non-zero direct medical cost for supplemental 
benefits. In the case of SSBCI, we are clarifying that such incurred 
cost should be a non-administrative cost for providing the benefit even 
if it is not necessarily a cost paid to a medical provider or facility 
because SSBCI benefits are not necessarily primarily health related. In 
all other respects not specifically addressed as part of our proposal, 
SSBCI would be treated like other supplemental benefits.
    Under section 1852(a)(3)(D)(ii)(I) of the Act, SSBCI benefits may 
include items or services that are not primarily health related. As 
discussed in detail in section VI.F. of this proposed rule, a primarily 
health related benefit is an item or service that is used to diagnose, 
compensate for physical impairments, acts to ameliorate the functional/
psychological impact of injuries or health conditions, or reduces 
avoidable emergency and healthcare utilization. Therefore, at Sec.  
422.102(f)(1)(ii), we propose to codify as part of the definition of 
SSBCI that these benefits may be non-primarily health related SSBCI 
benefits, including a cross-reference to where we propose to codify the 
definition of primarily health related; however, in all cases, an SSBCI 
must have, with respect to a chronically ill enrollee, a reasonable 
expectation of improving or maintaining the health or overall function 
of the enrollee. By including it in the definition, we are implementing 
the statutory authority for MA plans to offer both primarily health and 
non-primarily health related SSBCI. In the 2019 HPMS memo, we provided 
examples of non-primarily health related SSBCI benefits. Those examples 
included: Meals (beyond a limited basis), food and produce, 
transportation for non-medical needs, pest control, indoor air quality 
and equipment and services, access to community or plan-sponsored 
programs and events to address enrollee social needs, (such as non-
fitness club memberships, community or social clubs, park passes, 
etc.), complementary therapies (offered alongside traditional medical 
treatment), services supporting self-direction (for example. financial 
literacy classes, technology education, and language classes), 
structural home modifications, and general supports for living (for 
example. plan-sponsored housing consultations and/or subsidies for rent 
or assisted living communities or subsidies for utilities such as gas, 
electric, and water). We intend this guidance to be equally applicable 
to our proposed regulation.
    Another provision of our proposed rule flows from the statutory 
authority for SSBCI to be not primarily health related. Unlike with 
traditional supplemental benefits, MA plans might not incur direct 
medical costs in furnishing or covering SSBCI. In the 2020 Call Letter, 
we issued guidance that so long as an MA plan incurs a non-zero non-
administrative cost in connection with SSBCI, the benefits would be 
considered to meet this standard. As supplemental benefits, SSBCI may 
also take the same form as

[[Page 9013]]

traditional supplemental benefits. For example, reductions in cost 
sharing for benefits under the original Medicare fee-for-service 
program are an allowable supplemental benefit, as reflected in the 
definitions of mandatory supplemental benefit in Sec.  422.2. Thus, 
SSBCI can be in the form of--
     Reduced cost sharing for Medicare covered benefits (such 
as to improve utilization of high-value services that meet the 
definition of SSBCI);
     Reduced cost sharing for primarily health related 
supplemental benefits;
     Additional primarily health related supplemental benefits; 
or
     Additional non-primarily health related supplemental 
benefits.
    Eligibility for SSBCI must be determined based on identifying the 
enrollee as a chronically ill enrollee, using the statutory definition, 
and if the item or service has a reasonable expectation of improving or 
maintaining the health or overall function of the enrollee. In the 
April 2019 HPMS memo CMS clarified that MA plans can provide non-
primarily health related supplemental benefits that address chronically 
ill enrollees' social determinants of health so long as the benefits 
maintain or improve the health or function of that chronically ill 
enrollee. MA plans may consider social determinants when determining 
eligibility for an SSBCI of health as a factor to help identify 
chronically ill enrollees whose health could be improved or maintained 
with SSBCI. However, MA plans may not use social determinants of health 
as the sole basis for determining eligibility for SSBCI. We propose to 
codify the ability of an MA plan to consider social determinants (for 
example, food and housing insecurity) when determining whether an SSBCI 
benefit is likely to improve or maintain the health of a chronically 
ill enrollee as described at Sec.  422.102(f)(2)(iii).
    Generally, Sec.  422.100(d) and other regulations require all MA 
plan benefits to be offered uniformly to all enrollees residing in the 
service area of the plan. As explained in the April 2018 final rule (83 
FR 16480 through 16485), MA plans may also provide access to services 
(or specific cost sharing or deductibles for specific benefits) that 
are tied to a disease state in a manner that ensures that similarly 
situated individuals are treated uniformly. Section 
1852(a)(3)(D)(ii)(II) of the Act authorizes CMS to waive the uniformity 
requirements generally applicable to benefits covered by MA plans with 
respect to SSBCI, effective in CY 2020. As discussed in the April 2018 
final rule (83 FR 16481 and 16482), this gives CMS the authority to 
allow MA plans to offer chronically ill enrollees supplemental benefits 
that are not uniform across the entire population of chronically ill 
enrollees in the MA plan and may vary SSBCI offered to the chronically 
ill as a specific SSBCI relates to the individual enrollee's specific 
medical condition and needs. We are proposing to codify the authority 
for this waiver at Sec.  422.102(f)(2)(ii) such that upon approval by 
CMS, an MA plan may offer non-uniform SSBCI. In both the CY 2020 call 
letter and the April 2019 HPMS memo, we explained how we expect MA 
plans to have written policies based on objective criteria (for 
example, health risk assessments, review of claims data, etc.) for 
determining SSBCI eligibility to receive a particular SSBCI benefit, to 
document these criteria, and to make this information available to CMS 
upon request. We are also proposing to codify requirements at Sec.  
422.102(f)(3)(iii) and (iv) for MA plans that offer SSBCI to have 
written policies based on objective criteria, document those criteria, 
to document each determination that an enrollee is eligible to receive 
an SSBCI and make this information available to CMS upon request. We 
believe that objective criteria are necessary to address potential 
beneficiary appeals, complaints, and/or general oversight activities 
performed by CMS. We are also proposing, at Sec.  422.102(f)(3)(i), to 
require plans to have written policies for determining enrollee 
eligibility and must document its determination that an enrollee is a 
chronically ill enrollee based on the statutory definition codified in 
paragraph (f)(1)(i) of this section. And we are proposing to require 
plans to make information and documentation related to determining 
enrollee eligibility available to CMS upon request at Sec.  
422.102(f)(3)(ii). We also clarify here that the determination on the 
benefits an enrollee is entitled to receive under an MA plan's SSBCI is 
an organization determination that is subject to the requirements of 
part 422, subpart M, including the issuance of denial notices to 
enrollees.
    This provision codifies already existing guidance and practices and 
therefore is not expected to have additional impact above current 
operating expenses. Additionally, this provision amends definitions and 
therefore does not impose any collection of information requirements.

B. Improvements to Care Management Requirements for Special Needs Plans 
(SNPs) (Sec.  422.101)

    Special needs plans (SNPs) are MA plans that are specifically 
designed to provide targeted care and limit enrollment to special needs 
individuals. Section 50311 of the BBA of 2018 modified the requirements 
for C-SNPs in section 1859(f)(5) of the Act. Specifically, the 
amendments included the following:
     That the interdisciplinary team include a team of 
providers with demonstrated expertise, including training in an 
applicable specialty, in treating individuals similar to the targeted 
population of the C-SNP.
     That the C-SNP comply with requirements developed by CMS 
to provide face-to-face encounters with enrollees not less frequently 
than on an annual basis.
     That, as part of the mandatory model of care (MOC), the 
results of the initial assessment and annual reassessment required for 
each enrollee be addressed in the individual's individualized care 
plan.
     That, as part of the annual evaluation and approval of the 
MOC, CMS take into account whether the plan fulfilled the previous 
year's goals (as required under the model of care).
     That CMS establish a minimum benchmark for each element of 
the MOC and only approve a C-SNP's MOC if each element of the model of 
care meets such minimum benchmark applicable under the preceding 
sentence.
    We are proposing to amend and add new regulations at Sec.  
422.101(f) to implement the BBA of 2018 amendments to section 1859(f) 
of the Act and extend them to all SNP types. Specifically, we propose 
to add new regulations, to be codified at Sec.  422.101(f), to account 
for two new requirements governing SNP enrollee care management and 
three new requirements governing SNP model of care submissions.
    The history of special needs plans in the MA program is nearly as 
long as the program itself. The Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (hereinafter referred to as 
the MMA) (Pub. L. 108-173) authorized CMS to contract with MA 
coordinated care plans that are specifically designed to provide 
targeted care to individuals with special needs. Originally SNPs were 
statutorily authorized for a limited period, but after several 
extensions of that authority, section 50311(a) of the BBA of 2018 
permanently authorized SNPs. Under section 1859(f)(1) of the Act, SNPs 
are able to restrict enrollment to Medicare beneficiaries who are: (1) 
Institutionalized individuals, who are currently defined in Sec.  422.2 
as those residing or expecting to reside for 90 days or longer in a 
long-term care facility; (2) individuals entitled to

[[Page 9014]]

medical assistance under a state plan under Title XIX; or (3) other 
individuals with certain severe or disabling chronic conditions who 
would benefit from enrollment in a SNP. As of July 2019, 321 SNP 
contracts with 734 SNP plans have at least 11 members.\5\ These figures 
included 208 Dual Eligible SNP contracts (D-SNPs) with 480 D-SNP plans 
with at least 11 members, 57 Institutional SNP contracts (I-SNPs) with 
125 I-SNP plans with at least 11 members, and 56 Chronic or Disabling 
Condition SNP contracts (C-SNPs) with 129 C-SNP plans with at least 11 
members. For more discussion of the history of SNPs, please see Chapter 
16b of the Medicare Managed Care Manual (MMCM).\6\ This proposed rule 
would implement the provisions of the BBA of 2018 and establish new 
care management requirements at Sec.  422.101(f) for all SNPs, 
including minimum benchmarks for SNP models of care.
---------------------------------------------------------------------------

    \5\ See the following link for SNP plan and enrollment data: 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data-Items/SNP-Comprehensive-Report-2019-07.html?DLPage=1&DLEntries=10&DLSort=1&DLSortDir=descending.
    \6\ Chapter 16b of the Medicare Managed Care Manual can be found 
at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c16b.pdf.
---------------------------------------------------------------------------

    Section 1859(f) of the Act and the current implementing regulations 
specify several requirements for SNPs. MA organizations that would like 
to offer a SNP are required to engage in an application process to 
demonstrate that they meet SNP specific requirements, including the 
requirement in Sec.  [thinsp]422.101(f) that MA organizations offering 
a SNP implement an evidence based model of care (MOC) to be evaluated 
by the National Committee for Quality Assurance (NCQA); the requirement 
in Sec.  [thinsp]422.107 that D-SNPs have a contract with the state 
Medicaid agencies in the states in which they operate; and the 
requirement in Sec.  [thinsp]422.152(g) that SNPs conduct quality 
improvement programs. SNP applicants follow the same process in 
accordance with the same timeline as applicants seeking to contract to 
offer other MA plans.
    Section 164 of the Medicare Improvements for Patients and Providers 
Act (hereinafter referred to as MIPPA) (Pub. L. 110-275) added care 
management requirements for all SNPs effective January 1, 2010, as set 
forth in section 1859(f)(5) of the Act (42 U.S.C. 1395w-28(f)). The new 
mandate required dual-eligible, institutional, and chronic condition 
SNPs to implement care management requirements which have two explicit 
components: An evidence-based model of care and a series of care 
management services. While the revisions made in the Medicare Program; 
Revisions to the Medicare Advantage and Prescription Drug Benefit 
Programs interim final rule with comment (73 FR 54226), hereinafter 
referred to as the September 2008 final rule, simply reflected the 
substance of the new MIPPA provisions, the Medicare Program; Revisions 
to the Medicare Advantage and Prescription Drug Benefit Programs 
proposed rule, hereinafter referred to as the May 2008 proposed rule 
(73 FR 28555), proposed other, related provisions which were finalized 
in the Medicare Program; Medicare Advantage and Prescription Drug 
Benefit Programs: Negotiated Pricing and Remaining Revisions final rule 
(hereinafter referred to as the January 2009 final rule) (74 FR 1493).
    CMS had previously provided guidance and instructions in the 2008 
and 2009 Call Letters,7 8 ``Special Needs Plan 
Solicitation,'' in order to more clearly establish and clarify delivery 
of care standards for SNPs and to codify standards. In the May 2008 
proposed rule, CMS proposed that SNPs have networks with clinical 
expertise specific to the special needs population of the plan; use 
performance measures to evaluate models of care; and be able to 
coordinate and deliver care targeted to the frail/disabled, and those 
near the end of life based on appropriate protocols. Section 164 of the 
MIPPA subsequently added care management requirements for all SNPs as 
directed in section 1859(f)(5) of the Act (42 U.S.C. 1395w-28(f)), 
outlining new model of care requirements that include--(1) an 
appropriate network of providers and specialists to meet the 
specialized needs of the SNP target population; (2) a comprehensive 
initial health risk assessment and annual reassessments; (3) an 
individualized plan of care having goals and measurable outcomes; and 
(4) an interdisciplinary team to manage care. The MIPPA laid a 
statutory foundation for much of our regulatory standards for the model 
of care.
---------------------------------------------------------------------------

    \7\ Announcement of Calendar Year (CY) 2008 Medicare Advantage 
Capitation Rates and Payment Policies can be found at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/announcement2008.pdf.
    \8\ Announcement of Calendar Year (CY) 2009 Medicare Advantage 
Capitation Rates and Medicare Advantage and Part D Payment Policies 
can be found at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2009.pdf.
---------------------------------------------------------------------------

    MOCs are a vital quality improvement tool and integral component 
for ensuring that the unique needs of each beneficiary enrolled in a 
SNP are identified and addressed. Section 3205 of the Patient 
Protection and Affordable Care Act of 2010 (hereinafter referred to as 
the Affordable Care Act) (Pub. L. 111-148) amended section 1859(f) of 
the Act to require that, starting in 2012, all SNPs be approved by NCQA 
based on standards developed by the Secretary. As provided under 
Sec. Sec.  422.4(a)(iv), 422.101(f), and 422.152(g), the NCQA approval 
process is based on evaluation and approval of the SNP MOC, as per CMS 
guidance. Therefore, all SNPs must submit their MOCs to CMS for NCQA 
evaluation.
    The MOC is organized to promote clarity and enhance the focus on 
care coordination, care transition, care needs and activities. The NCQA 
scoring approval process is based on scoring each of the clinical and 
non-clinical elements of the MOC as part of the SNP application.
    The MOC narrative must include the following four elements:
     Description of the SNP Population.
     Care Coordination.
     SNP Provider Network.
     MOC Quality Measurement & Performance Improvement.
    Each of the four elements is comprised of a set of required 
subcomponents, or factors, such as an identification and comprehensive 
description of the SNP-specific population. These subcomponents are 
reviewed and scored by NCQA and contribute to the overall score for 
that element. A full list of elements and factors, as well as CMS 
subregulatory guidance pertaining to MOC submission requirements and 
structure, can be found in Chapter 5 of the MMCM.
    We propose to revise Sec.  422.101(f) to implement certain new 
requirements added to section 1859(f)(5)(B) of the Act by the BBA of 
2018 and to extend them to all SNP types. Specifically, we propose to 
revise Sec.  422.101(f) to impose the new requirements governing SNP 
enrollee care management and SNP MOC submissions. Section 50311(c) of 
the BBA of 2018 amends section 1859(f)(5) of the Act to explicitly 
require improvements in care management and the establishment of a 
minimum benchmark for each element of the SNP model of care of a plan 
specific to C-SNP MOC submissions. We are proposing that these 
requirements be extended to all SNP plan types for several reasons. 
First, these additional requirements are consistent with current 
regulations and sub-regulatory guidance CMS provides to all SNPs 
regarding care management and MOC compliance. Second, we believe that 
these proposed

[[Page 9015]]

regulations are important safeguards to preserve the quality of care 
for all special needs individuals, including those enrolled in D-SNPs 
and I-SNPs and not just those enrolled in C-SNPs. Given the prevalence 
of medically complex chronic conditions among I-SNP and D-SNP 
enrollees, we believe the proper application of these new care 
improvement requirements would improve care for enrollees with complex 
chronic conditions. Further, we believe that the application of 
multiple, different MOC standards would be operationally complex and 
burdensome for MA organizations that sponsor multiple SNP plan types, 
for instance, a D-SNP and a C-SNP. We welcome comment of the extension 
of the new care management and MOC requirements for C-SNPs to the care 
management and MOC requirements for all SNP types.
1. The Interdisciplinary Team in the Management of Care
    First, we propose to implement the requirement in section 
1859(f)(5)(B)(i) of the Act addressing the interdisciplinary team in an 
amendment to Sec.  422.101(f)(1)(iii) that would, in addition to 
implementing the statutory requirement for C-SNPs, extend the 
requirement to all SNPs. Currently, Sec.  422.101(f)(1)(iii) requires 
each SNP to use an interdisciplinary team in the management of care but 
does not include much detail about that requirement. We propose to 
amend paragraph (f)(1)(iii) to require that each MA organization 
offering a SNP plan must provide each enrollee with an 
interdisciplinary team in the management of care that includes a team 
of providers with demonstrated expertise and training, and, as 
applicable, training in a defined role appropriate to their licensure 
in treating individuals similar to the targeted population of the plan.
    As we noted in the January 2009 final rule, MIPPA required SNPs to 
conduct initial and annual comprehensive health risk assessments, 
develop and implement an individualized plan of care, and implement an 
interdisciplinary team for each beneficiary. We believe that 
combination of MIPPA's statutory elements and our regulatory 
prescription for the SNP model of care establishes the standardized 
architecture for effective care management while giving plans the 
flexibility to design the unique services and benefits that enable them 
to meet the identified needs of their target population. We believe 
this proposal, which amends paragraph (f)(1)(iii) and applies 
additional requirements pertaining to demonstrated expertise and 
training of interdisciplinary team providers to all SNPs, is consistent 
with the MIPPA requirements and the January 2009 final rule that 
provided the original authority regarding the use of interdisciplinary 
teams. All SNPs must have an interdisciplinary team to coordinate the 
delivery of services and benefits. However, one SNP may choose to 
contract with an interdisciplinary team to deliver care in community 
health clinics and another SNP may hire its team to deliver care in the 
home setting. Under the current rule, and our proposal, all SNPs must 
coordinate the delivery of services and benefits through integrated 
systems of communication among plan personnel, providers, and 
beneficiaries. However, one SNP may coordinate care through a 
telephonic connection among all stakeholders and a second SNP may 
coordinate care through an electronic system using Web-based records 
and electronic mail accessed exclusively by the plan, network 
providers, and beneficiaries. All SNPs must coordinate the delivery of 
specialized benefits and services that meet the needs of their most 
vulnerable beneficiaries. However, D-SNPs may need to coordinate 
Medicaid services while an institutional SNP may need to facilitate 
hospice care for its beneficiaries near the end of life. These examples 
demonstrate the variety of ways SNPs currently implement their systems 
of care, and we believe plans can and should provide enrollees with a 
team of providers with expertise and training that are appropriate for 
each individual enrollee.
    Ultimately, we believe plans are in the best position to identify 
an interdisciplinary team with the appropriate expertise and training 
necessary to meet the clinical needs for each enrollee based on the 
medical and behavioral health conditions of their member population. We 
solicit comment on this proposed implementation of section 
1859(f)(5)(B)(i) of the Act. We welcome feedback on how plans can meet 
the requirements for both demonstrated expertise and training in an 
applicable specialty.
2. Face-to-Face Annual Encounters
    Second, we propose to implement the requirement in section 
1859(f)(5)(B)(ii) of the Act requiring compliance with requirements 
(developed by CMS) to provide a face-to-face encounter with each 
enrollee. We are proposing that the face-to-face encounter be between 
each enrollee and a member of the enrollee's interdisciplinary team or 
the plan's case management and coordination staff on at least an annual 
basis, beginning within the first 12 months of enrollment, as feasible 
and with the individual's consent. A face-for-face encounter must be 
either in person or through a visual, real-time, interactive telehealth 
encounter. We propose to implement this requirement in a new paragraph 
(f)(1)(iv) of Sec.  422.101 that would extend the requirement to all 
SNPs. We propose to require the MA organization to provide an annual 
face-to-face visit, that is in-person or by remote technology, to occur 
starting within the first 12 months of enrollment within the plan. For 
instance, a plan enrolling a beneficiary on October 1 would need to 
facilitate an in-person meeting by September 30th of the following 
year. Under our proposal, a visit to or by a member of an individual's 
interdisciplinary team or the plan's case management and coordination 
staff that perform clinical functions, such as direct beneficiary care, 
would meet this requirement. Examples of what these encounters may 
entail, though not limited to, include a member of an individual's 
interdisciplinary team or the plan's case management and coordination 
staff engaging with the enrollee to manage, treat and oversee (or 
coordinate) their health care, including preventive care included in 
the individualized care plan (ICP). Additional examples of such 
activities may include annual wellness visits and/or physicals, health 
risk assessment (HRA) completion, care plan review, health related 
education, and care coordination activities, but these are not the only 
activities that satisfy the proposed regulatory requirement. Encounters 
may also address any concerns related to physical, mental/behavioral 
health, and overall health status, including functional status. We 
anticipate that, consistent with good clinical practice, concerns are 
addressed and any appropriate referrals, follow-up, and care 
coordination activities provided or scheduled as necessary as a result 
of these face-to-face encounters. Plans should implement this 
requirement in a manner that honors any enrollee's decision not to 
participate in any qualifying encounter as noted previously.
    Consistent with the authority for MA plans to offer additional 
telehealth benefits, under Sec.  422.135 as finalized in the Medicare 
and Medicaid Programs; Policy and Technical Changes to the Medicare 
Advantage, Medicare Prescription Drug Benefit, Programs of All-
Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and

[[Page 9016]]

Medicaid Managed Care Programs for Years 2020 and 2021 Final Rule 
(hereinafter referred to as the April 2019 final rule), we are 
proposing that the face-to-face encounters required for all SNPs under 
this new rule may include visual, real-time, interactive telehealth 
encounters. As we noted in the April 2019 final rule, we believe MA 
additional telehealth benefits will increase access to patient-centered 
care by giving enrollees more control to determine when, where, and how 
they access benefits. We are seeking comment on proposed Sec.  
422.101(f)(1)(iv) and the suggested criteria for what constitutes a 
face-to-face encounter.
3. Health Risk Assessments and the SNP Enrollee's Individualized Care 
Plan
    Third, we are proposing to codify the requirement in section 
1859(f)(5)(B)(iii) of the Act that, as part of the C-SNP model of care, 
the results of the initial assessment and annual reassessment required 
for each enrollee be addressed in the individual's individualized care 
plan. As with the other provisions in section 1859(f)(5)(B) of the Act, 
we are proposing to extend this requirement to the model of care for 
all SNPs in revisions to Sec.  422.101(f)(1)(i). Currently, MA 
organizations offering SNPs must conduct a comprehensive initial health 
risk assessment of the individual's physical, psychosocial, and 
functional needs as well as annual HRA, using a comprehensive risk 
assessment tool that CMS may review during oversight activities. We 
propose to revise Sec.  422.101(f)(1)(i) by adding that the MA 
organization must ensure that results from the initial assessment and 
annual reassessment conducted for each individual enrolled in the plan 
are addressed in the individual's individualized care plan required 
under Sec.  422.101(f)(1)(ii) are addressed in the individual's 
individualized care plan required under Sec.  422.101(f)(1)(ii).
    We believe that the HRA plays a critical role in coordinating the 
care of SNP enrollees. Section 1859(f)(5)(A) of the Act requires SNPs 
to conduct initial and annual comprehensive HRA, develop and implement 
an individualized plan of care, and implement an interdisciplinary team 
for each beneficiary. As noted in the January 2009 final rule, we 
believe that the combination of these statutory elements and our 
regulatory prescription for the SNP model of care establishes the 
standardized architecture for effective care management. We believe 
extending the requirement for the individualized care plan to address 
the results of the initial assessment and annual reassessment care to 
I-SNPs and D-SNPs, instead of limiting the requirement to C-SNPs, would 
further increase the effectiveness of the ICP and increase quality 
outcomes. We welcome comment concerning the amended regulation at Sec.  
422.101(f)(1)(i).
4. SNP Fulfillment of the Previous Year's MOC Goals
    Fourth, we are proposing to codify the requirement in section 
1859(f)(5)(B)(iv) of the Act that the evaluation and approval of the 
model of care take into account whether the plan fulfilled the previous 
MOC's goals and to extend this evaluation component to all SNP models 
of care, rather than limiting it to C-SNPs. We propose a new regulation 
at Sec.  422.101(f)(3)(ii) that as part of the evaluation and approval 
of the SNP model of care, NCQA must evaluate whether goals were 
fulfilled from the previous model of care and plans must provide 
relevant information pertaining to the MOC's goals as well as 
appropriate data pertaining to the fulfillment of the previous MOC's 
goals. If the SNP model of care did not fulfill the previous MOC's 
goals, the plan must indicate in the MOC submission how it will achieve 
or revise the goals for the plan's next MOC. We are also proposing to 
move an existing regulation at Sec.  422.101(f)(2)(vi) that requires 
all SNPs must submit their MOC to CMS for NCQA evaluation and approval 
in accordance with CMS guidance to a new paragraph at Sec.  
422.101(f)(3). The proposed paragraph at (f)(3)(i) would contain the 
same language as Sec.  422.101(f)(2)(vi).
    We intend that NCQA would determine whether each SNP, as part of 
the evaluation and MOC approval process, provided adequate information 
to evaluate the regulation under Sec.  422.101(f)(3)(ii) as well as 
whether the SNP met goals from the previous MOC submission. It is 
implicit in the evaluation of the MOC and the requirement for the SNP 
to submit relevant information that the information submitted by the 
SNP must be adequate for NCQA to use to evaluate whether the goals from 
the prior MOC have been fulfilled. We solicit comment whether more 
explicit requirements on this point should be part of the regulation 
text.
    The proposed regulation at Sec.  422.101(f)(3)(ii) aligns with our 
current guidance on the MOC submission and review process regarding SNP 
fulfillment of goals. Currently, all SNPs are required to identify and 
clearly define measureable goals and health outcomes as part of their 
model of care under MOC 4, Element B: Measureable Goals and Health 
Outcomes for the MOC as defined in Chapter 5 of the MMCM. CMS believes 
that it is critical for all SNPs to use the results of the quality 
performance indicators and measures to support ongoing improvement of 
the MOC, and that all SNPs should continuously assess and evaluate plan 
quality outcomes. MOC 4, Element B currently contains the following 
parameters:
     Identify and define the measurable goals and health 
outcomes used to improve the health care needs of SNP beneficiaries.
     Identify specific beneficiary health outcome measures used 
to measure overall SNP population health outcomes at the plan level.
     Describe how the SNP establishes methods to assess and 
track the MOC's impact on SNP beneficiaries' health outcomes.
     Describe the processes and procedures the SNP will use to 
determine if health outcome goals are met.
     Describe the steps the SNP will take if goals are not met 
in the expected timeframe.
    For SNPs submitting their initial MOC, NCQA will evaluate the 
information under MOC 4 Element B as the setting of clearly definable 
and measurable goals and health outcomes in their MOC for the upcoming 
MOC period of performance. For the following submission year, the plan 
will be evaluated on whether the measurable goals and health outcomes 
set in the initial MOC were achieved.
    Plans submitting an initial model of care must provide relevant 
information pertaining to the MOC's goals for review and approval under 
this paragraph. We propose specific regulation text on this point at 
Sec.  422.101(f)(3)(ii)(B). We seek comment on the new regulation at 
Sec.  422.101(f)(3)(ii).
5. Establishing a Minimum Benchmark for Each Element of the SNP Model 
of Care
    Finally, we propose new regulation text at Sec.  422.101(f)(3)(iii) 
to impose the requirement for benchmarks to be met for a MOC to be 
approved. Section 1859(f)(5)(B)(v) of the Act requires that the 
Secretary establish a minimum benchmark for each element of the C-SNP 
model of care, and that the MOC can only be approved if each element 
meets a minimum benchmark. We propose in Sec.  422.101(f)(3)(iii) to 
implement these benchmarks for all SNP models of care. Given that 
medically complex conditions are found in enrollees across all SNP 
types and

[[Page 9017]]

that implementation to C-SNPs alone would be operationally challenging 
for plans offering multiple SNP types, we believe it is appropriate to 
extend this requirement to all SNPs. Each SNP model of care would be 
evaluated based on a minimum benchmark for each of the four elements. 
Currently, each subfactor of a MOC element is valued at 0-4 points with 
the score of each element based on the number of factors met for that 
specific element; the aggregate total of all possible points across all 
elements equals 60, which is then converted to percentage scores based 
on the number of total points received. We propose that each element of 
the MOC must meet a minimum benchmark of 50 percent of total points as 
allotted, and a plan's MOC would only be approved if each element of 
the model of care meets the applicable minimum benchmark.
    We welcome comment on the proposed Sec.  422.101(f)(3)(iii). 
Specifically, we are seeking comment to our proposed benchmark and 
scoring criteria as they impact the evaluation of SNP models of care.

C. Coverage Gap Discount Program Updates (Sec. Sec.  423.100 and 
423.2305)

    We propose to amend our regulations at Sec. Sec.  423.100 
(definition of applicable drug) and 423.2305 (determination of coverage 
gap discount) to reflect recent changes to the relevant statutory 
provisions. Sections 53113 and 53116 of the BBA of 2018 amended section 
1860D-14A of the Act to (a) increase the coverage gap discount for 
applicable drugs from 50 to 70 percent of the negotiated price 
beginning in plan year 2019, and (b) revise the definition of an 
applicable drug to include biosimilar biological products, also 
beginning in plan year 2019.
    Specifically, section 53116 of the BBA of 2018 revised the 
definition of ``discounted price,'' meaning the price provided to the 
beneficiary, in section 1860D-14A(g)(4)(A) of the Act to mean, for a 
plan year after 2018, 30 percent of the negotiated price. This means 
that the coverage gap discount is 70 percent, rather than 50 percent. 
To make our regulations consistent with this change, we propose to 
amend the definition of ``applicable discount'' in Sec.  423.2305 to 
provide that, with respect to a plan year after plan year 2018, the 
applicable discount is 70 percent of the portion of the negotiated 
price (as defined in Sec.  423.2305) of the applicable drug of a 
manufacturer that falls within the coverage gap and that remains after 
such negotiated price is reduced by any supplemental benefits that are 
available.
    Section 53113 of the BBA of 2018 amended section 1860D-14A(g)(2)(A) 
of the Act to specify that biologic products licensed under subsection 
(k) (that is, biosimilar and interchangeable biological products) are 
excluded from the coverage gap discount program only with respect to 
plan years before 2019. Therefore, we are proposing to revise the 
definition of applicable drug at Sec.  423.100 to specify that such 
biological products are excluded only for plan years before 2019. 
Accordingly, biosimilar products are included in the Discount Program 
beginning for plan year 2019.

D. Part D Income Related Monthly Adjustment Amount (IRMAA) Calculation 
Update for Part D Premium Amounts (Sec.  423.286)

    Section 3308 of the Affordable Care Act amended section 1860D-13(a) 
of the Act and imposed an income-related monthly adjustment amount for 
Medicare Part D (hereinafter referred to as Part D-IRMAA) for 
beneficiaries whose modified adjusted gross income (MAGI) exceeds the 
same income threshold amount tiers established under section 1839(i) of 
the Act with respect to the Medicare Part B income-related monthly 
adjustment amount (Part B-IRMAA). The Part D-IRMAA is an amount that a 
beneficiary pays in addition to the monthly plan premium for Medicare 
prescription drug coverage under the Part D plan in which the 
beneficiary is enrolled when the beneficiary's MAGI is above the 
specified threshold.
    The Part D-IRMAA income tiers mirror those established for the Part 
B-IRMAA. As specified in section 1839(i) of the Act, when the Part B-
IRMAA went into effect in 2007, individuals and joint tax filers 
enrolled in Medicare Part B whose modified adjusted gross income 
exceeded $80,000 and $160,000, respectively, were assessed the Part B-
IRMAA on a sliding scale. As specified in section 1839(i)(5) of the 
Act, each dollar amount within the income threshold tiers shall be 
adjusted annually based on the Consumer Price Index (CPI). As a result 
of the annual adjustment, for calendar year 2010, the income threshold 
amounts had increased to reflect the four income threshold amount tiers 
for individuals and joint tax filers whose modified adjusted gross 
income exceeded $85,000 and $170,000, respectively. (We note that 
section 3402 of the Affordable Care Act froze the income thresholds for 
2011 through 2019 at the level established for 2010.)
    Consistent with section 3308 of the Affordable Care Act, the Part 
D-IRMAA is calculated using the Part D national base beneficiary 
premium (BBP) and the applicable premium percentage (P) as follows: BBP 
x [(P - 25.5 percent)/25.5 percent]. The premium percentage used in the 
calculation will depend on the level of the Part D enrollee's modified 
adjusted gross income.
    Section 3308 of the Affordable Care Act requires CMS to provide the 
Social Security Administration (SSA) with the national base beneficiary 
premium amount used to calculate the Part D-IRMAA no later than 
September 15 of each year, starting in 2010. Also effective in 2010, 
CMS must provide SSA no later than October 15 of each year, with: (1) 
The modified adjusted gross income threshold ranges; (2) the applicable 
percentages established for Part D-IRMAA in accordance with section 
1839 of the Act; (3) the corresponding monthly adjustment amounts; and 
(4) any other information SSA deems necessary to carry out Part D-
IRMAA.
    To determine a beneficiary's IRMAA, SSA considers the beneficiary's 
MAGI, together with their tax filing status, to determine the 
percentage of the: (1) Unsubsidized Medicare Part B premium the 
beneficiary must pay; and (2) cost of basic Medicare prescription drug 
coverage that the beneficiary must pay.
    Since the implementation of the Part D-IRMAA in 2011, subsequent 
revisions to the statute have modified the associated income tiers used 
in IRMAA calculations:
     Section 402 of the Medicare Access and CHIP 
Reauthorization Act (MACRA) of 2015, revised the income thresholds for 
the Part B- and Part D-IRMAA income groups such that beneficiaries with 
incomes greater than $85,000 but not more than $107,000 were required 
to pay 35 percent of Part B and Part D program costs; beneficiaries 
with incomes greater than $107,000 but not more than $133,500 would pay 
50 percent of Part B and Part D program costs; beneficiaries with 
incomes greater than $133,500 but not more than $160,000 would pay 65 
percent of Part B and Part D program costs; while beneficiaries with 
incomes greater than $160,000 were required to pay 80 percent of Part B 
and Part D program costs.
     Section 53114 of the BBA of 2018 revised the MAGI ranges 
again such that, beginning in 2019, beneficiaries with incomes greater 
than $500,000 ($750,000 for joint tax filers) are required to pay 85 
percent of program costs (an increase from 80 percent).
    We are proposing to revise Sec.  423.286(d)(4)(ii) for consistency 
with the changes made by section 53114 of

[[Page 9018]]

the BBA of 2018 and to make other technical changes to ensure that the 
calculations used in the methodology for updating Part D-IRMAA are 
described correctly. We propose to remove the language ``the product of 
the quotient obtained by dividing the applicable premium percentage 
specified in Sec.  418.2120 (35, 50, 65, or 80 percent) that is based 
on the level of the Part D enrollee's modified adjusted gross income 
for the calendar year reduced by 25.5 percent and the base beneficiary 
premium as determined under paragraph (c) of this section'' and replace 
it with the product of the standard base beneficiary premium, as 
determined under paragraph (c) of this section, and the ratio of the 
applicable premium percentage specified in 20 CFR 418.2120, reduced by 
25.5 percent; divided by 25.5 percent (that is, premium percentage -
25.5)/25.5).
    We are not scoring this provision in the Regulatory Impact Analysis 
section since it codifies existing guidance. We believe all 
stakeholders are already following the current guidance. We are also 
not scoring this provision in the Collection of Information section 
since we believe all information impacts of this provision have already 
been accounted for under OMB control number 0938-0964 (CMS-10141), but 
seek comment on this assumption.

E. Contracting Standards for Dual Eligible Special Needs Plan (D-SNP) 
Look-Alikes (Sec.  422.514)

    Special needs plans (SNPs) are MA plans created by the MMA that are 
specifically designed to provide targeted care and limit enrollment to 
special needs individuals. Under section 1859 of the Act, SNPs are able 
to restrict enrollment to: (1) Institutionalized individuals, who are 
currently defined in Sec.  422.2 as those residing or expecting to 
reside for 90 days or longer in a long term care facility; (2) 
individuals entitled to medical assistance under a State Plan under 
Title XIX; or (3) other individuals with certain severe or disabling 
chronic conditions who would benefit from enrollment in a SNP. As of 
July 2019, there are 321 SNP contracts with 734 SNP plans that have at 
least 11 members, including all of the following:
     480 dual eligible SNPs (D-SNPs).
     125 institutional SNPs (I-SNPs).
     129 chronic or disabling condition SNPs (C-SNPs).\9\
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    \9\ Centers for Medicare & Medicaid Services. SNP Comprehensive 
Report. (July 2019) Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.html.
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    Beneficiaries who are dually eligible for both Medicare and 
Medicaid can face significant challenges in navigating the two 
programs, which include separate or overlapping benefits and 
administrative processes. Fragmentation between the two programs can 
result in a lack of coordination for care delivery, potentially 
resulting in--(1) missed opportunities to provide appropriate, high-
quality care and improve health outcomes; and (2) undesirable outcomes, 
such as avoidable hospitalizations and poor beneficiary experiences. 
Advancing policies and programs that integrate care for dually eligible 
individuals is one way in which we seek to address such fragmentation. 
Under plans that offer integrated care, dually eligible individuals 
receive the full array of Medicaid and Medicare benefits through a 
single delivery system, thereby improving care coordination, quality of 
care, and beneficiary satisfaction, and reducing administrative burden. 
Some studies have shown that highly integrated managed care programs 
perform well on quality of care indicators and enrollee 
satisfaction.\10\
---------------------------------------------------------------------------

    \10\ See Kim, H., Charlesworth, C.J., McConnell, K.J., 
Valentine, J.B., and Grabowski, D.C. ``Comparing Care for Dual-
Eligibles Across Coverage Models: Empirical Evidence From Oregon'', 
Medical Care Research and Review, (November 15, 2017) 1-17. 
Retrieved from https://journals.sagepub.com/doi/abs/10.1177/1077558717740206; Anderson, W.L., Feng, Z., & Long, S.K. Minnesota 
Managed Care Longitudinal Data Analysis, prepared for the U.S. 
Department of Health and Human Services Assistant Secretary for 
Planning and Evaluation (ASPE) (March 31, 2016). Retrieved from 
https://aspe.hhs.gov/report/minnesota-managed-care-longitudinal-data-analysis; Health Management Associates. Value Assessment of the 
Senior Care Options (SCO) Program (July 21, 2015). Retrieved from 
https://www.mahp.com/wp-content/uploads/2017/04/SCO-White-Paper-HMA-2015_07_20-Final.pdf; and Medicare Payment Advisory Committee. 
``Chapter 2, Care coordination programs for dual-eligible 
beneficiaries.'' In June 2012 Report to Congress: Medicare and 
Health Care Delivery System (June 16, 2012). Retrieved from https://www.medpac.gov/docs/default-source/reports/jun12_entirereport.pdf?sfvrsn=0.
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    D-SNPs are intended to integrate or coordinate care for this 
population more effectively than standard MA plans or the original 
Medicare fee-for-service program by focusing enrollment and care 
management on dually eligible individuals. As of July 2019, 
approximately 2.6 million dually eligible individuals (1 of every 5 
dually eligible individuals) were enrolled in 480 D-SNPs.
    Federal statute and implementing regulations have established 
several requirements for D-SNPs in addition to those that apply to all 
MA plans, including all of the following:
     Health risk assessment. Section 164 of MIPPA amended 
section 1859(f) of the Act to require all SNPs to conduct an initial 
assessment and an annual reassessment of an enrollee's physical, 
psychosocial, and functional needs. Implementing regulations are 
codified at Sec.  422.101(f)(1)(i).
     Model of care. Section 164 of MIPPA amended section 
1859(f) of the Act to require all SNPs to have in place an evidence-
based model of care with appropriate networks of providers and 
specialists. Implementing regulations are codified at Sec.  422.101(f).
     Comprehensive written statement. Section 164 of MIPPA 
amended section 1859(f) of the Act to require D-SNPs to provide each 
prospective enrollee, prior to enrollment, with a comprehensive written 
statement that describes the benefits and cost-sharing protections to 
which the beneficiary is entitled under Medicaid and which of those 
Medicaid benefits are covered by the D-SNP. Implementing regulations 
are codified at Sec.  422.111(b)(2)(iii).
     State Medicaid agency contract. Section 164 of MIPPA also 
amended section 1859(f) of the Act to require that D-SNPs contract with 
the state Medicaid agency to provide benefits, or arrange for the 
provision of Medicaid benefits, which may include long-term care 
services consistent with state policy, to which an individual is 
entitled. Notwithstanding this requirement for D-SNPs, section 
164(c)(4) of MIPPA stipulated that a state is in no way obligated to 
contract with a D-SNP, which therefore provides states with significant 
control over the availability of D-SNPs. Implementing regulations are 
codified at Sec.  422.107.
    These requirements promote coordination of care. Additionally, the 
state Medicaid agency contracting requirement allows states the 
flexibility to require greater integration of Medicare and Medicaid 
benefits from the D-SNPs in their markets. For example, to develop 
products that integrate Medicare and Medicaid coverage, several 
states--including Arizona, Hawaii, Idaho, Massachusetts, Minnesota, New 
Jersey, and Tennessee--operate Medicaid managed care programs for 
dually eligible individuals in which the state requires that the 
Medicaid managed care organizations (MCOs) serving dually eligible 
individuals offer a companion D-SNP product. These states also require 
specific care coordination or data sharing activities in their 
contracts with D-SNPs.\11\
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    \11\ See Verdier, J., Kruse, A., Sweetland Lester, R., Philip, 
A.M., and Chelminsky, D. State Contracting with Medicare Advantage 
Dual Eligible Special Needs Plans: Issues and Options (November 
2016). Retrieved from https://www.integratedcareresourcecenter.com/sites/default/files/ICRC_DSNP_Issues_Options.pdf.

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[[Page 9019]]

    More recently, section 50311(b) of the BBA of 2018 amended section 
1859 of the Act to add new requirements for D-SNPs, beginning in 2021. 
These requirements, along with clarifications to existing regulations, 
were codified in the April 2019 final rule (84 FR 15680 through 15844).
     Minimum integration standards. As required under section 
1859(f)(8)(D)(i) of the Act, as added by the BBA of 2018, all D-SNPs 
must meet certain new minimum criteria for integration of Medicare and 
Medicaid benefits for 2021 and subsequent years. To achieve the minimum 
integration standards, we codified in the April 2019 final rule that a 
D-SNP must: (1) Be a fully integrated dual eligible (FIDE) SNP; (2) be 
a highly integrated dual eligible (HIDE) SNP; or (3) have a contract 
with the state to notify the state, or the state's designee, of high-
risk individuals' hospital and skilled nursing facility admissions. 
Section 1859(f)(8)(D)(ii) of the Act provides that for the years 2021 
through 2025, if the Secretary determines that a D-SNP fails to meet 
one of these integration standards, the Secretary may prevent the D-SNP 
from enrolling new members. These provisions are codified in amendments 
to Sec. Sec.  422.2, 422.107(d), and 422.752(d) that are effective 
January 1, 2021.
     Medicaid coordination: We interpreted the meaning of the 
requirement in section 1859(f)(3)(D) of the Act, originally codified at 
Sec.  422.107(b), that the MA organization has responsibility under the 
contract for providing benefits or arranging for benefits to be 
provided for individuals entitled to Medicaid as requiring a D-SNP, at 
a minimum, to coordinate the delivery of Medicare and Medicaid 
benefits. This requirement is reflected in an amendment to the D-SNP 
definition at Sec.  422.2, effective January 1, 2020. In addition, an 
amendment to Sec.  422.562(a)(5), also effective January 1, 2020, 
requires all D-SNPs to make assistance available to individuals filing 
a grievance or appeal for Medicaid services.
     Unified appeals and grievances. Sections 1859(f)(8)(B) and 
(C) of the Act require development of unified grievance and appeals 
processes for D-SNPs, to the extent feasible, to be applicable 
beginning 2021. We finalized definitions at Sec.  422.561 and 
implementing regulations, effective January 1, 2021, at Sec. Sec.  
422.560, 422.562, 422.566, 422.629 through 422.634, 438.210, 438.400, 
and 438.402 in the April 2019 final rule. For 2021 and subsequent 
years, integrated D-SNPs with exclusively aligned enrollment, termed 
``applicable integrated plans,'' must establish integrated grievance 
and appeals systems using integrated timeframes, notices, and 
processes. New rules under Sec.  422.632, also effective January 1, 
2021, require continuation of benefits pending appeal for enrollees in 
applicable integrated plans.
    The pattern of federal legislation, CMS rulemaking, and state use 
of D-SNP contracting requirements has incrementally created new 
requirements for D-SNPs that have generally promoted additional 
beneficiary protections, coordination of care, and integration of 
Medicare and Medicaid coverage for dually eligible individuals. While 
many of these requirements impose additional burdens for D-SNPs, they 
have not impeded enrollment growth in these plans. Total D-SNP 
enrollment has more than doubled from one million in 2010 to 2.6 
million in 2019.\12\ Participation of MA organizations is robust, and 
most markets are stable and competitive.
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    \12\ Centers for Medicare & Medicaid Services. SNP Comprehensive 
Report (July 2010 & July 2019). Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.html.
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    In its June 2018 and 2019 reports to Congress, the Medicare Payment 
Advisory Commission (MedPAC) describes the emergence of ``D-SNP look-
alike'' plans that have similar levels of dual eligible enrollment as 
D-SNPs. For example, MedPAC analysis of 2016 data in select California 
counties found that, as a percentage of total enrollment, dually 
eligible individuals accounted for 97 percent of enrollment in D-SNPs 
and 95 percent in D-SNP look-alikes--compared to 10 percent in other MA 
plans. Analysis of 2017 enrollment nationally showed multiple D-SNP 
look-alikes in which dually eligible individuals account for more than 
95 percent of total enrollment.\13\ Although section 1859(b)(6) of the 
Act establishes D-SNPs as the only type of MA plan that can exclusively 
enroll dually eligible individuals, the data show that D-SNP look-
alikes have levels of dual eligible enrollment that are virtually 
indistinguishable from those of D-SNPs and far above those of the 
typical MA plan.
---------------------------------------------------------------------------

    \13\ See June 2018 MedPAC Report to Congress, Chapter 9 at 
https://medpac.gov/docs/default-source/reports/jun18_ch9_medpacreport_sec.pdf?sfvrsn=0 and  June 2019 MedPAC Report 
to Congress, Chapter 12 at https://www.medpac.gov/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    We believe the low enrollment of non-dually eligible individuals in 
D-SNP look-alikes results from benefits and cost-sharing that, like the 
benefits and cost-sharing offered by D-SNPs, are designed to attract 
only dually eligible individuals. In contrast to non-SNP MA plans, both 
D-SNPs and D-SNP look-alikes allocate a lower percentage of MA rebate 
dollars received under the bidding process at Sec.  422.266 to reducing 
Medicare cost-sharing and a higher percentage of rebate dollars to 
supplemental medical benefits such as dental, hearing, and vision 
services. With such a benefit design, many D-SNP look-alikes 
technically require members to pay higher cost sharing on Parts A and B 
services than most MA plans require, which we believe dissuades most 
non-dually eligible Medicare beneficiaries from enrolling. However, 
because most dually eligible individuals are Qualified Medicare 
Beneficiaries (QMBs) who are not required to pay Medicare cost sharing, 
we believe they are not dissuaded from enrolling in these non-D-SNPs by 
the relatively higher cost sharing. A similar dynamic exists for Part D 
premiums and high deductibles, both of which are covered by the Part D 
low-income subsidy that dually eligible individuals receive. We believe 
that such benefit designs are unattractive for Medicare beneficiaries 
who are not dually eligible individuals because they would need to 
cover these costs out-of-pocket. Despite the similarities with D-SNPs 
in terms of levels of dual eligible enrollment and benefits and cost-
sharing design, D-SNP look-alikes are regulated as non-SNP MA plans and 
are not subject to the federal regulatory and state contracting 
requirements applicable to D-SNPs.
    D-SNP look-alikes first emerged in certain California markets in 
2013, after the state placed enrollment restrictions on D-SNPs in areas 
served by Medicare-Medicaid Plans (MMPs) participating in the Financial 
Alignment Initiative. Enrollment in D-SNP look-alikes has increased 
substantially since that time. In these California markets, MedPAC 
found that D-SNP look-alike enrollment grew from around 5,000 in 2013 
to over 95,000 in 2017.\14\ MedPAC also explored enrollment trends more 
broadly, identifying 31 non-SNP

[[Page 9020]]

plans \15\ operating in 2017 in which dually eligible individuals 
comprised 80 percent or more of total plan enrollment. These 31 plans, 
which operated in 10 states (mostly in California and Florida), 
included approximately 151,000 enrollees. MedPAC estimated that in 2019 
enrollment would increase to 193,000 beneficiaries in 54 D-SNP look-
alikes across 13 states.\16\
---------------------------------------------------------------------------

    \14\ See June 2018 MedPAC Report to Congress, Chapter 9 at 
https://medpac.gov/docs/default-source/reports/jun18_ch9_medpacreport_sec.pdf?sfvrsn=0.
    \15\ MedPAC also excluded employer group waiver plans (EGWPs) 
and a select group of medical savings account (MSA) plans.
    \16\ See June 2018 MedPAC Report to Congress, Chapter 9 at 
https://medpac.gov/docs/default-source/reports/jun18_ch9_medpacreport_sec.pdf?sfvrsn=0 and June 2019 MedPAC Report 
to Congress, Chapter 12 at https://www.medpac.gov/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    It is not clear that D-SNP look-alikes are essential to the 
implementation of the Medicare Advantage program or to access to 
coverage or care for Medicare beneficiaries. Unlike the non-SNP MA 
plans in which many dually eligible individuals enroll, D-SNP look-
alikes do, however, have the near-exclusive levels of dual eligible 
enrollment that the statute envisions only for D-SNPs that must meet 
additional Medicare and Medicaid coordination and integration 
requirements. Most D-SNP look-like enrollment is in markets that 
feature numerous other plan choices for beneficiaries. Only about 1.2 
percent of dually eligible enrollees in traditional MA plans (that is, 
non-SNP MA plans) are in plans with 80 percent or higher dually 
eligible enrollment. The data also show that traditional MA plans that 
are not D-SNP look-alikes can attract dually eligible enrollment; 97 
percent of dually eligible individuals enrolled in non-SNP MA plans are 
in a plan with dual eligible enrollment of 30 percent or less.\17\
---------------------------------------------------------------------------

    \17\ Ibid.
---------------------------------------------------------------------------

    The proliferation and growth of D-SNP look-alikes raises multiple 
areas of concern as follows:
     Effective implementation of BBA of 2018 requirements. As 
discussed earlier in this proposed rule, beginning in contract year 
2021, all D-SNPs must meet new minimum criteria for Medicare and 
Medicaid integration. D-SNP look-alikes hinder meaningful 
implementation of these statutory requirements. By creating and 
offering these D-SNP look-alikes that target the same dually eligible 
individuals who are intended to benefit from integrated D-SNPs, MA 
organizations are circumventing the new integration requirements.
     Meaningful integration. Several states use the state 
Medicaid agency contracting requirements for D-SNPs at Sec.  422.107 to 
promote greater Medicare-Medicaid integration. In such states, the 
state and D-SNP establish specific care coordination protocols, data 
sharing processes, and other activities to promote better beneficiary 
experiences. Proliferation of D-SNP look-alikes, for which the same 
state contracting requirement does not apply, impedes states from using 
their contracting authority under section 1859 of the Act to ensure 
that plans predominantly serving dually eligible individuals are 
working toward those goals. In its comments to CMS for the April 2019 
final rule, the Medicaid and CHIP Payment and Access Commission 
(MACPAC) expressed concern that the growth of D-SNP look-alikes may 
undermine efforts to promote increased integration through D-SNPs and 
urged CMS to continue to monitor the growth of look-alikes and 
determine if further action is needed.\18\ As we noted earlier, studies 
have shown that highly integrated managed care programs perform well on 
quality of care indicators and enrollee satisfaction.
---------------------------------------------------------------------------

    \18\ Available at https://www.macpac.gov/wp-content/uploads/2018/12/Comments-on-Changes-to-MA-the-Medicare-prescription-drug-benefit-PACE-Medicaid-fee-for-service-and-managed-care.pdf.
---------------------------------------------------------------------------

     Care coordination requirements. To better serve the dually 
eligible population, MIPPA and implementing regulations require D-SNPs 
to provide periodic health risk assessments, develop individualized 
care plans for their members, and develop and seek CMS approval for 
their models of care. These requirements do not apply to D-SNP look-
alikes. As a result, nothing requires the D-SNP look-alikes to deliver 
the types of care coordination that Congress established as statutory 
requirements for plans that are designed for dually eligible 
individuals.
     Beneficiary confusion. The prevalence of the D-SNP look-
alikes has led to instances of misleading marketing by brokers and 
agents that misrepresent to dually eligible individuals the 
characteristics of such look-alike plans, especially where the plans 
have marketed themselves as being special Medicaid-focused plans. We 
continue to learn of these marketing practices from our own review of 
broker materials, investigating complaints we have received, and 
reports from advocacy organizations.\19\ Confusing and misleading 
marketing efforts may violate Sec.  422.2268(a)(1) and (2) which this 
proposed rule proposes to redesignate as Sec.  422.2262(a)(1)(i) and 
(iii) which prohibits MA organizations from providing information that 
is inaccurate or misleading and from engaging in activities that could 
mislead or confuse Medicare beneficiaries or misrepresent the MA 
organization. For that reason, and as discussed elsewhere in this 
proposed rule, we propose at Sec.  422.2262(a)(1)(xvi) to codify 
previous subregulatory guidance from the Medicare Communications and 
Marketing Guidelines prohibiting MA organizations, with respect to 
their non-D-SNP plans, from marketing their plan as if it were a D-SNP, 
implying that their plan is designed for dually eligible individuals, 
targeting their marketing efforts exclusively to dually eligible 
individuals, or claiming a relationship with the state Medicaid agency, 
unless a contract to coordinate Medicaid services for that plan is in 
place.
---------------------------------------------------------------------------

    \19\ Justice in Aging, Dual Eligible Special Needs Plan (D-SNP) 
Look-Alikes: A Primer (July 2019) at https://www.justiceinaging.org/wp-content/uploads/2019/07/D-SNP-Look-Alikes-A-Primer.pdf.
---------------------------------------------------------------------------

    We sought comments on the impact of D-SNP look-alikes in Medicare 
and Medicaid in the 2020 Draft Call Letter.\20\ Specifically, we sought 
comment on topics related to the extent to which D-SNP look-alikes 
impact informed consumer choice; competition and innovation; the 
provision of high-quality coordinated care that addresses the full 
spectrum of dually eligible individuals' care and service needs; state 
Medicaid policy and operations; financial incentives; provider burden; 
and development and sustainability of products for dually eligible 
individuals through which an enrollee can receive all Medicare and 
Medicaid services from one organization.
---------------------------------------------------------------------------

    \20\ Available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html.
---------------------------------------------------------------------------

    As discussed in the 2020 Final Call Letter, we received comments 
from a range of stakeholders, including states, beneficiary advocates, 
and MA organizations and Medicaid MCOs.\21\ Overall, the comments 
reinforced our concern that the proliferation of D-SNP look-alikes 
impedes progress toward developing products that meaningfully integrate 
Medicare and Medicaid benefits for dually eligible individuals. 
Commenters believed that D-SNP look-alikes allow MA organizations to 
circumvent enrollment restrictions and federal regulatory and state 
contracting requirements for D-SNPs and MMPs, undercutting efforts to 
lower costs and improve the quality of care.
---------------------------------------------------------------------------

    \21\ Ibid.
---------------------------------------------------------------------------

    As we noted in the 2020 Final Call Letter, commenters highlighted 
three areas that warranted further investigation and analysis and 
potential rulemaking: Benefit design and

[[Page 9021]]

nondiscrimination; beneficiary education, marketing, and broker 
compensation; and enhanced requirements for MA plans with high 
proportions of dually eligible enrollees. Some stakeholders suggested 
that benefit design used by D-SNP look-alikes appears to violate the 
prohibition at Sec.  422.100(f)(2) against benefit designs that are 
discriminatory and against steering subsets of beneficiaries to 
specific plans, since their design targets dually eligible individuals.
    We also received broad support for efforts to ensure that MA 
organizations do not market D-SNP look-alikes as plans that coordinate 
Medicaid benefits, as particularly suited to dually eligible 
individuals, or as uniquely subject to rules that protect dually 
eligible individuals from cost sharing or for which Medicaid pays the 
full amount of plan cost sharing. Lastly, several commenters 
recommended that CMS require MA plans with high proportions of dually 
eligible individuals to meet D-SNP regulatory requirements, including 
the requirement to contract with the state Medicaid agency.
    To address these concerns, we are proposing at Sec.  422.514(d) 
that CMS not enter into or renew a contract for a D-SNP look-alike in 
any state where there is a D-SNP or any other plan authorized by CMS to 
exclusively enroll dually eligible individuals. We also propose to 
establish procedures for transitioning enrollees from D-SNP look-likes 
to other MA plans in new regulation text at Sec.  422.514(e). The 
proposed new contracting standards would effectively ensure all MA 
plans that predominantly serve dually eligible individuals integrate 
delivery of Medicare and Medicaid services and coordinate care 
consistent with the statutory and regulatory requirements for D-SNPs 
wherever it is feasible to do so.
    Under our authority to adopt standards implementing the Part C 
statute and to add contract terms in sections 1856(b) and 1857(e)(1) of 
the Act, we are proposing to establish contracting standards for MA 
organizations based on their projected dually eligible enrollment in 
plan bids or on the proportion of dually eligible enrollees actually 
enrolled in the plan. A high rate of enrollment by dually eligible 
individuals in a non-D-SNP would allow us to identify non-SNP MA plans 
that are intended to predominantly enroll dually eligible individuals 
(that is, D-SNP look-alikes). We propose exceptions to these 
contracting standards for all SNPs. We believe that our proposal is an 
effective way to ensure that MA organizations do not undermine the 
statutory requirements established for D-SNPs by designing non-SNP MA 
plans to predominantly enroll dually eligible individuals. We believe 
that failure to adopt these exceptions could compromise the statutory 
and regulatory framework for D-SNPs. Any MA organization, by designing 
its benefits and outreach strategy to target dually eligible 
enrollment, practices that the enrollment patterns of D-SNP look-alikes 
show MA organizations are readily adopting, can offer an MA plan with 
high rates--in some cases almost 100 percent--of dually eligible 
enrollment without implementing any of the care management or Medicaid 
coordination activities that federal law requires of D-SNPs. States' 
ability to set contract terms for D-SNPs, including terms that limit 
contracted D-SNPs to entities that deliver integrated Medicare and 
Medicaid benefits, as provided under section 1859 of the Act, is 
likewise subverted by D-SNP look-alikes. Our proposal is especially 
critical as we approach implementation of new D-SNP requirements 
included in the BBA of 2018.
    To prevent the undermining of the statutory and regulatory 
framework for D-SNPs, we therefore propose to establish a new 
regulation precluding CMS from entering into or renewing a contract for 
an MA plan that an MA organization offers, or proposes to offer, with 
enrollment of dually eligible individuals that exceeds specific 
enrollment thresholds. This proposed regulation would apply in any 
state where there is a D-SNP or any other plan authorized by CMS to 
exclusively enroll dually eligible individuals. Section 1856(b)(1) of 
the Act provides the Secretary with the authority to establish in 
regulation other standards not otherwise specified in statute that are 
both consistent with Part C statutory requirements and necessary to 
carry out the MA program. Our proposed regulations would ensure 
applicability and compliance with the statutory framework for D-SNPs. 
Additionally, section 1857(e)(1) of the Act authorizes the Secretary to 
establish MA organization contract terms and conditions that are 
necessary and appropriate and not inconsistent with other Part C 
statutory requirements. We believe that our proposed contract terms 
prohibiting the offering of D-SNP look-alikes is not inconsistent with 
the Part C statute and is necessary and appropriate to retain the 
integrity of the D-SNP statutory framework. Under the statute, only D-
SNPs can primarily enroll dually eligible individuals, and D-SNPs must 
meet certain requirements. Our proposal would ensure that a non-SNP MA 
plan that, in practice, enrolls primarily dually eligible individuals 
under the conditions outlined in our proposal does not skirt the 
specific statutory and regulatory requirements designed to meet the 
specific needs of dually eligible individuals.
    We propose not to enter into or renew MA contracts for an MA plan 
for an upcoming plan year when that MA plan is identified as exceeding 
specific enrollment thresholds for dually eligible individuals. 
However, MA organizations with plans identified as exceeding the 
enrollment threshold that also have approved D-SNPs for the following 
plan year would be permitted to transition dually eligible enrollees 
from D-SNP look-alikes to D-SNPs for which the individuals are 
eligible. We would permit this transition process to minimize 
disruptions to beneficiary coverage and allow enrollees in these D-SNP 
look-alikes to benefit from the statutory and regulatory care 
coordination and Medicaid integration requirements. We describe the 
specific changes we are proposing to Sec.  422.514 as follows.
    We propose changing the title of Sec.  422.514 by removing the word 
``minimum'' because the changes we propose to Sec.  422.514 reflect an 
additional type of enrollment requirement beyond the minimum enrollment 
requirements currently articulated in Sec.  422.514. We also propose to 
change the title of paragraph (a) from ``Basic rule'' to ``Minimum 
enrollment rules'' for clarity due to the proposed change to the scope 
of Sec.  422.514.
    We propose a new paragraph (d) to establish new contract 
requirements related to dual eligible enrollment. The proposed 
requirement at paragraph (d) would apply for an MA plan that is not a 
special needs plan for special needs individuals as defined in Sec.  
422.2. We propose applying this requirement only to non-SNP plans to 
allow for the predominant dually eligible enrollment that characterizes 
D-SNPs, I-SNPs, and some C-SNPs by virtue of the populations that the 
statute expressly permits each type of SNP to exclusively enroll. For 
D-SNPs, the rationale for the exception is obvious--these MA plans 
enroll dually eligible individuals by statute. I-SNPs, by virtue of 
enrolling institutionalized individuals, or community-residing 
individuals who, but for the long-term services and supports they 
receive, otherwise reside in a long-term care institution, typically 
have high proportions of dually eligible individuals who qualify to 
receive

[[Page 9022]]

Medicaid long-term care benefits. In July 2017, 92 percent of I-SNP 
enrollees were dually eligible individuals.\22\ Certain C-SNPs also 
have a relatively high proportion of dually eligible individuals 
because the chronic conditions these plans target are more prevalent 
among dually eligible individuals. For example, in July 2017, dually 
eligible individual enrollment in one end-stage renal disease (ESRD) C-
SNP was 49 percent of total enrollment, in one HIV/AIDS C-SNP was 68 
percent of total enrollment, and in one chronic and disabling mental 
health conditions C-SNP was 83 percent of total enrollment.\23\ We 
would not want our proposed requirements to limit C-SNP enrollment by 
dually eligible individuals who could benefit from a plan that employs 
a specialized model of care, periodic health risk assessments, and 
other techniques that result in specialized, comprehensive care for 
individuals with certain chronic conditions.
---------------------------------------------------------------------------

    \22\ CMS, Chronic Conditions Data Warehouse, Part D Plan 
Characteristics File and Master Beneficiary Summary File, Final 2017 
MBSF created in January 2019.
    \23\ Ibid.
---------------------------------------------------------------------------

    The proposed requirement at paragraph (d) would be limited to 
states where there is a D-SNP or any other plan authorized by CMS to 
exclusively enroll dually eligible individuals, such as MMPs. We 
propose this limitation because it is only in such states that the 
implementation of D-SNP requirements necessitates our proposed new 
contracting requirements. That is, in a state with no D-SNPs or 
comparable managed care plans like MMPs, the D-SNP requirements have 
not had any relevance historically. There are no plans contracted with 
the state to implement the D-SNP requirements or otherwise integrate 
Medicare and Medicaid services, and therefore the operation of a D-SNP 
look-alike would not have any material impact on the full 
implementation of federal D-SNP requirements. In such states, the 
existence of D-SNP look-alikes is not impeding state or federal 
implementation of any requirements for enhanced care coordination and 
Medicaid integration by providing a vehicle for MA organizations to 
avoid compliance with those requirements that are imposed on D-SNPs or 
comparable managed care plans like MMPs. Therefore, we do not believe 
it is critical for our proposed requirements in paragraph (d) to apply 
in such states.
    As of July 2019, eight states do not have any D-SNPs. We believe 
there are two main reasons for the absence of D-SNPs in these states. 
First, the rural nature of some states makes it challenging for any MA 
plan, including a D-SNP, to operate because of the sparse Medicare 
population and the difficulty in establishing networks. Second, some 
state Medicaid agencies have decided not to contract with any D-SNPs, 
either because the agency is not pursuing integration of Medicare and 
Medicaid through managed care, or is pursuing integrated care through 
MMPs.
    We believe the proposed limitation on the states where the proposed 
dual eligible enrollment requirement would apply would continue to 
protect states' ability to contract with plans--including for Medicaid 
behavioral health services and long-term supports and services--in a 
manner that promotes integration and coordination of benefits and a 
more seamless experience for dually eligible individuals in such plans. 
Based on the type of plan, states use different contracting mechanisms 
to establish such requirements. In particular, states establish three-
way contracts with MMPs, state Medicaid agency contracts with D-SNPs, 
and other contracts with Medicaid MCOs affiliated with D-SNPs for the 
delivery of Medicaid benefits. Each type of contract between the state 
and plan can effectively establish integration and coordination of 
benefits requirements.
    However, we recognize that the limitation would allow, in certain 
states, D-SNP look-alikes that do not meet the minimum D-SNP 
requirements for data sharing or care coordination. We seek comment on 
whether the absence of these data sharing and care coordination 
requirements for D-SNP look-alikes in states where they could continue 
to operate under our proposed rule disadvantages the dually eligible 
individuals in D-SNP look-alikes and whether we should extend the 
proposed requirement at paragraph (d) to all states.
    We propose to add new paragraphs (d)(1) and (2) that would require 
that CMS not enter into or renew a contract, for plan year 2022 or 
subsequent years, for an MA plan that is a non-SNP plan that either:
     Projects in its bid submitted under Sec.  422.254 that 80 
percent or more of the plan's total enrollment are enrollees entitled 
to medical assistance under a state plan under Title XIX, or
     Has actual enrollment, as determined by CMS using the 
January enrollment of the current year, consisting of 80 percent or 
more of enrollees who are entitled to medical assistance under a state 
plan under Title XIX, unless the MA plan has been active for less than 
one year and has enrollment of 200 or fewer individuals at the time of 
such determination.
    We believe that using either enrollment scenario is necessary to 
ensure that both new D-SNP look-alikes are not offered and that 
current, or existing, D-SNP look-alikes are not continued.
    Proposed paragraph (d)(2), which would allow us to identify D-SNP 
look-alikes based on actual enrollment, would limit the prohibition to 
MA plans that have been active for one or more years and with 
enrollment equal to or greater than 200 individuals at the time of CMS' 
determination under proposed paragraph (d)(2). This limitation on our 
proposed contract requirement during a plan's first year is important 
because an early enrollment pattern may not be representative of the 
enrollment profile the plan will experience at a point of greater 
maturity.
    To provide an example of how CMS would implement proposed paragraph 
(d)(2) in the first year, CMS would review MA plan enrollment data for 
January 2021 to determine if actual enrollment consists of 80 percent 
or more of enrollees who are entitled to medical assistance under a 
state plan under Title XIX. CMS would not enter into or renew the 
contract for contract year 2022 for an MA plan that exceeds the 80 
percent threshold unless the MA plan has been active for less than one 
year and has January 2021 enrollment of 200 or fewer individuals.
    We believe focusing on the proportion of dually eligible 
enrollment, both in bids and actual enrollment, is the best way to 
identify D-SNP look-alikes because it is the net result of benefit 
design and marketing strategies and less subject to gaming by plans 
than other alternatives, as discussed later in this preamble. We 
propose a threshold for dually eligible enrollment at 80 percent of a 
non-SNP MA plan's enrollment because it far exceeds the share of dually 
eligible individuals in any given market and, therefore, would not be 
the result for any plan that had not intended to achieve high dually 
eligible enrollment. MedPAC analysis shows that in most MA markets, the 
proportion of dually eligible individuals as a percentage of total 
enrollment is clustered in the 10 to 25 percent range and in no county 
exceeds 50 percent.\24\ We believe the proportion of dually eligible 
enrollment as a percentage of

[[Page 9023]]

total plan enrollment is therefore a reliable indicator or proxy for 
identifying a non-SNP MA plan that the MA organization intends to have 
exclusive or predominantly dually eligible enrollment in without being 
subject to the D-SNP integration and care coordination requirements. 
MedPAC data show that our proposed threshold would have minimal impact 
on total dually eligible enrollment in non-SNP MA plans. Among dually 
eligible enrollees in traditional MA plans, only about 1.2 percent are 
in plans in which dually eligible individuals make up 80 percent or 
more of total plan enrollment. Also, 97 percent of dually eligible 
individuals enrolled in traditional MA plans are enrolled in a plan 
with 30 percent or less dually eligible enrollment, which indicates 
that traditional MA plans do not have to create D-SNP look-alikes to 
attract dually eligible individuals.\25\
---------------------------------------------------------------------------

    \24\ June 2019 MedPAC Report to Congress, Chapter 12 at https://www.medpac.gov/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf?sfvrsn=0.
    \25\ See June 2018 MedPAC Report to Congress, Chapter 9 at 
https://medpac.gov/docs/default-source/reports/jun18_ch9_medpacreport_sec.pdf?sfvrsn=0 and June 2019 MedPAC Report 
to Congress, Chapter 12 at https://www.medpac.gov/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    We considered an alternative discussed by MedPAC in its June 2019 
report to Congress for identifying traditional MA plans with 
predominantly dually eligible enrollment: Setting the bar at the higher 
of 50 percent dually eligible enrollment or the proportion of dually 
eligible MA-eligible individuals in the plan service area plus 15 
percentage points. We also considered setting a lower threshold for 
dually eligible enrollment at a point between 50 percent and our 
proposed 80 percent threshold. However, we opted to propose an 
enrollment threshold of 80 percent or higher as an indicator that the 
plan is designed to attract disproportionate dually eligible enrollment 
because it aligns with MedPAC's 2019 research findings, provides a 
threshold that would be easier for MA organizations to determine 
prospectively, and would be easier for CMS to implement. We seek 
comment on whether these alternative enrollment thresholds are 
preferable.
    Under our proposal for paragraph (d)(2), we would annually make the 
determination whether an MA organization has a non-SNP MA plan with 
actual enrollment exceeding the established threshold using the plan's 
enrollment in January of the current year. We intend to make such 
evaluations and issue the necessary information to affected MA 
organizations early in the coverage year. Even without a notice from 
CMS, we expect that each MA organization would be able to independently 
determine the level of dually eligible enrollment in its MA plan. Upon 
receiving the notice from CMS that this proposed prohibition on 
contracting with D-SNP look-alikes is triggered, the MA organization 
would then have the opportunity to make an informed business decision 
to: (1) As necessary, apply and contract for a new D-SNP for the 
forthcoming contract year; (2) create a new MA plan or plans through 
the annual bid submission process; or (3) terminate the D-SNP look-
alike plan and not submit a bid for the following contract year.
    In proposed paragraph (e), we propose a process and procedures for 
transitioning individuals who are enrolled in a D-SNP look-alike to 
another MA-PD plan (or plans) offered by the MA organization to 
minimize disruption as a result of the prohibition on contract renewal 
for existing D-SNP look-alikes. Enrollees in MA plans that an MA 
organization cannot continue to operate as a result of our proposal may 
choose new forms of coverage for the following plan year, including a 
new MA or MA-PD plan or through the original Medicare fee-for-service 
program. Under our proposal, an MA organization with a non-SNP MA plan 
determined to meet the enrollment threshold in proposed paragraph 
(d)(2) could transition enrollees into another MA-PD plan (or plans) 
offered by the same MA organization, as long as any such MA-PD plan 
meets certain proposed criteria described in this section. As stated in 
paragraph (e)(2), this proposed transition process would allow MA 
enrollees to be transitioned from one MA plan offered by an MA 
organization to another MA-PD plan (or plans) without having to fill 
out an election form or otherwise indicate their enrollment choice as 
typically required, but it would also permit the enrollee to make an 
affirmative choice for another MA plan of his or her choosing. 
Enrollees would still have the opportunity to choose their own plan 
during this transition process because of how the proposed transition 
process would overlap with the annual coordinated election period.
    Proposed paragraph (e)(1) specifies that, for coverage effective 
January 1 of the next year, the MA organization could only transition 
individuals from the D-SNP look-alike that is not being renewed into 
one or more MA plans (including a D-SNP) if such individuals are 
eligible to enroll in the receiving plan(s) in accordance with 
Sec. Sec.  422.50 through 422.53. Thus, the individual would have to 
reside in the service area of the new plan and otherwise meet 
eligibility requirements for it. The proposed process would allow, but 
not require, the MA organization to transition dually eligible 
enrollees from a D-SNP look-alike into one or more D-SNPs offered under 
the MA organization, or another MA organization that shares the same 
parent organization as the MA organization, and therefore allow 
enrollees to benefit not only from continued coverage under the same 
parent organization but also from the care coordination and Medicaid 
benefit integration offered by a D-SNP.
    We also propose at paragraphs (e)(1)(i) through (iii) specific 
criteria for any MA plan to receive enrollment through this transition 
process. Our policy goal for this process is to ensure that enrollees 
receive coverage under their new MA plan that is similarly affordable 
as the plan that would not be permitted for the next year. Under 
paragraph (e)(1)(i), we propose to allow a terminating D-SNP look-alike 
to transition enrollment to another non-SNP plan (or plans) only if the 
resulting total enrollment in each of the MA plans receiving enrollment 
consists of less than 80 percent dually eligible individuals. SNPs 
receiving transitioned enrollment would not be subject to the proposed 
dual eligible enrollment requirement. The percent of dually eligible 
individuals in the resulting total enrollment would have to be 
determined prospectively in order for us to make a timely decision on 
whether to allow for an MA organization to transition enrollment into a 
non-SNP MA plan or plans. As described at proposed paragraph (e)(3), we 
would make such determination by adding the cohort of enrollees that 
the MA organization proposes to enroll into a different non-SNP plan to 
the April enrollment of the receiving plan and calculating the 
resulting percent of dually eligible enrollment. We would make this 
calculation for each non-SNP plan into which the MA organization 
proposes to transition enrollment. This proposed criterion would ensure 
that the enrollment transitions under this regulation do not result in 
another non-SNP MA plan being treated as a D-SNP look-alike under 
proposed paragraph (d). Proposed paragraph (e)(1)(ii) would require 
that any plan receiving transitioned enrollment be an MA-PD plan as 
defined in Sec.  422.2. Proposed paragraph (e)(1)(iii) would require 
that any MA plan receiving transitioned enrollment from a D-SNP look-
alike have a combined Part C and D beneficiary premium of $0 after 
application of the premium subsidy for

[[Page 9024]]

full subsidy eligible individuals described at Sec.  423.780(a).
    As proposed in paragraph (e)(2)(ii), the MA organization would be 
required to describe changes to MA-PD benefits and provide information 
about the MA-PD plan into which the individual is enrolled in the 
Annual Notice of Change that the MA organization must send, consistent 
with Sec.  422.111(a), (d), and (e) and proposed Sec.  422.2267(e)(3). 
Consistent with Sec.  422.111(d)(2), enrollees would receive this 
Annual Notice of Change (ANOC) describing the change in plan enrollment 
and any differences in plan enrollment at least 15 days prior to the 
first day of the annual election period. By proposing that this 
information is provided before the annual election period through this 
reference to the ANOC, we believe that we are ensuring that each 
enrollee affected by a transition under this proposal would have the 
information necessary to decide if they wish to change plans rather 
than be transitioned to the MA organization's other plan. By timing the 
notice with the annual open enrollment period, our proposal ensures 
that affected enrollees retain the opportunity to choose another MA 
plan or the original Medicare fee-for-service program and a 
Prescription Drug Plan.
    As proposed in paragraph (e)(4), in cases where an MA organization 
does not transition some or all current enrollees from a D-SNP look-
alike plan to one or more of the MA organization's other plans as 
provided in proposed paragraph (e)(1), it would be required to send 
affected enrollees a written notice consistent with the non-renewal 
notice requirements at Sec.  422.506(a)(2). This proposal ensures that 
affected enrollees who would otherwise be disenrolled to the original 
Medicare fee-for-service program have an opportunity during the annual 
open enrollment period to make a different enrollment election.
    This proposed transition process is conceptually similar to 
``crosswalk exception'' procedures historically allowed by CMS and 
proposed at Sec.  422.530, as described in section VI.C. of this 
proposed rule. However, in contrast to the proposed crosswalk 
exceptions, our proposal would allow the transition process to apply 
across legal entities offered by MA organizations under the same parent 
organization, as well as different plan types (for example, non-SNP to 
SNP). Allowing this type of enrollment transition process would 
minimize disruptions in coverage for dually eligible individuals 
enrolled in a D-SNP look-alike (who could be transitioned to a D-SNP or 
a non-D-SNP) and the small number of Medicare-only individuals enrolled 
in a D-SNP look-alike plan (who could be transitioned into a non-SNP MA 
plan operated by the same MA organization). Because this transition 
process is not the same as the crosswalk process, our proposal codifies 
it as part of Sec.  422.514.
    We considered an alternative that would require transitioning any 
dually eligible individuals into a D-SNP for which they were eligible 
if such a plan is offered by the MA organization. We opted for 
proposing a less prescriptive set of transition rules, recognizing a 
potentially wide array of transition scenarios, but seek comment on 
this alternative. In addition, we seek comment on whether additional 
criteria for the receiving plan are necessary to protect beneficiaries 
who are affected by this proposed prohibition on renewing MA plans that 
meet the criteria in proposed Sec.  422.514(d).
    We intend for the transition process to take effect in time for D-
SNP look-alikes operating in 2020 to utilize the transition process for 
enrollments to be effective January 1, 2021. This will allow current 
MA-PD plans that expect to meet the enrollment threshold in proposed 
paragraph (d)(2) to retain some or all of their current enrollment by 
transitioning these individuals to other MA-PD plans offered by the 
same MA organization a year before CMS implements any plan terminations 
under this proposal. Contract terminations for plans that are specified 
in proposed paragraph (d)(2) would take effect no earlier than December 
31, 2021, because, as specified in the proposed regulation text, such 
terminations would apply only beginning for plan year 2022. However, 
the proposed provision at paragraph (e)(1) allowing an MA organization 
to transition enrollees from a D-SNP look-alike plan into one or more 
MA-PD plans offered by that MA organization would be effective after 
the publication of a final rule in 2020. That is, if our proposal is 
finalized, we would work with plans that expect to have enrollment of 
dually eligible individuals that exceeds the enrollment threshold in 
proposed paragraph (d)(2) for Contract Year 2021 to confirm eligibility 
for the transition process and take necessary operational steps in 2020 
to allow transition of enrollees from those plans into new MA-PD plans 
offered by the same MA organization on January 1, 2021, because CMS 
would not renew those contracts for 2022.
    Overall, our proposal focuses on dually eligible beneficiaries as a 
percentage of a plan's total enrollment. We considered using 
alternative criteria instead of, or in addition to, the percentage of 
projected or actual dually eligible enrollment, to identify non-SNP MA 
plans designed to exclusively or predominantly enroll dually eligible 
individuals. In particular, we considered identifying D-SNP look-alikes 
by the benefit design these plans typically offer--relatively high 
Parts A and B cost sharing and a high Part D deductible that make the 
plans unattractive to Medicare-only beneficiaries, supplemental 
benefits like dental and hearing services and over-the-counter drugs 
that mimic typical D-SNP offerings, and a premium for Part D coverage 
that is fully covered by the Part D low-income subsidy. We also 
considered using the percentage of MA rebate dollars allocated to buy 
down Parts A and B cost sharing compared to other supplemental 
benefits--D-SNP look-alikes typically allocate a greater percentage to 
the latter--as a way to identify D-SNP look-alikes. However, we chose 
our proposal over these alternatives for multiple reasons. First, we 
are concerned that further regulating benefit design in this way could 
inadvertently diminish benefit flexibility that genuinely improves 
competition and choice, without necessarily being designed to undermine 
rules applicable to D-SNPs. For example, it is conceivable that future 
benefit designs would be precluded by any benefit and cost sharing 
criteria we established to eliminate D-SNP look-alikes, even if those 
benefit designs would not have drawn a high percentage of dually 
eligible individuals based on factors that we cannot currently foresee. 
Second, we determined that MA organizations could likely avoid any new 
limitations on benefit design through small tweaks to their benefit 
design or allocation of MA rebate dollars. Most importantly, we 
determined that the best indicator that a MA organization intends a 
plan to have exclusive or predominantly dually eligible enrollment is 
in the enrollment it projects in the bid and in the enrollment it 
actually achieves. Finally, we believe the criteria to identify D-SNP 
look-alikes should mirror the principal criterion that distinguishes D-
SNPs from other MA plans in statute the ability to have enrollment that 
exclusively, or predominantly, consists of dual eligible individuals--
which enables a D-SNP to integrate and coordinate the delivery of 
Medicaid services and necessitates the additional care coordination to 
meet the needs of this vulnerable population. We seek comment on 
whether these alternative criteria should be used instead of, or in 
addition to, the criteria we are

[[Page 9025]]

proposing for identifying D-SNP look-alikes and applying contracting 
prohibition.

III. Implementation of Several Opioid Provisions of the Substance Use-
Disorder Prevention That Promotes Opioid Recovery and Treatment 
(SUPPORT) for Patients and Communities Act

A. Mandatory Drug Management Programs (DMPs) (Sec.  423.153)

1. Summary and Background of DMPs
    The SUPPORT Act made changes to the requirements for Part D DMPs to 
enhance Part D sponsors' ability to reduce the abuse or misuse of 
opioid medications in their prescription drug benefit plans. CMS is 
proposing two corresponding changes to the Part D DMP provisions 
codified in Sec.  423.153(f): (1) Requiring Part D sponsors to adopt 
DMPs with respect to a plan year on or after January 1, 2022, as 
required under section 2004 of the SUPPORT Act; and (2) requiring 
inclusion of Part D beneficiaries with a history of opioid-related 
overdose in sponsors' DMPs beginning January 1, 2021, as required under 
section 2006 of the SUPPORT Act. In addition, CMS is proposing an 
additional category of exempt beneficiaries, for example, those with 
sickle cell disease, from DMPs and proposing several technical 
clarifications to the DMP regulations, which are described in 
subsequent paragraphs.
    CARA amended the Act and included new authority for the 
establishment of DMPs in Medicare Part D, effective on or after January 
1, 2019. CMS established through notice and comment rulemaking a 
framework at Sec.  423.153(f) under which Part D plan sponsors may 
establish a DMP for beneficiaries at-risk for prescription drug abuse, 
or ``at-risk beneficiaries'' (ARBs) (defined in Sec.  423.100).
    Under the DMPs in place today, CMS identifies ``potential at-risk 
beneficiaries'' (PARBs) (defined in Sec.  423.100) who meet the 
clinical guidelines described in Sec.  423.153(f)(16), which we refer 
to as the minimum Overutilization Management System (OMS) criteria. The 
OMS reports such beneficiaries to their Part D plans for case 
management under their DMP. There are also supplemental clinical 
guidelines, or supplemental OMS criteria, which Part D sponsors can 
apply themselves to identify additional potential at-risk 
beneficiaries.
    The OMS criteria used to identify PARBs are based on a history of 
filling opioids from multiple doctors and/or multiple pharmacies. Once 
PARBs are identified, plan sponsors engage in case management of these 
beneficiaries through contact with their prescribers to determine 
whether the beneficiary is at-risk for prescription drug misuse or 
abuse. If a sponsor determines through case management that a PARB is 
at-risk, after notifying the beneficiary in writing, the sponsor may 
limit their access to coverage of opioids and/or benzodiazepines to a 
selected prescriber and/or network pharmacy(ies) and/or through a 
beneficiary-specific point-of-sale (POS) claim edit. This process does 
not apply to ``exempted beneficiaries'' (defined at Sec.  423.100). 
Exempted beneficiaries currently include those being treated for active 
cancer-related pain, residing in a long-term care facility, receiving 
hospice care or receiving palliative or end-of-life care, but we are 
proposing, in section VIII.N. of this proposed rule, to exempt 
beneficiaries with sickle cell disease beginning with plan year 2021.
    CMS data has shown value from plan sponsors engaging in case 
management. From 2011 \26\ through 2017, there was a 76 percent 
decrease in the number of Part D potential at-risk beneficiaries 
(almost 22,500 beneficiaries) who met the applicable OMS criteria under 
the prior opioid overutilization policy. Part D sponsors also 
implemented 4,375 beneficiary-specific POS opioid claim edits through 
2017. Early analysis of the coverage limitations (for example, pharmacy 
and prescriber limitations and beneficiary-specific POS claim edits) 
implemented under DMPs through the second quarter of 2019 continues to 
show a relatively low application of coverage limitations by Part D 
sponsors. However, this is not unexpected,\27\ as the design of the DMP 
process is for Part D sponsors to engage in beneficiary-specific 
casework with the PARB's prescribing physicians to address the unique 
needs of the beneficiary and coordinate care. Nevertheless, the 
availability and use of coverage limitations by sponsors remains 
important, necessary, and appropriate in certain clinical situations.
---------------------------------------------------------------------------

    \26\ In developing the Medicare Part D opioid overutilization 
policy and OMS which began in 2013, we conducted pilots and testing 
in 2012. Therefore, we use 2011 as the pre-pilot/pre-policy 
measurement period. DMPs incorporated the OMS criteria and case 
management approach established in the opioid overutilization 
policy.
    \27\ See discussion p. 16690: ICRs Regarding the Implementation 
of the Comprehensive Addictions and Recovery Act of 2018 (CARA) 
Provisions (Sec.  423.153) in the April 2018 final rule (83 FR 
16440).
---------------------------------------------------------------------------

2. Mandatory Drug Management Programs (DMPs)
    Section 2004 of the SUPPORT Act requires that, no later than 
January 1, 2022, Part D sponsors must have established DMPs. We are 
proposing to amend regulatory language at Sec.  423.153(f) to reflect 
this requirement. We note that while implementation of DMPs has been 
optional since 2019, when Part D sponsors could first adopt them, 85.9 
percent of Part D contracts in calendar year 2019 and 87.2 percent for 
calendar year 2020 adopted DMPs to address opioid overutilization among 
their enrollees. Thus, of about 49 million beneficiaries who were 
enrolled in the Medicare Part D program in 2019, about 48.5 million 
enrollees (99 percent) were covered under Part D contracts that offered 
a DMP already. Our internal analysis estimates that only 158 additional 
PARBs will be identified due to making DMPs mandatory by meeting the 
current minimum OMS criteria.

B. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.100)

    Under section 2006 of the SUPPORT Act, CMS is required to identify 
Part D beneficiaries with a history of opioid-related overdose (as 
defined by the Secretary), and such individuals must be included as 
PARBs for prescription drug abuse under a Part D plan's DMP. CMS is 
also required under this section to notify the sponsor of such 
identifications. In line with this requirement, we are proposing to 
modify the definition of ``potential at-risk beneficiary'' at Sec.  
423.100 to include a Part D eligible individual who is identified as 
having a history of opioid-related overdose, as we propose to define 
it.
    We propose to define ``history of opioid-related overdose'' to mean 
that for the Part D beneficiary, a recent claim has been submitted \28\ 
that contains a principal diagnosis code reflecting an opioid overdose, 
regardless of the type of opioid and at least one recent PDE for an 
opioid dispensed to such beneficiary has been submitted.
---------------------------------------------------------------------------

    \28\ Claim date for meeting lookback period criteria based on 
the claim dates of service, admission date or date the claim was 
loaded into CMS's data warehouse.
---------------------------------------------------------------------------

    We propose to operationalize this proposed definition by: (1) Using 
diagnoses that include both prescription and illicit opioid overdoses; 
(2) using a 12-month lookback period from the end of each OMS reporting 
quarter, for record of opioid-related overdose within Medicare fee-for-
service (FFS) claims

[[Page 9026]]

and Medicare Advantage Encounter data (excluding those not enrolled in 
a Part D plan, whether an MA-PD or standalone PDP plan); and (3) using 
a 6-month lookback period from the end of each OMS reporting quarter, 
for record of a recent Part D opioid PDE. The number of unique 
beneficiaries identified under this proposal is approximately 18,268.
    Our rationale for this proposal is that a past overdose is the risk 
factor most predictive for another overdose or suicide-related 
event.\29\ We propose using diagnoses that include both prescription 
and illicit opioid overdoses because an opioid overdose may result from 
prescription or illicit opioids alone or in combination, and the 
statute does not distinguish based on type of opioid. Further, in the 
case of prescription opioids, the diagnosis code does not indicate if 
the prescription was legally obtained and used by the intended patient. 
Lastly, we propose to define history of opioid-related overdose to 
include only those instances where the enrollee also recently filled an 
opioid prescription under their Part D benefit, because the existence 
of an opioid PDE means sponsors would have an opioid prescriber with 
whom to conduct case management, which is an integral part of the DMP 
process.
---------------------------------------------------------------------------

    \29\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the US Veterans Health Administration. Addiction. 2017 
Jul;112(7):1193-1201. doi: 10.1111/add.13774.
---------------------------------------------------------------------------

    Other factors we took into consideration for our proposal: First, 
as to including both prescription and illicit opioid overdose 
diagnoses, we considered that the Part D program is a prescription drug 
benefit program and, therefore, considered defining a history of 
opioid-related overdose as only including those overdoses involving 
validly prescribed and taken prescription opioids. However, given the 
risks associated with opioid-related overdose, we believe the best 
policy is to include both types of overdoses. Also, we cannot 
accurately identify whether an illicit or prescription opioid drug or 
drugs contributed to an overdose, and even if we could, we cannot 
determine whether a prescription opioid that contributed to the 
overdose was legally obtained and taken. Thus, our approach also 
overcomes limitations in the diagnosis data available (described 
further in this section of this proposed rule). The Alternatives 
Considered section of the Regulatory Impact Analysis (section X.D.1. of 
this proposed rule) provides a more in-depth review of the various 
other approaches considered and the projected numbers of affected 
enrollees.
    Second, we note that the proposed 12-month lookback period of 
Medicare FFS claims and Medicare Advantage Encounter data to identify 
enrollees with a history of opioid-related overdose, which aligns with 
the measurement period used for active cancer diagnosis data in the 
current OMS criteria, takes into account program size and factors in 
patterns of beneficiaries who overdose more than once. We think 12 
months is the appropriate lookback period to identify the beneficiaries 
who are at the most risk. When using Medicare fee-for-service inpatient 
data, we noted that a two-year lookback period (between July 2016 and 
June 2018) for Medicare beneficiaries who overdosed more than once 
almost proportionately doubles the number of overdoses compared to a 
one-year lookback (July 2017 to June 2018); however, 90 percent of the 
beneficiaries who had more than one opioid-related overdose episode, 
had a subsequent overdose episode on average within 12 months. In our 
methodology, we used the calendar month and year of opioid-related 
overdose events to identify each episode and also found that 95 percent 
of the beneficiaries had a subsequent overdose episode on average 
within 14 months and 99 percent of the beneficiaries had a subsequent 
overdose episode on average within 19 months. Thus, a 12-month lookback 
period strikes a better balance in identifying beneficiaries who would 
be at risk of having another opioid-related overdose taking into 
consideration the drug management program size.
    Third, while we considered reporting any enrollees who have a 
history of opioid-related overdose during the 12-month lookback period, 
regardless of whether there is an opioid PDE, we believe our proposal 
to report only those enrollees who also recently filled a Part D opioid 
prescription should increase the likelihood for the sponsor to conduct 
successful provider outreach for case management. This aligns with the 
6-month measurement period used for opioid PDE records in the current 
OMS criteria. We solicit feedback on the proposed 12-month lookback 
period for identifying claims for opioid-related overdose and the 
proposal to report only those enrollees with at least one Part D opioid 
PDE within the prior 6 months.
    To derive an estimated population of PARBs identified under this 
proposal, we identified beneficiaries with inpatient, outpatient or 
professional FFS or encounter data opioid overdose claims based on the 
principal International Classification of Disease (ICD)-10 diagnosis 
codes (see Table 1) during the 12-month measurement period from 07/01/
2017 to 06/30/2018 and at least one recent Part D opioid PDE from 01/
01/2018 to 06/30/2018. We excluded beneficiaries if they were 
identified as having elected hospice, in a resident facility, had 
palliative care diagnosis, and/or had a death date during the last 6 
months (01/01/2018-06/30/2018). We also excluded beneficiaries if they 
had active cancer during the 12-month lookback period (07/01/2017-06/
30/2018). This is consistent with the measurement period used to 
identify these attributes in the current OMS criteria. Finally, we 
excluded beneficiaries who were not Part D enrolled during the last 
month of the OMS measurement period. Again, the number of unique 
beneficiaries identified under this proposal is 18,268. To align with 
our current OMS quarterly reporting frequency, we ran additional 
simulations using 2018 data and estimated that about 4,500 new 
beneficiaries with an opioid related overdose would be identified every 
quarter.
---------------------------------------------------------------------------

    \30\ ICD-10 diagnosis codes related to underdosing, adverse 
effects and assault are excluded.

   Table 1--List of Opioid-Related Overdose Codes Included in Analysis
------------------------------------------------------------------------
               Overdose type                 ICD-10 diagnosis codes \30\
------------------------------------------------------------------------
Any Opioid.................................  T40.0 (opium), T40.1
                                              (heroin), T40.2 (natural/
                                              semisynthetic opioids
                                              including hydrocodone and
                                              oxycodone), T40.3
                                              (methadone), T40.4
                                              (synthetic opioids other
                                              methadone including
                                              fentanyl and tramadol) and
                                              T40.6 (other and
                                              unspecified narcotics).
Prescription Opioid........................  T40.2 (natural/
                                              semisynthetic opioids
                                              including hydrocodone and
                                              oxycodone), T40.3
                                              (methadone), and T40.6
                                              (other and unspecified
                                              narcotics).
Illicit Opioid.............................  T40.1 (heroin) and T40.4
                                              (synthetic opioids other
                                              methadone likely illicitly
                                              manufactured fentanyl).
------------------------------------------------------------------------


[[Page 9027]]

    Table 1 categorizes the diagnoses codes we used to derive our 
estimate, as well as the other options in section X.D.1. of this 
proposed rule. As previously noted, there are limitations when using 
diagnosis data to identify opioid-related overdoses. An additional 
limitation is that there is an unspecified opioid overdose code, which 
requires that assumptions be made in order to classify an overdose code 
as prescription or illicit. We classified code 40.2 (other opioids), as 
a prescription opioid overdose, but in some cases oxycodone may have 
been obtained illegally. We classified code 40.4 (other synthetic 
opioids) as illicit opioid overdose but in some cases fentanyl may have 
been obtained by prescription. We made these designations in order for 
our proposal to align with Centers for Disease Control and Prevention's 
(CDC) practice of defining all fentanyl overdoses (synthetic opioids 
other than methadone) as likely illicit.\31\
---------------------------------------------------------------------------

    \31\ Current information reported about overdose deaths in NVSS 
does not distinguish pharmaceutical fentanyl from illicitly 
manufactured fentanyl (IMF). Opioid Data Analysis and Resources. 
Available from: https://www.cdc.gov/drugoverdose/data/analysis.html.
---------------------------------------------------------------------------

    As noted earlier in this proposed rule, Part D sponsors with DMPs 
must conduct case management for each PARB identified by CMS through 
OMS which includes sending written information to the beneficiary's 
prescribers that the beneficiary met the clinical guidelines/OMS 
criteria and is a PARB. Currently, case management under DMPs generally 
addresses safety concerns related to opioid prescriptions for Part D 
beneficiaries involving multiple prescribers/pharmacies. We continue to 
encourage providers to consult state-based prescription drug monitoring 
programs before prescribing opioids to reduce the number of 
beneficiaries meeting the current OMS criteria. However, under this 
proposal, the nature of the safety concern for the Part D beneficiaries 
who must be identified and reported to sponsors by OMS is different. 
Sponsors will communicate with providers about potential safety 
concerns due to the beneficiary's history of opioid-related overdose, 
and the provider may or may not already be aware of this history and 
the beneficiary may or may not be using multiple opioid prescribers/
pharmacies. Thus, our proposal is similar to PARBs who are reported by 
OMS with a benzodiazepine flag, as a particular provider may or may not 
be aware that a beneficiary is taking benzodiazepines in addition to 
opioids.
    Such communication is an opportunity for sponsors, through their 
DMPs, to offer information to, and/or discuss with, providers the risk 
factors relevant to opioid use and a prior overdose history, and to 
make prescribers aware of the tools available under a DMP to assist 
them in managing their patient's care, as they consider prescription 
opioid use of their patient. The provider should also consider 
prescribing the beneficiary an opioid-reversal agent if they are newly 
aware of the beneficiary's history of opioid-related overdose and DMPs 
should notify providers and patients of the coverage of naloxone and 
its availability through their plan. As with any beneficiary in a DMP, 
the goal is the best-possible, coordinated, and safe care for each 
unique patient as determined by their provider(s), and not to 
stigmatize the patient; nor abruptly taper or discontinue their 
medications, nor unnecessarily or abruptly remove the patient from a 
provider's practice.
    We solicit comments on whether our proposal needs any additional 
features to facilitate the case management process for PARBs with a 
history of opioid related overdose, such as written sponsor-provider 
communication and/or to address the anticipated effects of this type of 
sponsor-provider collaboration. We recognize that the model beneficiary 
notices \32\ provided by CMS may need to be revised to incorporate a 
PARB having a history of opioid-related overdose (noted in section 
IX.B.3. of this proposed rule).
---------------------------------------------------------------------------

    \32\ Notice documents available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Drug-Management-Program-Notices-.zip.
---------------------------------------------------------------------------

C. Information on the Safe Disposal of Prescription Drugs (Sec.  
422.111)

    Section 6103 of the SUPPORT Act amends section 1852 of the Act by 
adding a new subsection (n). Section 1852(n)(1) requires MA plans to 
provide information on the safe disposal of prescription drugs when 
furnishing an in-home health risk assessment. Section 1852(n)(2) 
requires us to establish, through rulemaking, criteria that we 
determine appropriate with respect to information provided to an 
individual during an in-home health risk assessment to ensure that he 
or she is sufficiently educated on the safe disposal of prescription 
drugs that are controlled substances.
    In order to implement the requirements of section 1852(n)(1) for MA 
plans, CMS proposes to revise the Sec.  422.111, Disclosure 
Requirements, to add a paragraph (j), which would require MA plans that 
furnish an in-home health risk assessment on or after January 1, 2021, 
to include both verbal (when possible) and written information on the 
safe disposal of prescription drugs that are controlled substances in 
such assessment. Consistent with section 1852(n)(1), we propose that 
information must include details on drug takeback programs and safe in-
home disposal methods.
    In educating beneficiaries about the safe disposal of medications 
that are controlled substances, we propose MA plans would communicate 
to beneficiaries in writing and, when feasible, verbally. We propose 
that MA plans must do the following to ensure that the individual is 
sufficiently educated on the safe disposal of controlled substances: 
(1) Advise the enrollee that unused medications should be disposed of 
as soon as possible; (2) advise the enrollee that the US Drug 
Enforcement Administration allows unused prescription medications to be 
mailed back to pharmacies or other authorized sites using packages made 
available at such pharmacies or other authorized sites; (3) advise the 
enrollee that the preferred method of disposing of controlled 
substances is to bring them to a drug take back site; (4) identify drug 
take back sites that are within the enrollee's MA plan service area or 
that are nearest to the enrollee's residence; and (5) instruct the 
enrollee on the safe disposal of medications that can be discarded in 
the household trash or safely flushed. Although we are not proposing to 
require MA plans to provide more specific instructions with respect to 
drug disposal, we are proposing that the communication to enrollees 
provide the following additional guidance: If a drug can be safely 
disposed of in the enrollee's home, the enrollee should conceal or 
remove any personal information, including Rx number, on any empty 
medication containers. If a drug can be discarded in the trash, the 
enrollee should mix the drugs with an undesirable substance such as 
dirt or used coffee grounds, place the mixture in a sealed container 
such as an empty margarine tub, and discard in the trash.
    We also propose that the written communication include a web link 
to the information available on the United States Department of Health 
and Human Services website identifying methods for the safe disposal of 
drugs available at the following address: https://www.hhs.gov/opioids/prevention/safely-dispose-drugs/. We note that the safe 
disposal of drugs guidance at this website can be used for all 
medications not just medications that

[[Page 9028]]

are controlled substances. We believe that plan communications 
consistent with the standard on this website provides enrollees with 
sufficient information for proper disposal of controlled substances in 
their community.

D. Beneficiaries' Education on Opioid Risks and Alternative Treatments 
(Sec.  423.128)

    Sponsors of Part D prescription drug plans, including MA-PDs and 
standalone PDPs, must disclose certain information about their Part D 
plans to each enrollee in a clear, accurate, and standardized form at 
the time of enrollment and at least annually thereafter under section 
1860D-4(a)(1)(a) of the Act. Among the drug specific information that 
sponsors must provide pursuant to section 1860D-4(a)(1)(B) of the Act 
is information about the plan formulary, pharmacy networks, beneficiary 
cost-sharing requirements, and the availability of medication therapy 
management (MTM) and DMPs.
    Section 6102 of the SUPPORT Act amended section 1860D-4(a)(1)(B) of 
the Act to require that, for plan year 2021 and each subsequent plan 
year, Part D sponsors also must disclose to each enrollee, with respect 
to the treatment of pain, information about the risks of prolonged 
opioid use. In addition to this information, with respect to the 
treatment of pain, MA-PD sponsors must disclose coverage of non-
pharmacological therapies, devices, and non-opioid medications under 
their plans. Sponsors of standalone PDPs must disclose coverage of non-
pharmacological therapies, devices, and non-opioid medications under 
their plans and under Medicare Parts A and B.
    Section 6102 of the SUPPORT Act also amended section 1860D-
4(a)(1)(C) of the Act to permit Part D sponsors to disclose this opioid 
risk and alternative treatment coverage information to only a subset of 
plan enrollees, such as enrollees who have been prescribed an opioid in 
the previous 2-year period, rather than disclosing the information to 
each plan enrollee. To implement section 6102, we propose to amend our 
regulations at Sec.  423.128 to reflect that Part D sponsors may 
provide such information to a subset of such enrollees, in accordance 
with section 1860D-4(a)(1)(C), in lieu of providing it to all 
enrollees.
    If a sponsor does not send the information to all enrollees, we 
have a few suggested subsets of enrollees for sponsors to consider and 
the estimated number of enrollees in each subset, as shown in Table 2. 
The estimates are based on 2018 Part D PDE data and do not include the 
populations that are exempted from Part D opioid policies in 2021, for 
example, enrollees with active cancer-related pain, in hospice, in a 
resident facility, or in palliative care. Sponsors may or may not 
choose to adopt one of the suggestions, and sponsors may or may not 
exempt the same beneficiaries that are exempted from other Part D 
opioid policies.
    However, we thought that providing some options, along with Part D 
program-wide data, would be useful to sponsors, as they decide to which 
enrollees they will disclose the required opioid risk and alternate 
pain treatment coverage information. We are also interested in comments 
identifying other possible appropriate subsets of enrollees.

 Table 2--Suggested Subset Options To Receive Education on Opioid Risks
                       and Alternate Treatments *
------------------------------------------------------------------------
                                             Number of      Percent  of
     Subset          Suggested subset      enrollees  in   total  opioid
                                            this subset        users
------------------------------------------------------------------------
1..............  All Part D Enrollees...      46,759,911             N/A
2..............  Any opioid use in last       16,134,063             100
                  2 years.
3..............  Any opioid use in past       11,027,271             100
                  year.
4..............  7 days continuous             7,163,615              65
                  opioid use.
5..............  Greater than 30 days          3,816,731              35
                  continuous opioid use,
                  7 day or less gap.
6..............  Greater than 90 days          2,698,064              24
                  continuous opioid use,
                  7 day or less gap.
------------------------------------------------------------------------
* All figures based on 2018 PDE data as of 7/6/2019, except subset 2
  which is based on 2017 and 2018 PDE data. Beneficiaries were excluded
  from the opioid use subsets if they were in hospice, in a resident
  facility, or had a palliative care diagnosis (07/01/2018-12/31/2018).
  Beneficiaries were also excluded if they had a cancer diagnosis (01/01/
  2018-12/31/2018). No exclusions were applied to the all Part D
  enrollees figure (subset 1).

    The first suggested option is for sponsors to disclose the opioid 
risk and alternate coverage information to all Part D enrollees. This 
option has the advantage of disseminating the information most widely--
to approximately 46,759,911 enrollees--and not trying to determine 
which enrollees may need the information more than other enrollees. 
Beneficiaries may receive information about risks and treatment 
alternatives before they use opioids under this option. However, this 
option has the disadvantage of being largely over-inclusive, in the 
sense that a significant number of enrollees will receive information 
that is not, and may never be, pertinent to them.
    The second suggested option is to disclose the opioid information 
to the subset suggested by the SUPPORT Act, which is enrollees who have 
been prescribed an opioid in the previous 2-year period, approximately 
16,134,063 enrollees. This option has the advantage of targeting 
enrollees who have actually used opioids, but has the disadvantage of 
not being as proactive as the first option, while also still including 
enrollees who may not have used opioids in quite some time; may only 
have used them for short-term acute use; and may not take them again 
soon or ever.
    The third suggestion option is to disclose the opioid information 
to the subset of all opioid users in the Part D program who had at 
least one opioid prescription in a year, which would be 11,027,271 
enrollees based on 2018 estimates. This option still has the advantage 
of a fairly wide dissemination of information about the risk of opioid 
use and coverage of alternate pain treatment; however, it would also 
mean that the information would be sent to enrollees who only took 
opioids for short-term acute use; are no longer taking opioids; or may 
never take them again.
    The fourth suggested option is to disclose the opioid information 
to the subset of enrollees who have a greater than 7 days of continued 
opioid use. This option would disseminate the information to 7,163,615 
enrollees, who represent well over the majority (65%) of opioid users 
in the Part D program. While this subset is much more targeted than the 
other suggested subsets, it would involve sending the information to 
enrollees who may still be in the acute phase of opioid use and may not

[[Page 9029]]

transition to chronic use, as three-quarters of opioids users in 2018 
had less than 90 days of opioid use. Moreover, our internal analysis 
shows that opioid prescriptions are filled with a median day supply of 
30 days. Thus, the greater than 7 day use criteria would include 
enrollees who have not yet received a subsequent opioid fill after an 
initial opioid prescription or received fills with a smaller days' 
supply.
    A fifth suggested option is to disclose this information to the 
subset of enrollees with greater than 30 days of continuous opioid use 
without more than a 7 day gap. This subset would be approximately 
3,816,731 enrollees, which is 35% of opioid users. This suggested 
option attempts to strike a balance of not sending the information to 
enrollees who are less at risk for prolonged opioid use and to 
proactively educate enrollees who could be at risk before progression 
to chronic opioid use. However, no option can precisely distinguish 
between enrollees who will only use opioids for an acute period and 
those who will progress to chronic use, putting them at greater risk of 
complications. Of note, this option does not account for providing the 
information before the enrollee begins opioid use.
    A sixth and final suggested option is to disclose this information 
to the subset of enrollees with greater than greater than 90 days 
continuous opioid use, without more than a 7 day gap. This option 
involves approximately 2,698,064 enrollees which represent 24% of 
opioid users in the Part D program. While this option involves the 
smallest number of Part D enrollees, it has the disadvantage that the 
information will be disclosed to enrollees who are more likely already 
chronic users of opioids. While the information may still be useful to 
them if they are concerned about the risks of opioids and interested in 
alternate treatments, this option would not have a proactive aspect for 
enrollees who are not yet chronic opioid users.
    For these suggested options, we note that we considered opioid use 
to be ``continuous'' even if there is a short break, such as 7 days or 
fewer, in opioid utilization. To illustrate our suggested approach, if 
a beneficiary filled an opioid prescription on 01/01/2018 for a 5 day 
supply and another on 01/10/2018 for a 10 days, this beneficiary would 
have a continuous opioid use days of 20 days ==that is a 5 days + 10 
days + 5 ``gap days.'' This approach would not take into account early 
refills, but rather allow up to a 7 days gap period to accommodate for 
varying prescription refills and beneficiary opioid utilization 
patterns.
    Section 1860D-4(a)(1)(C) also permits Part D sponsors to disclose 
the required information to enrollees through mail or electronic means. 
Given the importance of the information, we suggest that sponsors only 
send it electronically if the enrollee has consented to receiving plan 
information in electronic form.
    The existing regulatory framework for the information that must be 
disclosed pursuant to section 1860D-4(a)(1) of the Act is Sec.  
423.128. CMS proposes to use this existing regulatory framework to 
codify the opioid risk and alternative pain treatment coverage 
information that Part D sponsors must disseminate pursuant to section 
6102 of the SUPPORT Act. Specifically, CMS proposes to revise Sec.  
423.128(a) to provide that, except as provided in new paragraph 
(b)(11), information specified in paragraph (b) must be provided to 
each enrollee annually in a clear, accurate, and standardized form. We 
propose in new paragraph (b)(11) that the plan would be required to 
disclose to each enrollee, with respect to the treatment of pain, the 
risks associated with prolonged opioid use and coverage of alternative 
therapies, unless the plan elects to provide such information to a 
subset of enrollees, as discussed previously.
    To assist Part D sponsors in providing clear and accurate 
information to enrollees, we refer MA-PDs and standalone PDPs to CMS' 
pain management website (https://www.medicare.gov/coverage/pain-management), which contains coverage information on non-pharmacological 
therapies, devices, and non-opioid medications for the treatment of 
pain under the Medicare fee-for-service program. Part D sponsors would 
be able to be use this information to convey the required alternative 
treatment coverage information MA-PD sponsors can consult this website 
as well, however, they would also be required to add any additional 
coverage that they provide under their plans to their standardized 
forms. We believe that both MA-PDs and standalone PDPs should be able 
to describe the risks of prolonged opioid use, as they both provide 
drug coverage and thus have expertise in the use of drugs. However, we 
refer Part D sponsors to the U.S. Department of Health and Human 
Services website as an additional resource that contains information 
about the risks of opioids, as well as a searchable index for local 
treatment centers addressing substance abuse and mental health 
consultations. (See https://www.hhs.gov/opioids/)

E. Eligibility for Medication Therapy Management Programs (MTMPs) 
(Sec.  423.153)

    We propose to amend Part D Medication Therapy Management (MTM) 
program requirements in Sec.  423.153 to conform with the relevant 
SUPPORT Act provisions. The SUPPORT Act modified MTM program 
requirements for Medicare Part D plans beginning January 1, 2021, by 
expanding the population of beneficiaries who are targeted for MTM 
program enrollment (``targeted beneficiaries'') to include at-risk 
beneficiaries (ARBs), and by adding a new service component requirement 
for all targeted beneficiaries. More specifically, first, section 6064 
of the SUPPORT Act amended section 1860D-4(c)(2)(A)(ii) of the Act by 
adding a new provision requiring that ARBs be targeted for enrollment 
in the Part D plan's MTM program. Our proposal to implement this 
provision would be codified at Sec.  423.153(d)(2). Second, section 
6103 of the SUPPORT Act amended the MTM program requirements in section 
1860D-4(c)(2)(B) of the Act by requiring Part D plans to provide 
enrollees with information about the safe disposal of prescription 
drugs that are controlled substances, including information on drug 
takeback programs, in-home disposal, and cost-effective means for safe 
disposal of such drugs. Our proposal to implement this provision would 
be codified at Sec.  423.153(d)(1)(vii)(E).
    We wish to provide some background on Part D MTM programs before 
further delineating our proposal to revise the definition of ``targeted 
beneficiaries'' for purposes of MTM to include beneficiaries who are 
determined to be at-risk beneficiaries (ARBs) under Part D sponsors' 
drug management programs (DMPs), meaning beneficiaries who are at-risk 
for prescription drug abuse. Please refer to sections III.A. and III.B. 
of this proposed rule for more information about DMPs.
    MTM programs serve as integral components of the Medicare Part D 
benefit. All Part D sponsors are required to have an MTM program that 
is designed to assure, with respect to targeted beneficiaries, that 
covered Part D drugs are appropriately used to optimize therapeutic 
outcomes through improved medication use, and to reduce the risk of 
adverse events, including adverse drug interactions (see section 1860D-
4(c)(2)). The Act also establishes general patient eligibility and 
service intervention requirements that CMS has implemented through 
regulation in

[[Page 9030]]

Sec.  423.153(d). Each Part D sponsor has the latitude to develop 
specific eligibility criteria for its own MTM program, as long as the 
criteria target beneficiaries who: (1) Have multiple chronic diseases, 
with three chronic diseases being the maximum number a Part D plan 
sponsor may require for targeted enrollment; (2) are taking multiple 
Part D drugs, with eight Part D drugs being the maximum number of drugs 
a Part D plan sponsor may require for targeted enrollment; and (3) are 
likely to incur costs for covered Part D drugs in an amount greater 
than or equal to the specified cost threshold ($4,255 for plan year 
2020). The MTM cost threshold is increased each year by the annual 
percentage specified in Sec.  423.104(d)(5)(iv). CMS reviews Part D 
sponsor submissions to ensure compliance with MTM requirements. Section 
423.153(d)(6) requires each Part D sponsor to provide information 
regarding the procedures and performance of its MTM program to CMS for 
review.
1. ARBs and MTM
    As part of codifying the framework for DMPs in 2018, CMS codified a 
definition of an ARB in Sec.  423.100. An ARB is defined as 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 (FADs) under a Part D sponsor's drug 
management program in accordance with the requirements of Sec.  
423.153(f); or (2) With respect to whom a Part D 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 and such 
identification had not been terminated upon disenrollment. Please refer 
to sections III.A. and III.B. of this proposed rule for more 
information about DMPs.
    Under our proposed revisions to Sec.  423.153(d) to implement 
sections 6064 and 6103 of the SUPPORT Act, at-risk beneficiaries, as 
defined in Sec.  423.100 would be targeted for enrollment in a 
sponsor's MTM program. The existing criteria that Part D sponsors 
currently use to target beneficiaries for MTM program enrollment would 
remain unchanged, so that two groups of enrollees would now be targeted 
for enrollment: the first group would include enrollees who meet the 
existing criteria (multiple chronic diseases, multiple Part D drugs and 
Part D drug costs); and the second group would include enrollees who 
are determined to be at-risk beneficiaries under Sec.  423.100. The MTM 
program requirements would be the same for all targeted beneficiaries 
enrolled in a Part D sponsor's MTM program, regardless of whether they 
were targeted for enrollment based upon the existing criteria or 
because they are at-risk beneficiaries.
    Under this proposal, Part D sponsors would be required to 
automatically enroll all at-risk beneficiaries in their MTM programs on 
an opt-out only basis as required in Sec.  423.153(d)(1)(v). In 
addition, Part D sponsors would be required to offer each at-risk 
beneficiary enrolled in the MTM program the same minimum level of MTM 
services as specified in Sec.  423.153(d)(1)(vii) that sponsors 
currently are required to offer to beneficiaries enrolled in their MTM 
program.
    This means, in addition to interventions for both beneficiaries and 
prescribers, sponsors must offer ARBs an annual comprehensive 
medication review (CMR) under Sec.  423.153(d)(1)(vii)(B). By way of 
background, CMS has developed a Standardized Format that an MTM 
provider must use to summarize the results of the CMR and recommended 
action plan for the beneficiary (reference CMS-10396, OMB Control 
Number 0938-1154). The CMR must include an interactive, person-to-
person, or telehealth consultation performed by a pharmacist or other 
qualified provider. Section 423.153(d)(1)(vii)(B)(2) provides that in 
the event the beneficiary is offered the annual CMR and is unable to 
accept the offer to participate, the MTM provider may reach out to the 
beneficiary's prescriber, caregiver, or other authorized individual. 
The CMS Standardized Format provides instructions for those 
circumstances. In the Medicare Program; Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs for 
Contract Year 2013 and Other Changes; Final Rule (77 FR 22140), we 
explained that when the beneficiary is cognitively impaired and cannot 
make decisions regarding his or her medical needs (that is, is unable 
to accept the offer to participate), we recommend that the pharmacist 
or qualified provider reach out to the beneficiary's prescriber, 
caregiver, or other authorized individual, such as the resident's 
health care proxy or legal guardian, to take part in the beneficiary's 
CMR. However, this recommendation applies only to those situations 
where fulfilment of that statutory obligation is not reasonably 
possible because the beneficiary is cognitively impaired; it does not 
apply to situations where the sponsor is unable to reach the 
beneficiary (such as no response by mail, no response after one or more 
phone attempts, or lack of phone number or address), if there is no 
evidence of cognitive impairment, or the beneficiary declines the CMR 
offer. When the CMR is performed with an authorized individual 
participating on the beneficiary's behalf, the MTM provider should 
discuss the delivery of the CMS Standardized Format and any 
accompanying summary materials with the beneficiary's representative to 
determine to whom and where they should be sent. The CMR summary should 
be delivered to the beneficiary's authorized representative, such as 
the health care power of attorney or the enrollee's representative.\33\ 
Currently, the CMS Standardized Format is not in a machine-readable 
format because it is designed for sharing with the beneficiary, 
although the MTM provider may elect to share the information with the 
beneficiary's provider as well.
---------------------------------------------------------------------------

    \33\ See Standardized Format FAQ: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/MTM-Program-Standardized-Format-Revisions-v082917.zip.
---------------------------------------------------------------------------

    In addition to the CMR, the minimum level of MTM services also 
includes a requirement at Sec.  423.153(d)(1)(vii)(C) for the plan to 
provide targeted medication reviews (TMRs) to all MTM program enrollees 
no less often than quarterly following MTM enrollment with follow-up 
interventions when necessary. Thus, under our proposal, Part D sponsors 
would have to provide TMRs to ARBs enrolled in their MTM program. As 
additional background, CMS has not provided a standardized format for 
the TMR service, and the MTM provider should determine the patient's 
unmet medication-related needs and use the TMR to follow up with the 
patient (or prescriber) as appropriate. The follow-up interventions 
with MTM-enrolled beneficiaries should be person-to-person, if 
possible, but may be delivered via the mail or other means. Sponsors 
may determine how to tailor the follow-up interventions based on the 
specific needs or medication use issues of the beneficiary. The MTM 
provider should seek to resolve any recurring issues that exist with 
the patient, as well as to identify any new opportunities that are 
identified. Therefore, while the follow-up intervention that results 
from a TMR may be person-to-person, the TMR is distinct from a CMR 
because the TMR is focused on specific actual or potential medication-
related problems (see

[[Page 9031]]

annual MTM Program guidance memo).\34\
---------------------------------------------------------------------------

    \34\ See Annual MTM Program Guidance Memo, April 5, 2019, CY 
2020 Medication Therapy Management Program Guidance and Submission 
Instructions: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Memo-Contract-Year-2020-Medication-Therapy-Management-MTM-Program-Submission-v-041019-.pdf.
---------------------------------------------------------------------------

    Like all other targeted beneficiaries, ARBs would be required to be 
enrolled in the Part D sponsor's MTM program using an opt-out method of 
enrollment.\35\ As explained in the MTM Program guidance memo, 
following enrollment in the MTM program, a beneficiary may refuse or 
decline individual services without having to disenroll from the 
program. For example, if an enrolled ARB declines the annual CMR, Sec.  
423.153(d)(1)(vii)(C) still requires the sponsor to offer interventions 
to the prescriber and perform TMRs at least quarterly to assess 
medication use on an on-going basis. In addition, sponsors should not 
wait for the beneficiary to accept the offer for the CMR and should 
perform TMRs and provide interventions to the beneficiary's prescriber 
once the beneficiary is enrolled in the MTM program. Part D sponsors 
are encouraged to use more than one approach when possible to reach all 
eligible targeted beneficiaries to offer MTM services versus only 
reaching out via passive offers. Sponsors may increase beneficiary 
engagement by following up with beneficiaries who do not respond to 
initial offers (for example, by providing telephonic outreach after 
mailed outreach). Also, sponsors are expected to put in place 
safeguards against discrimination based on the nature of their MTM 
interventions (for example, using TTY if phone based, Braille if mail 
based, etc.).
---------------------------------------------------------------------------

    \35\ See Sec.  423.153(d)(1)(v).
---------------------------------------------------------------------------

    Including ARBs in Part D MTM programs as proposed would provide 
Part D sponsors with another tool to address opioid misuse among the 
Part D beneficiaries they serve. DMPs primarily involve a prescriber-
centric approach through case management to promote safer use of 
opioids and benzodiazepines and care coordination. In contrast, MTM 
leverages a beneficiary-centric approach to improve the beneficiary's 
medication use and reduce the risk of adverse events involving all of 
the medications the beneficiary is taking (including opioids and other 
FADs). We encourage sponsors to design MTM interventions for this new 
population of targeted beneficiaries to reflect their simultaneous 
inclusion in the sponsors' DMPs. For example, MTM services for these 
beneficiaries may include beneficiary and/or prescriber interventions 
or discussions to assess the risks and benefits of ongoing opioid use, 
discuss beneficiary goals and alternative treatment options, talk about 
how to prevent prescription drug misuse and overdose, review access to 
naloxone, assess concurrent use of benzodiazepines or other potentiator 
drugs that may increase the risk for adverse events or overdose, review 
common side effects, and discuss safe storage and safe disposal of 
medications. (As noted later in this section, beginning in 2021, MTM 
services furnished to all targeted beneficiaries must include the 
provision of certain information on the safe disposal of prescription 
drugs that are controlled substances.) We recommend that plans consult 
existing clinical guidelines, such as those issued by the Centers for 
Disease Control and Prevention for Prescribing Opioids for Chronic 
Pain,\36\ when developing MTM strategies and materials. These materials 
may help plans design MTM interventions such that treatment decisions 
to start, stop or reduce prescription opioids are individualized and 
carefully considered between the prescriber and at-risk beneficiary. 
Interventions should not promote abrupt tapering or discontinuation of 
opioids.
---------------------------------------------------------------------------

    \36\ Accessible at
    https://www.cdc.gov/mmwr/ volumes/65/rr/
rr6501e1.htm?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fmmwr%2Fvolumes
%2F65%2Frr%2Frr6501e1er.htm.
---------------------------------------------------------------------------

    Because we propose that beneficiaries would be targeted for MTM 
services on the basis of being an ARB, this means that the beneficiary 
will have received a second written notice in accordance with DMP 
regulations at Sec.  423.153(f)(6). CMS solicits input into how 
sponsors can best coordinate DMPs and MTM programs and effectively 
perform outreach to offer MTM services. We also seek feedback on how to 
leverage MTM services to improve medication use and reduce the risk of 
adverse events in this population, how to measure the quality of MTM 
services delivered, and how to increase meaningful engagement of the 
new target population in MTM. Lastly, we seek comments on the type of 
information that CMS should use to monitor the impact of MTM services 
on at-risk beneficiaries, who will now be targeted for MTM services.
    As the annual CMR is a key element of the MTM services, we have 
evaluated the CMS Standardized Format to determine how it might be 
modified in order to accommodate the new population of at-risk 
beneficiaries that will be enrolled in Part D sponsors' MTM programs. 
The Standardized Format for the CMR must be approved by the Office of 
Management and Budget (OMB) through the Paperwork Reduction Act (PRA) 
process. OMB has approved the current version of the standardized 
format (CMS-10396; OMB control number: 0938-1154) until August 31, 
2020. Based on the results of feedback from limited cognitive 
interviews with consumers and other stakeholders conducted in 2018, we 
had intended to propose revisions to the Standardized Format to 
optimize the utility of the CMR summary for beneficiaries while 
reducing burden on Part D sponsors through a standalone PRA package 
approval process as we did when the Standardized Format was originally 
developed. However, the changes proposed in this proposed rule will 
also require changes to the Standardized Format for the CMR summary to 
account for information provided to MTM enrollees about the safe 
disposal of prescription medications that are controlled substances, as 
discussed later in this section. In order to allow Part D plans to 
review all proposed changes to the document together, in section 
IX.B.5. of this proposed rule we are proposing a new format for the 
Standardized Format and seeking public comment.
    Also, we encourage sponsors to share the CMR summary with the 
beneficiaries' prescribers, including those the sponsor engaged in case 
management under DMPs, to help them coordinate care for these 
beneficiaries. In order to facilitate the transfer of information from 
the CMR to the Electronic Health Record (EHR), we are considering 
modifying the CMS Standardized Format to allow the form to be completed 
in a machine readable format. In the Medicare and Medicaid Programs; 
Patient Protection and Affordable Care Act; Interoperability and 
Patient Access for Medicare Advantage Organization and Medicaid Managed 
Care Plans, State Medicaid Agencies, CHIP Agencies and CHIP Managed 
Care Entities, Issuers of Qualified Health Plans in the Federally-
facilitated Exchanges and Health Care Providers Proposed Rule (84 FR 
7610), CMS proposed a framework for the sharing of data across the 
industry, which we believe may be suitable to use when conveying data 
from the MTM provider to the prescriber. The policies in that proposed 
rule would encourage use of Health Level Seven (HL7[supreg]) Fast

[[Page 9032]]

Healthcare Interoperability Resources (FHIR[supreg])-based APIs to make 
other health information more widely accessible. We are seeking 
feedback on whether using HL7[supreg]-enabled CMRs could positively 
impact the sharing of CMR data with the prescriber for an MTM enrollee. 
We also seek input on the value of encouraging Part D MTM providers to 
use FHIR-enabled platforms when providing MTM to Part D enrollees to 
facilitate integration of the MTM service elements into prescribers' 
EHRs.
2. Information on Safe Disposal of Prescription Drugs That Are 
Controlled Substances for MTM Enrollees
    The information we previously provided about CMRs and TMRs is also 
relevant to our proposal to implement Section 6103 of the SUPPORT Act, 
which, as we described at the beginning of this section, amended the 
MTM requirements in section 1860D-4(c)(2)(B) of the Act. Section 6103 
added a new requirement that Part D plans provide beneficiaries 
enrolled in their MTM program with information about the safe disposal 
of prescription drugs that are controlled substances, including 
information on drug takeback programs, in-home disposal, and cost-
effective means for safe disposal of such drugs. To implement this new 
requirement, we propose that Part D sponsors would be required to 
provide this information to all beneficiaries enrolled in their MTM 
programs at least annually, as part of the CMR or through the quarterly 
TMRs or follow up. Furthermore, while not required, we encourage 
sponsors to provide information on safe disposal of all medications, 
not just controlled substances, to MTM enrollees.
    Section 6103 of the SUPPORT Act states that the information 
provided to beneficiaries regarding safe disposal of prescription drugs 
that are controlled substances must meet the criteria established in 
section 1852(n)(2) of the Act, including information on drug takeback 
programs that meet such requirements determined appropriate by the 
Secretary and information on in-home disposal. Section 1852(n)(2) 
states that the Secretary shall, through rulemaking, establish criteria 
the Secretary determines appropriate to ensure that the information 
provided to an individual sufficiently educates the individual on the 
safe disposal of prescription drugs that are controlled substances. We 
describe our proposed criteria and requirements for MA plans to furnish 
information on safe disposal of controlled substances when providing an 
in-home health risk assessment in section III.C. of this proposed rule 
and propose to codify these requirements in a new provision of the 
regulations at Sec.  422.111(j); in this section we are proposing that 
Part D plans would be required to furnish materials in their MTM 
programs regarding safe disposal of prescription drugs that are 
controlled substances that meet the criteria specified in Sec.  
422.111(j). Like MA plans, Part D plans would retain the flexibility to 
refine their educational materials based on updated information and/or 
on beneficiary feedback, so long as the materials meet the proposed 
criteria. Section 1860D-4(c)(2)(B)(ii) expressly directs that the 
information on safe disposal furnished as part of an MTM program meet 
the criteria established under section 1852(n)(2) for MA plans. 
Accordingly, to ensure consistency and to avoid burdening MA-PD plans 
with creating separate documents addressing safe disposal for purposes 
of conducting in-home health risk assessments and their MTM programs, 
CMS believes it is appropriate to apply the same criteria specified in 
the proposed provision at Sec.  422.111(j) to MTM programs by including 
a reference to the requirements of Sec.  422.111(j) in the regulation 
at Sec.  423.153(d) governing MTM programs.
    When developing the proposal to codify section 6103 of the SUPPORT 
Act, we considered proposing to require that safe disposal be addressed 
during the CMR session. Because the required information would appear 
to be a natural topic of interest when reviewing a beneficiary's 
medication history; the MTM provider could provide information in the 
medication action plan section of the CMR summary on drug takeback 
programs and safe in-home disposal methods, as required by the SUPPORT 
Act. This would allow the beneficiary to have all pertinent reference 
materials within the Standardized Format and also avoid the MTM 
provider having to mail a separate document to the beneficiary.
    However, granting MTM providers the flexibility to furnish safe 
disposal information to MTM recipients during the CMR session, as part 
of a quarterly TMR, or through another follow-up service could have 
significant advantages over requiring that the information be provided 
during the CMR session. For example, beneficiaries may decline the CMR, 
which would result in their not receiving safe disposal information as 
required. On the other hand, quarterly TMRs are performed for all 
eligible enrollees, meaning that safe disposal information could be 
circulated to all eligible beneficiaries, not just those who accept the 
CMR service. In the event that a beneficiary does not receive a CMR 
that includes safe disposal information, the plan would need to ensure 
that a TMR that includes safe disposal information is provided to the 
beneficiary either in person (such as at the pharmacy) or by mail. 
Additionally, as plan sponsors begin quarterly TMRs immediately upon 
enrolling a beneficiary in the MTM program, beneficiaries could receive 
this important information soon after qualifying for MTM rather than 
waiting for a CMR to be scheduled. Based on these considerations, we 
propose to give Part D plans the discretion to furnish safe disposal 
information to the beneficiary during the CMR, a TMR, or another follow 
up service, depending upon the circumstances, as long as the required 
information is shared with each MTM program enrollee at least once per 
year. Specifically, we are proposing to revise Sec.  423.153(d)(1)(vii) 
to include a requirement that all MTM enrollees receive at least 
annually, as part of the CMR, a TMR, or another follow up service, 
information about safe disposal of prescription drugs that are 
controlled substances, take back programs, in-home disposal, and cost-
effective means of safe disposal that meets the criteria in Sec.  
422.111(j).

F. Automatic Escalation to External Review Under a Medicare Part D Drug 
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec.  423.153, 
423.590, and 423.600)

    CARA amended the Act to include new authority for Medicare Part D 
drug management programs effective on or after January 1, 2019. Final 
regulations were published in the April 2018 final rule (83 FR 16440) 
and provided at Sec.  423.153(f), that a plan sponsor may establish a 
drug management program (DMP) for at-risk beneficiaries enrolled in 
their prescription drug benefit plans to address overutilization of 
frequently abused drugs. If an enrollee is identified as at-risk under 
a DMP, the individual has the right to appeal an at-risk determination 
under the rules in part 423, subparts M and U. In addition to the right 
to appeal an at-risk determination, an enrollee has the right to appeal 
the implementation of point-of-sale claim edits for frequently abused 
drugs that are specific to an at-risk beneficiary or a limitation of 
access to coverage for frequently abused drugs to those that are 
prescribed for the beneficiary by one or more prescribers or dispensed 
to the beneficiary by one or more network pharmacies (lock-in).
    In the April 2018 final rule, we explained that the Secretary had 
discretion under the statute to provide

[[Page 9033]]

for automatic escalation of drug management program appeals to external 
review. We declined to exercise that discretion based on comments we 
received that cited to administrative efficiencies in using the 
existing Part D appeal process that is familiar to enrollees and plans. 
Accordingly, we implemented a final rule that follows the existing Part 
D benefit appeals process. 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 process, cases are auto-forwarded to the IRE only when the 
plan fails to issue a coverage determination within the applicable 
timeframe.
    Subsequently, section 2007 of the SUPPORT Act amended section 
1860D-4(c)(5) of the Act to require that, if on reconsideration a Part 
D sponsor affirms its denial of a DMP appeal, in whole or in part, the 
case shall be automatically forwarded to the independent outside entity 
contracted with the Secretary for review and resolution. We are 
proposing rules to codify that provision. For consistency with existing 
appeals regulations at part 422, subparts M and U, and for purposes of 
this proposal, the independent outside entity contracted with the 
Secretary is referred to as the Part D independent review entity (IRE) 
that is contracted with CMS to perform reconsiderations under the Part 
D program.
    To implement the changes required by the SUPPORT Act, we are 
proposing revisions to the requirements for the content of the initial 
notice at Sec.  423.153(f)(5)(ii)(C)(3) and the requirements for the 
second notice at Sec.  423.153(f)(6)(ii)(C)(4)(iii). Specifically, we 
are proposing that these notices explain that if on redetermination a 
plan sponsor affirms its at-risk decision, in whole or in part, the 
enrollee's case shall be automatically forwarded to the IRE for review 
and resolution. While section 2007 of the SUPPORT Act refers to a plan 
sponsor affirming its denial, in whole or in part, on 
``reconsideration,'' we are proposing revisions that reference a plan 
sponsor's ``redetermination,'' which is the term used throughout part 
423, subparts M and U to describe the plan level appeal. We believe 
that use of the term ``redetermination'' is consistent with the intent 
of the SUPPORT Act that adverse plan level appeals be automatically 
forwarded to the IRE so that the IRE can review and resolve outstanding 
issues related to the individual's at-risk status under the plan 
sponsor's DMP.
    We are also proposing to revise the requirements related to 
adjudication timeframes and responsibilities for making 
redeterminations at Sec.  423.590 by adding paragraph (i) to state that 
if on redetermination the plan sponsor affirms, in whole or in part, 
its decision related to an at-risk determination under a DMP in 
accordance with Sec.  423.153(f), the plan sponsor must forward the 
case to the IRE by the expiration of the applicable adjudication 
timeframe under paragraph (a)(2), (b)(2), or (d)(1) of Sec.  423.590. 
We believe that requiring plan sponsors to automatically forward these 
cases within existing adjudication timeframes will promote timely 
review and resolution of issues remaining in dispute in accordance with 
the SUPPORT Act.
    We are also proposing to revise Sec.  423.600(b) to clarify that 
the requirement that the IRE solicit the views of the prescribing 
physician or other prescriber applies to determinations that are auto-
forwarded to the IRE. Under this proposal, the Part D IRE would be 
required to accept and process cases where the plan sponsor has 
affirmed its denial on redetermination of an issue related to at-risk 
determinations made under Sec.  423.153(f). In addition to the proposed 
change at Sec.  423.600(b) as previously described, necessary 
modifications would be made to the Part D IRE's contract upon 
finalization of rules to implement section 2007 of the SUPPORT Act.
    We believe these proposed changes related to auto-forwarding of 
adverse plan level appeals involving at-risk determinations made under 
plan sponsor DMPs afford the intended protections to individuals 
identified as at-risk and are consistent with the provisions of the 
SUPPORT Act. We welcome feedback on these proposals.

G. Suspension of Pharmacy Payments Pending Investigations of Credible 
Allegations of Fraud and Program Integrity Transparency Measures 
(Sec. Sec.  405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)

1. Medicare Parts C and D Fraud Efforts
    CMS's role in overseeing the Medicare program is to ensure that 
payments are made correctly and that fraud, waste, and abuse are 
prevented and detected. Failure to do so endangers the Trust Funds and 
can even result in harm to beneficiaries. CMS has established various 
regulations over the years to address potentially fraudulent and 
abusive behavior in Medicare Parts C and D. For instance, 42 CFR 
424.535(a)(14)(i) addresses improper prescribing practices and permits 
CMS to revoke a physician's or other eligible professional's enrollment 
if he or she has a pattern or practice of prescribing Part D drugs that 
is abusive or represents a threat to the health and safety of Medicare 
beneficiaries or both.
2. SUPPORT Act--Sections 2008 and 6063
a. Background
    Opioid use disorder (OUD) and deaths from prescription and illegal 
opioid overdoses have reached alarming levels. The CDC estimated 47,000 
overdose deaths were from opioids in 2017, and 36 percent of those 
deaths involved prescription opioids.\37\ On October 26, 2017, Acting 
Health and Human Services Secretary, Eric D. Hargan, declared a 
nationwide public health emergency on the opioid crisis as requested by 
President Donald Trump.\38\ This public health emergency has since been 
renewed several times by Secretary Alex M. Azar II.\39\
---------------------------------------------------------------------------

    \37\ https://www.cdc.gov/drugoverdose/data/.
    \38\ https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
    \39\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/opioid-19apr2019.aspx.
---------------------------------------------------------------------------

    Section 2008 of the SUPPORT Act amends and adds several sections of 
the Act to address the concept of a ``credible allegation of fraud.'' 
Specifically:
     Sections 2008(a) and (b) of the SUPPORT Act amended 
sections 1860D-12(b) and 1857(f)(3) of the Act, respectively, by adding 
new requirements for Medicare Part D plan sponsors and MA organizations 
offering MA-PD plans. Specifically, the provisions--
    ++ Apply certain parts of section 1862(o) of the Act, regarding 
payment suspensions based on credible allegations of fraud, to Medicare 
Part D plan sponsors and MA organizations offering MA-PD plans, 
allowing them to impose payment suspensions on pharmacies in the same 
manner as these provisions apply to CMS;
    ++ Require these Part D plan sponsors and MA organizations offering 
MA-PD plans to notify the Secretary regarding the imposition of a 
payment suspension on a pharmacy pending an investigation of a credible 
allegation of fraud and does not extend the requirement to report to 
the Secretary other payment suspensions for which plan sponsors already 
have authority.
    ++ Require this notification to be made such as via a secure 
internet website portal (or other successor technology) established 
under section 1859(i).

[[Page 9034]]

     Section 2008(d) of the SUPPORT Act, which amended section 
1862(o) of the Act, states that a fraud hotline tip (as defined by the 
Secretary) without further evidence shall not be treated as sufficient 
evidence for a credible allegation of fraud.
    The effective date for these provisions of section 2008 of the 
SUPPORT Act is for plan years beginning on or after January 1, 2020.
    Section 6063(a) of the SUPPORT Act, which added a new paragraph 
(i)(1) to section 1859 of the Act, requires the following:
     The Secretary, after consultation with stakeholders, shall 
establish a secure web-based program integrity portal (or other 
successor technology) that would allow secure communication among the 
Secretary, MA plans, and prescription drug plans, as well as eligible 
entities with a contract under section 1893, such as Medicare program 
integrity contractors. The purpose is to enable, through the portal:
    ++ The referral by such plans of substantiated or suspicious 
activities (as defined by the Secretary) of a provider of services 
(including a prescriber) or supplier related to fraud, waste, or abuse 
for the purpose of initiating or assisting investigations conducted by 
the eligible entity; and
    ++ Data sharing among such MA plans, prescription drug plans, and 
the Secretary.
     The Secretary shall disseminate the following information 
to MA plans and prescription drug plans via the portal: (1) Providers 
and suppliers referred for substantiated or suspicious activities 
during the previous 12-month period; (2) providers and suppliers who 
are currently either excluded under section 1128 of the Act or subject 
to a payment suspension pursuant to section 1862(o) or otherwise; (3) 
providers and suppliers who are revoked from Medicare, and (4) in the 
case the plan makes a referral via the portal concerning substantiated 
or suspicious activities of fraud, waste, or abuse of a provider or 
supplier, the Secretary shall notify the plan if the related providers 
or suppliers were subject to administrative action under title XI or 
XVIII for similar activities.
     The Secretary shall, through rulemaking, specify what 
constitutes substantiated or suspicious activities of fraud, waste, or 
abuse, using guidance such as that provided in the CMS Pub. 100-08, 
Medicare Program Integrity Manual (PIM), chapter 4, section 4.8. In 
section 4.8 of the PIM, CMS provides guidance to its Medicare program 
integrity contractors on the disposition of cases referred to law 
enforcement. Similar to what is stated in section 2008(d) of the 
SUPPORT Act, a fraud hotline tip without further evidence does not 
constitute sufficient evidence for substantiated fraud, waste, or 
abuse.
     On at least a quarterly basis, the Secretary must make 
available to the plans information on fraud, waste, and abuse schemes 
and trends in identifying suspicious activity. The reports must include 
administrative actions, pertinent information related to opioid 
overprescribing, and other data determined appropriate by the Secretary 
in consultation with stakeholders. This information must be anonymized 
data submitted by plans without identifying the source of such 
information.
    The effective date for these provisions of section 6063(a) of the 
SUPPORT Act is beginning not later than 2 years after the date of 
enactment, or by October 24, 2020.
    Furthermore, section 6063(b) of the SUPPORT Act, which amended 
section 1857(e) of the Act, requires MA organizations and Part D plan 
sponsors to submit to the Secretary, information on investigations, 
credible evidence of suspicious activities of a provider of services 
(including a prescriber) or supplier related to fraud, and other 
actions taken by such plans, related to inappropriate prescribing of 
opioids. The Secretary shall, in consultation with stakeholders, 
establish a process under which MA organizations and Part D plan 
sponsors must submit this information. In addition the Secretary shall 
establish a definition of inappropriate prescribing, which will reflect 
the reporting of investigations and other corrective actions taken by 
MA organizations and Part D plan sponsors to address inappropriate 
prescribing of opioids and the types of information that must be 
submitted.
    The effective date for these provisions of section 6063(b) of the 
SUPPORT Act is for plan years beginning on or after January 1, 2021.
b. Need for Additional Measures
    Existing regulations for MA and Part D plan sponsors in Sec. Sec.  
422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3) specify that plan 
sponsors should have procedures to voluntarily self-report potential 
fraud or misconduct related to the MA and Part D programs to CMS or its 
designee. (We note that Sec.  422.503(b) generally outlines 
requirements that MA organizations must meet. Section 423.504(b) 
outlines conditions necessary to contract as a Part D plan sponsor.) 
Presently, MA organizations and Part D plan sponsors voluntarily report 
such data to CMS through either--(1) direct submissions to CMS, or (2) 
communication with the National Benefit Integrity Medicare Drug 
Integrity Contractor (NBI MEDIC). Given the gravity of the nationwide 
opioid epidemic and the need for CMS and the plans to have as much 
information about potential and actual prescribing misbehavior as 
possible in order to halt such misbehavior, we believe that further 
regulatory action in this regard is warranted. Sections 2008 and 6063 
of the SUPPORT Act provide the authority to establish regulations to 
implement a requirement for plans to report certain related data.
3. Proposed Provisions
    Consistent with the foregoing discussion, we propose the following 
regulatory provisions to implement sections 2008 and 6063 of the 
SUPPORT Act. As explained, some of our proposals would modify or 
supplement existing regulations, while others would establish new 
regulatory paragraphs altogether. Existing (and our proposed) 
regulations related to Part C/MA are addressed in 42 CFR part 422; 
those pertaining to Part D are addressed in 42 CFR part 423. 
Regulations pertaining to or contained in other areas of title 42 will 
be noted as such.
a. Definitions
    The definitions outlined below will be effective following the 
required statutory deadlines for each reporting piece described in the 
SUPPORT Act. Therefore, substantiated or suspicious activities of 
fraud, waste or abuse and fraud hotline time would be effective 
beginning October 24, 2020. Inappropriate prescribing of opioids and 
credible allegations of fraud would be effective beginning January 1, 
2021.
(1) Substantiated or Suspicious Activities of Fraud, Waste, or Abuse
    We indicated earlier that section 6063(a) of the SUPPORT Act added 
a new section 1859(i)(1) to the Act requiring the establishment of a 
regulatory definition of ``substantiated or suspicious activities of 
fraud, waste, or abuse,'' using guidance such as that in CMS Pub. 100-
08, PIM, chapter 4, section. 4.8. To this end, we propose to add to 
Sec. Sec.  422.500 and 423.4 a definition specifying that substantiated 
or suspicious activities of fraud, waste or abuse means and includes, 
but is not limited to allegations that a provider of services 
(including a prescriber) or supplier: Engaged in a pattern of improper 
billing; submitted improper claims with suspected knowledge of their 
falsity; submitted improper claims with reckless disregard or 
deliberate ignorance of their truth or falsity; or is

[[Page 9035]]

the subject of a fraud hotline tip verified by further evidence.
    Consistent with the reference in section 6063(a) of the SUPPORT Act 
to chapter 4 of the PIM, our proposed definition largely mirrors that 
in section 4.8 of the PIM. We also believe that this definition is, 
importantly, broad enough to capture a wide variety of activities that 
could threaten Medicare beneficiaries and the Trust Funds. We solicit 
public comment on this definition.
(2) Inappropriate Prescribing of Opioids
    Section 6063(b) of the SUPPORT Act, as mentioned previously, states 
the Secretary is required to establish: (1) A definition of 
inappropriate prescribing; and (2) a method for determining if a 
provider of services meets that definition. MA organizations and Part D 
Plan Sponsors must report actions they take related to inappropriate 
prescribing of opioids. We accordingly propose to add the following 
definition of inappropriate prescribing with respect to opioids. We 
propose to add this definition to Sec. Sec.  422.500 and 423.4. We 
propose that inappropriate prescribing means that, after consideration 
of all the facts and circumstances of a particular situation identified 
through investigation or other information or actions taken by MA 
organizations and Part D Plan Sponsors, there is an established pattern 
of potential fraud, waste and abuse related to prescribing of opioids, 
as reported by the Plan Sponsors. Plan Sponsors may consider any number 
of factors including, but not limited to the following: Documentation 
of a patient's medical condition; identified instances of patient harm 
or death; medical records, including claims (if available); concurrent 
prescribing of opioids with an opioid potentiator in a manner that 
increases risk of serious patient harm; levels of Morphine Milligram 
Equivalent (MME) dosages prescribed; absent clinical indication or 
documentation in the care management plan, or in a manner that may 
indicate diversion; State level prescription drug monitoring program 
(PDMP) data; geography, time and distance between a prescriber and the 
patient; refill frequency and factors associated with increased risk of 
opioid overdose.
    We believe the many steps that CMS, the CDC, and HHS have taken in 
response to the nation's opioid crisis have had an overall positive 
impact on clinician prescribing patterns, resulting in safer and more 
conscientious opioid prescribing across clinician types and across the 
settings where beneficiaries receive treatment for pain, and have also 
resulted in heightened public awareness of the risks associated with 
opioid medications. Recent HHS guidance \40\ for example, highlights 
the importance of judicious opioid prescribing that minimizes risk and; 
urges collaborative, measured approaches to opioid dose escalation, 
dose reduction, and discontinuation; furthermore, a 2019 HHS Task Force 
report \41\ outlines best practices for multimodal approaches to pain 
care. In this definition, we recognize that there are legitimate 
clinical scenarios that may necessitate a higher level of opioid 
prescribing based on the clinician's professional judgement, including, 
the beneficiary's clinical indications and characteristics, whether the 
prescription is for an initial versus a subsequent dose, clinical 
setting in which the beneficiary is being treated, and various other 
factors. We welcome public comments on specific populations or 
diagnoses that could be excluded for purposes of this definition, such 
as cancer, hospice, and/or sickle cell patients. Based upon widely 
accepted principles of statistical analysis and taking into account 
clinical considerations mentioned previously, CMS may consider certain 
statistical deviations to be instances of inappropriate prescribing of 
opioids. We also welcome evidence from clinical experts regarding 
evidence based guidelines for opioid prescribing across clinical 
specialties and care settings that could be considered to develop 
meaningful and appropriate outlier methodologies. Therefore, we propose 
that inappropriate prescribing of opioids should be based on an 
established pattern as previously described in this section utilizing 
many parameters.
---------------------------------------------------------------------------

    \40\ ``HHS Guide for Clinicians on the Appropriate Dosage 
Reduction or Discontinuation of Long-Term Opioid Analgesics'' found 
at https://www.hhs.gov/opioids/sites/default/files/2019-10/8-Page%20version__HHS%20Guidance%20for%20Dosage%20Reduction%20or%20Discontinuation%20of%20Opioids.pdf.
    \41\ https://www.hhs.gov/ash/advisory-committees/pain/.
---------------------------------------------------------------------------

    We solicit public comment on other reasonable measures of 
inappropriate prescribing of opioids.
(3) Credible Allegation of Fraud
    Somewhat similar to section 6063(a) of the SUPPORT Act, section 
2008(d) of the SUPPORT Act states that a fraud hotline tip (as defined 
by the Secretary) without further evidence shall not be treated as 
sufficient evidence for a credible allegation of fraud. The term 
``credible allegation of fraud'' is currently defined at Sec. Sec.  
405.370 and 455.2 (which, respectively, apply to Medicare and Medicaid) 
as an allegation from any source including, but not limited to the 
following: (1) Fraud hotline complaints; (2) claims data mining; and 
(3) patterns identified through provider audits, civil false claims 
cases, and law enforcement investigations. Allegations are considered 
to be credible when they have indicia of reliability, and, in the case 
of Sec.  455.2, the State Medicaid agency has reviewed all allegations, 
facts, and evidence carefully and acts judiciously on a case-by-case 
basis.
    To address this section 2008(d) of the SUPPORT Act requirement, we 
propose to revise the term ``credible allegation of fraud'' in 
Sec. Sec.  405.370 and 455.2 as follows. We propose that the existing 
version of paragraph (1) in both Sec. Sec.  405.370 and 455.2 would be 
amended to state ``Fraud hotline tips verified by further evidence.'' 
The existing version of paragraph (2) and (3) would remain unchanged. 
Similarly, we propose to add in Sec.  423.4 a definition of credible 
allegation of fraud stating that a credible allegation of fraud is an 
allegation from any source including, but not limited to: Fraud hotline 
tips verified by further evidence; claims data mining; patterns 
identified through provider audits, civil false claims cases, and law 
enforcement investigations. Allegations are considered to be credible 
when they have indicia of reliability. In the case of Sec.  423.4, 
examples of claims data mining would include, but are not limited to, 
prescription drug events and encounter data mining. We solicit public 
comment on this definition.
(4) Fraud Hotline Tip
    Sections 2008(d) and 6063(a) of the SUPPORT Act require the 
Secretary to define a fraud hotline tip. To this end, we propose to add 
to Sec. Sec.  405.370, 422.500, 423.4, and 455.2 a plain language 
definition of this term. We propose that a fraud hotline tip would be 
defined as a complaint or other communications that are submitted 
through a fraud reporting phone number or a website intended for that 
purpose, such as the federal government's HHS Office of the Inspector 
General (OIG) Hotline or a health plan's fraud hotline. This definition 
is intended to be broad enough to describe mechanisms such as the 
federal government's HHS OIG Hotline or a commercial health plan's 
fraud hotline. Many private plans, which have their own fraud reporting 
hotlines, participate as plan sponsors in Medicare Part D and this 
definition would seek to reflect their processes for reporting 
information on potential fraud, waste and abuse. We solicit public 
comment on this definition.

[[Page 9036]]

b. Reporting
(1) Vehicle for Reporting
    We plan to utilize a module within the HPMS as the program 
integrity portal for information collection and dissemination. The 
portal would serve as the core repository for the data addressed in 
sections 2008 and 6063 of the SUPPORT Act. Such data and the regular 
submission and dissemination of this important information would, in 
our view, strengthen CMS' ability to oversee plan sponsors' efforts to 
maintain an effective fraud, waste, and abuse program. We further 
believe that data sharing via use of a portal would, in conjunction 
with our proposals, help accomplish the following objectives in our 
efforts to alleviate the opioid epidemic:
     Enable CMS to perform data analysis to identify fraud 
schemes.
     Facilitate transparency among CMS and plan sponsors 
through the exchange of information.
     Provide better information and education to plan sponsors 
on potential fraud, waste, and abuse issues, thus enabling plan 
sponsors to investigate and take action based on such data.
     Improve fraud detection across the Medicare program, 
accordingly allowing for increased recovery of taxpayer funds and 
enrollee expenditures (for example, premiums, co-insurance, other plan 
cost sharing).
     Provide more effective support, including leads, to plan 
sponsors and law enforcement.
     Increase beneficiary safety through increased oversight 
measures.
(2) Type of Data To Be Reported by Plans
    Sections 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3), as 
noted, state that plan sponsors should have procedures to voluntarily 
self-report potential fraud or misconduct related to the MA and Part D 
programs, respectively, to CMS or its designee. To conform to the 
aforementioned requirements of sections 2008(a) and (b) and section 
6063(b) of the SUPPORT Act, we propose to add new regulatory language, 
effective beginning in 2021, in parts 422 and 423 as stated throughout 
this section.
    First, we propose new language at Sec. Sec.  
422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to include the new 
provisions. We propose that the new Sec. Sec.  422.503(b)(4)(vi)(G)(4) 
and 423.504(b)(4)(vi)(G)(4) would state that the MA organization or 
Part D plan sponsor, respectively, must have procedures to identify, 
and must report to CMS or its designee either of the following, in the 
manner described in paragraphs (b)(4)(vi)(G)(4) through (6) of this 
section:
     Any payment suspension implemented by a plan, pending 
investigation of credible allegations of fraud by a pharmacy, which 
must be implemented in the same manner as the Secretary does under 
section 1862(o)(1) of the Act; and
     Any information related to the inappropriate prescribing 
of opioids and concerning investigations, credible evidence of 
suspicious activities of a provider of services (including a 
prescriber) or supplier, and other actions taken by the plan. Second, 
we propose that new Sec. Sec.  422.503(b)(4)(vi)(G)(5) and 
423.504(b)(4)(vi)(G)(5) would require the data referenced in proposed 
Sec. Sec.  422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to be 
submitted via the program integrity portal. We propose that MA 
organizations and Part D plan sponsors would have to submit the data 
elements, specified below, in the portal when reporting payment 
suspensions pending investigations of credible allegations of fraud by 
pharmacies; information related to the inappropriate prescribing of 
opioids and concerning investigations and credible evidence of 
suspicious activities of a provider of services (including a 
prescriber) or supplier, and other actions taken by plan sponsors; or 
if the plan reports a referral, through the portal, of substantiated or 
suspicious activities of a provider of services (including a 
prescriber) or a supplier related to fraud, waste or abuse to initiate 
or assist with investigations conducted by CMS, or its designee, a 
Medicare program integrity contractor, or law enforcement partners. The 
data elements, as applicable, are as follows:

 Date of Referral.
 Part C or Part D Issue.
 Complainant Name.
 Complainant Phone.
 Complainant Fax.
 Complainant Email.
 Complainant Organization Name.
 Complainant Address.
 Complainant City.
 Complainant State.
 Complainant Zip.
 Plan Name/Contract Number.
 Plan Tracking Number.
 Parent Organization.
 Pharmacy Benefit Manager.
 Beneficiary Name.
 Beneficiary Phone.
 Beneficiary Health Insurance Claim Number (HICN).
 Beneficiary Medicare Beneficiary Identifier (MBI).
 Beneficiary Address.
 Beneficiary City.
 Beneficiary State.
 Beneficiary Zip.
 Beneficiary Date of Birth (DOB).
 Beneficiary Primary language.
 Beneficiary requires Special Accommodations. If Yes, Describe.
 Beneficiary Medicare Plan Name.
 Beneficiary Member ID Number.
 Whether the Beneficiary is a Subject.
 Did the complainant contact the beneficiary? If Yes, is there 
a Report of the Contact?
 Subject Name.
 Subject Tax Identification Number (TIN).
 Does the Subject have Multiple TIN's? If Yes, provide.
 Subject NPI.
 Subject DEA Number.
 Subject Medicare Provider Number.
 Subject Business.
 Subject Phone Number.
 Subject Address.
 Subject City.
 Subject State.
 Subject Zip.
 Subject Business or Specialty Description.
 Secondary Subject Name.
 Secondary Subject Tax Identification Number (TIN).
 Does the Secondary Subject have Multiple TIN's? If Yes, 
provide.
 Secondary Subject NPI.
 Secondary Subject DEA Number.
 Secondary Subject Medicare Provider Number.
 Secondary Subject Business.
 Secondary Subject Phone Number.
 Secondary Subject Address.
 Secondary Subject City.
 Secondary Subject State.
 Secondary Subject Zip.
 Secondary Subject Business or Specialty Description.
     Complaint Prior MEDIC Case Number.
     Period of Review.
     Complaint Potential Medicare Exposure.
     Whether Medical Records are Available.
     Whether Medical Records were Reviewed.
     Whether the submission has been Referred to Law 
Enforcement. Submission Accepted? If so, provide Date Accepted.
     What Law Enforcement Agency(ies) has it been Referred to.
     Whether HPMS Analytics and Investigations Collaboration 
Environment for Fraud, Waste, and Abuse (AICE-FWA) was Used.
     Whether the submission has indicated Patient Harm or 
Potential Patient Harm.

[[Page 9037]]

     Whether the submission has been Referred. If so, provide 
Date Accepted.
     What Agency was it Referred to.
     Description of Allegations/Plan Sponsor Findings.
    We note that the requirement for reporting payment suspensions 
pending investigations of credible allegations of fraud by pharmacies 
under Sec.  422.503(b)(4)(vi)(G)(4) would only apply to Medicare Part C 
in the context of Medicare Advantage Prescription Drug Plans (MA-PD 
plans). We believe this information is necessary to enable CMS to fully 
and completely understand the identity of the applicable party, the 
specific behavior involved, and the status of the action. We solicit 
public comment on these proposed requirements
(3) Timing of Plan Sponsor's Reporting
    We propose in new Sec. Sec.  422.503(b)(4)(vi)(G)(6)(i) and 
423.504(b)(4)(vi)(G)(6)(i) that MA organizations and Part D plan 
sponsors would be required to notify the Secretary, or its designee of 
a payment suspension described in Sec. Sec.  422.503(b)(4)(vi)(G)(4)(i) 
and 423.504(b)(4)(vi)(G)(4)(i) 14 days prior to implementation of the 
payment suspension. This timeframe will allow CMS to provide our law 
enforcement partners sufficient notice of a payment suspension to be 
implemented that may impact an ongoing investigation into the subject. 
We propose in the new Sec. Sec.  422.503(b)(4)(vi)(G)(6)(ii) and 
423.504(b)(4)(vi)(G)(6)(ii) that plans would be required to submit the 
information described in Sec. Sec.  422.503(b)(4)(vi)(G)(4)(ii) and 
423.504(b)(4)(vi)(G)(4)(ii) no later than January 15, April 15, July 
15, and October 15 of each year for the preceding periods, 
respectively, of October 1 through December 31, January 1 through March 
31, April 1 through June 30, and July 1 through September 30. We 
propose that plans would be required to submit information beginning in 
2021. For the first reporting period (January 15, 2021), the reporting 
will reflect the data gathered and analyzed for the previous quarter in 
the calendar year (October 1-December 31). We believe that quarterly 
updates would be frequent enough to ensure that the portal contains 
accurate and recent data while giving plans sufficient time to furnish 
said information. We solicit public comment on the proposed timing of 
reporting by plans.
(4) Requirements and Timing of CMS' Reports
    As mentioned earlier in this proposed rule, section 6063(a) of the 
SUPPORT Act requires the Secretary make available to the plans, not 
less frequently than quarterly, information on fraud, waste, and abuse 
schemes and trends in identifying suspicious activity. The reports must 
include administrative actions, pertinent information related to opioid 
overprescribing, and other data determined appropriate by the Secretary 
in consultation with stakeholders. Moreover, the information must be 
anonymized data submitted by plans without identifying the source of 
such information.
    Section 6063 of the SUPPORT Act requires the Secretary provide 
reports no less frequently than quarterly. Consistent with this 
requirement, we propose in the new Sec. Sec.  
422.503(b)(4)(vi)(G)(7)(i) through (iv) and 423.504(b)(4)(vi)(G)(7)(i) 
through (iv) that CMS will provide MA organizations and Part D plan 
sponsors with data report(s) or links to data no later than April 15, 
July 15, October 15, and January 15 of each year based on the 
information in the portal, respectively, as of the preceding October 1 
through December 31, January 1 through March 31, April 1 through June 
30, and July 1 through September 30. We propose that CMS would provide 
this information beginning in 2021. For the first quarterly report 
(April 15, 2021), the report will reflect the data gathered and 
analyzed for the previous quarter submitted by the plan sponsors on 
January 15, 2021. Similar to the timing requirements related to new 
Sec. Sec.  422.503(b)(4)(vi)(G)(6)(ii) and 423.504(b)(4)(vi)(G)(6)(ii), 
we believe that quarterly updates would strike a suitable balance 
between the need for frequently updated information while giving CMS 
time to review and analyze this data in preparation for complying with 
new Sec. Sec.  422.503(b)(4)(vi)(G)(4) through (7) and 
423.504(b)(4)(vi)(G)(4) through (7). We solicit public comment on the 
proposed timing of CMS dissemination of reports to plans.

IV. Implementation of Certain Provisions of the 21st Century Cures Act

A. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease 
(ESRD) Beneficiaries (Sec. Sec.  422.50, 422.52, and 422.110)

    Section 4001 of the Balanced Budget Act of 1997 (hereinafter 
referred to as the BBA of 1997) added sections 1851 through 1859 to the 
Act establishing Part C of the Medicare program known originally as 
``Medicare + Choice'' and later as ``Medicare Advantage (MA).'' As 
enacted, section 1851 of the Act provided that every individual 
entitled to Medicare Part A and enrolled under Part B, except for 
individuals with end stage renal disease (ESRD), could elect to receive 
benefits through an MA plan. The statute further permitted that, in the 
event that an individual developed ESRD while enrolled in an MA plan or 
in a health plan offered by the MA organization, he or she could remain 
in that MA plan or could elect to enroll in another health plan offered 
by that organization. These requirements were codified at Sec.  
422.50(a)(2) in the initial implementing regulations for the Part C 
program published in 1998 (63 FR 35071).
    Section 1851 of the Act was subsequently amended several times to 
expand coverage of ESRD beneficiaries in MA plans.
     Section 620 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (hereinafter referred to as 
BIPA), established a one-time opportunity for individuals, medically 
determined to have ESRD, whose enrollment in an MA plan was terminated 
or discontinued after December 31, 1998, to enroll in another MA plan. 
The exception, codified in our regulations at Sec.  422.50(a)(2)(ii) 
(68 FR 50855), was effective December 14, 2000, but was retroactive, to 
include individuals whose enrollment in an MA plan was terminated 
involuntarily on or after December 31, 1998.
     Section 231 of the MMA gave the Secretary authority to 
waive section 1851(a)(3)(B) of the Act, which precludes beneficiaries 
with ESRD from enrolling in MA plans. Under this authority, CMS 
undertook rulemaking to allow individuals with ESRD to join an MA 
special needs plan. This was codified at Sec. Sec.  422.50(a)(2)(iii) 
and 422.52(c) (70 FR 4715) and was effective for the 2006 plan year.
    In 2016, paragraph (a) of section 17006 of the Cures Act further 
amended section 1851 of the Act to remove the prohibition for 
beneficiaries with ESRD from enrolling in an MA plan. This change is 
effective for plan years beginning on or after January 1, 2021. (Please 
see sections IV.B. and IV.C. of this proposed rule for further changes 
established by section 17006 of the Cures Act.) To implement these 
changes in eligibility for MA plan enrollment made by the Cures Act, we 
propose the following amendments:
     Section 422.50(a)(2) would be revised to specify that the 
prohibition of beneficiaries with ESRD from enrolling in MA plans (and 
associated exemptions) is only applicable for coverage prior to January 
1, 2021. Because of this limit on the prohibition

[[Page 9038]]

to plan years before 2021, the regulatory prohibition on enrollment in 
an MA plan by a beneficiary with ESRD will not apply to future periods. 
The exceptions to that prohibition would be similarly limited as the 
exceptions would no longer be necessary after January 1, 2021.
     Section 422.52(c) would be revised to specify that CMS 
authority to waive the enrollment prohibition in Sec.  422.50(a)(2) to 
permit ESRD beneficiaries to enroll in a special needs plan would also 
only be applicable for plan years prior to 2021. Because there will be 
no additional limitations on enrollment by beneficiaries with ESRD 
beginning 2021, this waiver authority is unnecessary for that period.
     Section 422.110(b) would be revised to specify that the 
exception to the anti-discrimination requirement, which was adopted to 
account for the prohibition on MA enrollment by beneficiaries who have 
ESRD, is only applicable for plan years prior to 2021.
    We considered whether Sec.  422.66(d)(1), which requires MA 
organizations to accept enrollment in their MA plans by newly eligible 
Medicare beneficiaries who are seamlessly converting from health plan 
coverage offered by the MA organization and who are otherwise eligible 
for the MA plan, would also need to be amended to implement the 
eligibility changes made by the Cures Act. Section 422.66(d)(1) already 
provides that this right to seamlessly convert to an MA plan in the 
circumstances outlined in the regulation applies regardless whether the 
individual has ESRD. Therefore, we do not believe that any amendment to 
the regulation is necessary to ensure that the Cures Act change in MA 
eligibility is implemented. We solicit comment on this issue.
    As noted previously in this rule, the changes mandated by the Cures 
Act do not take effect until the 2021 plan year. As such, individuals 
entitled to Medicare Part A and enrolled under Part B, and medically 
determined to have ESRD, are not eligible to choose to receive their 
coverage and benefits through an MA plan prior to plan year 2021, 
subject to the limited exceptions reflected in the current regulation 
text.

B. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney 
Acquisitions for Medicare Advantage (MA) Beneficiaries (Sec.  422.322)

    The MA organization is generally responsible for furnishing or 
providing coverage of all Medicare Part A and Part B benefits, 
excluding hospice, for its enrollees. The Medicare FFS program does not 
pay health care providers for furnishing these benefits to such 
enrollees. Section 1851(i) of the Act generally provides that, subject 
to specific exceptions, CMS pays only the MA organization for the 
provision of Medicare-covered benefits to a Medicare beneficiary who 
has elected to enroll in an MA plan. There are specific, statutory 
exceptions to this general rule in the statute, such as authority in 
section 1853(h) of the Act for FFS Medicare payment for Medicare-
covered hospice services that an MA plan is prohibited by statute from 
covering. Section 17006(c) of the Cures Act amended section 
1852(a)(1)(B)(i) of the Act to exclude from the list of items or 
services an MA plan is required to cover for an MA enrollee coverage 
for organ acquisitions for kidney transplants, including as covered 
under section 1881(d) of the Act. Effective January 1, 2021, these 
costs will be covered under the original Medicare FFS program, pursuant 
to an amendment by section 17006(c)(2) of the Cures Act to section 
1851(i) of the Act. As amended, section 1851(i)(3) of the Act 
authorizes FFS Medicare payment for the expenses for organ acquisitions 
for kidney transplants described in section 1852(a)(1)(B)(i) of the 
Act. We are proposing conforming regulatory changes to reflect the 
revision to the statute.
    Specifically, we propose to revise Sec.  422.322, which describes 
the source of payment and effect of MA plan election on payment for 
Medicare-covered benefits. Paragraphs (b) and (c) of Sec.  422.322 
generally track the statutory requirements that, subject to specific 
exceptions, CMS payment to MA organizations is in lieu of the amounts 
that would otherwise be payable under the original Medicare FFS program 
for Medicare-covered benefits furnished to an MA enrollee and are the 
only payment by the government for those Medicare-covered services. 
Consistent with the amendments to sections 1851(i) and 1852(a)(1)(B)(i) 
of the Act, we are proposing to amend Sec.  422.322 to add a new 
paragraph (d) to reflect that expenses for organ acquisitions for 
kidney transplants are an exception to the terms outlined in paragraphs 
(b) and (c), and will be covered by original Medicare. Our proposed new 
paragraph (d) generally tracks how section 17006(c) of the Cures Act 
amends section 1851(i)(3) of the Act.
    The Cures Act does not provide for Medicare FFS coverage of organ 
acquisition costs for kidney transplants incurred by PACE participants. 
Therefore, PACE organizations must continue to cover organ acquisition 
costs for kidney transplants, consistent with the requirement described 
in section 1894(b)(1)(A)(i) of the Act that PACE organizations provide 
all Medicare-covered items and services. Accordingly, CMS will continue 
to include the costs for kidney acquisitions in PACE payment rates.

C. Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) 
Benchmarks (Sec. Sec.  422.258 and 422.306)

    Section 17006(b) of the Cures Act amended section 1853 of the Act 
to require that the Secretary's estimate of standardized costs for 
payments for organ acquisitions for kidney transplants be excluded from 
Medicare Advantage (MA) benchmarks and capitation rates, effective 
January 1, 2021. As amended, section 1853(k)(5) of the Act provides for 
the exclusion from the applicable amount and section 1853(n)(2) 
provides for the exclusion from the specified amount of the Secretary's 
estimate of the standardized costs for payments for organ acquisitions 
for kidney transplants covered under the Medicare statute (including 
expenses covered under section 1881(d) of the Act). As discussed in 
greater detail in the Medicare Program; Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs for 
Contract Year 2012 and Other Changes Final Rule (hereinafter referred 
to as the April 2011 final rule) (76 FR 21431, 21484 through 21485) and 
the annual Advance Notices and Rate Announcements starting with Payment 
Year 2012,\42\ the applicable amount and the specified amount are used 
in the calculation of the MA benchmarks and capitation rates. We are 
proposing to revise the relevant regulations to reflect these 
amendments.
---------------------------------------------------------------------------

    \42\ The Advance Notice and Rate Announcement for each year are 
available online at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html.
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    Specifically, we propose to revise Sec.  422.258, which describes 
the calculation of MA benchmarks. Under section 1853(n)(1)(B) of the 
Act and Sec.  422.258(d) of the regulations, for 2012 and subsequent 
years, the MA benchmark for a payment area for a year is equal to the 
amount specified in section 1853(n)(2) of the Act (that is, the 
``specified amount''), but cannot exceed the applicable amount as 
described in 1853(n)(4) and Sec.  422.258(d)(2). Prior to enactment of 
the Cures Act, section 1853(n)(2)(A) of the Act described the specified 
amount as the product of the base payment amount for an area for a year 
(adjusted to take into account the

[[Page 9039]]

phase-out in the indirect costs of medical education from capitation 
rates) and the applicable percentage for the area and year. The base 
payment amount is, for years after 2012, the average FFS expenditure 
amount specified in Sec.  422.306(b)(2). Section 17006(b)(2)(A) of the 
Cures Act amended section 1853(n)(2)(A)(i) of the Act to require that, 
for 2021 and subsequent years, the base payment amount used to 
calculate the specified amount must also be adjusted to take into 
account the exclusion of payments for organ acquisitions for kidney 
transplants from the capitation rate. We are proposing to make 
conforming amendments to paragraphs (d)(3), (5), and (6) of Sec.  
422.258. As amended, paragraph (d)(3) will specify that for 2021 and 
subsequent years, the base payment amount used to calculate the 
specified amount is required to be adjusted to take into account the 
exclusion of payments for organ acquisitions for kidney transplants. 
Also, as amended, paragraphs (d)(5) and (6) will specify that the 
average FFS expenditure amount used to determine the applicable 
percentage is adjusted to take into account the exclusion of payments 
for organ acquisitions for kidney transplants. To make these 
amendments, we propose to insert references to the adjustment made 
under Sec.  422.306(d) to modify the various references to the base 
payment amount in paragraphs (d)(3) and (5), (d)(5)(i) and (ii), and 
(d)(6).
    We also propose to amend Sec.  422.306 by revising the introductory 
text and adding a new paragraph (d). Proposed paragraph (d) would 
describe the required adjustment, beginning for 2021, to exclude the 
Secretary's estimate of the standardized costs for payments for organ 
acquisitions for kidney transplants covered under this title (including 
expenses covered under section 1881(d) of the Act) in the area for the 
year. By operation of Sec.  422.258(d)(2), the applicable amount is 
established by reference to Sec.  422.306, and the rules there for 
calculation of MA annual capitation rates. By adding Sec.  422.306(d), 
we would implement the new language in section 1853(k)(5) of the Act 
(added by section 17006(b)(1)(B) of the Cures Act) to require the 
adjustment to exclude payments for organ acquisitions for kidney 
transplants. We request comment whether these proposed revisions to 
Sec. Sec.  422.258(d) and 422.306 adequately implement the statutory 
changes made by section 17006 of the Cures Act to require exclusion of 
the costs of kidney acquisition from the applicable amount and the 
specified amount for purposes of setting MA benchmarks and capitation 
rates.
    Per section 1853(a)(1)(H) of the Act, CMS is required to establish 
separate rates of payment to an MA organization for individuals with 
end stage renal disease (ESRD) who are enrolled in a plan offered by 
that organization. This special rule for ESRD payment rates is codified 
in the regulations at 42 CFR 422.304(c). Since the Cures Act requires 
FFS Medicare payment for kidney acquisition costs for all MA enrollees, 
including MA enrollees with ESRD, we propose to apply the exclusion of 
kidney acquisition costs to the ESRD payment rates. As Sec.  422.304(c) 
does not prescribe the specific methodology CMS must use to determine 
the separate rates of payment for ESRD enrollees described in section 
1853(a)(1)(H) of the Act, the exclusion of kidney acquisition costs 
from ESRD rates does not require regulatory amendment. CMS will address 
the methodology for excluding kidney acquisition costs from MA 
benchmarks (including the MA ESRD state rates) in the 2021 Advance 
Notice and Rate Announcement. Section 1894(d)(2) of the Act requires 
that PACE capitation amounts be based upon MA payment rates established 
under section 1853 of the Act and adjusted to take into account the 
comparative frailty of PACE enrollees and such other factors as the 
Secretary determines to be appropriate. While capitated payments made 
to PACE organizations are based on the applicable amount under section 
1853(k)(1) of the Act, CMS will include the costs for kidney 
acquisitions in PACE rates. Because PACE organizations are required to 
cover all Medicare-covered items and services under section 
1894(b)(1)(A)(i) of the Act, including organ acquisition costs for 
kidney transplants, CMS will include kidney acquisition costs in PACE 
payment rates, including PACE ESRD rates. This approach is consistent 
with how PACE organizations have historically been paid for kidney 
acquisition costs for PACE enrollees.

V. Enhancements to the Part C and D Programs

A. Reinsurance Exceptions (Sec.  422.3)

    Section 1855(b) of the Act requires MA organizations to assume full 
financial risk on a prospective basis for the provision of basic 
benefits (and, for plan years before 2006, additional benefits required 
under section 1854 of the Act) furnished to MA plan enrollees, subject 
to the exceptions listed in the statute at section 1855(b)(1)-(4) of 
the Act. The exception at section 1855(b)(1) of the Act states that an 
MA organization may obtain insurance or make arrangements for the cost 
of providing to any enrolled member such services the aggregate value 
of which exceeds a per-enrollee aggregate level established by the 
Secretary. Section 1855(b)(1) of the Act describes stop loss insurance 
arrangements but we are not using those terms in the regulation in 
order to be specific in describing the form of the arrangement. Section 
1855(b)(1) of the Act permits an MA organization to obtain insurance or 
make other arrangements under which the MA organization bears less than 
full financial risk for the costs of providing basic benefits for an 
individual enrollee that exceed a certain threshold. For the reasons 
discussed in this section of this proposed rule, we are proposing to 
implement, at a new Sec.  422.3, the exception at section 1855(b)(1) of 
the Act and establish in regulation options to use insurance for costs 
beyond a specified threshold. We are proposing that an MA organization 
may obtain insurance (that is, reinsurance) or make other arrangements 
for the cost of providing basic benefits to an individual enrollee the 
aggregate value of which exceeds $10,000 during a contract year or, 
alternatively, such costs may be shared proportionately on a first 
dollar basis, the value of which is calculated on an actuarially 
equivalent basis to the cost of the insurance for costs that exceed 
$10,000 in a contract year. We also propose that if the MA organization 
chooses to purchase pro rata coverage that provides first dollar 
coverage, the price of that coverage cannot exceed the cost of the 
option of purchasing stop loss insurance for enrollee health care costs 
that exceed a threshold of $10,000 in a contract year. The statutory 
exceptions at section 1855(b)(2)-(4) of the Act still apply. This 
proposal serves to establish in regulation the threshold described in 
section 1855(b)(1) of the Act.
    Because we interpret section 1855(b) of the Act as requiring an MA 
organization to remain at full financial risk for basic benefits, 
subject to the exceptions listed in subsections (b)(1) through (b)(4), 
we are proposing that the limits in proposed Sec.  422.3 apply for 
purposes of insuring (or making other arrangements) for costs of 
providing basic benefits and therefore do not apply to supplemental 
benefits offered by MA organizations. We are implementing the exception 
at section 1855(b)((1) of the Act because concerns were raised that 
absent the implementation of specific standards by CMS under section 
1855(b)(1) of the Act

[[Page 9040]]

there was ambiguity about the legal basis of MA organizations sharing 
risk through reinsurance. A number of MA organizations expressed 
concern to CMS about this legal uncertainty as they have utilized 
reinsurance within the MA program. Therefore, we are proposing to 
implement section 1855(b)(1) of the Act to formally establish 
reinsurance standards for the MA program and remove any uncertainty on 
the permitted utilization of reinsurance.
    Under this proposed implementation of the exception at section 
1855(b)(1) of the Act, MA organizations which are voluntarily choosing 
to purchase insurance to limit their exposure to enrollee medical 
losses will have two options. In the first option, an MA organization 
could purchase insurance that would stop losses for the MA organization 
for individual plan enrollees when an individual enrollee's covered 
costs for basic benefits exceed $10,000 during a contract year. Stated 
another way, the MA organization could have insurance for costs that 
exceed $10,000 for covering or furnishing basic benefits to an 
individual plan enrollee in the contract year. In the second option, an 
MA organization could purchase pro rata insurance coverage that would 
provide first dollar coverage provided that the value of the insured 
risk is actuarially equivalent to costs that exceed $10,000 and the 
insurance coverage is priced at an actuarial value not to exceed the 
cost of purchasing the stop loss insurance for medical expenses 
exceeding $10,000 per member per year. Specifically, the cost to the MA 
organization in purchasing first dollar pro rata insurance cannot 
exceed the cost to the MA organization of purchasing $10,000 per member 
per year stop loss insurance.
    Based on discussions with the National Association of Insurance 
Commissioners (NAIC) and previous 2018 Call Letter comments we have 
received, CMS recognizes that the use of insurance by health care 
insurers is a common and long standing market practice for both 
commercial health insurers and MA organizations and that the practice 
serves to reduce financial exposure to changes in health care costs, 
helps manage capital requirements, and allows health care insurers to 
grow enrollment. Based on our discussions with the NAIC and earlier 
discussion with the industry it is our understanding that MA 
organizations located in areas with fewer beneficiary choices (for 
example, rural, underserved areas) may particularly benefit from using 
reinsurance because of how it provides financial stability for the MA 
organization, which in turn can lead to enhanced competition and 
consumer choice, especially in small and mid-sized market areas. 
Insuring part of the risk assumed under an MA plan is important for 
smaller MA organizations to compete with larger organizations that can 
independently finance their operations. We recognize that some may see 
hazards in excessive reinsurance to the extent that the direct health 
insurer (here, the MA organization) might pass a large share of their 
risk and premium through insurance and that the MA organization could 
be viewed as no longer possessing the primary responsibility for 
furnishing the health care services. While the statute identifies the 
category of risk for which an MA organization may seek insurance or 
other arrangements (such as, in section 1855(b)(1) of the Act, the cost 
of providing to any enrolled member such services the aggregate value 
of which exceeds an established threshold), it is in the context of a 
mandate that MA organizations assume full financial risk on a 
prospective basis for providing basic benefit to enrollees. Therefore, 
we are cognizant of the need to ensure that MA organizations are not 
transferring all the risk of providing services to enrollees to a third 
party that is not under contract with CMS. We seek to balance these 
different interests in setting the threshold for the individual stop 
loss insurance coverage authorized by the statute.
    The $10,000 threshold we are proposing has its roots in our review 
of the Conference Report for the BBA of 1997 (H.R. Conf. Rep. 105-217) 
and the difference between the House bill and the Senate amendment on 
the threshold at which a Part C plan could reinsure per-enrollee costs. 
The Conference Report indicates that the House bill tracked existing 
language in section 1876(b)(2)(D)(i) of the Act in using a $5,000 per 
year threshold while the Senate amendment provided for an amount 
established by the agency with an annual adjustment using the Consumer 
Price Index-Urban (CPI-U) for the 12-month period ending with June of 
the previous year. The conference agreement was to adopt the language 
in section 1855(b)(1) of the Act that remains today: A threshold 
established by the agency from time to time. To develop the $10,000 
threshold we are proposing, we started with the amount of $5,000 
identified in the Conference Report and used the following methodology: 
We multiplied the amount identified in the Conference Report ($5,000) 
by the increase in the CPI-U. Our policy choice was heavily influenced 
by the description in the Conference Report of the Senate amendment: 
``the applicable amount of insurance for 1998 is the amount established 
by the Secretary and for 1999 and any succeeding year, is the amount in 
effect for the previous year increased by the percentage change in the 
CPI-urban for the 12-month period ending with June of the previous 
year.'' In updating the threshold this way, we rounded the amount for 
each year to the nearest whole dollar. Actual CPI-U values through June 
2019 were used to perform these calculations. After 2019, the CPI-U 
values are estimated using the Congressional Budget Office's August 
2019 report: An Update to the Economic Outlook: 2019 to 2029.
    Based on our scan of the market and current practices of commercial 
health insurers, in selecting the $10,000 threshold for stop loss 
insurance we believe the level of risk transfer we have proposed is 
reasonable and consistent with supporting robust competition in 
Medicare Advantage. We believe the proposed level of risk transfer is 
acceptable given that CMS closely monitors MA organizations in terms of 
their administration of their MA plans, and specifically their timely 
provision of medically necessary health care services to enrollees and 
their overall financial solvency. CMS has a direct contract with each 
MA organization and despite any insurance arrangements, the MA 
organization remains accountable to CMS for ensuring timely access for 
enrollees to medically necessary Medicare covered services. In 
addition, CMS through its regional offices, plan audits, review of 
enrollee appeals and stakeholder letters closely monitors the 
performance of MA organizations and intervenes whenever it has evidence 
an MA organization is not meeting its contractual obligations. Also, 
any insurance arrangement used by MA organizations is subject to state 
insurance regulation and oversight regarding solvency because section 
1856(b)(3) of the Act does not preempt those laws or provide that CMS 
regulation supersedes them. It is also our understanding that the NAIC 
model laws (Model 785); NAIC Credit for Reinsurance Regulation (Model 
786); and the NAIC Life and Health Reinsurance Agreements Model 
Regulation (Model 791) have been substantially adopted by all states. 
We believe CMS oversight along with the states' oversight of financial 
solvency substantially ensures that CMS will be able to intervene on a 
timely basis when an MA organization is experiencing solvency problems 
or is not meeting its obligation to appropriately furnish its

[[Page 9041]]

enrollees with benefits covered under the MA plan.
    Notwithstanding our rationale for proposing this specific 
threshold, we recognize that the reinsurance marketplace is complex and 
evolving. Therefore, we solicit comments regarding our proposed 
reinsurance regulation generally and the specific threshold proposed; 
we are particularly interested in comments whether the $10,000 
threshold is a reasonable level and if the flexibility we are proposing 
for MA organizations in permitting insurance or other arrangements that 
are actuarially equivalent to a $10,000 threshold is sufficient to 
serve the goals outlined here. In addition, we welcome comments that 
provide additional information about insurance or other arrangements 
for addressing the risk of costs that exceed specific thresholds on an 
individual enrollee basis.
    Additionally, CMS wishes to clarify what we consider to be an MA 
organization for purposes of this statute and is proposing to broaden 
our interpretation to include parent organizations. The result of that 
would be to evaluate compliance with section 1855(b) of the Act and 
proposed Sec.  422.3 at the parent organization level, such that risk 
sharing or allocations of losses and costs among wholly-owned 
subsidiaries would not be evaluated. Therefore, we are seeking comment 
on whether CMS should consider a parent organization to be part of an 
MA organization for purposes of section 1855(b) of the Act or whether 
CMS should consider a parent organizations to be a separate entity from 
an MA organization.

B. Out-of-Network Telehealth at Plan Option

    On April 16, 2019, CMS finalized requirements for MA plans offering 
additional telehealth benefits (ATBs).\43\ Section 50323 of the BBA of 
2018 created a new subsection (m) of section 1852 of the Act, 
authorizing MA plans to offer ATBs to enrollees starting in plan year 
2020 and treat ATBs as basic benefits. In the April 2019 final rule, we 
finalized a new regulation at Sec.  422.135 to implement that 
authority. As part of the parameters for the provision of ATBs, we 
finalized a requirement, at Sec.  422.135(d), that MA plans furnishing 
ATBs only do so using contracted providers. The regulation specifically 
provides that benefits furnished by a non-contracted provider through 
electronic exchange may only be covered by an MA plan as a supplemental 
benefit.
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    \43\ Medicare and Medicaid Programs; Policy and Technical 
Changes to the Medicare Advantage, Medicare Prescription Drug 
Benefit, Programs of All-Inclusive Care for the Elderly (PACE), 
Medicaid Fee-For-Service, and Medicaid Managed Care Programs for 
Years 2020 and 2021. Retrieved at: https://www.federalregister.gov/documents/2019/04/16/2019-06822/medicare-and-medicaid-programs-policy-and-technical-changes-to-the-medicare-advantage-medicare.
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    We finalized the proposal at Sec.  422.135(d) to require that all 
MA plan types, including preferred provider organizations (PPOs), use 
only contracted providers to provide MA additional telehealth benefits. 
In the April 2019 final rule, CMS adopted a policy that services 
furnished by non-contracted providers through electronic exchange are 
not MA ATBs. We explained that limiting service delivery of MA ATBs to 
contracted providers offers MA enrollees access to these covered 
services in a manner consistent with the statute because plans would 
have more control over how and when services are furnished. In the 
April 2019 final rule, we took the position that limiting MA ATBs to 
contracted providers will ensure additional oversight of providers' 
performance, thereby increasing plans' ability to provide these 
benefits. In response to commenters' recommendation that CMS allow PPOs 
to provide ATBs through contracted and non-contracted providers, we 
clarified that if a PPO furnishes MA ATBs consistent with the 
requirements at Sec.  422.135, then the PPO plan requirement at Sec.  
422.4(a)(1)(v) (that the PPO must furnish all services both in-network 
and out-of-network) will not apply to the MA additional telehealth 
benefits and all other benefits covered by the PPO must be covered on 
both an in-network and out-of-network basis. In other words, a PPO plan 
is not required to furnish its MA additional telehealth benefits out-
of-network, as is the case for all other plan-covered services. 
However, a PPO plan may cover--as a supplemental benefit--telehealth 
services that are furnished out-of-network.
    Although we took the position that limiting MA ATBs to contracted 
providers will ensure additional oversight of providers' performance in 
the April 2019 final rule, CMS is also considering whether limiting MA 
ATBs to contracted providers may unnecessarily limit the ability of MA 
plans to furnish ATBs. If CMS revises Sec.  422.135(d) to allow all 
plan types to offer ATBs through non-contracted providers, CMS would 
leverage existing oversight programs, which include monitoring 
beneficiary complaints, organization determinations, and appeals 
related to MA ATBs. CMS has regularly scheduled meetings with the Part 
C Independent Review Entity (IRE) contractor; during these meetings, 
CMS and the IRE contractor identify and evaluate systemic problems with 
coverage decisions that rise to the level of the IRE. We would continue 
to hold plans accountable for ensuring sufficient oversight of 
medically necessary Medicare covered items and services such as MA ATBs 
through CMS's oversight activities and believe that we have the means 
to do that through these monitoring and oversight policies.
    The statute does not prohibit MA plans' use of non-contracted 
providers to deliver ATBs. Therefore, CMS is considering whether to 
revise Sec.  422.135 to permit ATBs to be provided by non-contracted 
providers in cases where the non-contracted providers satisfy ATB 
requirements set forth in the April 2019 final rule. CMS believes 
requiring non-contracted and contracted providers to meet the same ATB 
requirements will ensure ATBs are delivered in a manner consistent with 
the statute and plans will have necessary control over how and when 
services are furnished. We solicit comment whether Sec.  422.135(d) 
should be revised to allow all MA plan types, including PPOs, to offer 
ATBs through non-contracted providers and treat them as basic benefits 
under MA.

C. Supplemental Benefits, Including Reductions in Cost Sharing (Sec.  
422.102)

    In the Medicare Program; Establishment of the Medicare Advantage 
Program Final Rule, published in the Federal Register on January 28, 
2005 (hereinafter referred to as the January 2005 final rule) (70 FR 
4588, 4617), CMS established that an MA plan could reduce cost sharing 
below the actuarial value specified in section 1854(e)(4)(B) of the Act 
only as a mandatory supplemental benefit and codified that policy at 
Sec.  422.102(a)(4). In order to clarify the scope of section 
1854(e)(4)(A) of the Act, we are proposing to amend Sec.  422.102(a)(4) 
and add new rules at Sec.  422.102(a)(5) and (a)(6)(i) and (ii) to 
further clarify the different circumstances in which an MA plan may 
reduce cost sharing for covered items and services as a mandatory 
supplemental benefit and to specifically authorize certain flexibility 
in the mechanisms by which an MA plan may make reductions in cost 
sharing available.
    Currently, reductions in cost sharing are an allowable supplemental 
benefit in Medicare Advantage (MA) and may include:
     Reductions in the cost-sharing for Parts A and B benefits 
compared to the actuarially equivalent package of Parts A and B 
benefits; and

[[Page 9042]]

     Reductions in cost-sharing for Part C supplemental 
benefits, for example provided for specific services for enrollees that 
meet specific medical criteria, such that similarly situated enrollees 
(that is, all enrollees who meet the identified criteria) are treated 
the same and enjoy the same access to these targeted benefits.
    We propose to codify regulation text to clarify that reductions in 
cost sharing for (1) Part A and B benefits and (2) covered items and 
services that are not basic benefits are allowable supplemental 
benefits but may only be offered as mandatory supplemental benefits at 
Sec.  422.102(a)(4) and (5). We propose to revise the current language 
at Sec.  422.102(a)(4) by inserting the phrase ``for Part A and B 
benefits'' after the cite to section 1854(e)(4)(A) of the Act and to 
add a new paragraph (a)(5) to specify that reduced cost sharing may be 
applied to items and services that are not basic benefits; for both 
categories, the reduction of cost sharing may only be provided as a 
mandatory supplemental benefit.
    MA plans currently have options in how they may choose to structure 
mandatory supplemental benefits that are in the form of cost sharing 
reductions. For example, MA organizations may offer, as a supplemental 
benefit, a reimbursement or a debit card to reduce cost sharing towards 
plan covered services or to provide coverage of 100 percent of the cost 
of covered items. For instance, enrollees may be given a debit card 
with a dollar amount that can be used towards cost sharing for plan 
covered services. MA plans may also decide to offer, as a supplemental 
benefit, a reduction in cost through a maximum allowance. An MA plan 
may establish a dollar amount of coverage that may be used to reduce 
cost sharing towards plan covered services and subject to a plan-
established annual limit; enrollees can ``spend'' the allowance on cost 
sharing for whichever covered benefits the enrollee chooses. In both 
scenarios, MA plans are expected to administer the benefit in a manner 
that ensures the debit card and/or allowance can only be used towards 
plan-covered services. We are proposing new regulation text, at Sec.  
422.102(a)(6)(i) and (ii), to codify these flexibilities in how 
reductions in cost sharing are offered. These flexibilities are only 
for Part C supplemental benefits, as defined in proposed Sec.  
422.102(c) and discussed in section VI.F. Of this proposed rule. 
Therefore, cost sharing for Part D drugs is not included in these 
flexibilities.
    As proposed, the flexibilities identified here are permitted only 
as a mandatory supplemental benefit which is why we are proposing to 
codify them in Sec.  422.102(a). Further, this proposed flexibility is 
only for items and services that are identified in the MA plan's bid 
and marketing and communication materials as covered benefits, which is 
why the proposed regulation text uses the terms ``covered benefits'' 
and ``coverage of items and services.'' Thus, MA plans would not be 
able to offer use of a debit card for purchase of items or services 
that are not covered. This is consistent with current guidance in 
Chapter 4 of the Medicare Managed Care Manual under section 40.3 that 
allows debit cards to be used for plan-covered over-the-counter items 
under the conditions that the card is exclusively linked to the OTC 
covered items and has a dollar limit tied to the benefit maximum. We 
recognize that a debit card could be utilized as a reimbursement 
mechanism or as a means for the MA plan to make its payment for an item 
or service; in either case, the use of the card is tied to coverage of 
the benefit. Like all other coverage, the flexibilities proposed here 
are limited to the specific plan year; therefore, this authority to use 
debit cards or a basket of benefits up to a set value from which an 
enrollee can choose cannot be rolled over into subsequent years. We 
have proposed specific text in paragraph (a)(6) limiting these forms of 
supplemental benefits to the specific plan year to emphasize that 
rolling over benefits to the following plan year is not permitted.
    For both benefit options, as previously described, MA plans have 
the flexibility to establish a maximum plan benefit coverage amount for 
supplemental benefits or a combined amount that includes multiple 
supplemental benefits, such as a combined maximum plan benefit coverage 
amount that applies to dental and vision benefits. Plans may not offer 
reimbursement, including use of a debit card to pay for supplemental 
benefits that are not covered by the plan. Reductions in cost sharing 
as a supplemental benefit are subject to an annual limit that the 
enrollee can ``spend'' on cost sharing for whichever covered benefits 
the enrollee chooses. Plans may use a receipt-based reimbursement 
system or provide the dollar amount on a debit card (linked to an 
appropriate merchant and item/service codes) so that the enrollee may 
pay the cost sharing at the point of service. This provision codifies 
already existing guidance and practices and therefore is not expected 
to have additional impact above current operating expenses. 
Additionally, this provision amends definitions and therefore does not 
impose any collection of information requirements.

D. Referral/Finder's Fees (Sec. Sec.  422.2274 and 423.2274)

    In the Medicare Program; Contract Year 2015 Policy and Technical 
Changes to the Medicare Advantage and the Medicare Prescription Drug 
Benefit Programs Final Rule, published in the Federal Register on May 
23, 2014 (79 FR 29960), CMS codified rules in Sec. Sec.  422.2274(h) 
and 423.2274(h) for MA organizations and Part D plans to pay agents and 
brokers for referrals of beneficiaries for enrollment, also known as 
finder's fees. In the proposed language, we are clarifying our 
longstanding intent that compensation is on a per-enrollment basis. 
Since referral fees are part of compensation, organizations may not pay 
independent agents more than regulatory limits. Because referral fees 
are already incorporated into compensation, limiting the amount of a 
referral fee has no impact on the statutory requirement of an agent 
enrolling a beneficiary in the plan that best meets their health care 
needs. With respect to captive and employed agents, who only sell for 
one organization, the referral fees also have no impact given the 
organization sets rates of pay, nor is there a statutory steerage 
impact.
    Therefore, we propose to remove Sec. Sec.  422.2274(h) and 
423.2274(h). As currently codified at Sec. Sec.  422.2274(b) and 
423.2274(b), compensation for initial enrollments may not exceed the 
fair market value and compensation for renewal enrollments may not 
exceed 50 percent of the fair market value. Compensation is defined in 
the same current regulation, at paragraph (a), as all monetary or non-
monetary remuneration of any kind relating to the sale or renewal of a 
policy including, but not limited to, commissions, bonuses, gifts, 
prizes or awards, or referral or finder fees. By eliminating the 
individual referral fee limit, we are restructuring the regulation to 
only provide for referral fees within the scope of Fair Market Value 
(FMV). Our proposal clarifies that MA organizations and Part D plans 
have the ability to compensate agents for referrals provided the total 
dollar amount does not exceed FMV. We believe that the primary value 
for this proposed additional flexibility is in connection with 
independent agents, as we believe that for captive and employed agents, 
referral/finder fees do not play a factor in making sure the agent 
enrolls the beneficiary in the best plan, since captive and employed 
agents

[[Page 9043]]

only sell for one organization. We therefore propose to eliminate the 
current specific limit on finder or referral fees that is codified at 
paragraph (h). Currently, the definition of compensation already 
includes referral or finder fees, so the result of this specific 
proposal would be an overall limit on compensation for initial and 
renewal enrollments, which includes finder or referral fees. In section 
VI.H. of this proposed rule, we also propose additional changes for 
Sec. Sec.  422.2274(g) and 423.2274(g) regarding agent and broker 
compensation for Part C and Part D enrollments. Under those proposals, 
the definition of compensation continues to include finder or referral 
fees, so the limits on compensation continue to include finder or 
referral fees. We solicit comment on whether removing the limit on 
referral/finder's fees would generate concerns such as those discussed 
in the 2010 Call Letter for MA organizations issued March 30, 2009, 
CMS's October 19, 2011, memo entitled ``Excessive Referral Fees for 
Enrollments,'' or the ``Medicare Program; Contract Year 2016 Policy and 
Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' final rule that codified referral/
finder's fees limits in regulation.

E. Medicare Advantage (MA) and Part D Prescription Drug Program Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.252, 423.182, 
423.184, and 423.186)

1. Introduction
    In the April 2018 final rule, CMS codified at Sec. Sec.  422.160, 
422.162, 422.164, and 422.166 (83 FR 16725 through 83 FR 16731) and 
Sec. Sec.  423.180, 423.182, 423.184, and 423.186 (83 FR 16743 through 
83 FR 16749) the methodology for the Star Ratings system for the MA and 
Part D programs, respectively. This was part of the Administration's 
effort to increase transparency and give advance notice regarding 
enhancements to the Part C and D Star Ratings program. Under those 
regulations, CMS must propose through rulemaking any future changes to 
the methodology for calculating the ratings, addition of new measures, 
and substantive changes to the measures. Sections 422.164(e) and 
423.184(e) provide authority and a mechanism for the removal of 
measures for specific reasons (low statistical reliability and when the 
clinical guidelines associated with the measure change such that the 
specifications are no longer believed to align with positive health 
outcomes). Generally, removal of a measure for other reasons would also 
occur through rulemaking. In the 2020 Call Letter, CMS announced the 
removal of the Adult Body Mass Index Assessment (Part C), Appeals Auto-
Forward (Part D), and Appeals Upheld (Part D) measures due to low 
statistical reliability starting with the 2020 measurement year and 
associated 2022 Star Ratings following the rules codified at Sec. Sec.  
422.164(e) and 423.184(e). The collection of Part D Timeliness 
Monitoring Project (TMP) data was also stopped for the 2020 measurement 
year since it was used to validate the two Part D appeals measures. In 
the April 2019 final rule, CMS amended Sec. Sec.  422.166(a)(2)(i) and 
423.186(a)(2)(i) to update the methodology for calculating cut points 
for non-Consumer Assessment of Healthcare Providers and Systems (non-
CAHPS) measures by adding mean resampling and guardrails, codify a 
policy to adjust Star Ratings for disasters, and finalize some measure 
updates.
    At this time, we are proposing to further increase the stability of 
cut points by modifying the cut point methodology for non-CAHPS 
measures through direct removal of outliers. We are also proposing to 
increase the weight of patient experience/complaints and access 
measures, remove the Rheumatoid Arthritis Management (Part C) measure 
from the Star Ratings because the measure steward is retiring the 
measure from the HEDIS measurement set, implement substantive updates 
to the specifications of the Health Outcomes Survey (HOS) outcome 
measures, add two new Part C measures to the Star Ratings program, 
clarify the rules around consolidations when data are missing due to 
data integrity concerns, and add several technical clarifications. We 
are also proposing to codify additional existing rules for calculating 
MA Quality Bonus Payment (QBP) ratings. Unless otherwise stated, these 
changes would apply (that is, data would be collected and performance 
measured) for the 2021 measurement period and the 2023 Star Ratings.
2. Definitions (Sec.  422.252)
    We propose to amend the definition at Sec.  422.252 for new MA 
plans by clarifying how we apply the definition. We are proposing to 
modify the definition as follows: New MA plan means a plan that meets 
the following: (1) Is offered under a new MA contract; and (2) is 
offered under an MA contract that is held by a parent organization 
defined at Sec.  422.2 that has not had an MA contract in the prior 3 
years. For purposes of this definition, the parent organization is 
identified as of April of the calendar year before the payment year to 
which the final QBP rating applies, and contracts associated with that 
parent organization are also evaluated using contracts in existence as 
of April of the 3 calendar years before the payment year to which the 
final QBP rating applies. Under our current policy, we identify the 
parent organization for each MA contract in April of each year and then 
whether any MA contracts have been held by that parent organization in 
the immediately preceding 3 years to determine if the parent 
organization meets the 3 year standard. For example, if a parent 
organization is listed for an MA contract in April 2019, and that 
parent organization does not have any other MA contracts in April 2019, 
April 2018, or 2017, the plans under the MA contract would be 
considered new MA plans for 2020 QBP purposes.
3. Measure-Level Star Ratings (Sec. Sec.  422.166(a), 423.186(a))
    Over the past 2 years, we have codified and refined the methodology 
for calculating the Star Ratings from the performance scores for non-
CAHPS measures. At Sec. Sec.  422.166(a) and 423.186(a), we initially 
codified the historical methodology for calculating Star Ratings at the 
measure level in the April 2018 final rule. The methodology for non-
CAHPS measures employs a hierarchical clustering algorithm to identify 
the gaps that exist within the distribution of the measure-specific 
scores to create groups (clusters) that are then used to identify the 
cut points. The Star Ratings categories are designed such that the 
scores in the same Star Ratings category are as similar as possible and 
the scores in different Star Ratings categories are as different as 
possible. The current methodology uses only data from the most recent 
Star Ratings year; therefore, the cut points are sensitive to changes 
in performance from 1 year to the next.
    The primary goal of any cut point methodology is to disaggregate 
the distribution of scores into discrete categories or groups such that 
each grouping accurately reflects true performance. The current MA Star 
Ratings methodology converts measure-specific scores to measure-level 
Star Ratings so as to categorize the most similar scores within the 
same measure-level Star Rating while maximizing the differences across 
measure-level Star Ratings. We solicited comments in the Medicare 
Program; Contract Year 2019 Policy and Technical Changes to the 
Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the 
Medicare Prescription Drug Benefit

[[Page 9044]]

Programs, and the PACE Program Proposed Rule (hereinafter referred to 
as the November 2017 proposed rule) regarding the approach to convert 
non-CAHPS measure scores to measure-level Star Ratings (82 FR 56397 
through 56399). We requested input on the desirable attributes of cut 
points and recommendations to achieve the suggested characteristics in 
the Medicare and Medicaid Programs; Policy and Technical Changes to the 
Medicare Advantage, Medicare Prescription Benefit, Programs for All-
inclusive Care for the Elderly (PACE), Medicaid Fee-for-Service, and 
Medicaid Managed Care Programs for Years 2020 and 2021 Proposed Rule 
(hereinafter referred to as the November 2018 proposed rule). In 
addition, we requested that commenters either suggest alternative cut 
point methodologies or provide feedback on several options detailed in 
the November 2018 proposed rule, such as setting the cut points by 
using a moving average, using the mean of the 2 or 3 most recent years 
of data, or restricting the size of the change in the cut points from 1 
year to the next.
    The commenters identified several desirable attributes for cut 
points that included stability, predictability, and attenuation of the 
influence of outliers; commenters also suggested restricting movement 
of cut points from 1 year to the next and recommended that CMS either 
pre-announce cut points before the plan preview period or pre-determine 
cut points before the start of the measurement period. In the April 
2018 final rule (83 FR 16567), we expressed appreciation for our 
stakeholders' feedback and stated our intent to use it to guide the 
development of an enhanced methodology while maintaining the intent of 
the cut point methodology to accurately reflect true performance.
    Using the feedback from the comments we received in response to the 
November 2018 proposed rule, we considered enhancements to the 
methodology that would increase the stability and predictability of the 
cut points and finalized in the April 2019 final rule two enhancements 
to the historical methodology. In the April 2019 final rule, we amended 
Sec. Sec.  422.166(a)(2)(i) and 423.186(a)(2)(i) to add mean resampling 
of the current year's data to the current clustering algorithm to 
attenuate the effect of outliers; we also added measure-specific caps 
in both directions to provide guardrails so that the measure-threshold-
specific cut points do not increase or decrease more than the cap from 
1 year to the next. Some commenters to the November 2018 proposed rule 
believed mean resampling would not be sufficient to address outliers 
and expressed support for directly removing outliers before clustering. 
We did not finalize an approach for directly removing outliers in the 
April 2019 final rule since the public did not have an opportunity to 
comment on a specific approach.
    As we stated in the April 2019 final rule in response to public 
comments on this topic, we evaluated two options to address direct 
removal of outliers--trimming and Tukey outer fence outlier deletion. 
Under trimming, all contracts with scores below the 1st percentile or 
above the 99th percentile are removed prior to clustering. Although 
trimming is a simple way to remove extreme values, it removes scores 
below the 1st percentile or above the 99th percentile regardless of 
whether the scores are true outliers. This means in cases when true 
outliers are between the 1st and 99th percentile, they would not be 
removed by trimming, and in cases when the distribution of scores is 
skewed, scores that are not true outliers would be trimmed.
    Tukey outer fence outlier deletion is a standard statistical 
method. Tukey outer fence outliers are sometimes called Whisker 
outliers. Under this methodology, outliers are defined as measure 
scores below a certain point (first quartile - 3.0 x (third quartile - 
first quartile)) or above a certain point (third quartile + 3.0 x 
(third quartile - first quartile)). The Tukey outer fence outlier 
deletion will remove all outliers based on the previous definition and 
will not remove any cases that are not identified as outliers. Values 
identified by Tukey outer fence outlier deletion would be removed prior 
to clustering. If Tukey outer fence outlier deletion and a 5 percent 
guardrail had been implemented for the 2018 Star Ratings, 2 percent of 
MA-PD contracts would have seen their Star Rating increase by half a 
star, 16 percent would have decreased by half a star, and one contract 
would have decreased by 1 star. For PDP contracts, 2 percent would have 
increased by half a star, and 18 percent would have decreased by half a 
star. This simulation of the impact of Tukey outlier deletion also 
takes into account the removal of the two Part D appeals measures 
(Appeals Auto-Forward and Appeals Upheld) and the Part C measure Adult 
BMI Assessment in the simulations, because these measures will be 
removed starting with the 2022 Star Ratings. In general, there tend to 
be more outliers on the lower end of measure scores. As a result, the 1 
to 2 star thresholds often increased in the simulations when outliers 
were removed compared to the other thresholds which were not as 
impacted.
    The effect of Tukey outlier deletion would create a savings of 
$808.9 million for 2024, increasing to $1,449.2 million by 2030. Given 
the significant drawbacks of trimming, we are proposing to add Tukey 
outer fence outlier deletion to the clustering methodology for non-
CAHPS measures. We request commenter feedback on Tukey outer fence 
outlier deletion as an additional step prior to hierarchal clustering. 
In the first year that this would be implemented, the prior year's 
thresholds would be rerun, including mean resampling and Tukey outer 
fence deletion so that the guardrails would be applied such that there 
is consistency between the years. We propose to amend Sec. Sec.  
422.162 and 423.182 to add a definition of the outlier methodology and 
amend Sec. Sec.  422.166(a)(2) and 423.186(a)(2) to apply the outlier 
deletion using that methodology prior to applying mean resampling with 
hierarchal clustering. We welcome comments on this proposal.
4. Contract Consolidations (Sec. Sec.  422.162(b)(3), 423.182(b)(3))
    The process for calculating the measure scores for contracts that 
consolidate is specified as a series of steps at Sec. Sec.  
422.162(b)(3) and 423.182(b)(3). We propose to add a rule to account 
for instances when the measure score is missing from the consumed or 
surviving contract(s) due to a data integrity issue as described at 
Sec. Sec.  422.164(g)(1)(i) and (ii) and 423.184(g)(1)(i) and (ii). CMS 
proposes to assign a score of zero for the missing measure score in the 
calculation of the enrollment-weighted measure score. These rules would 
apply for contract consolidations approved on or after January 1, 2021. 
First, we propose minor technical changes to the regulation text in 
Sec. Sec.  422.162(b)(3)(iv)(A) and (B) and 423.182(b)(3)(ii)(A) and 
(B) to improve the clarity of the regulation text. Second, we propose 
to redesignate the current regulation text (with the technical changes) 
as new paragraphs (b)(3)(iv)(A)(1) and (b)(3)(iv)(B)(1) and 
(b)(3)(ii)(A)(1) and (b)(3)(ii)(B)(1) of these regulations and to 
codify this new rule for contract consolidations approved on or after 
January 1, 2021 as Sec. Sec.  422.162(b)(3)(iv)(A)(2) and 
(b)(3)(iv)(B)(2) and 423.182(b)(3)(ii)(A)(2) and (b)(3)(ii)(B)(2). We 
welcome comments on this proposal. We also propose an additional rule 
at Sec. Sec.  422.164(g)(1)(iii)(A) and 423.184(g)(1)(iii)(A) to 
address how the Timeliness Monitoring Project

[[Page 9045]]

(TMP) or audit data are handled when two or more contracts consolidate. 
We propose to add that the TMP or audit data will be combined for the 
consumed and surviving contracts before carrying out the methodology as 
provided in paragraphs B through N (for Part C) and paragraphs B 
through L (for Part D). These rules would apply for contract 
consolidations approved on or after January 1, 2021. We propose to 
redesignate the current regulation text as new paragraphs 
(g)(1)(iii)(A)(1) and (g)(1)(ii)(A)(1) of these regulations and to 
codify this new rule for contract consolidations on or after January 1, 
2021 as paragraphs (g)(1)(iii)(A)(2) and (g)(1)(ii)(A)(2). We welcome 
comments on this proposal.
5. Adding, Updating, and Removing Measures (Sec. Sec.  422.164, 
423.184)
    The regulations at Sec. Sec.  422.164 and 423.184 specify the 
criteria and procedure for adding, updating, and removing measures for 
the Star Ratings program. Due to the regular updates and revisions made 
to measures, CMS does not codify a list in regulation text of the 
measures (and specifications) adopted for the MA and Part D Star 
Ratings Program (83 FR 16537). CMS lists the measures used for the Star 
Ratings each year in the Technical Notes or similar guidance document 
with publication of the Star Ratings. In this rule, CMS is proposing 
measure changes to the Star Ratings program for performance periods 
beginning on or after January 1, 2021.
a. Proposed Measure Removal
    CMS proposes to remove the Rheumatoid Arthritis Management measure 
from the Part C Star Ratings for the 2021 measurement year and the 2023 
Star Ratings. The measure steward, NCQA, is retiring this measure from 
the HEDIS measurement set for the 2021 measurement year due to multiple 
concerns. For example, there are concerns that the performance on the 
measure may not reflect the rate at which members get anti-rheumatic 
drug therapy because sometimes these medications are covered by Patient 
Assistance Programs, which do not generate claims. In terms of the 
measure construction, the measure assesses only if members received a 
disease-modifying anti-rheumatic drug once during the measurement year, 
rather than assessing if members remain adherent to the medication. 
Additionally, it is unclear, based on the evidence, whether patients in 
remission should remain on these medications. Since NCQA plans to 
retire this measure from the HEDIS measurement set, CMS proposes to 
remove it starting with the 2023 Star Ratings. We welcome comments on 
this proposal.
b. Proposed Measure Updates
(1) Updates to the Improving or Maintaining Physical Health Measure and 
Improving or Maintaining Mental Health Measure From the HOS (Part C).
    In accordance with Sec.  422.164(d)(2), we are proposing 
substantive updates to two measures from the Medicare Health Outcomes 
Survey (HOS): The Improving or Maintaining Physical Health (PCS) 
measure and Improving or Maintaining Mental Health (MCS) measure.
    First, we are proposing to change the case-mix adjustment for the 
measures. Case-mix adjustment (CMA) is critical to measuring and 
comparing longitudinal changes in the physical and mental health of 
beneficiaries across MA contracts through the PCS and MCS measures. To 
ensure fair and comparable contract-level scores, it is important to 
account for differences in beneficiary characteristics across contracts 
for these two measures. CMS proposes to modify the current approach for 
adjusting for differences in the case-mix of enrollees across 
contracts. The proposed approach would improve the case-mix model 
performance and simplify the implementation and interpretation of case-
mix results when particular case-mix variables, such as household 
income, are missing. The current method for handling missing case-mix 
variables results in a reduced number of case-mix variables used for a 
beneficiary because it does not use any of the case-mix variables in a 
group of adjusters if one is missing from the group (see Medicare Part 
C & D Star Ratings Technical Notes, Attachment A for a full description 
of the current HOS case-mix methodology). This ``all-or-nothing'' 
approach for each group of adjusters may not be as efficient as 
alternative approaches for handling missing case-mix adjusters. Under 
the proposed change, when an adjuster is missing for a beneficiary, it 
would be replaced with the mean value for that adjuster for other 
beneficiaries in the same contract who also supply data for the PCS/MCS 
measures. This proposed approach has been used for the Medicare 
Advantage and Prescription Drug Plan CAHPS surveys for many years (see 
the 2020 Medicare Part C & D Star Ratings Technical Notes Attachment A 
for a description of the CAHPS case-mix methodology). In simulation 
models, this approach either outperformed the current approach for 
predicting outcomes or matched the current approach. The proposed 
approach is also easier to implement than the current approach because 
replacing the missing adjuster values with the contract mean scores for 
those adjusters rather than deleting the grouping of adjusters is less 
burdensome because it involves fewer steps and is easier to replicate 
and understand.
    Second, we are proposing to increase the minimum required 
denominator from 30 to 100 for the two measures. The proposed increase 
to the minimum denominator would bring these measures into alignment 
with the denominator requirements for the HEDIS measures that come from 
the HOS survey and increase the reliability for these measures compared 
to the current reporting threshold of 30. We welcome comments on these 
proposals.
(2) Statin Use in Persons With Diabetes (Part D)
    In the 2019 Call Letter, we proposed and finalized the addition of 
the Statin Use in Persons with Diabetes (SUPD) measure to the 2019 Star 
Ratings with a weight of 1 as a first year measure, then to have an 
increased weight of 3 as an intermediate outcome measure, starting with 
the 2020 Star Ratings. CMS did not increase the weight of this measure 
in the 2020 Star Ratings in response to the majority of comments to the 
Draft 2020 Call Letter opposing CMS's categorization of the measure as 
an intermediate outcome measure. The commenters presented a number of 
reasons for reclassifying the SUPD measure as a process measure, and we 
generally agree. For example, commenters noted that the Part C Statin 
Therapy for Patients with Cardiovascular Disease measure is similar to 
the SUPD and is a process measure. Also, commented pointed out that the 
SUPD measure specifications require two diabetes medication fills to 
qualify for the denominator, while only a single fill of a statin drug 
is required to be counted in the numerator. Commenters believed that 
this does not indicate a level of medication compliance needed to 
categorize it as an intermediate outcome measure. Furthermore, in a 
Frequently Asked Question (FAQ), the Pharmacy Quality Alliance 
clarified that ``The PQA SUPD measure is classified as a process 
measure. This aligns with the NQF definition for process measures, as 
prescribing a statin is a ``step that should be followed to provide 
good care'' rather than an outcome of such

[[Page 9046]]

care. \44\ The FAQ can be found at https://www.pqaalliance.org/measures-overview#supd.
---------------------------------------------------------------------------

    \44\ Process measures: These types of measures focus on whether 
actions that have been shown to benefit patients have been followed. 
Examples include: Whether patients with diabetes receive HbA1c 
testing during the measurement period; whether adolescents have 
received recommended immunizations; or whether stroke patients have 
received clot-busting medications in a timely manner.
---------------------------------------------------------------------------

    We finalized the SUPD measure with the intermediate outcome 
classification in the April 2019 final rule for the 2021 Star Ratings 
but no longer believe that is the appropriate classification. We 
propose to modify the classification of the SUPD measure category from 
an intermediate outcome classification to be a process measure, 
starting with the 2023 Star Ratings. This aligns with CMS's definition 
in the April 2019 final rule that process measures capture the health 
care services provided to beneficiaries which can assist in 
maintaining, monitoring, or improving their health status. We welcome 
comments on this proposal.
c. Proposed Measure Additions
    As discussed in the April 2018 final rule (83 FR 16440), CMS stated 
that we anticipate that new measures will be added over time. Sections 
422.164(c)(3) and (4) and 423.184(c)(3) and (4) provide that new 
measures would be reported on the display page for a minimum of 2 years 
before being added to the Star Ratings program; and new Star Ratings 
measures will be proposed and finalized through rulemaking. CMS is 
working with NCQA to expand efforts to better evaluate a plan's success 
at effectively transitioning care from a clinical setting to home. In 
the 2019 Call Letter, CMS discussed two potential new Part C measures 
and finalized these two measures in the 2020 Call Letter. CMS is 
proposing to add the HEDIS Transitions of Care and the HEDIS Follow-up 
after Emergency Department Visit for Patients with Multiple Chronic 
Conditions measures to the 2023 Star Ratings covering the contract year 
2021 Performance Period. We are planning to display these new Part C 
measures on the display page for 3 years prior to adding them to the 
Star Ratings program, starting with the 2020 display page.
    Since the Part C and D measures are now proposed and finalized 
through rulemaking, going forward we intend to follow the pre-
rulemaking process that is used in other CMS programs. Section 3014 of 
the Affordable Care Act created a new section 1890A of the Social 
Security Act, which requires that HHS establish a federal pre-
rulemaking process for the selection of quality and efficiency measures 
for use by HHS. HHS is required to convene multi-stakeholder groups to 
provide consensus-based input for the annual Measures under 
Consideration List. Both of these proposed measures were submitted 
through the Measures under Consideration process and were reviewed by 
the Measure Applications Partnership which is a multi-stakeholder 
partnership that provides recommendations to HHS on the selection of 
quality and efficiency measures for CMS programs.
(1) Transitions of Care (Part C)
    The HEDIS Transitions of Care measure is the percent of discharges 
for members 18 years or older who have each of the four indicators 
during the measurement year: (1) notification of inpatient admission 
and discharge; (2) receipt of discharge information; (3) patient 
engagement after inpatient discharge; and (4) medication reconciliation 
post discharge.
    Based on stakeholder input, NCQA is considering making a few non-
substantive measure specification changes. The first considered change, 
for all measure indicators, is to broaden the forms of communications 
from one outpatient medical record to other forms of communication such 
as admission, discharge, and transfer record feeds, health information 
exchanges, and shared electronic medical records. The second is to 
change the notifications and receipts from `on the day of admission or 
discharge or the following day' to `on the day of admission or 
discharge or within the following two calendar days.' A third is to 
change one of the six criteria of the Receipt of Discharge Information 
indicator from `instructions to the primary care providers or ongoing 
care provider for patient care' to `instructions for patient care post-
discharge.' If these updates are implemented we believe all of these 
changes are non-substantive since they add additional tests that would 
meet the numerator requirements as described at Sec.  
422.164(d)(1)(iv)(A); add alternative data sources as described at 
Sec.  422.164(d)(1)(v); and do not change the population covered by the 
measure.
    The intent of this measure is to improve the quality of care 
transitions from an inpatient setting to home, as effective 
transitioning will help reduce hospital readmissions, costs, and 
adverse events. The Transitions of Care measure excludes members in 
hospice and is based on the number of discharges, not members. We are 
proposing to add this measure to the Star Ratings in 2023 covering the 
contract year 2021 measurement period.
(2) Follow-Up After Emergency Department Visit for Patients With 
Multiple Chronic Conditions (Part C)
    CMS is proposing to add a new HEDIS measure assessing follow-up 
care provided after an emergency department (ED) visit for patients 
with multiple chronic conditions. This measure is the percentage of ED 
visits for members 18 years and older who have high-risk multiple 
chronic conditions who had a follow-up service within 7 days of the ED 
visit between January 1 and December 24 of the measurement year. The 
measure is based on ED visits, not members. Eligible members must have 
two or more of the following chronic conditions: Chronic obstructive 
pulmonary disease (COPD) and asthma; Alzheimer's disease and related 
disorders; chronic kidney disease; depression; heart failure; acute 
myocardial infarction; atrial fibrillation; and stroke and transient 
ischemic attack. The following meet the criteria to qualify as a 
follow-up service for purposes of the measure: An outpatient visit 
(with or without telehealth modifier); a behavioral health visit; a 
telephone visit; transitional care management services; case management 
visits; and complex care management. Patients with multiple chronic 
conditions are more likely to have complex care needs, and follow-up 
after an acute event, like an ED visit, can help prevent the 
development of more severe complications. We are proposing to add this 
measure to the 2023 Star Ratings covering the contract year 2021 
measurement period.
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    We welcome comments on these proposals.
6. Measure Weights (Sec. Sec.  422.166(e), 423.186(e))
    As finalized in the April 2018 final rule, beginning with the 2021 
Star Ratings, Sec. Sec.  422.166(e)(1)(iii) and (iv) and 
423.186(e)(1)(iii) and (iv) provide the weight of 2 for both patient 
experience/complaints and access measures. We stated in the April 2018 
final rule (83 FR 16575-16576) that given the importance of hearing the 
voice of patients when evaluating the quality of care provided, CMS 
intends to further increase the weight of patient experience/complaints 
and access measures in the future. The measures include the patient 
experience of care measures collected through the CAHPS survey, Members 
Choosing to Leave the Plan, Appeals, Call Center, and Complaints 
measures. The majority of the measures impacted by the proposed weight 
change are the CAHPS measures that focus on critical aspects of care 
from the perspective of patients such as access and care coordination 
issues. The experience of care measures focus on matters that patients 
themselves say are important to them and for which they are the best 
and/or only source of information.
    The proposed increase in the weight does not impact the assignment 
of stars at the measure level, just the calculation of the overall and 
summary ratings, and will not impact the distribution of stars which 
varies for each of these measures. The statistical reliability of the 
CAHPS measures is high, exceeding standards for quality measurement so 
that higher star categories correspond to meaningfully better 
performance (generally, reliabilities of 0.7 or more are considered 
high for a quality measure).\45\ The inter-unit reliability of the 
CAHPS measures range from 0.7638 for Customer Service to 0.9215 for 
Rating of Health Plan measure. The reliability for the other measures 
is as follows: Care Coordination is 0.8155, Getting Appointments and 
Care Quickly is 0.9059, Getting Needed Care is 0.8543, Getting Needed 
Prescription Drugs is 0.7895, Rating of Drug Plan is 0.8937, and Rating 
of Health Care Quality is 0.8263.
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    \45\ https://www.rand.org/content/dam/rand/pubs/technical_reports/2009/RAND_TR653.pdf.
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    CMS has pledged to put patients first and to empower patients to 
work with their providers to make health care decisions that are best 
for them. To best meet the needs of beneficiaries, CMS believes we must 
listen to their perceptions of care, as well as ensure that they have 
access to needed care. Thus, CMS proposes to modify Sec. Sec.  
422.166(e) and 423.186(e) at paragraphs (e)(1)(iii) and (iv) to 
increase the weight of patient experience/complaints and access 
measures to 4 to further emphasize the importance of patient 
experience/complaints and access issues. If both Tukey outlier deletion 
and increasing the weight of patient experience/complaints and access 
measures are adopted, the net savings would be $368.1 million for 2024, 
increasing to $999.4 million for 2030.
7. Extreme and Uncontrollable Circumstances (Sec. Sec.  422.166(i), 
423.186(i))
    As we have gained more experience with disasters and applying the 
disaster policy over the last couple of years, we are soliciting 
additional feedback on the disaster policy for contracts impacted 
across multiple years. As we stated in the April 2019 final rule, we 
are concerned about looking back too many years for contracts affected 
by disasters multiple years in a row; we are also concerned about 
including too many measurement periods in 1 year of Star Ratings. We 
also must consider operational feasibility, because using different 
thresholds for contracts affected by disasters in different ways would 
be very complicated for administration and for providing the necessary 
transparency to MA organizations, Part D plan sponsors, and 
beneficiaries who use and rely on the Star Ratings. We must balance 
these concerns about using older data with concerns about using data 
based on performance that has been impacted by consecutive disasters.
    In striking a balance, we finalized in the April 2019 final rule a 
policy starting with the 2022 Star Ratings for contracts with at least 
25 percent of enrollees in FEMA-designated Individual Assistance areas 
that were affected by disasters that began in 1 year and were also 
affected by disasters that began in the previous year. Such multiple 
year-affected contracts will receive the higher of the current year's 
Star Rating or what the previous year's Star Rating would have been in 
the absence of any adjustments that took into account the effects of 
the previous year's disaster for each measure. For example, if a 
multiple year-affected contract reverts to the 2021 Star Rating on a 
given measure in the 2022 Star Ratings, the 2021 Star Rating is not 
used in determining the 2023 Star Rating; rather, the 2023 Star Rating 
is compared to what the 2022 Star Rating would have been absent any 
disaster adjustments.
    The rule for treatment of multiple year-affected contracts was 
established to limit the age of data that will be carried forward into 
the Star Ratings. We use the measure score associated with the year 
with the higher measure Star Rating regardless of whether the score is 
higher or lower that year. We finalized this policy to address when 
contracts are affected by separate extreme and uncontrollable 
circumstances that occur in successive years for the adjustments to 
CAHPS, HOS, HEDIS, and other measures. The provisions at Sec. Sec.  
422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and 
423.186(i)(2)(v) and (i)(4)(iv) include this rule for how ratings for 
these measures are adjusted in these circumstances. We solicit comment 
on this policy and whether further adjustments are necessary.
    In addition, the regulation we finalized to govern adjustments to a 
contract's Star Rating based on extreme and uncontrollable 
circumstances includes a provision to address when an affected contract 
has missing data. This provision was finalized at Sec. Sec.  
422.166(i)(8) and 423.186(i)(6) and provides that for an affected 
contract that has missing data in the current or previous year, the 
final measure rating comes from the current year unless an exemption 
described elsewhere in the regulation applies. We propose to modify 
Sec. Sec.  422.166(i)(8) and 423.186(i)(6) to add new text at the end 
of the current regulation text to clarify that missing data includes 
data where there is a data integrity issue as defined at Sec.  
422.164(g)(1) and 423.184(g)(1). Under this proposal, when there is a 
data integrity issue in the current or previous year, the final measure 
rating comes from the current year.
8. Quality Bonus Payment Rules
    The Affordable Care Act amended sections 1853(n) and 1853(o) of the 
Act to require CMS to make quality bonus payments (QBPs) to Medicare 
Advantage (MA) organizations that achieve at least 4 stars in a 5-star 
Quality Rating system. The Affordable Care Act also amended section 
1854(b)(1)(C) of the Act to change the share of savings that MA 
organizations must provide to enrollees as the beneficiary rebate, 
mandating that the level of rebate is tied to the level of an MA 
organization's Quality Bonus Payment (QBP) rating. As a result, 
beginning in 2012, quality as measured by the 5-star Quality Rating 
System directly affected the monthly payment amount MA organizations 
receive from CMS. At the time the QBPs were implemented, CMS codified 
at Sec.  422.260

[[Page 9050]]

an administrative review process available to MA organizations for 
payment determinations based on the quality bonuses. Historically, 
every November CMS has released the preliminary QBP ratings for MA 
contracts to review their ratings and to submit an appeal if they 
believe there is a calculation error or incorrect data are used as 
described at Sec.  422.260(c).
    In the April 2018 final rule, we codified at Sec.  422.160(b)(2) 
that the ratings calculated and assigned under this subpart are used to 
provide quality ratings on a 5-star rating system used in determining 
QBPs and rebate retention allowances. Historically, the QBP rating 
rules have been announced through the Advance Notice and Rate 
Announcement since section 1853(b) of the Act authorizes an advance 
notice and rate announcement to solicit comment for proposed changes 
and announce changes to the MA payment methodology. As we have over the 
last couple of years codified in regulation the methodology for the 
Star Ratings, we are also proposing to clarify the rules around 
assigning QBP ratings, codify the rules around assigning QBP ratings 
for new contracts under existing parent organizations, and amend the 
definition of new MA plan that is codified at Sec.  422.252 by 
clarifying how we apply the definition. Our proposal would codify 
current policy (for how we have historically assigned QBP ratings) 
without any changes.
    Historically, for contracts that receive a numeric Star Rating, the 
final QBP rating released in April for the following contract year 
would be the contract's highest rating as defined at Sec.  422.162(a). 
Section 422.260(a) states that the QBP determinations are made based on 
the overall rating for MA-PDs and the Part C summary rating for MA-only 
contracts. For further clarification, we are proposing to add language 
at Sec.  422.162(b)(4) stating that for contracts that receive a 
numeric Star Rating, the final QBP rating is released in April of each 
year for the following contract year and that the QBP rating is the 
contract's highest rating, as that term is defined at Sec.  422.162(a). 
We also propose to clarify in the regulation text that QBP rating is 
the contract's highest rating from the Star Ratings published by CMS in 
October of the calendar year that is 2 years before the contract year 
to which the QBP rating applies. For example, the 2020 QBPs were 
released in April 2019 and based on the Star Ratings published in 
October 2018. For MA contracts that offer Part D, the QBP rating would 
be the numeric overall Star Rating. For MA contracts that do not offer 
Part D (MA-only, MSA, and some PFFS contracts), the QBP rating would be 
the numeric Part C summary rating. We also propose adding language at 
Sec.  422.160(b)(2)(ii) clarifying that the contract QBP rating is 
applied to each plan benefit package under the contract.
    If a contract does not have sufficient data to calculate and assign 
Star Ratings for a given year because it is a new MA plan or low 
enrollment contract, Sec.  422.166(d)(2)(v) provides the rules for 
assigning a QBP rating. That regulation references the definitions at 
Sec.  422.252. We propose to amend the definition at Sec.  422.252 for 
new MA plans by clarifying how we apply the definition as follows: New 
MA plan means a plan that meets the following: (1) Is offered under a 
new MA contract; and (2) is offered under an MA contract that is held 
by a parent organization defined at Sec.  422.2 that has not had an MA 
contract in the prior 3 years.
    We also propose to add rules at Sec.  422.166(d)(2)(vi) for 
contracts that do not have sufficient data to calculate and assign 
ratings and do not meet the definition of low enrollment or new MA 
plans at Sec.  422.252. Our proposal would codify the policy that has 
been in place since the 2012 Rate Announcement: any new contract under 
an existing parent organization that has had MA contract(s) with CMS in 
the previous 3 years receives an enrollment-weighted average of the 
Star Ratings earned by the parent organization's existing MA contracts. 
We intend for this policy to continue uninterrupted so that the 
calculation of QBPs remains stable and transparent to stakeholders.
    We propose to add at Sec.  422.166(d)(2)(vi)(A) that any new 
contract under an existing parent organization that has other MA 
contracts with numeric Star Ratings in November (when the preliminary 
QBP ratings are calculated for the contract year that begins 14 months 
later) would be assigned the enrollment-weighted average of the highest 
Star Rating of all other MA contracts under the parent organization 
that will be active as of April the following year. The Star Ratings 
used in this calculation would be the rounded stars (to the whole or 
half star) that are publicly displayed. For example, for the 2021 QBPs, 
for any new contracts under an existing parent organization, we would 
apply this rule as follows:
    (i) We identify the parent organization of the new contract in 
November 2019.
    (ii) We identify the MA contracts held by that parent organization 
in November 2019, when the preliminary 2021 QBP ratings are posted for 
review. For preliminary QBP ratings, we use the numeric Star Ratings 
for those MA contracts that were held by the parent organization in 
November 2019 that we anticipate to still be in existence and held by 
that parent organization in April 2020.
    (iii) Using the enrollment in those other MA contracts as of 
November 2019, we calculate the enrollment-weighted average of the 
highest Star Rating(s) of those MA contracts.
    (iv) In April 2020, we update the enrollment-weighted average 
rating based on any changes to the parent organization of existing 
contracts, using the November 2019 enrollment in the contracts. The 
enrollment-weighted average rating would include the ratings of any 
contract(s) that the parent organization acquired since November 2019. 
This enrollment-weighted average would be used as the 2021 QBP rating 
for the new MA contract under the parent organization for payment in 
2021. This final QBP rating would be released to the MA organization 
for the new contract in April of 2020.
    We propose to add at Sec.  422.166(d)(2)(vi)(B) that if a new 
contract is under a parent organization that does not have any other MA 
contracts with numeric Star Ratings in November, CMS would look at the 
MA Star Ratings for the previous 3 years. The QBP rating would be the 
enrollment-weighted average of the MA contracts' highest Star Ratings 
from the most recent year that had been rated for that parent 
organization. For example, if in November 2019 there are no other MA 
contracts under the parent organization with numeric 2020 Star Ratings, 
we would go back first to the 2019 Star Ratings and then the 2018 Star 
Ratings. If there were MA contract(s) in the parent organization with 
Star Ratings in any of the previous 3 years, the QBP rating would be 
the enrollment-weighted average of the MA contracts' highest Star 
Ratings from the most recent year rated. The Star Ratings used in this 
calculation would be the rounded stars (to the whole or half star) that 
are publicly reported at some point on www.medicare.gov.
    For example, for the 2021 QBPs, for any new contract(s) under a 
parent organization that has no MA contracts in November 2019, we would 
apply this rule as follows:
    (i) We identify the MA contracts held by that parent organization 
in November 2018. If the parent organization had other MA contracts in 
November 2018, we use the numeric Star Ratings issued in October 2018 
for those MA contracts that were held by the parent organization in 
November 2018.
    (ii) Using the enrollment in those other MA contracts as of 
November

[[Page 9051]]

2018, we would calculate the enrollment-weighted average of the highest 
Star Rating(s) of those MA contracts.
    (iii) This enrollment-weighted average would be used as the 2021 
QBP rating for the new MA contract for that parent organization, for 
payment in 2021. This final QBP rating would be released to the MA 
organization for the new contract in April of 2020.
    For the 2021 QBPs, for any new contract(s) under a parent 
organization that has no MA contracts in November 2018 and 2019, we 
would apply this rule as follows:
    (i) We identify the MA contracts held by that parent organization 
in November 2017. If the parent organization had other MA contracts in 
November 2017, we use the numeric Star Ratings for those MA contracts 
that were held by the parent organization in November 2017.
    (ii) Using the enrollment in those other MA contracts as of 
November 2017, we calculate the enrollment-weighted average of the 
highest Star Rating(s) of those MA contracts.
    (iii) This would be used as the 2021 QBP rating for the new MA 
contract for payment in 2021. This final QBP rating would be released 
to the MA organization for the new contract in April of 2020.
    If there were no MA contract(s) in the parent organization with 
numeric Star Ratings in the previous 3 years, the contract is rated as 
a new MA plan in accordance with Sec.  422.258 (for QBP purposes) and 
Sec.  422.166(d)(2)(v) (for other purposes).
    We propose the rules for calculating the enrollment-weighted 
average and addressing changes in parent organizations in paragraphs 
(d)(2)(iv)(C) through (E). We propose to add at Sec.  
422.166(d)(2)(vi)(C) that the enrollment used in the enrollment-
weighted calculations is the November enrollment in the year the Star 
Ratings are released. The enrollment data are currently posted publicly 
at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/.
    We also propose at Sec.  422.166(d)(2)(vi)(D) that the QBP ratings 
would be updated for any changes in a contract's parent organization 
prior to the release of the final QBP ratings in April of each year. 
The same rules described at Sec.  422.166(d)(2)(vi)(A), (B), and (C) 
would be applied to the new contract using the new parent organization 
information. For example, for the 2021 QBPs, in April 2020 when the 
final QBP ratings are released, the enrollment-weighted average rating 
would include the ratings of any MA contract(s) that the parent 
organization acquired since November 2019. Thus, if a parent 
organization buys an existing contract it would be included in the 
enrollment-weighted average. We are also proposing at Sec.  
422.166(d)(2)(vi)(E) to codify our current practice that once the QBP 
ratings are finalized in April of each year for the following contract 
year, no additional parent organization changes are possible for QBP 
purposes.
    We welcome comments on this proposal.

F. Permitting a Second, ``Preferred'', Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)

1. Overview and Summary
    Section 1860D-2(b)(2) of the Act, which establishes the parameters 
of the Part D program's Defined Standard benefit, allows for 
alternative benefit designs that are actuarially equivalent to the 
Defined Standard, including the use of tiered formularies. Although not 
required, Part D sponsors are permitted to include a specialty tier in 
their plan design. Use of a specialty tier provides the opportunity for 
Part D sponsors to manage high-cost drugs apart from tiers that have 
less expensive drugs.
    CMS's policy for the specialty tier has aimed to strike the 
appropriate balance between plan flexibility and Part D enrollee access 
to drugs, consistent with our statutory authority. Section 1860D-2(b) 
of the Act requires that a plan design be actuarially equivalent to the 
Defined Standard benefit. Permitting tiering exceptions to allow Part D 
enrollees to obtain drugs on specialty tiers at a lower cost sharing 
applicable to non-specialty tiers could result in increased Part D 
premiums as well as increased cost sharing for non-specialty tiers. In 
other words, the ability to get lower cost sharing on specialty drugs 
through these kinds of exceptions means that costs would have to go up 
elsewhere--such as by increasing the cost-sharing on generic drug 
tiers--in order to keep the benefit design actuarially equivalent. 
Section 1860D-4(g)(2) of the Act grants CMS authority to establish 
guidelines under which Part D enrollees may request exceptions to 
tiered cost-sharing structures. Accordingly, we have developed a 
minimum dollar-per-month threshold amount to determine which drugs are 
eligible, based on relative high cost, for inclusion on the specialty 
tier,\46\ and implemented a regulation (most recently Sec.  
423.578(a)(6)(iii)) permitting Part D sponsors to exempt drugs placed 
on the specialty tier from their tiering exceptions process. To prevent 
discriminatory formulary structures, in particular to protect Part D 
enrollees with certain disease types that are treated only by specialty 
tier-eligible drugs, our guidance \47\ has set the maximum allowable 
cost sharing for drugs on the specialty tier between 25 and 33 percent 
coinsurance (25/33 percent).
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    \46\ See, for instance, Draft 2020 Call Letter, pages 178-179 
(available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part2.pdf), and 
Final 2020 Call Letter, page 208 (available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf).
    \4\ See section 30.2.4 of Chapter 6 of the Medicare Prescription 
Drug Benefit Manual, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf and page 21 of the 2020 Bid 
Submission User Manual, Chapter 7: Plan Benefit Package Rx Drugs 
Section. The Bid Submission User Manual for 2020 is available at the 
following pathway after logging into the Health Plan Management 
System (HPMS): Plan Bids > Bid Submission > Contract Year 2020 > 
View Documentation > Bid Submission User Manual.
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    We have not previously permitted Part D sponsors to structure their 
plans with more than one specialty tier. Pointing to factors such as 
the introduction of biosimilar biological products to the market\48\ 
and recent higher pricing of some generic drugs relative to brand drug 
costs, some stakeholders requested that we reconsider this policy. They 
posited, for instance, that creating an additional specialty tier could 
improve the ability of Part D sponsors to negotiate with pharmaceutical 
manufacturers to help lower the prices of high-cost Part D drugs. 
Moreover, in its June 2016 Report to Congress (available at https://www.medpac.gov/docs/default-source/reports/june-2016-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf), the 
Medicare Payment Advisory Commission (MedPAC) suggested that having two 
specialty tiers with differential cost sharing could potentially 
encourage the use of lower-cost biosimilar (or interchangeable, when 
available) biological products and encourage competition among existing 
specialty Part D drugs. More recently, some commenters on our Draft 
2020 Call Letter (available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents-Items/2020Advance.html) took the

[[Page 9052]]

opportunity to advocate for a second specialty tier.
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    \5\ See the April 2018 final rule for more background on 
biosimilar biological products (83 FR 16610).
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    Improving Part D enrollee access to needed drugs and lowering drug 
costs are central goals for CMS. Accordingly, in the hopes of providing 
flexibility that will promote these goals, we propose to allow Part D 
sponsors to establish up to two specialty tiers and design an 
exceptions process that exempts Part D drugs on these tiers from 
tiering exceptions to non-specialty tiers. Under our proposal, Part D 
sponsors would have the flexibility to determine which Part D drugs are 
placed on either specialty tier, subject to the ingredient cost 
threshold established according to the methodology we are proposing and 
the requirements of the CMS formulary review and approval process under 
Sec.  423.120(b)(2). To maintain Part D enrollee protections, we are 
proposing to codify a maximum allowable cost sharing that would apply 
to a single specialty tier, or, if a Part D sponsor has a plan with two 
specialty tiers, to the higher cost-sharing specialty tier. Further, we 
propose to require that if a Part D sponsor has a plan with two 
specialty tiers, one must be a ``preferred'' tier that offers lower 
cost sharing than the higher cost sharing tier, which is subject to the 
proposed maximum allowable specialty-tier cost sharing. We note that we 
are not proposing any revisions to Sec.  423.578(c)(3)(ii), which 
requires Part D sponsors to provide coverage for a drug for which a 
tiering exception was approved at the cost sharing that applies to the 
preferred alternative. We are proposing that the exemption from tiering 
exceptions for specialty tier drugs, at Sec.  423.578(a)(6)(iii), would 
apply only to tiering exceptions to non-specialty tiers (meaning, when 
the tiering exception request is for the specialty tier drug to be 
covered at a cost-sharing level that applies to a non-specialty tier). 
Under our proposal, we would require Part D sponsors to permit tiering 
exception requests for drugs on the higher cost-sharing specialty tier 
to the lower cost-sharing specialty tier.
    To improve transparency, we propose to codify current methodologies 
for cost sharing and calculations relative to the specialty tier, with 
some modifications. First, we propose to codify a maximum allowable 
cost sharing permitted for the specialty tiers of between 25 percent 
and 33 percent, depending on whether the plan includes a deductible, as 
described further in section V.F.4. of this proposed rule. We also 
propose to determine the specialty-tier cost threshold--meaning whether 
the drug has costs high enough to qualify for specialty tier 
placement--based on a 30-day equivalent supply. Additionally, we 
propose to base the determination of the specialty-tier cost threshold 
on the ingredient cost reported on the PDE. This would be a change from 
our current policy, which uses the negotiated price reflected on the 
PDE. Under our proposal, the specialty-tier cost threshold would apply 
to both specialty tiers. To respond to comments on our Draft 2020 Call 
Letter requesting that the specialty-tier cost threshold be increased 
regularly, we also propose to maintain a specialty-tier cost threshold 
that is set at a level that, in general, reflects Part D drugs with 
monthly ingredient costs that are in the top one percent of all monthly 
ingredient costs, as described further in section V.F.6. of this 
proposed rule. We propose to adjust the threshold, in an increment of 
not less than ten percent, rounded to the nearest $10, when an annual 
analysis of PDEs shows that recalibration of the specialty-tier cost 
threshold is necessary to continue to reflect only Part D drugs with 
the top one percent of monthly ingredient costs. We propose to annually 
determine whether the adjustment would be triggered and announce the 
specialty-tier cost threshold.
2. A Second, ``Preferred'', Specialty Tier
    Placement on the specialty tier can play an important role in 
maintaining lower drug prices. Non-preferred brand or other non-
preferred, non-specialty tiers frequently have cost sharing equal to as 
much as 50 percent coinsurance. This means that Part D enrollees would 
pay considerably more after application of coinsurance for a high-cost 
drug if it appeared on a non-preferred tier with, for instance, 50 
percent cost sharing as opposed to placement on the specialty tier, 
which (as discussed later) has been subject to lower cost sharing 
requirements. For this reason we reject the suggestion of some 
commenters on our Draft 2020 Call Letter that we eliminate the 
specialty tier altogether. To the opposite effect, as noted previously, 
other stakeholders, including MedPAC, have recommended we permit Part D 
sponsors to create a second specialty tier. Stakeholders favoring this 
approach have posited that this change would: (1) Improve the ability 
of Part D sponsors and pharmacy benefit managers (PBMs) to negotiate 
better rebates with manufacturers by enabling them to establish a 
preferred specialty tier that distinguishes between high-cost drugs and 
effectively encourages the use of preferred specialty drugs; (2) reduce 
costs for Part D enrollees, not only through direct cost-sharing 
savings associated with a lower-cost, ``preferred'' specialty tier, but 
also through the lowered premiums for all Part D enrollees that could 
result from better rebates on specialty tier drugs; and (3) reduce 
costs to CMS directly through lower drug costs because lower cost 
sharing would delay a Part D enrollee's entry into the catastrophic 
phase of the benefit in which the government is responsible for 80 
percent of the costs.
    Consistent with CMS' ongoing efforts to implement new strategies 
that can help lower drug prices and increase competition, CMS now 
proposes to permit Part D sponsors to have up to two specialty tiers by 
permitting a new preferred specialty tier. However, driven by ongoing 
concerns over actuarial equivalence and discriminatory benefit designs, 
in order to strike the appropriate balance between plan flexibility and 
Part D enrollee access, CMS must also carefully weigh the following 
factors: (1) Tiering exceptions between the two specialty tiers or to 
other, non-specialty tiers; (2) the maximum allowable cost sharing for 
each specialty tier; and (3) tier composition (that is, the selection 
of Part D drugs for each specialty tier). The proposed regulatory text 
to allow up to two specialty tiers (which reflects CMS' consideration 
of these factors) and other related proposals are discussed in the 
following sections of this preamble.
3. Tiering Exceptions and Two Specialty Tiers
    Section 1860D-4(g)(2) of the Act specifies that a beneficiary 
enrolled in a Part D plan offering a prescription drug benefit for Part 
D drugs through the use of a tiered formulary may request an exception 
to the Part D sponsor's tiered cost-sharing structure. Additionally, 
Part D sponsors are required under this section to create an exceptions 
process to handle such requests, consistent with guidelines established 
by CMS (see section 40.5.1 of Parts C & D Enrollee Grievances, 
Organization/Coverage Determinations, and Appeals Guidance, available 
at https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf). However, section 1860D-4(g)(2) of the Act 
did not require tiering exceptions in every case, and even indicated 
that tiering exceptions might not be covered in every instance, by 
recognizing that non-preferred Part D drugs ``could be'' covered at the 
cost sharing applicable to preferred Part D drugs.
    As noted earlier, the requirement that Part D plans be actuarially 
equivalent to

[[Page 9053]]

the Defined Standard benefit means that if Part D sponsors were 
required to permit Part D enrollees to obtain drugs on specialty tiers 
at non-specialty tier cost sharing, Part D sponsors might need to 
increase premiums and cost sharing for non-specialty tiers. To avoid 
such increased costs, in the Medicare Program; Medicare Prescription 
Drug Benefit Final Rule (hereinafter referred to as the January 2005 
final rule, 70 FR 4193), CMS finalized Sec.  423.578(a)(7), which 
provided that Part D sponsors with a tier for very high cost and unique 
items (in other words, a specialty tier), such as genomic and biotech 
products, could exempt such drugs from its tiering exception process 
(70 FR 4353).
    In CMS's April 2018 final rule, CMS revised and redesignated Sec.  
423.578(a)(7) as new Sec.  423.578(a)(6)(iii) to specify that if a Part 
D sponsor maintains a specialty tier, the Part D 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. While the 
current policy does not require that Part D sponsors use a specialty 
tier that is exempt from tiering exceptions, we are aware that nearly 
all do.
    Section 1860D-4(g)(2) of the Act stipulates that under an 
exception, a non-preferred Part D drug could be covered under the terms 
applicable for preferred Part D drugs if the prescribing provider 
determines that the preferred Part D drug for treatment of the same 
condition would not be as effective for the Part D enrollee, would have 
adverse effects for the Part D enrollee, or both. Thus, the statutory 
basis for approval of tiering exceptions requests is the presence of 
(a) clinically appropriate therapeutic alternative drug(s) or 
biological product(s) on a lower cost-sharing tier of the plan's 
formulary. Therefore, even if a Part D sponsor permitted tiering 
exceptions for Part D drugs on the specialty tier, tiering exceptions 
requests would not be approvable if the plan's formulary did not 
include any clinically appropriate therapeutic alternative Part D drugs 
on a lower cost-sharing tier. For example, suppose that reference 
biological product ``Biologic A'' and another biological product in the 
same class, ``Biologic B'' are both on the specialty tier with no 
clinically appropriate therapeutic alternative on a lower cost-sharing 
tier. If the Part D enrollee's prescriber were to write for Biologic A, 
and the prescriber were to request a tiering exception, because 
Biologic B, the clinically appropriate therapeutic alternative, is on 
the same tier as Biologic A, and not a lower cost-sharing tier, the 
tiering exception request would be denied. For further explanation of 
tiering exceptions requirements, please see Sec.  423.578(a)(6).
    Permitting Part D sponsors to exempt Part D drugs on a higher cost-
sharing specialty tier from any tiering exceptions, even to a preferred 
specialty tier, would improve Part D sponsors' ability to negotiate 
better rebates. Nevertheless, unlike our justification for allowing 
Part D plans to exempt a specialty tier from tiering exceptions to 
lower cost non-specialty tiers, permitting tiering exceptions from the 
higher cost-sharing, specialty tier to the preferred specialty tier is 
less likely to lead to increased premiums or cost sharing to meet 
actuarial requirements because we are proposing to apply the same cost 
threshold to both specialty tiers. Our current belief is that improved 
negotiation alone is not sufficient to justify permitting Part D 
sponsors to exempt drugs on the higher cost-sharing, specialty tier 
from requests for tiering exceptions to the preferred specialty tier 
cost sharing. While as currently proposed, CMS would not require Part D 
sponsors to permit tiering exceptions from either specialty tier to 
lower, non-specialty tiers, our proposal would not change current 
regulations that require Part D sponsors to cover drugs for which a 
tiering exception was approved at the cost-sharing level that applies 
to the preferred alternative(s). This would mean that Part D sponsors 
would be required to permit tiering exceptions for Part D drugs from 
the higher cost-sharing, specialty tier to the preferred specialty tier 
if tiering exceptions requirements are met (for instance, when a Part D 
enrollee cannot take an applicable therapeutic alternative on the 
preferred specialty tier). Specifically, CMS proposes to amend Sec.  
423.578(a)(6)(iii) to specify that if a Part D sponsor maintains up to 
two specialty tiers, the Part D sponsor may design its exception 
process so that Part D drugs on the specialty tier(s) are not eligible 
for a tiering exception to non-specialty tiers. Consequently, the 
existing policy at Sec.  423.578(c)(3)(ii) would require Part D 
sponsors to permit tiering exceptions between their two specialty tiers 
to provide coverage for the approved Part D drug on the higher cost-
sharing, specialty tier that applies to preferred alternative Part D 
drugs on the lower cost-sharing, preferred specialty tier. While CMS 
would not require Part D sponsors to permit tiering exceptions to non-
specialty tiers for Part D drugs on a specialty tier, nothing precludes 
a Part D sponsor from doing so, insofar as their plan benefit design 
remains actuarially equivalent to the Defined Standard benefit.
    Alternatively, CMS could continue to permit Part D sponsors to 
exempt drugs on either specialty tier from tiering exceptions, as is 
provided under current regulations. We do not believe maintaining the 
current exemption would be discriminatory in light of CMS's proposal, 
discussed in the next section, to set a maximum allowable cost sharing 
(that is, 25/33 percent) for the higher cost-sharing, specialty tier 
and to also require the preferred specialty tier to have cost sharing 
below that maximum. If the proposed maximum allowable cost sharing is 
finalized, Part D enrollees would pay no more for a drug on either 
specialty tier than is the case under our current policy. And, as noted 
previously, maintaining the current exemption from tiering exceptions 
for all drugs on a specialty tier could allow Part D sponsors to 
negotiate better rebates. On the other hand, our proposal to require 
Part D sponsors with two specialty tiers to permit tiering exceptions 
from the higher-cost sharing to the lower-cost sharing, preferred 
specialty tier would provide a Part D enrollee protection when there is 
a therapeutic alternative on the preferred specialty tier that the Part 
D enrollee is unable to take. Accordingly, we invite comment on the 
benefits or drawbacks of maintaining the current policy under Sec.  
423.578(a)(6)(iii) that, if we were to finalize our proposal to permit 
Part D sponsors to have up to two specialty tiers, would apply to 
permit Part D sponsors to exempt drugs on a specialty tier from the 
tiering exceptions process altogether.
    CMS notes that, as part of our proposed change at Sec.  
423.578(a)(6)(iii), we have proposed a technical change to remove the 
phrase ``and biological products.'' While the specialty tier usually 
includes biological products, in the context of the Part D program, 
biological products already are included in the definition of a Part D 
drug at Sec.  423.100. Therefore the phrase ``Part D drugs and 
biological products'' is redundant and potentially misleading. 
Consequently, we propose to remove the phrase ``and biological 
products.''
    To summarize, we are proposing to amend Sec.  423.578(a)(6)(iii) 
to: (1) Reflect the possibility of a second specialty tier, permitting 
Part D sponsors to design their exception processes so that Part D 
drugs on the specialty tier(s) are not eligible for a tiering exception 
to non-specialty tiers and (2) remove the phrase ``and biological 
products.'' Additionally, we are proposing to maintain the existing 
policy at Sec.  423.578(c)(3)(ii),

[[Page 9054]]

thereby requiring Part D sponsors to permit tiering exceptions between 
their two specialty tiers to provide coverage for the approved Part D 
drug on the higher cost-sharing specialty tier that applies to 
preferred alternative Part D drugs on the lower cost-sharing, preferred 
specialty tier. Additionally, if we finalize our proposal to permit 
Part D sponsors to maintain up to two specialty tiers, we solicit 
comment on maintaining the existing policy at Sec.  423.578(a)(6)(iii), 
thereby permitting Part D sponsors to exempt drugs on either specialty 
tier from the tiering exceptions process altogether.
4. Maximum Allowable Cost Sharing and Two Specialty Tiers
    At the start of the Part D program, when CMS provided Part D 
sponsors the option to exempt specialty tiers from the exceptions 
process, we remained concerned that removing this option for the 
specialty tier could potentially be discriminatory for Part D enrollees 
with certain diseases only treated by specialty tier-eligible drugs, 
and thus in conflict with the statutory directive under section 1860D-
11(e)(2)(D) of the Act that CMS disapprove any ``design of the plan and 
its benefits (including any formulary and tiered formulary structure) 
that are likely to substantially discourage enrollment by certain part 
D eligible individuals under the plan.'' Using this authority, CMS 
aligned the cost-sharing limit for Part D drugs on the specialty tier 
with the Defined Standard benefit at section 1860D-2(b)(2)(A) of the 
Act. Consequently, CMS established a ``25/33 percent'' maximum 
allowable cost sharing for the specialty tier, meaning that we would 
approve cost sharing for the specialty tier of no more than 25 percent 
coinsurance after the standard deductible and before the initial 
coverage limit (ICL), or up to 33 percent coinsurance for plans with 
decreased or no deductible under alternative prescription drug coverage 
designs and before the ICL. In other words, under actuarially 
equivalent alternative prescription drug coverage designs, CMS allows 
the maximum allowable cost sharing for the specialty tier to be between 
25 and 33 percent coinsurance if the Part D plan has a decreased 
deductible, such that the maximum allowable cost sharing equates to 25 
percent coinsurance plus the standard deductible. CMS derived the 
maximum allowable cost sharing of 33 percent coinsurance for plans with 
no deductible under alternative prescription drug coverage by adding 
the allowable deductible to the 25 percent maximum allowable cost 
sharing between the deductible and initial coverage limit (ICL) and 
dividing the resultant value by the ICL.
    For example, in 2006, under the Defined Standard benefit, the 
maximum deductible was $250, and the ICL was $2250. The maximum 
allowable cost sharing between the deductible and the ICL was 25 
percent coinsurance. (This example uses contract year 2006 numbers for 
simplicity, but the concepts presented still apply to current 
guidance.)
    $2250 ICL - $250 deductible = $2000 difference x 0.25 = $500 
maximum allowable cost sharing after the deductible and before the ICL 
for specialty tier drugs in plans with the standard deductible.
    $500 maximum (previous calculation) + $250 deductible = $750. 
Therefore, the maximum coinsurance before the ICL for specialty tier 
drugs in plans with no deductible is $750 divided by the $2250 ICL = 
0.33, or 33 percent coinsurance.
    Plans with deductibles between $0 and $250 were permitted to have 
maximum allowable cost sharing for specialty tier drugs between the 
deductible and the ICL of between $500 and $750 (that is, coinsurance 
between 25 and 33 percent) provided that such cost sharing added to the 
deductible was $750. For example, using contract year 2006 numbers, if 
the deductible was $100, the maximum coinsurance that the plan could 
charge for specialty tier drugs between the deductible and the ICL 
would have been approximately 30 percent:
    $750 - $100 deductible = $650 maximum allowable cost sharing (that 
is, $650 + $100 = $750). Therefore the maximum coinsurance between the 
$100 deductible and the $2250 ICL [ap] 0.30, or 30 percent coinsurance; 
that is, $650 divided by $2150 [ap] 0.30, or 30 percent. (This 30 
percent represents mathematical rounding from the actual calculated 
value.)
    Because section 1860D-2(b)(2) of the Act requires that plan benefit 
designs be actuarially equivalent to the Defined Standard benefit, the 
cost sharing for high-cost drugs would likely increase without the use 
of a specialty tier. This is because often the specialty tier has lower 
cost sharing than non-preferred brand or other non-preferred, non-
specialty tier, which frequently have cost sharing as much as 50 
percent coinsurance. Additionally, many specialty tier-eligible Part D 
drugs, particularly biological products, often do not have viable 
alternatives on lower-cost tiers. Our proposal to codify a maximum 
allowable cost sharing for the specialty tier equal to the cost sharing 
for the Defined Standard benefit plus the cost of any deductible would 
ensure Part D enrollees still pay no more than the Defined Standard 
cost sharing for high-cost drugs placed on a specialty tier.
    Although CMS is proposing to allow Part D sponsors to have up to 
two specialty tiers, CMS notes that the currently available tier model 
structures already allow Part D sponsors to negotiate rebates and 
distinguish their preferred high-cost Part D drugs by placing them on 
the preferred brand tier as opposed to the specialty tier, and placing 
less preferred agents on the specialty tier. Such distinction could 
potentially drive the same rebates as two specialty tiers; however, 
Part D sponsors have told CMS they are reluctant to take such an 
approach because of the availability of tiering exceptions for the non-
specialty tiers, which could increase costs in lower, non-specialty 
tiers in order to achieve actuarial equivalence. We believe this 
concern is addressed by our proposal (discussed previously) to permit 
Part D sponsors to exempt Part D drugs on either or both specialty 
tiers from exceptions to lower, non-specialty tiers.
    Additionally, while CMS is sensitive and trying to be responsive to 
the volatility of the specialty drug market by proposing to allow Part 
D sponsors to have up to two specialty tiers, CMS remains concerned 
about whether this proposal will actually achieve the potential 
benefits to the Part D program and Part D enrollees asserted by 
stakeholders in support of two specialty tiers. As discussed 
previously, those stakeholders contend that permitting two specialty 
tiers will reduce Part D enrollee cost sharing for specialty Part D 
drugs. However, this would be true only for Part D drugs on the lower 
cost-sharing, preferred specialty tier, and only if the lower cost-
sharing, preferred specialty tier cost sharing were set lower than 25/
33 percent.
    When requesting a second specialty tier, some Part D sponsors and 
PBMs have told CMS they would need to charge more than 25/33 percent 
for the higher cost-sharing specialty tier. However, if CMS were to 
permit Part D sponsors to charge more than 25/33 percent for the higher 
cost-sharing, specialty tier, the cost sharing for drugs in the higher 
cost-sharing, specialty tier would likely be higher than if there were 
only one specialty tier. We appreciate that permitting Part D sponsors 
to increase cost sharing over current limits might lead to negotiations 
for better rebates, which could result in savings to Part D enrollees 
offered through, for instance, lower costs on some Part D drugs in the 
preferred

[[Page 9055]]

specialty tier or lower premiums. However, in the absence of evidence 
to the contrary, it appears to us that if we were to permit Part D 
sponsors to charge higher percentages than is currently the case, Part 
D enrollees who need Part D drugs on the higher cost-sharing specialty 
tier will pay more, and possibly significantly more, than they 
currently do for those drugs given that specialty tiers by definition 
offer high-cost drugs, unless they happen to be taking those Part D 
drugs whose costs are lowered due to better rebates. In other words, we 
remain concerned about Part D enrollee protections and do not want 
improved rebates on some Part D drugs to come at the expense of those 
Part D enrollees who could already be paying, as proposed, as much as a 
33 percent coinsurance on the highest-costing drugs. Moreover, because 
Part D enrollees who use high-cost Part D drugs progress quickly 
through the benefit, some Part D enrollees' entry into the catastrophic 
phase of the benefit may be advanced faster if the higher cost-sharing, 
specialty tier were to have a maximum allowable cost sharing that is 
higher than 25/33 percent. Therefore, it is unclear to CMS, in the 
aggregate, how much a second specialty tier would save the government 
if the second specialty tier was allowed to have a higher cost sharing 
than the current 25/33 percent.
    In addition, while a second specialty tier might improve Part D 
sponsors' ability to negotiate better rebates, CMS also has concerns 
regarding actuarial equivalence and discriminatory plan design with a 
second, higher cost-sharing, specialty tier with cost sharing higher 
than the 25/33 percent that is currently permitted. If CMS were to 
allow a maximum allowable cost sharing for the higher cost-sharing, 
specialty tier above the 25/33 percent that is currently permitted, 
Part D enrollees whose Part D drugs are placed on the higher cost-
sharing, specialty tier could see their out-of-pocket (OOP) costs 
increase above the Defined Standard cost-sharing amount, yet still be 
exempt from tiering exceptions. CMS is concerned that the 
disproportionate impact on Part D enrollees who take Part D drugs on 
the higher cost-sharing, specialty tier runs a greater risk of 
discriminatory plan design. Additionally, while it is generally 
allowable for plans to use tier placement to steer Part D enrollees 
toward preferred agents, CMS would have to develop additional formulary 
checks to prevent discrimination against those Part D enrollees who 
require Part D drugs on the higher cost-sharing, specialty tier, and 
those additional formulary checks would limit the ability of plans to 
negotiate for tier placement between the two specialty tiers.
    We propose to set a maximum allowable cost sharing for a single 
specialty tier or, in the case of a plan with two specialty tiers, the 
higher cost-sharing, specialty tier as follows: (1) For plans with the 
full deductible provided for in the Defined Standard benefit, 25 
percent coinsurance; (2) for plans with no deductible, 33 percent 
coinsurance; and (3) for plans with a deductible that is greater than 
$0 and less than the deductible provided for in the Defined Standard 
benefit, a coinsurance percentage that is determined by subtracting the 
plan's deductible from 33 percent of the initial coverage limit (ICL) 
under section 1860D-2(b)(3) of the Act, dividing the difference by the 
difference between the ICL and the plan's deductible, and rounding to 
the nearest one percent. We propose to require that a plan's second 
specialty tier, if any, must have a maximum allowable cost sharing that 
is less than the maximum allowable cost sharing of the higher cost-
sharing, specialty tier. For example, if a Part D sponsor establishes a 
cost sharing of 25 percent on its higher-cost sharing specialty tier, 
the Part D sponsor would need to set the cost sharing for the preferred 
specialty tier at any amount lower than 25 percent. Similarly, if a 
Part D sponsor establishes a cost sharing of 33 percent on its higher 
specialty tier (permitted if the plan has no deductible, as discussed 
previously), the Part D sponsor would need to set the cost sharing for 
the preferred specialty tier at any amount lower than 33 percent. To 
encourage the flexibility and with the belief that we might not be able 
to anticipate every variation Part D sponsors might plan, we are not 
proposing to require a minimum difference between the cost-sharing 
levels of the higher cost-sharing, specialty tier and a lower cost-
sharing, preferred specialty tier that would apply to Part D sponsors 
choosing to provide two specialty tiers. As we have generally seen, for 
example, in relation to our policy recommending a threshold of $20 for 
the generic tier and ``less than $20'' for the preferred generic 
tier,\49\ we believe it would be unlikely that Part D sponsors would 
take the trouble to create two different tiers and then establish an 
inconsequential differential. That said, we would, of course, reexamine 
this policy if we were to finalize this provision and thereafter find 
that not requiring a minimum difference between the cost-sharing levels 
of the two specialty tiers was creating problems. And we solicit 
comment as to whether to set a numeric or other differential in cost 
sharing between a specialty tier and any preferred specialty tier, 
including suggestions on requiring a minimum difference between the 
cost-sharing levels of the two specialty tiers that can provide maximum 
flexibility and anticipate varied approaches that Part D sponsors might 
take. Lastly, nothing in our proposal would prohibit Part D sponsors 
from offering less than the maximum allowable cost sharing on either 
tier as long as the preferred specialty tier has lower cost sharing 
than the higher cost-sharing, specialty tier.
---------------------------------------------------------------------------

    \49\ See page 212 of the Final 2020 Call Letter, available at 
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

    As mentioned previously, CMS has ongoing concerns that offering a 
lower cost-sharing, preferred specialty tier below the current 25/33 
percent maximum could, in theory, lead to increased costs in lower, 
non-specialty tiers in order to achieve actuarial equivalence. However, 
because these increases in costs would be spread across the overall 
plan design, we believe the overall impact on Part D enrollees, would 
be less impactful than the increase on individual Part D enrollee cost 
sharing were we to permit a maximum allowable cost sharing for the 
specialty tier above what is currently permitted (25/33 percent). 
Although CMS is concerned about offsetting increases to lower, non-
specialty tiers, the 25/33 percent maximum allowable cost sharing that 
we are proposing is based upon the Defined Standard benefit cost 
sharing and therefore would provide is an important Part D enrollee 
protection to prevent discriminatory benefit structures. Consequently, 
CMS believes this approach would strike the appropriate balance between 
Part D sponsor flexibility and Part D enrollee access. CMS would 
monitor bids to assess the impact of this proposed policy.
    In summary, CMS proposes to add a new paragraph at Sec.  
423.104(d)(2)(iv)(D) to specify that a Part D plan may maintain up to 
two specialty tiers. Further, CMS proposes to set a maximum allowable 
cost sharing for a single specialty tier, or, in the case of a plan 
with two specialty tiers, the higher cost-sharing, specialty tier by 
adding paragraphs (d)(2)(iv)(D)(1), (2), and (3) which provide: (1) 25 
Percent coinsurance for plans with the full deductible provided under 
the Defined Standard benefit; (2) 33 percent

[[Page 9056]]

coinsurance for plans with no deductible; and (3) for plans with a 
deductible that is greater than $0 and less than the deductible 
provided under the Defined Standard benefit, a coinsurance percentage 
that is between 25 and 33 percent, determined by subtracting the plan's 
deductible from 33 percent of the initial coverage limit (ICL), 
dividing this difference by the difference between the ICL and the 
plan's deductible, then rounding to the nearest one percent.
    We solicit comment on this approach. CMS is also interested in and 
seeks comments on plan benefit designs with two specialty tiers if we 
were to permit the higher cost-sharing, specialty tier to have a higher 
coinsurance than what we have proposed. Specifically, CMS is interested 
in comments that discuss whether permitting a coinsurance higher than 
25/33 percent would be discriminatory.
    Additionally, we note that the deductible applies to all tiers, and 
is not limited to, nor borne solely by, Part D enrollees taking Part D 
drugs on the specialty tier. Therefore, it is unclear that we should 
continue to differentiate the specialty tier from the other tiers on 
the basis of the deductible. Accordingly, we are also considering 
adopting a maximum allowable cost sharing of 25 percent for any 
specialty tier, regardless of whether the plan has a deductible. We 
solicit comment on alternative approaches of using a maximum allowable 
cost sharing of 25 percent coinsurance regardless of whether there is a 
deductible.
    To summarize, we are proposing to add a new paragraph at Sec.  
423.104(d)(2)(iv)(D) to: (1) Specify that a Part D plan may maintain up 
to two specialty tiers; and (2) set a maximum allowable cost sharing of 
25/33 percent for a single specialty tier, or, in the case of a plan 
with two specialty tiers, the higher cost-sharing specialty tier. We 
are also proposing to allow Part D sponsors to set the cost sharing for 
the preferred specialty tier at any amount lower than that of the 
higher cost-sharing, specialty tier. Additionally, we solicit comment 
on actuarial equivalence and the potential for discriminatory effects 
plan designs with two specialty tiers if we were to permit: (1) The 
higher cost-sharing, specialty tier to have a higher coinsurance than 
the 25/33 percent maximum allowable cost sharing we have proposed; or 
(2) a maximum allowable cost sharing of 25 percent without regard to 
deductible. Finally, we also solicit comment as to whether to set a 
numeric or other differential in cost sharing between a specialty tier 
and any preferred specialty tier.
5. Tier Composition and Two Specialty Tiers
    A few commenters on the Draft 2020 Call Letter suggested that we 
should create a lower cost specialty tier for generic drugs and 
biosimilar biological products, and that such a tier should be limited 
to only such products. We decline to propose such a policy. First, we 
wish to provide maximum flexibility to Part D sponsors that might find, 
for instance, that a brand-name Part D drug costs less with a rebate 
than a generic equivalent or corresponding biosimilar (or 
interchangeable, when available) biological product. Moreover, generic 
drugs and biosimilar (or interchangeable, when available) biological 
products that meet the specialty-tier cost threshold may not always be 
the lowest-priced product. Second, nothing in our proposal would 
prohibit Part D sponsors from setting up such parameters should they 
choose (provided they meet all other requirements, including the 
proposed maximum allowable cost sharing). Therefore, in order to 
provide more flexibility for plans to generate potential savings 
through benefit design and manufacturer negotiations, CMS is not 
proposing to prescribe which Part D drugs may go on either specialty 
tier. However, such placement will be subject to the requirements of 
the CMS formulary review and approval process under Sec.  
423.120(b)(2). Additionally, consistent with our current policy, CMS 
will continue to evaluate formulary change requests involving 
biosimilar (or interchangeable, when available) biological products on 
the specialty tiers on a case-by-case basis to ensure they continue to 
meet the requirements of the CMS formulary review and approval process. 
(See Sec.  423.120(b)(5).)
    CMS solicits comment on whether Part D sponsors should restrict the 
lower cost-sharing, preferred specialty tier to only generic drugs and 
biosimilar (or interchangeable, when available) biological products 
while also placing them along with any other Part D drugs meeting the 
specialty-tier cost threshold on the higher cost-sharing specialty 
tier. In other words, either brand or generic drugs and biosimilar (or 
interchangeable, when available) biological products would be placed on 
the higher cost-sharing specialty tier, but only generic drugs and 
biosimilar (or interchangeable, when available) biological products 
would be placed on the preferred specialty tier. CMS is particularly 
interested in comments that discuss what impact such a policy would 
have on non-specialty tiers.
6. Codifying the Specialty-Tier Cost Threshold Methodology
    To effectuate the specialty tier, it was necessary to determine 
which Part D drugs could be placed on a specialty tier. Consequently, 
we developed a minimum dollar-per-month threshold amount to determine 
which Part D drugs are eligible, based on relative high cost, for 
inclusion on the specialty tier. CMS has sought comment on both this 
methodology used to establish the specialty-tier cost threshold and the 
resultant value of the specialty-tier cost threshold when publishing 
the annual Draft Call Letter. Most recently, commenters on the Draft 
2020 Call Letter were largely supportive of having a methodology in 
place to annually evaluate and adjust the specialty-tier cost 
threshold, as appropriate. While some commenters wanted to maintain the 
current level (and others wanted to eliminate the specialty tier or 
reduce its cost sharing), there was broad support to regularly increase 
the specialty-tier cost threshold. Some comments asked for annual 
increases, while others wanted us to tie increases to the specialty-
tier cost threshold to drug inflation, or benefit parameters. As we 
will detail later in this discussion, we are proposing to codify, with 
some modifications, the same outlier PDE analysis we have historically 
used. Our proposed annual methodology would account for rising drug 
costs, as well as any potential changes in utilization. By identifying 
the top one percent of 30-day equivalent PDEs, our proposal aims to 
create a specialty-tier cost threshold that is representative of 
outlier claims for the highest-cost drugs. By using PDEs, the proposed 
analysis would also reflect the fact that the numbers of Part D 
enrollees filling prescriptions for high-cost drugs as a percentage of 
all drug claims may vary from year to year. Given the general support 
for regular increases in the specialty-tier cost threshold, we propose 
to make adjustments to the specialty-tier cost threshold based on a 
specific methodology, as discussed later in this section.
    Beginning in 2007, CMS established the specialty-tier cost 
threshold at $500 per month \50\ based on identifying outlier claims 
(that is, the top one percent of claims having the highest negotiated 
prices as reported on the PDE, adjusted, as described in this

[[Page 9057]]

section of this proposed rule, for 30-day equivalent supplies) and 
increased the threshold to $600 beginning in contract year 2008. The 
specialty-tier cost threshold remained at $600 per month from contract 
years 2008 through 2016.51 52 In the 2016 analysis for 
contract year 2017 (using contract year 2015 PDE data), the number of 
claims for 30 day-equivalent supplies with negotiated prices meeting 
the existing $600 per month cost threshold exceeded one percent. This, 
coupled with the significant increase in the cost of Part D drugs since 
the last adjustment (in 2008), supported an increase in the specialty-
tier cost threshold for contract year 2017. To adjust the specialty-
tier cost threshold, CMS applied the annual percentage increase used in 
the Part D benefit parameter updates (that is, 11.75 percent for 
contract year 2017) to the $600 threshold. This increase in the 
specialty-tier cost threshold (that is, $70.50), rounded to the nearest 
$10 increment (that is, $70), was sufficient to reestablish the one 
percent outlier threshold for PDEs having negotiated prices for 30-day 
equivalent supplies greater than the threshold. Since contract year 
2017, the specialty-tier cost threshold has been $670 per month.
---------------------------------------------------------------------------

    \50\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/downloads/CY07FormularyGuidance.pdf.
    \51\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2017.pdf.
    \52\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf.
---------------------------------------------------------------------------

    In our April 2018 final rule, we defined specialty tier in 
regulation at Sec.  423.560 to mean 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 (83 FR 16509). To 
improve transparency, we propose to codify current methodologies for 
calculations relative to the specialty tier, with some changes. As 
noted previously, it was necessary to establish the composition of a 
specialty tier in order to effectuate specialty tier exceptions and 
anti-discrimination policies. Under Sec.  423.560, only very high-cost 
drugs and biological products that meet or exceed a cost threshold 
established by the Secretary may be placed on a plan's specialty tier 
(for example, a negotiated price of or exceeding $670 per month for 
coverage year 2020). Current guidance at section 30.2.4 of Chapter 6 of 
the Medicare Prescription Drug Benefit Manual describes these high-cost 
drugs and biological products as those having Part D sponsor-negotiated 
prices that exceed a dollar-per-month amount established by CMS in the 
annual Call Letter, which has noted the historical use of a threshold 
under which approximately 99 percent of monthly PDEs adjusted for 30-
day equivalent supplies have been below the specialty-tier cost 
threshold.
    In setting the specialty-tier cost threshold, CMS has historically 
analyzed prescription drug event (PDE) data for the plan year that 
ended 12 months before the applicable plan year (for example, CMS used 
contract year 2017 PDE data to determine the cost threshold for 
contract year 2019). First, CMS has calculated the number of 30-day 
equivalent supplies reported on each PDE. We have considered a 30-day 
equivalent supply to be any days' supply, as reported on each PDE, of 
less than or equal to 34 days. Thus, a PDE with a 34-days' supply has 
been considered one 30-day equivalent supply. (This reflects the fact 
that a full supply of medication for a Part D enrollee could equal less 
than a month's supply, or reflect manufacturer packaging. For instance, 
we did not want to triple the cost of a 10-day course of antibiotics to 
determine the 30-day equivalent supply because that would overstate the 
Part D enrollee's cost for the full prescription). If the days' supply 
on the PDE is greater than 34, the 30-day equivalent supply is equal to 
the PDE's days' supply divided by 30. Thus, for example, a PDE with a 
90-day supply has been considered as three 30-day equivalent supplies. 
Similarly, a PDE with a drug that has been dispensed in a package 
containing a 45-days' supply has been considered as 1.5 30-day 
equivalent supplies. This includes long-acting drugs, including, but 
not limited to long-acting injections. For example, a single injection 
that is considered to be a 90-days' supply has been considered as three 
30-day equivalent supplies.
    After determining the number of 30-day equivalent supplies for each 
PDE, we have calculated the 30-day equivalent negotiated price for the 
PDE by dividing the PDE's negotiated price by the number of 30-day 
equivalent supplies reflected on the PDE. Thus, for example, if the PDE 
is for a 90-days' supply and has a negotiated price of $810, that PDE 
contains three 30-day equivalent supplies, and the 30-day equivalent 
negotiated price is $270.
    Next, taking into consideration the 30-day equivalent negotiated 
prices for all Part D drugs for which PDE data are available, CMS has 
identified the PDEs with 30-day equivalent negotiated prices that 
reflect the top 1 percent of 30 day-equivalent negotiated prices, and 
has maintained the specialty-tier cost threshold at an amount that 
corresponds to the lowest 30-day equivalent negotiated price that is 
within the top one percent of all 30-day equivalent negotiated prices.
    We note that this process may result in dose specificity of 
eligibility for placement on the specialty tier, such that one strength 
of a Part D drug may be eligible but another strength may not. For 
example, suppose that Part D drug X is available as tablets in 
strengths of 10mg, 20mg, and 30mg taken once daily with 30-day 
equivalent negotiated prices of $300, $600, and $900, respectively. The 
30mg tablets, because their 30-day equivalent negotiated price exceeds 
the specialty-tier cost threshold, are eligible for placement on the 
specialty tier, but the 10mg and 20mg tablets are not, because their 
30-day equivalent negotiated prices do not exceed the specialty-tier 
cost threshold.
    We believe our existing policy to set the specialty-tier cost 
threshold such that only the top one percent of 30-day equivalent 
negotiated prices would exceed it is consistent with the purpose of the 
specialty tier--that is, that only the highest-cost Part D drugs are 
eligible for placement on the specialty tier. For this reason, we 
propose to codify a similar process to adjust and rank PDE data as the 
basis for determining the specialty-tier cost threshold, as described 
in this section of this proposed rule. Specifically, instead of 30-day 
equivalent negotiated prices, we propose to determine the 30-day 
equivalent ingredient cost to set the specialty tier-cost threshold in 
the same manner as we have historically done, as described previously 
in this section.
    In addition, to maintain stability in the specialty-tier cost 
threshold, we propose to set the specialty-tier cost threshold for 
contract year 2021 to reflect the top 1 percent of 30-day equivalent 
ingredient costs, at an amount that corresponds to the lowest 30-day 
equivalent ingredient cost that is within the top 1 percent of all 30-
day equivalent ingredient costs. We also propose to undertake an 
analysis of 30-day equivalent ingredient costs annually, and to 
increase the specialty-tier cost threshold for a plan year only if CMS 
determines that no less than a ten percent increase in the specialty-
tier cost threshold, before rounding to the nearest $10 increment, is 
needed to reestablish the specialty-tier cost threshold that reflects 
the top one percent of 30-day equivalent ingredient costs.
    As a hypothetical example, suppose that, in 2020, when analyzing 
contract year 2019 PDE data for contract year 2021, CMS finds that more 
than one percent of PDEs have 30-day equivalent ingredient costs that 
exceed the contract year 2020 specialty-tier cost threshold of

[[Page 9058]]

$670. Further, suppose that CMS finds that one percent of the PDEs have 
30-day equivalent ingredient costs that exceed $685. This $15 
difference represents a 2.24 percent increase over the $670 specialty-
tier cost threshold. Under our proposed methodology, we would not 
increase the specialty-tier cost threshold for contract year 2021.
    However, if we suppose that, instead of $685, CMS finds that one 
percent of the PDEs have 30-day equivalent ingredient costs that exceed 
$753, then in this scenario, the $83 change represents a 12.39 percent 
increase over the $670 specialty-tier cost threshold. Under our 
proposed methodology, because this would be a change of more than 10 
percent, we would set the specialty-tier cost threshold for contract 
year 2021 at $750 which is the nearest $10 increment to $753.
    We solicit comment on this proposal. Because CMS notes that 
rounding down, as in the previous example, would technically cause the 
new specialty-tier cost threshold to account for very slightly more 
than one percent of 30 day-equivalent ingredient costs, we are also 
considering the alternative that CMS would always round up to the next 
$10 increment. Using the previous example, CMS would have set the 
threshold for contract year 2021 at $760 instead of $750. This 
alternative would: (a) Better ensure that the new specialty-tier cost 
threshold actually reflects the top one percent of claims adjusted for 
30-day equivalent supplies, and (b) provide more stability, to the 
specialty-tier cost threshold, that is, it will theoretically not need 
to be changed as frequently, because rounding down will always result 
in a specialty-tier cost threshold that would include more than the top 
one percent of 30-day equivalent ingredient costs. We do not expect 
that this alternative would significantly impact the number of Part D 
drugs that would meet our proposed specialty-tier cost threshold. We 
solicit comment on this alternative approach to rounding and could 
finalize an amended version of our proposed language at Sec.  
423.104(d)(2)(B) to reflect such alternative. We propose to annually 
determine whether the adjustment would be triggered using the proposed 
methodology, and if it is, we would apply the proposed methodology to 
determine the new specialty-tier cost threshold, which we would 
announce via an HPMS memorandum or a comparable guidance document. 
Finally, we propose for contract year 2021 that we would apply our 
proposed methodology to the contract year 2020 specialty-tier cost 
threshold of $670, and if a change to the methodology based on comments 
received on this proposed rule would result in a change to that 
threshold, we will announce the new specialty-tier cost threshold in 
the final rule.
    CMS has concerns regarding the use of negotiated prices of drugs, 
as the term is currently defined in Sec.  [thinsp]423.100, in the 
determination of the specialty-tier cost threshold, because the 
negotiated prices include all pharmacy payment adjustments except those 
contingent amounts that cannot reasonably be determined at the point-
of-sale. For this reason, negotiated prices typically do not reflect 
any performance-based pharmacy price concessions that lower the price a 
Part D sponsor ultimately pays for a drug. Negotiated prices in the PDE 
record are composed of ingredient cost, administration fee (when 
applicable), dispensing fee, and sales tax (when applicable). 
Administration fees, dispensing fees, and sales tax are highly 
variable. Therefore, because the ingredient cost has fewer variables 
than the negotiated price, the ingredient cost represents the most 
transparent, least complex, and most predictable of all the components 
of negotiated price upon which to base the determination of the 
specialty-tier cost threshold. Consequently, as noted previously, we 
propose to use the ingredient costs associated with 30-day equivalent 
supplies when we determine the specialty-tier cost threshold according 
to the methodology proposed earlier in this preamble. We do not expect 
that this change would significantly affect the number of Part D drugs 
meeting the specialty-tier cost threshold because the ingredient cost 
generally accounts for most of the negotiated price; however we are 
proposing this change to use the ingredient cost in order to ensure 
that we are using the most predictable of all the components of the 
negotiated price upon which to base the specialty- tier cost threshold.
    Using the methodology proposed in this proposed rule and contract 
year 2019 PDE data that CMS has to date, the specialty-tier cost 
threshold for contract year 2021 would be $780 as a 30-day equivalent 
ingredient cost. To determine this proposed threshold, we analyzed 2.2 
billion PDEs, and determined the lowest 30-day equivalent ingredient 
cost that is within the top one percent of all 30-day equivalent 
ingredient costs to be $780, which did not require rounding. Therefore, 
we are proposing to increase the specialty-tier cost threshold to $780 
(as a 30-day equivalent ingredient cost) for contract year 2021 from 
the previous $670 (as a 30-day equivalent negotiated price). While this 
change will impact the specific dollar threshold amount for specialty-
tier eligibility, the specialty-tier cost threshold still accounts for 
the top 1 percent of all claims, as adjusted for 30-day equivalent 
supplies. Due to the increased costs of prescription drugs since the 
previous $670 specialty-tier cost threshold was set several years ago, 
the top 1 percent of all claims, as adjusted for 30-day equivalent 
supplies, cost more, on average. Moreover, we estimate that the change 
from using negotiated price to using ingredient cost only will result 
in fewer than 20 drugs not meeting the $780 30-day equivalent 
ingredient cost specialty-tier cost threshold that would have if we 
continued to use the 30-day equivalent negotiated price.
    Additionally, consistent with current guidance in section 30.2.4 in 
Chapter 6 of the Medicare Prescription Drug Benefit Manual, CMS 
considers claims history in reviewing the placement of Part D drugs on 
Part D sponsors' specialty tiers. Consequently, CMS proposes to codify 
current guidance that a Part D drug will be eligible for placement on a 
specialty tier if the majority of a Part D sponsor's claims for that 
Part D drug, when adjusted for 30-day equivalent supplies, exceed the 
specialty-tier cost threshold. However, for Part D drugs newly approved 
by the Food and Drug Administration (FDA) for which Part D sponsors 
would have little or no claims data because such drugs have only 
recently become available on the market, we propose to permit Part D 
sponsors to estimate the 30-day equivalent ingredient cost portion of 
their negotiated prices based on the maximum dose specified in the FDA-
approved labeling and taking into account dose optimization, when 
applicable for products that are available in multiple strengths. If, 
based on their estimated 30-day equivalent ingredient cost, the newly 
FDA-approved Part D drug is anticipated to exceed the specialty-tier 
cost threshold most of the time (that is, more than 50 percent of the 
time), we would allow Part D sponsors to place such drug on a specialty 
tier. Finally, such placement would be subject to CMS review and 
approval as part of our formulary review and approval process.
    CMS proposes to add paragraphs (d)(2)(iv)(A), (B), and (C) to Sec.  
423.104 and to cross reference this section in our proposed revised 
definition of specialty tiers, which we are proposing to move to Sec.  
423.104, as described later in this section. Specifically, we propose 
in paragraph (d)(2)(iv)(A) to described in paragraphs (d)(2)(iv)(A)(1) 
through (4) the manner by which CMS sets the specialty-tier cost 
threshold, and further, to describe in paragraph

[[Page 9059]]

(d)(2)(iv)(A)(5) a Part D drug's eligibility for placement on the 
specialty tier. We propose that paragraph (d)(2)(iv)(A)(1) would 
specify that CMS uses PDE data, and further, uses the ingredient cost 
reflected on the PDE to determine the ingredient costs in dollars for 
30-day equivalent supplies of drugs. We propose that paragraph 
(d)(2)(iv)(A)(2) would specify how CMS determines 30-day equivalent 
supplies from PDE data, such that if the days' supply reported on a PDE 
is less than or equal to 34, the number of 30-day equivalent supplies 
equals one, and if the days' supply reported on a PDE is greater than 
34, the number of 30-day equivalent supplies is equal to the number of 
days' supply reported on the PDE divided by 30. We propose that 
paragraph (d)(2)(iv)(A)(3) would specify that CMS then determines the 
amount that equals the lowest 30-day equivalent ingredient cost that is 
within the top 1 percent of all 30-day equivalent ingredient costs 
reflected in the PDE data. Further, proposed paragraph (d)(2)(iv)(A)(4) 
would specify that, except as provided in proposed paragraph (B), the 
amount determined in paragraph (d)(2)(iv)(A)(3) is the specialty-tier 
cost threshold for the plan year. Proposed paragraph (d)(2)(iv)(A)(5) 
would specify that, except for newly FDA-approved Part D drugs only 
recently available on the market for which Part D sponsors would have 
little or no claims data, CMS will approve the placement of a Part D 
drug on a specialty tiers when that Part D sponsor's claims data from 
the plan year that ended 12 months prior to the applicable plan year 
demonstrate that greater than 50 percent of the Part D sponsor's PDEs 
for a given Part D drug, when adjusted for 30-day equivalent supplies, 
have ingredient costs for 30-day equivalent supplies that exceed the 
specialty-tier cost threshold.
    We propose in paragraph (d)(2)(iv)(B) to describe the methodology 
CMS will use to increase the specialty-tier cost threshold. 
Specifically, we propose to increase the specialty-tier cost threshold 
for a plan year only if the amount determined by proposed paragraph 
(d)(2)(iv)(A)(3) for a plan year is at least ten percent above the 
specialty-tier cost threshold for the prior plan year. CMS proposes 
that if an increase is made, CMS would round the amount determined in 
proposed paragraph (d)(2)(iv)(A)(3) to the nearest $10. That amount 
would be the specialty-tier cost threshold for the applicable plan 
year.
    Finally, CMS proposes paragraph (d)(2)(iv)(C) to specify that the 
determination of the specialty-tier cost threshold for a plan year is 
based on PDE data from the plan year that ended 12 months prior to the 
beginning of the applicable plan year.
    As mentioned previously, to align the definition of specialty tier 
with our proposal to allow Part D sponsors to have up to two specialty 
tiers, CMS first proposes to move the definition of specialty tier from 
Sec.  423.560 to appear in Sec.  423.104(d)(2)(iv) as part of a 
proposed new section on specialty tiers that also includes the 
methodology for determining the specialty tier cost-thresholds and 
maximum allowable cost sharing. (We also propose to revise Sec.  
423.560 and Sec.  423.578(a)(6)(iii) to cross reference the placement 
of that definition in Sec.  423.104(d)(2)(iv).) Additionally, CMS 
proposes to amend the definition of specialty tier to reflect our 
proposal to allow Part D sponsors to have up to two specialty tiers. 
With respect to the phrase ``and biological products,'' for the reasons 
discussed in the previous section of this preamble, (specifically, that 
biological products are already are included in the definition of a 
Part D drug at Sec.  423.100), CMS is also proposing a technical change 
to the definition of specialty tier to remove the phrase ``and 
biological products.'' Therefore, CMS proposes to define specialty tier 
at Sec.  423.104(d)(2)(iv) to mean a formulary cost-sharing tier 
dedicated to high-cost Part D drugs with ingredient costs for a 30-day 
equivalent supply (as described in Sec.  423.104(d)(2)(iv)(A)(2)) that 
are greater than the specialty-tier cost threshold specified in Sec.  
423.104(d)(2)(iv)(A).
    To summarize, we are proposing to: (1) Amend the definition of 
specialty tier at Sec.  423.560 and move it to Sec.  423.104(d)(2)(iv); 
(2) amend Sec.  423.578(a)(6)(iii) to cross reference placement of the 
definition of specialty tier at Sec.  423.104(d)(2)(iv); (3) add new 
paragraph (d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through 
(4), the manner by which CMS sets the specialty-tier cost threshold, 
and in (d)(2)(iv)(A)(5), a Part D drug's eligibility for placement on 
the specialty tier; (4) add new paragraph (d)(2)(iv)(B), which 
describes the methodology CMS will use to increase the specialty-tier 
cost threshold; and (5) add new paragraph (d)(2)(iv)(C), which 
specifies that the determination of the specialty-tier cost threshold 
for a plan year is based on PDE data from the plan year that ended 12 
months prior to the beginning of the applicable plan year. We solicit 
comment on specifying at the proposed new Sec.  423.104(d)(2)(iv)(B) 
that we would round up to the nearest $10 increment.

G. Beneficiary Real Time Benefit Tool (RTBT) (Sec.  423.128)

    Section 101 of the MMA requires the adoption of Part D E-
Prescribing (eRx) 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.
    Prescribers and dispensers who electronically transmit and receive 
prescription and certain other information for Part D-covered drugs 
prescribed for Medicare Part D eligible individuals, 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. of the February 4, 
2005, Medicare Program; E-Prescribing and the Prescription Drug Program 
Proposed Rule (70 FR 6256).
    In accordance with our regulations at Sec.  423.160(b)(1), (2), and 
(5), CMS' Part D eRx program requires that Part D sponsors support the 
use of the adopted standards when electronically conveying prescription 
and formulary and benefit information regarding Part D-covered drugs 
prescribed to Part D-eligible individuals between plans, prescribers, 
and dispensers.
    We utilized several rounds of rulemaking to update the Part D e-
prescribing program. Most recently, in the May 2019 Modernizing Part D 
and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket 
Expenses Final Rule (84 FR 23832) (hereinafter referred to as the May 
2019 final rule), we required that Part D plans support a prescriber 
electronic real-time benefit tool capable of integrating with at least 
one e-prescribing or electronic health record (EHR) system. The 
prescriber RTBT must provide its enrollees with complete, accurate, 
timely, and clinically appropriate patient-specific real-time formulary 
and benefit information (including cost, formulary alternatives and 
utilization management requirements). This ``prescriber RTBT'' 
electronic transaction requirement will become effective January 1, 
2021, and is expected to enhance medication adherence and lower overall 
drug costs by providing Part D prescribers information in real time 
when lower-cost alternative drugs are available.

[[Page 9060]]

    The SCRIPT and the NCPDP Formulary and Benefits standards have 
already become critical components of the Part D program, and we 
believe the recently finalized prescriber RTBT requirement at Sec.  
423.160(b)(7) will do the same by enhancing the electronic 
communication of prescription-related information between plans and 
prescribers under the Part D benefit program. While these requirements 
will empower prescribers, we also believe it is important to empower 
patients with information like that which will be included in the 
prescriber RTBT and give them the ability to access this information 
either at their computer or using a mobile device. We now propose to 
adopt at Sec.  423.128(d) a requirement that Part D sponsors implement 
a beneficiary RTBT that would allow enrollees to view accurate, timely, 
and clinically appropriate patient-specific real-time formulary and 
benefit information, effective January 1, 2022, so as to allow both 
prescriber and patient to consider potential cost differences when 
choosing a medication that best meets the patient's medical and 
financial needs. Each system response value would be required to 
present real-time values for the patient's cost-sharing information and 
clinically appropriate formulary alternatives, where appropriate. This 
requirement would include the formulary status of clinically 
appropriate formulary alternatives, including any utilization 
management requirements, such as step therapy, quantity limits, and 
prior authorization, applicable to each alternative medication. We're 
also proposing to add Sec.  423.128(d)(1)(vi) to require that plans 
make this information available to enrollees via their customer service 
call center. The goal of this requirement is help ensure that the 
beneficiary RTBT information is available to enrollees without computer 
or smartphone access.
    We believe that January 1, 2022 is an appropriate deadline for this 
proposal, since it would give plans adequate time to implement the 
proposal while still helping ensure that enrollees have access to this 
information in a timely manner. We welcome comments on this proposal, 
including the feasibility for plans to meet the proposed January 1, 
2022 deadline or whether this proposal should be finalized effective 
January 1, 2021 in order to align with the prescriber RTBT effective 
date.
    We also welcome comments on the need for the beneficiary RTBT when 
Part D plans will be required to support the prescriber RTBT by January 
1, 2021. For instance, we would like to understand the beneficiary 
interest in such a tool compared to provider interest. We also would 
like to understand whether a beneficiary RTBT is a less complicated, 
therefore more likely utilized tool, than a prescriber RTBT.
    As we stated in our April 16, 2018 final rule adopting version 
2017071 of the SCRIPT standard for various Part D e-prescribing 
transactions (see 83 FR 16440), we believe that patient-specific 
coverage information at the point of prescribing would enable the 
prescriber and patient to collaborate in selecting a medication based 
on clinical appropriateness, coverage, and cost. In order to fully 
realize this benefit, however, we believe that it is important to 
afford the patient direct access to this formulary and benefit 
information so they need not depend on their prescribers pulling up the 
information to empower their discussions with those prescribers as to 
medication options.
    Section 1860D-12(b)(3)(D) of the Act authorizes additional contract 
terms not inconsistent with the Part D statute. Under this authority, 
we are proposing to require Part D sponsors to offer a patient RTBT 
because we believe that it is appropriate to require that the formulary 
and benefit information be provided to enrollees in real time. 
Enrollees should have continuous access to this information, since drug 
pricing information is so dynamic.
    Based on our research, we believe that the process that Part D 
sponsors will have to follow in order to implement a prescriber RTBT 
would establish a foundation from which a beneficiary RTBT could be 
implemented for use by enrollees, since the required information and 
information culling process is substantially similar. As discussed in 
our May 2019 final rule, implementation of an effective prescriber RTBT 
requires that plans review formulary medications to determine which 
alternatives may exist and whether those alternatives could save the 
beneficiary money through reduced cost sharing if deemed clinically 
appropriate by the practitioner. As discussed in our May 2019 final 
rule, analysis needed when developing the formulary and benefit 
information necessary to implement prescriber RTBTs would also include 
cataloging any existing drug-specific utilization requirements such as 
prior authorization (PA) or step therapy. Specifically, the plan's 
prescriber RTBT system will require integration with at least one 
prescriber's e-Prescribing (eRx) system or electronic health record 
(EHR) to provide complete, accurate, timely, clinically appropriate, 
patient-specific formulary and benefit information to the prescriber in 
real time for assessing coverage under the Part D plan (Sec.  
423.160(b)(7)). Such information must include enrollee cost-sharing 
information, clinically appropriate formulary alternatives, when 
available, and the formulary status of each drug presented including 
any utilization management requirements applicable to each alternative 
drug. Once the Part D sponsor has developed the information necessary 
to implement the prescriber RTBT, the list of formulary alternatives 
and utilization requirements could also be used to implement a 
beneficiary RTBT.
    We believe that sharing this kind of formulary and benefit 
information would allow enrollees to take an active role in their 
health care decisions, which we believe would yield greater medication 
adherence. In our May 2019 final rule (see 84 FR 23832), we cited 
evidence suggesting that reducing medication cost yields benefits in 
increased patient medication adherence. Evidence indicated that 
increased medication out-of-pocket costs was associated with adverse 
non-medication related outcomes such as additional medical costs, 
office visits, hospitalizations, and other adverse events. Given that 
patient cost is such a determinant of adherence, allowing the patient 
greater access to drug cost information, independent of their 
prescriber, should improve medication adherence. Further, research 
shows that when patients play an active role in their health care 
decisions the result is increased patient knowledge, satisfaction, 
adherence with treatment and improved outcomes.\53\ Although not all 
patients will chose to actively participate in treatment decisions, 
interactive discussions between patients and physicians are correlated 
with improved patient satisfaction with their health care provider.\54\
---------------------------------------------------------------------------

    \53\ See https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1855272/.
    \54\ See https://www.ncbi.nlm.nih.gov/pubmed/11021677/.
---------------------------------------------------------------------------

    We believe that bringing all of these benefits to Part D enrollees 
is especially important, in light of the fact that the Medicare 
population is becoming increasingly comfortable with technology. 
According to a 2017 Pew Research Center study, some groups of seniors, 
particularly those who are younger, report ``owning and using various 
technologies at rates similar to adults under the age of 65''\55\ and 
also characterized ``82 percent of 65- to 69-year-olds as internet 
users'' and found

[[Page 9061]]

that 40 percent of seniors now own smartphones, ``more than double the 
share that did so in 2013''. As more seniors use computers and smart 
phones in their daily lives, they may use electronic means to research 
information about their prescription medications. CMS believes that the 
Part D program must move to accommodate those enrollees by enhancing 
the way that digital technologies are used in the Part D e-prescribing 
context. We are aware that some Part D plans have already created 
beneficiary portals.
---------------------------------------------------------------------------

    \55\ Report is accessible at https://www.pewinternet.org/2017/05/17/technology-use-among-seniors/.
---------------------------------------------------------------------------

    The intent of this proposal is to ensure that enrollees have access 
to formulary and benefit information while giving plans latitude to 
determine how to meet this beneficiary need. We encourage Part D 
sponsors to explore whether a beneficiary RTBT function could be added 
to existing beneficiary portals with the intent of giving enrollee 
access to a variety of drug plan services through a single secure 
portal. Alternatively, if this provision is finalized, Part D plans 
could also create dedicated beneficiary RTBTs for use on a computer or 
smart phone or create a new patient portal for this purpose. We propose 
to allow for either of these solutions.
    When developing their solutions, Part D Plans should also be 
mindful of ensuring their compliance with their current non-
discrimination responsibilities and obligations, particularly to 
individuals who are deaf, hard of hearing, or blind, or who have other 
sensory or manual impairments.\56\ Plans should be mindful of complying 
with current regulations at 28 CFR 36.303 45 CFR 84, 92.4, and 92.202. 
In addition, should this proposal be finalized, Part D Plans should 
ensure that beneficiaries without computer or smart phone access can 
retrieve the same formulary and benefits information available on the 
beneficiary RTBT via calling the Plan's call center. We believe that 
this is important to help guarantee that all Part D enrollees have 
equal access to the information on the beneficiary RTBT.
---------------------------------------------------------------------------

    \56\ These responsibilities and obligations include compliance 
with Title VI of the Civil Rights Act of 1964, sections 504 and 508 
of the Rehabilitation Act, the Age Discrimination Act, and section 
1557 of the Affordable Care Act.
---------------------------------------------------------------------------

    Currently, enrollees in Part D can use a number of tools to access 
prescription drug information for their particular plan, but the tools 
do not offer the advantages of a beneficiary RTBT. Blue Button 2.0 is 
an application programming interface that provides traditional Medicare 
beneficiaries with cost and beneficiary information after those 
expenses are incurred. By contrast, the beneficiary RTBT would provide 
the information before the expenses are incurred, so that beneficiaries 
and prescribers can have meaningful conversations about their 
medications before choosing the most appropriate medication. The 
Medicare Plan Finder (MPF) (https://www.medicare.gov/find-a-plan/questions/home.aspx) is a web tool that is available to the public. The 
web tool allows beneficiaries to make informed choices about enrolling 
in Part D plans by comparing coverage options based on the plans' 
benefit package (PBP), premium, formulary, pharmacy, and pricing data. 
Beneficiaries also use the MPF to evaluate their estimated annual out-
of-pocket drug costs at the selected pharmacies from those pharmacies 
available in their area. These tools are powered by the data Part D 
sponsors submit to CMS and its contractors. In addition, the web tool 
also shows the plans' Star Ratings, which can be used by beneficiaries 
to evaluate quality and performance of available plans.
    Part D plan enrollees can also access helpful information by 
viewing plan websites, which contain their current plan formularies, 
including the drug tiers and any PA requirements. Enrollees can use 
these tools to predict cost sharing for the medication selected.
    Although the aforementioned tools are helpful, neither the MPF nor 
plan websites identify drug-specific formulary alternatives for 
enrollees, nor can they provide beneficiary-specific PA information. 
For example, a plan may have a PA requirement on a drug and that 
requirement would be listed on the online formulary and in MPF. 
However, if a PA request for a drug for a particular beneficiary has 
already been approved and additional PA is not required for that 
enrollee, he or she could not ascertain that information unless they 
call the plan. Similarly, as beneficiary costs vary depending upon the 
benefit phase, the costs included on MPF and plan websites may not 
accurately reflect beneficiary-specific out-of-pocket costs based on 
the applicable phase of the benefit phase that the beneficiary is in at 
that point in time. Although we are proposing that plans can use 
similar formulary and benefit information to implement both a 
prescriber and a beneficiary RTBT, we recognize that there would be 
inherent differences in the way that each real time benefit tool will 
be used, and each tool raises different concerns. First, the end user 
of the beneficiary RTBT would be the beneficiary, and since the data 
would not be passed on from the beneficiary RTBT to another system, we 
believe that the information released would have to be information that 
is understandable to the average patient and that can be of use to them 
in their interactions with their provider, whereas the information from 
the prescriber RTBT would be information that is understandable to 
prescribers. Second, there are not any different standards available 
for a beneficiary tool, since plans can use their own portals or 
computer applications for the beneficiary RTBT, and a standard is only 
required when information flows to another system. We invite comment on 
these issues.
    We understand that, generally, most enrollees may not have the 
clinical background required to accurately discern the clinical 
appropriateness of the alternatives that would be presented to a 
prescriber using an RTBT. We realize that there may be occasions where 
certain drugs, for example certain antibiotics which are ``drugs of 
last resort'' that are typically reserved for instances in which the 
patient is found to have certain drug-resistant infections, or 
instances in which side-effects are such that a given prescription 
would not typically be selected in the absence of countervailing risks 
that would justify risking such side-effects, or instances in which 
there would be interactions with other drugs already used by the 
beneficiary that would contra-indicate prescribing a given drug. In 
these and other clinically appropriate instances, we believe it may be 
appropriate to omit certain drugs from what is presented to the user of 
a beneficiary RTBT. Furthermore, where there are many potential 
prescriptions that could be presented to the beneficiary through an 
RTBT for a given condition, and those drugs fall exclusively in a small 
number of classes or categories of drugs, it may be appropriate to 
allow the RTBT to present those classes or categories rather than 
requiring the listing of every medication for that condition as it may 
be overly burdensome for Part D sponsors to do otherwise, and confusing 
for enrollees. Thus, in order to address these and other clinically 
appropriate scenarios, we propose that Part D sponsors would be 
permitted to have their Pharmacy and Therapeutics (P & T) committees 
evaluate whether certain medications should be excluded from the 
beneficiary RTBT. P & T committees should exclude medications from the 
beneficiary RTBT if any of the following criteria are met: (1) The only 
formulary alternatives would have significant negative side effects for 
most enrollees and the drug would not typically be a practitioner's 
first choice for treating a given condition due to those side effects, 
(2) for cases where medications

[[Page 9062]]

are considered to be ``drugs of last resort,'' (3) instances in which 
there would be interactions with other drugs already used by the 
beneficiary that would contra-indicate prescribing a given drug, or (4) 
other clinically-appropriate instances.
    We propose to allow these exceptions to what should be provided to 
beneficiary RTBTs, since we believe that it will help ensure that 
beneficiaries have reasonable access to information about the viable 
alternatives for treating their conditions which will increase 
transparency about drug alternatives over what is currently available, 
while addressing what we believe are reasonable policy concerns about 
the potential ill-effects of providing unfiltered information to 
consumers. We note that this would only be appropriate in limited 
circumstances. In order to provide the most appropriate decision 
support to beneficiaries, we propose at this time to defer to plans and 
their medical professionals to choose which medication options should 
be presented in the beneficiary RTBT, but we would monitor for improper 
use of this discretion, and would propose changes if this discretion is 
found to be abused. Alternatives must only be excluded based only on 
clinical appropriateness, not based on any cost implications to the 
beneficiary or plan. By contrast, prescriber RTBTs must show all 
medication alternatives, since prescribers have the ability to discern 
which medications can appropriately treat the specific issues and what 
their side effects could be.
    Should this proposal be finalized, if plans do not populate the 
beneficiary RTBT with all options, Part D plans would be required to 
indicate to the Part D enrollee that not all potential medication 
options are included and the rationale for why not all options were 
included. Although we recognize that in some cases information 
presented through RTBT would thereby differ for beneficiaries and 
providers, we believe that the provider would be positioned to explain 
the differences if they are brought to the providers' attention. We 
propose that the fact that a beneficiary received a curated listing of 
options would need to be prominently shown in the human-readable output 
of the technology used by the beneficiary to access the formulary and 
benefit information, such as on the screen viewed through a patient 
portal or computer application or the print out generated using such 
portal or application.
    However, we want to clarify that the data that we are proposing to 
require be provided in the beneficiary RTBT must be patient-specific, 
clinically appropriate, timely, and accurate, and must be devoid of 
commercial purposes that would adversely impact the intended 
functionality of promoting cost-effective beneficiary and prescriber 
selections of drugs. Such improper commercial purposes would include 
the presentation of advertising in the beneficiary RTBT, outputs that 
are intended to promote choices based on the commercial interests of 
the part D sponsor rather than the beneficiary's best interests, or the 
promotion of medications or refills based on the rebates that would be 
received. We also would consider it a best practice, should the 
proposal be finalized, for beneficiary RTBTs to include cost-sharing 
amounts for medications if purchased at a pharmacy selected by the 
beneficiary, provided the pharmacy is in the plan's network. Sponsors 
would also be allowed to provide cost data for alternative pharmacies 
in the plan's network. However, due to concerns with enrollees being 
improperly steered to different pharmacies, we are not proposing to 
require that beneficiary RTBTs include pharmacy-specific cost sharing 
information.
    In order to support maximum transparency, CMS also encourages plans 
to show each drug's negotiated price (as defined in Sec.  423.100) in 
the beneficiary RTBTs in addition to the requirement to reflect the 
beneficiary's out-of-pocket cost information at the beneficiary's 
currently chosen pharmacy. Alternatively, if the beneficiary RTBT does 
not show the negotiated price, we would encourage plans to provide 
additional cost data comparing the beneficiary and plan cost 
comparisons for each drug and its alternatives. For example, if Drug A 
has beneficiary cost sharing of $10 and the plan pays $100, and Drug B 
also has a beneficiary cost sharing of $10 but the plan only pays $90, 
the beneficiary RTBT would reflect a difference of $0 for cost sharing 
and -$10 in comparative plan cost for Drug B. Providing data such as 
negotiated price or comparative plan costs would provide beneficiaries 
with a better understanding of the price differences between 
alternative drugs and could help provide beneficiaries with information 
on potential clinically appropriate alternatives that could steer a 
discussion with their clinician and provide the biggest savings to the 
beneficiary and potentially lower Part D costs overall. Although we 
encourage the inclusion of the negotiated price and other comparative 
information in the beneficiary RTBT, we are not proposing to require 
the inclusion of such information at this time. We are also not 
proposing this requirement at this time because we don't have research 
that shows learning the payer's rate will effect beneficiary choice if 
there is no effect on their payment amount. However, we solicit comment 
on this proposal.
    To summarize, we propose that each Part D sponsor implement a 
beneficiary real time benefit tool that will allow enrollees to view a 
plan-defined subset of the information included in the prescriber RTBT, 
which includes accurate, timely, and clinically appropriate patient-
specific real-time formulary and benefit information (including 
enrollee cost-sharing information, clinically appropriate formulary 
alternatives, subject to the aforementioned exceptions, and the 
formulary status of each drug presented including any utilization 
management requirements applicable to each alternative drug), no later 
than January 1, 2022. Plans are encouraged, but would not be required, 
to include the negotiated price. Plans could meet this proposed 
requirement by using existing or new secure patient portals, or an 
application or other technology. We seek feedback on this proposal, 
including if any further limitations should be imposed, what type of 
information should be included in the beneficiary RTBT, and the value 
of this tool being in the hands of the beneficiary and the prescriber.
    In addition, in order to encourage enrollees to use the beneficiary 
RTBT, we propose to allow plans to offer rewards and incentives (RI) to 
their enrollees who use the tool. We propose to define use, for 
purposes of permitted RI, to mean logging onto either the portal or 
application or calling the plan's call center to ask for this 
information, without regard to whether the enrollee engages in a 
discussion with his or her prescriber or obtains or switches to any 
medication in response to such use. In other words, we propose that 
plans who choose to offer RI must offer it to all plan enrollees who 
use the tool or seek to access this information via phone and must not 
make RI contingent upon the medical diagnosis or the type of medication 
a beneficiary is taking, or upon the enrollee switching medications.
    In addition, we prohibit any enrollee remuneration under the guise 
of RI, which includes waivers of copayments and deductible amounts and 
transfers of items or services for free. We also prohibit plans from 
offering any cash or monetary donations, under the guise of RI. 
However, we do allow for the use of

[[Page 9063]]

gift cards, as long as they are not cash equivalents and do not 
encourage enrollees to further patronize the plan or any of the plan's 
corporate affiliates. CMS considers gift cards to be used like cash, 
for example, a VISA or Amazon gift card, to be a ``cash equivalent.'' 
Cash equivalents also may include, for example, instruments convertible 
to cash or widely accepted on the same basis as cash, such as checks 
and debit cards. This means that gas cards or restaurant gift cards 
would be permitted. However, a gift card that can be used for goods or 
services purchased from the plan would be prohibited, since that could 
incentivize enrollment in plans that could provide gift cards that 
enrollees could use at pharmacies or retail stores owned by their plan, 
rather than at a third-party establishment owned by a different 
company.
    In addition, we seek to minimize risks of violations of the Federal 
anti-kickback statute and compromising the integrity of the program.
    We also propose that the RI be of nominal value, which OIG guidance 
specifies as no more than $15 per login or $75 in the aggregate 
annually, in accordance with OIG guidance.\57\ We also propose that the 
member can receive a RI for no more than one login per month. Should 
this proposal be finalized, this expense would have to be included as 
an administrative expense in the bids of Part D sponsors. We would 
prohibit it from being considered a drug cost. We seek comments on 
these limitations and on how we can ensure that these RIs will not be 
indirectly provided or funded by pharmaceutical manufacturers. We also 
seek comments on safeguards to mitigate risks of fraud and abuse with 
respect to these incentives.
---------------------------------------------------------------------------

    \57\ Office of Inspector General Policy Statement Regarding 
Gifts of Nominal Value To Medicare and Medicaid Beneficiaries, 
Office of Inspector General (2016).
---------------------------------------------------------------------------

    MA-PDs are already permitted to offer rewards and incentives for 
Part C benefits under our regulation at Sec.  422.134, which permits 
plans to offer health-driven rewards and incentives that are designed 
to encourage enrollees to participate in activities that focus on 
promoting improved health, preventing injuries and illness, and 
promoting efficient use of health care resources. We propose to adopt 
Part C's ban at Sec.  422.134(b) on discrimination for Part D RI that 
plans offer to encourage the use of the beneficiary RTBT. We therefore 
propose to require that if a plan offers RI, it must be available to 
all of the plan's enrollees that log into the plan's portal or call the 
plan's call center, regardless of the enrollee's race, national origin, 
gender, disability, chronic disease, health status, or basis prohibited 
by any applicable law.
    Our statutory authority to allow RI for beneficiary RTBT stems from 
section 1860D-4(c)(1)(A) of the Act, which requires Part D sponsors to 
have in place, directly or through appropriate arrangements, a cost-
effective drug utilization management program, including incentives to 
reduce costs when medically appropriate. We believe that an RI program 
for beneficiary RTBTs could be part of the plan's effective UM program, 
since they help inform and remind Part D enrollees about their 
utilization management requirements for their medications and provide 
them with alternatives that may be more appropriate for enrollees' 
individual health and budgetary needs. As a result, we believe that 
this provision would fall under the utilization management provisions 
of the Act. Previously, CMS has solicited comment from Part D sponsors 
about whether allowing rewards and incentives in Part D would be 
beneficial.\58\ Specifically, we asked for input on the kinds of RI 
Program(s) Part D sponsors would propose to offer enrollees, the level 
of incentives Part D sponsors believe would be necessary to achieve 
positive outcomes for beneficiaries, such as medication adherence, and 
how to mitigate any concerns about a sponsor potentially selecting 
healthier beneficiaries for rewards. Commenters expressed interest in 
allowing for RI under Part D, and offered a variety of different 
suggestions about the types of rewards to incent enrollees. However, we 
did not receive suggestions about how to mitigate concerns about 
sponsors potentially selecting healthier beneficiaries for rewards.
---------------------------------------------------------------------------

    \58\ See the 2014 Call Letter, available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/downloads/Announcement2014.pdf.
---------------------------------------------------------------------------

    Over the past several years, plans and vendors have written CMS to 
express their interest in allowing RI under Part D. In addition, CMS 
has obtained additional information demonstrating that RI can 
positively impact beneficiaries' health-related choices by increasing 
medication adherence and encouraging beneficiaries to choose lower-cost 
alternative medications.59 60 61 62 Since the objectives of 
the beneficiary RTBT so closely align with these goals, we believe that 
allowing Part D plans to offer RI for beneficiary RTBT usage would 
further incentivize beneficiaries to use the RTBT, while providing CMS 
the opportunity to further review the impact of RI under Part D by 
examining the differences in costs and beneficiary behavior between 
plans that use RI versus plans that do not. We propose to add this 
provision to our regulations at Sec.  423.128 by amending paragraph (d) 
to add paragraphs (a)(4) and (5). Paragraph (a)(4) would address the 
beneficiary RTBT and paragraph (a)(5) would address the rewards and 
incentives for use of the beneficiary RTBT. We believe that this 
proposal fits under Sec.  423.128, since it is consistent with the 
requirements under that provision to increase transparency to Part D 
enrollees. We believe that this new tool would enhance the existing 
disclosures by providing another means for Part D enrollees to access 
the information.
---------------------------------------------------------------------------

    \59\ The Effectiveness of Financial Incentives for Health 
Behaviour Change: Systematic Review and Meta-Analysis Giles EL, 
Robalino S, McColl E, Sniehotta FF, Adams J (2014) The Effectiveness 
of Financial Incentives for Health Behavior Change: Systematic 
Review and Meta-Analysis. PLOS ONE 9(3): e90347. https://doi.org/10.1371/journal.pone.0090347.
    \60\ Personal financial incentives for changing habitual health-
related behaviors: A systematic review and meta-analysis. Mantzari, 
Eleni, et al. Preventive medicine 75 (2015): 75-85.
    \61\ Acceptability of financial incentives for health behavior 
change to public health policymakers: A qualitative study, Giles, 
Sniehotta, et al. BMC Public Health (2016).
    \62\ A Simulation Modeling Framework to Optimize Programs Using 
Financial Incentives to Motivate Health Behavior Change Basu, 
Kiernan Medical Decision Making (2016).
---------------------------------------------------------------------------

H. Establishing Pharmacy Performance Measure Reporting Requirements 
(Sec.  423.514)

    Section 1860D-12(b)(3)(D) of the Act provides broad authority for 
the Secretary to add terms to the contracts with Part D sponsors, 
including terms that require the sponsor to provide the Secretary with 
information as the Secretary may find necessary and appropriate. 
Pursuant to our statutory authority, we codified these information 
collection requirements for Part D sponsors in regulation at Sec.  
423.514.
    Section 423.514(a) requires each Part D sponsor to have a procedure 
to develop, compile, evaluate, and report to CMS, to its enrollees, and 
to the general public, at the times and in the manner that CMS 
requires, statistics indicating the following: (1) The cost of its 
operations; (2) the patterns of utilization of its services; (3) the 
availability, accessibility, and acceptability of its services; (4) 
information demonstrating it has a fiscally sound operation; and (5) 
other matters as required by CMS.

[[Page 9064]]

    We established the Part D reporting requirements to monitor the 
prescription drug benefit to ensure a safe, consistent and fair 
experience for beneficiaries purchasing medication through the Part D 
prescription drug program. These data have successfully enabled us to 
respond to questions about the Part D program and to identify Part D 
sponsors that are not operating in an equitable manner in regard to 
their respective enrollees and not in compliance with specific 
contractual terms required by the Medicare Part D program. Consistent 
with Sec.  423.514(a), the reporting requirements program requires Part 
D sponsors to report a set of performance measures either annually or 
quarterly providing an element of transparency to the Part D program as 
many of the performance measures' results are made public. Over time we 
have added or retired reporting requirements and any corresponding data 
elements as our needs to evaluate the program evolved. New reporting 
sections and changes to the data elements are proposed for public 
comment in the Federal Register and approved through the Office of 
Management and Budget (OMB) Paperwork Reduction Act (PRA) process. The 
current Part D reporting requirements (OMB 0938-0992) may be accessed 
at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxContracting_ReportingOversight.html.
    We propose to amend the regulatory language at Sec.  423.514(a) to 
establish a requirement for Part D sponsors to disclose to CMS the 
pharmacy performance measures they use to evaluate pharmacy 
performance, as established in their network pharmacy agreement. 
Collecting pharmacy performance measures used to determine whether a 
financial reward or penalty is incurred by a pharmacy after the point-
of-sale (POS) will enable CMS at a minimum to better understand the 
extent to which the measures are applied, whether it be uniformly or 
specific to pharmacy type. This effort may also explain if there is a 
pharmacy performance problem, as pharmacy price concessions (financial 
penalties incurred) after the POS have continued to grow annually. 
Knowledge of the industry's pharmacy performance measures would also 
provide transparency to the process and likely confirm or dispel the 
idea that many of the measures may not provide appropriate metrics 
across all types of pharmacies. Given the growing use of pharmacy 
performance measures in determining the final cost of a drug under Part 
D and the impact of these recoupment practices on the amount a 
beneficiary pays for a Part D drug at the POS, we believe this 
information to be essential if there is to be predictable reimbursement 
for pharmacies and cost sharing for beneficiaries.
    Once collected, CMS would publish the list of pharmacy performance 
measures to increase public transparency. The public would benefit from 
the release of this information because pharmacy services are 
expanding, and therefore, it is imperative to measure the care 
provided. Quality measures can document a pharmacy's contribution to 
value-based care and incentivize high quality care. We believe 
collecting this information is the right thing to do for patients and 
our healthcare system. Standardized pharmacy measures bring value and 
relevance to patient care and cost management. In addition, this 
supports collaboration and consensus within the pharmacy industry. 
Collected data elements would be limited to those necessary to identify 
and understand each measure and how it is applied by pharmacy type, if 
applicable and may include:

 Name of the performance measure
 Performance calculation methodology
 Success/failure threshold(s)
 Financial implications of success/failure to achieve 
threshold(s)
 Pharmacy appeal requirements; and
 Method of payment of collection

    We may also consider collecting retrospective information on the 
number of pharmacies by pharmacy type, if applicable that achieved 
established success/failure thresholds and average scores or other 
statistics for each measure. If this proposal is finalized, the actual 
Part D reporting requirements data elements (consistent with our 
adopted standard), timeline, and method of submission would then be 
proposed through the OMB PRA process after publication of the final 
rule. We normally seek comment on a new information collection and its 
associated burden through rulemaking, however, we believe the best 
approach is to have the industry first begin to develop, test and 
achieve a consensus on the measures themselves, via a measure 
developer. Then, we would provide an opportunity for the industry to 
comment on more specific data collection instruments via notices in the 
Federal Register. This encourages collaboration and consensus within 
the industry and promotes alignment across the pharmacies and plans. We 
would also have the opportunity to gather initial feedback on the 
actual data elements in response to this proposal.
    We encourage the industry to continue to work together on 
developing a set of pharmacy performance measures through a consensus 
process and Part D sponsors to adopt such measures to ensure 
standardization, transparency and fairness. We also encourage Part D 
sponsors to use a third party, independent organization that is free of 
conflict of interest to assess pharmacy performance on such measures 
(including data aggregation, development of measure thresholds and cut 
points, and definition of applicable pharmacy types for each measure). 
We are aware that the Pharmacy Quality Alliance (PQA), a measure 
developer, hosted a consensus building workshop in early 2019 and 
hosted an all-member webinar in late August 2019 to share the results 
of the workshop to build consensus across pharmacy, plan, PBM, and 
other stakeholders to create a standard set of feasible, valid, and 
reliable measures that could be used in plan-pharmacy agreements in 
Medicare Part D. The participants reached consensus on an approach to 
prioritize the development of measures in the short, medium, and long 
term. The PQA plans to re-specify certain plan-level measures at the 
pharmacy-level and to create new pharmacy-level measures. The short 
term pharmacy-level measure specifications and testing may be complete 
in early 2020 for the 2021 contract year. We are encouraged by the 
progress being made by the industry to establish a consensus set of 
pharmacy performance measures and encourage the industry to keep us 
apprised of their efforts in this area.
    We recommend that pharmacy performance measures established for use 
in Part D adhere to the following principles. The measures should--
     Improve medication use and outcomes for the beneficiaries 
served;
     Be specified at the right level of attribution and 
appropriate level of comparison considering pharmacy type;
     Factor in both pharmacy accountability and drug plan 
performance goals;
     Have clear specifications and be established prior to the 
measurement period;
     Be reliable, transparent and fair; and
     Use threshold minimums if appropriate.
    In the future, CMS may develop measures to consider for use in the 
Part D Star Ratings that, for example, assess Part D plan sponsors' 
uptake of a standard set of pharmacy performance measures or that 
evaluate the percent of high-performing pharmacies in the sponsors' 
pharmacy network.

[[Page 9065]]

    We solicit comment on the principles that Part D pharmacy 
performance measures should adhere to, including potential burden or 
hardship of performance measures on small, independent, and/or rural 
pharmacies, and recommendations for potential Part D Star Ratings 
metrics related to these measures. Finally, we solicit comment on the 
data elements, timeline, and method of submission for the reporting of 
pharmacy performance measures.

I. Medical Loss Ratio (MLR) (Sec. Sec.  422.2420, 422.2440, and 
423.2440)

1. Background
    Section 1103 of Title I, Subpart B of the Health Care and Education 
Reconciliation Act (Pub. L. 111-152) amended section 1857(e) of the Act 
to add a medical loss ratio (MLR) requirement to Medicare Part C (MA 
program). An MLR is expressed as a percentage, generally representing 
the percentage of revenue used for patient care rather than for such 
other items as administrative expenses or profit. Because section 
1860D-12(b)(3)(D) of the Act incorporates by reference the requirements 
of section 1857(e) of the Act, these MLR requirements also apply to the 
Medicare Part D program. In the May 2013 Medicare MLR final rule, which 
codified the MLR requirements for Part C MA organizations and Part D 
sponsors (including organizations offering cost plans that offer the 
Part D benefit) in the regulations at 42 CFR part 422, subpart X and 
part 423, subpart X. In the April 2018 final rule (83 FR 16440), we 
changed certain aspects of the MLR calculation and revised the 
reporting requirements.
    For contracts for 2014 and later, MA organizations and Part D 
sponsors are required to report their MLRs and are subject to financial 
and other sanctions for a failure to meet the statutory requirement 
that they have an MLR of at least 85 percent (see Sec. Sec.  422.2410 
and 423.2410). The statute imposes several levels of sanctions for 
failure to meet the 85 percent minimum MLR requirement, including 
remittance of funds to CMS, a prohibition on enrolling new members, and 
ultimately contract termination. The minimum MLR requirement creates 
incentives for MA organizations and Part D sponsors to reduce 
administrative costs, such as marketing costs, profits, and other uses 
of the funds earned by plan sponsors, and helps to ensure that 
taxpayers and enrolled beneficiaries receive value from Medicare health 
and drug plans.
    This proposed rule sets forth our proposed changes to the incurred 
claims portion of the MLR numerator for MA contracts. We are also 
proposing to codify the current definitions of partial, full, and non-
credibility and the credibility factors for MA and Part D contracts, 
and to add a deductible factor for MA MSA contracts.
2. Regulatory Changes to Incurred Claims (Sec.  [thinsp]422.2420)
    Section 422.2420(a) of the regulations sets forth a high-level 
definition of the MLR as the ratio of the numerator, defined in 
paragraph (b), to the denominator, defined in paragraph (c). In 
general, MA costs are in the numerator and revenues are in the 
denominator. Section 422.2420(b)(1) identifies the three components of 
the MLR numerator for MA contracts that are not MSA contracts: (1) 
Incurred claims (as defined in paragraphs (b)(2) through (4)); (2) the 
amount of the reduction, if any, in the Part B premium for all MA plan 
enrollees under the contract for the contract year; and (3) 
expenditures under the contract for activities that improve health care 
quality, which are described in detail at Sec.  422.2430. For MA MSA 
contracts, the three components of the MLR numerator are (1) incurred 
claims (as defined in paragraphs (b)(2) through (4)); (2) expenditures 
under the contract for activities that improve health care quality; and 
(3) the amount of the deposit into the Medicare savings account for MSA 
enrollees. Our proposal is to revise the regulation text regarding the 
incurred claims portion of the numerator.
    Under current Sec.  422.2420(b)(2)(i), incurred claims include 
direct claims that the MA organization pays to providers (including 
under capitation contracts) for covered services (described at 
paragraph (a)(2) of that section) that are provided to all enrollees 
under the contract. Section 422.2 defines a ``provider'' for purposes 
of the MA regulations as any individual or entity that is engaged in 
the delivery of health care services in a State and is licensed or 
certified by the State to engage in that activity in the state, or to 
deliver those services if such licensing or certification is required 
by State law and regulation. Per Sec.  422.2420(a)(2), ``covered 
services'' are the benefits defined at Sec.  422.100(c): basic 
benefits, mandatory supplemental benefits, and optional supplemental 
benefits.
    As explained in greater detail in sections II.A. and VI.F. of this 
proposed rule, CMS is proposing to revise the regulations at Sec.  
422.100 to codify subregulatory guidance and statutory changes that 
have expanded the types of supplemental benefits that MA plans may 
include in their plan benefit packages (PBPs). The proposed amendment 
to Sec.  422.100(c)(2) would codify CMS's longstanding interpretation 
of the statute to require a supplemental benefit to be an item or 
service (1) that is primarily health related, such that the benefit 
diagnoses, compensates for physical impairments or acts to ameliorate 
the functional or psychological impact of injuries or health 
conditions, or reduces avoidable emergency and healthcare utilization; 
(2) for which the MA organization incurs a non-zero direct medical 
cost; and (3) that is not covered by Medicare Parts A, B, or D. In the 
contract year (CY) 2019 Call Letter, issued on April 2, 2018, CMS 
announced that we reinterpreted the scope of the ``primarily health 
related'' supplemental benefit definition. Under this reinterpretation, 
to be considered ``primarily health related,'' a supplemental benefit 
must focus directly on an enrollee's health care needs and should be 
recommended by a licensed medical professional as part of a health care 
plan, but it need not be directly provided by one. As part of proposed 
Sec.  422.100(c)(2), to account for the types of supplemental benefits 
that may be offered under the policy changes addressed in sections 
II.A. and VI.F. of this proposed rule, CMS is also proposing specific 
provisions to address permissible supplemental benefits that are not 
primarily health related and for which the non-zero direct cost 
incurred must be a non-administrative direct cost (if it is not a 
medical cost).
    In proposed Sec.  422.102(f), we are proposing to codify regulation 
text implementing amendments made by the BBA of 2018 to section 
1852(a)(3) of the Act to expand the types of supplemental benefits that 
may be offered to chronically ill enrollees, starting in contract year 
2020. Under paragraph (D) of section 1852(a)(3) of the Act, as added by 
the BBA of 2018, MA organizations may provide SSBCI that are not 
primarily health related to chronically ill enrollees, as long as the 
item or service has the reasonable expectation to improve or maintain 
the chronically ill enrollee's health or overall function.
    Under Sec.  422.2420(b)(2)(i) of the MA MLR regulations, incurred 
claims in the MLR numerator include direct claims paid to providers for 
covered services furnished to all enrollees under an MA contract. The 
amendment to section 1852(a)(3)(D) of the Act has expanded the types of 
supplemental benefits that can be ``covered services'' under an MA 
plan. The proposal to implement that change at Sec.  422.102(f) and the 
continuation of our policy for establishing what it means for a benefit

[[Page 9066]]

to be primarily health related both mean that permissible supplemental 
benefits might include items and services that would not typically be 
furnished by an individual or entity that is a ``provider'' as defined 
at Sec.  422.2. A provider, as defined in Sec.  422.2, is an individual 
or entity engaged in the delivery of health care services and who is 
licensed or certified by the State to engage in that activity in the 
State. To ensure that amounts that an MA organization pays for covered 
services to individuals or entities that are not health care providers 
are included in incurred claims under current Sec.  422.2420(b)(2)(i), 
we propose to amend the regulation to remove the specification that 
incurred claims are payments to providers for covered services.
    If incurred claims do not include amounts an MA organization pays 
to individuals or entities that are not providers for supplemental 
benefits, including SSBCI, under current rules these expenditures could 
still potentially be included in the MLR numerator as expenditures 
related to quality improvement activities (QIAs). To be considered QIA-
related expenditures under Sec.  422.2430, the benefit must be an 
activity that falls into one or more of the categories listed in 
paragraph (a)(2) of that section, and it must be designed for the 
purposes listed in paragraph (a)(3): (1) To improve health quality; (2) 
to increase the likelihood of desired health outcomes in ways that are 
capable of being objectively measured and of producing verifiable 
results; (3) to be directed toward individual enrollees, specific 
groups of enrollees, or other populations as long as enrollees do not 
incur additional costs for population-based activities; and (4) to 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. Although we 
believe that supplemental benefits that meet the expanded ``primarily 
health related'' standard at proposed Sec.  422.100(c)(2)(ii)(A) and 
non-primarily health related SSBCI described at proposed Sec.  
422.102(f) could potentially qualify as QIAs under Sec.  422.2430, 
whether a particular benefit met all of the requirements of that 
regulation would need to be determined on a case-by-case basis. With 
our proposal, this case-by-case determination would no longer be 
necessary for services that are covered under the plan benefit package 
offered by an MA plan pursuant to the statute and regulations governing 
the MA program; all expenditures for covered services would be included 
in the incurred claims portion of the MLR numerator.
    We believe that including in the MLR numerator amounts MA 
organizations spend on supplemental benefits that meet the ``primarily 
health related standard'' at proposed Sec.  422.100(c)(2)(ii)(A) and on 
non-primarily health related SSBCI under proposed Sec.  422.102(f) is 
consistent with the purpose of the MA MLR requirement. As explained in 
the May 2013 Medicare MLR final rule adopting the MLR regulations (78 
FR 31284), the MLR requirement creates an incentive for MA 
organizations to reduce administrative costs such as marketing costs, 
profits, and other uses of plan revenues, and to help ensure that 
taxpayers and enrolled beneficiaries receive value from Medicare health 
plans.
    In order to ensure that the MLR numerator includes amounts MA 
organizations spend on supplemental benefits that are ``primarily 
health related'' under proposed Sec.  422.100(c)(2)(ii)(A) and on non-
primarily health related SSBCI under proposed Sec.  422.102(f), we 
propose to modify the regulation at Sec.  [thinsp]422.2420(b)(2)(i) to 
remove the specification that incurred claims are direct claims that an 
MA organization pays to providers for covered services provided to all 
enrollees under the contract. We also propose to remove the 
specification that incurred claims include payments under capitation 
contracts with physicians. Finally, we propose to replace the phrase 
``direct claims,'' which customarily refers to billing invoices 
providers submit to payers for reimbursement, with the general term 
``amounts.'' As amended, Sec.  422.2420(b)(2)(i) would include in 
incurred claims all amounts that an MA organization pays (including 
under capitation contracts) for covered services, regardless of whether 
the recipient of the payment is a provider as defined in Sec.  422.2. 
Including in incurred claims amounts spent on these expanded 
supplemental benefits, as proposed, avoids creating uncertainty over 
whether payments for such services could otherwise be included in the 
MLR numerator (for example, as QIA-related expenditures), and it is 
consistent with our determination in the May 2013 Medicare MLR final 
rule (78 FR 31289) that incurred claims should reflect the benefit 
design under the contract.
3. Codifying Current Definitions of Partial, Full, and Non-Credibility 
and Credibility Factors (Sec. Sec.  [thinsp]422.2440 and 423.2440)
    The regulations at Sec. Sec.  422.2440 and 423.2440 provide for the 
application of a credibility adjustment to the medical loss ratios 
(MLRs) of certain MA and Part D contracts with relatively low 
enrollment. A credibility adjustment is a method to address the impact 
of claims variability on the experience of smaller contracts by 
adjusting the MLR upward. As discussed in the February 23, 2013 
Medicare Program; Medical Loss Ratio Requirements for the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs Proposed 
Rule (78 FR 12428, 12438) (hereinafter referred to as the ``February 
2013 Medicare MLR proposed rule''), for contracts with fewer members, 
random variations in the claims experience of enrollees could cause a 
contract's reported MLR to be considerably below or above the statutory 
requirement in any particular year, even though the MA organization or 
Part D sponsor estimated in good faith that the combination of the 
projected revenues and projected claims would produce an MLR that meets 
the statutory 85 percent minimum MLR requirement. The MLR credibility 
adjustments address the effect of this random variation by increasing 
the MLR of smaller contracts, thereby reducing the probability that 
such contracts will fail to meet the minimum MLR requirement simply 
because of random claims variability.
    Whether a contract receives a credibility adjustment depends on the 
extent to which the contract has credible experience. A contract with 
credible experience is one that covers a sufficient number of 
beneficiaries for its experience to be statistically valid. A contract 
with fully credible experience has sufficient data to expect that the 
statistical variation in the reported MLR is within a reasonably small 
margin of error and will not receive a credibility adjustment under 
Sec. Sec.  422.2440(b) and 423.2440(b). A contract has non-credible 
experience if it has so few beneficiaries that it lacks valid data to 
determine whether the contract meets the MLR requirement. Under 
Sec. Sec.  422.2440(c) and 423.2440(c), a contract with non-credible 
experience is not subject to sanctions for failure to meet the 85 
percent MLR requirement. A contract has partially credible experience 
if it exceeds the enrollment threshold for non-credible experience but 
does not have a sufficient number of enrollees for its experience to be 
fully credible. For contracts with partially credible

[[Page 9067]]

experience, a credibility adjustment adds additional percentage points 
to the MLR in recognition of the statistical unreliability of the 
underlying data.
    In the May 2013 Medicare MLR final rule (78 FR 31284, 31295-96), 
CMS published the definitions of partial, full, and non-credibility and 
the credibility factors for partially credible MA and Part D contracts 
for contract year 2014. The factors appear in proposed Table 1 to Sec.  
422.2440 and proposed Table 1 to Sec.  423.2440. Consistent with that 
final rule and regulations at Sec. Sec.  422.2440 and 423.2440, for 
contract years 2015 through 2020, we have finalized through the annual 
Advance Notice and Rate Announcement process the continued use of these 
definitions and credibility factors.
    We believe that the definitions of partial, full, and non-
credibility and the credibility factors published in the May 2013 
Medicare MLR final rule continue to appropriately address the effect of 
random claims variability on the MLRs of low enrollment MA and Part D 
contracts. However, we believe that it is more consistent with the 
policy and principles articulated in Executive Order 13892 on Promoting 
the Rule of Law Through Transparency and Fairness in Civil 
Administrative Enforcement and Adjudication (October 9, 2019) that we 
define and publish the definitions of partial, full, and non-
credibility and the credibility factors in the Federal Register, and 
that we codify these definitions and factors in the Code of Federal 
Regulations, as opposed to defining and publishing these terms and 
factors through the annual Advance Notice and Rate Announcement 
process. Therefore, we are proposing to amend the regulations at 
Sec. Sec.  422.2440 and 423.2440 to codify in regulation text the 
definitions of partial, full, and non-credibility and the credibility 
factors that CMS published in the May 2013 Medicare MLR final rule (78 
FR 31296). First, we propose to amend paragraph (d) of Sec. Sec.  
422.2440 and 423.2440 by removing the current text (which states that 
CMS will define and publish definitions of partial, full, and non-
credibility and the credibility factors through the annual Advance 
Notice and Rate Announcement process) and adding new paragraphs (d)(1) 
through (3) to specify ranges for the number of member months at which 
a contract's experience is, respectively, partially credible, fully 
credible, or non-credible. We propose that the number of member months 
at which a contract's experience is defined as partially credible, 
fully credible, or non-credible be the same as the values that were 
used define each of those terms in the May 2013 Medicare MLR final 
rule. Thus, for MA contracts, we propose that a contract is partially 
credible if it has at least 2,400 member months and fewer than or equal 
to 180,000 member months, fully credible if it has more than 180,000 
member months, and non-credible if it has fewer than 2,400 member 
months. For Part D contracts, we propose that a contract is partially 
credible if it has at least 4,800 member months and fewer than or equal 
to 360,000 member months, fully credible if it has more than 360,000 
member months, and non-credible if it has fewer than 4,800 member 
months. We propose to amend paragraphs (a), (b), and (c) of both 
Sec. Sec.  422.2440 and 423.2440 by removing the text which provides 
that CMS determines whether a contract's experience is partially 
credible, fully credible, or non-credible, respectively, and by adding 
new language specifying that partially credible experience is defined 
at (d)(1), fully credible experience is defined at (d)(2), and non-
credible experience is defined at (d)(3).
    At Sec.  422.2440, we propose to add new paragraph (e) to address 
the credibility adjustment for partially credible contracts. We propose 
at paragraph (e)(1) that, for partially credible MA contracts other 
than MSA contracts, the credibility adjustment is the base credibility 
factor determined under proposed paragraph (f). At proposed paragraph 
(f), we propose to specify that the base credibility factor for a 
partially credible MA contract is determined based on the number of 
member months and the factors in proposed Table 1 to Sec.  422.2440. 
Proposed paragraph (f) also states the rules for using proposed Table 1 
to Sec.  422.2440 to identify the base credibility factor: (i) When the 
number of member months for a partially credible MA contract exactly 
matches the amount in the ``Member months'' column in proposed Table 1 
to Sec.  422.2440, the value associated with that number of member 
months is the base credibility factor; and (ii) the base credibility 
factor for a number of member months between the values shown in 
proposed Table 1 to Sec.  422.2440 is determined by linear 
interpolation.
    At Sec.  423.2440, we propose to add new paragraph (e), which 
provides that for partially credible Part D contracts, the applicable 
credibility adjustment is determined based on the number of member 
months and the factors in proposed Table 1 to Sec.  423.2440. Proposed 
paragraph (e) states the rules for using proposed Table 1 to Sec.  
423.2440 to identify the base credibility factor: (1) When the number 
of member months used to determine credibility exactly matches a member 
month category listed in proposed Table 1 to Sec.  423.2440, the value 
associated with that number of member months is the credibility 
adjustment; and (ii) the credibility adjustment for a number of member 
months between the values shown in proposed Table 1 to Sec.  423.2440 
is determined by linear interpolation.
    To illustrate linear interpolation, if the number of member months 
for an MA contract falls between two values in proposed Table 1 to 
Sec.  422.2440, the base credibility factor would be calculated by 
first determining where, by percentage of the difference between those 
two values, the number of member months falls. Thus, if an MA contract 
has 10,000 member months, its number of member months falls 66.7 
percent of the way between 6,000 and 12,000 (equal to (10,000-6,000) / 
(12,000-6,000)). This percentage is multiplied by the difference 
between the base credibility factors corresponding to the number of 
member months in proposed Table 1 to Sec.  422.2440; 0.667 * (0.053-
0.037) = 0.011. To find the base credibility factor, this amount is 
subtracted from the factor corresponding to the lower number of member 
months in proposed Table 1 to Sec.  422.2440. Thus, 0.053-0.011 is 
equal to 0.042, or 4.2 percent, which is the base credibility factor 
for an MA contract with 10,000 member months.
4. Deductible Factor for MA Medical Savings Account (MSA) Contracts 
(Sec.  422.2440)
    We are proposing to include in the MLR calculation an additional 
adjustment factor for MA medical savings account (MSA) contracts that 
receive an MLR credibility adjustment. Specifically, we are proposing 
that the credibility adjustment for partially credible MA MSA contracts 
will be calculated by multiplying the applicable base credibility 
factor in proposed Table 1 to Sec.  422.2440 by a ``deductible 
factor.'' This additional adjustment for MA MSAs is intended to 
recognize that the variability of claims experience is greater under 
health insurance policies with higher deductibles than under policies 
with lower deductibles, with high cost or outlier claims representing a 
larger portion of the overall claims experience of plans with high 
deductibles. As a result, a contract with a high average deductible is 
more likely to report a low MLR than is a contract with the same number 
of enrollees but with a low average deductible. As under the commercial 
MLR rules, the proposed deductible-based adjustment would only apply to 
contracts that receive a credibility adjustment due to low enrollment. 
We believe that a

[[Page 9068]]

contract with experience that is fully credible has sufficient data to 
expect that the statistical variation in the reported MLR is within a 
reasonably small margin of error, regardless of the deductible level.
    As explained in the February 2013 Medicare MLR proposed rule (78 FR 
12428), CMS used the MLR rules that apply to issuers of employer group 
and individual market private insurance (referred to hereafter as the 
``commercial MLR rules'') as a reference point for developing the MLR 
rules for MA and Part D (referred to hereafter as 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. However, we 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 way in which the Medicare MLR rules 
currently deviate from the commercial rules is the omission of a 
deductible-based adjustment to the Medicare MLR calculation. The 
rationale given in the February 2013 Medicare MLR proposed rule for 
omitting a deductible factor from the Medicare MLR calculation was that 
Medicare deductibles were more confined than deductibles in the 
commercial market, and that we believed that the limited range of 
Medicare cost sharing did not prompt the need for such an adjustment 
(78 FR 12439).
    Although we continue to believe that deductibles for most MA and 
Part D contracts are too low to necessitate the adoption of a 
deductible factor for all contracts, we now recognize that the February 
2013 Medicare MLR proposed rule's rationale for excluding a deductible 
factor from the Medicare MLR calculation did not adequately take into 
account the specific characteristics of MA MSA plans, which tend to 
have much higher deductibles than other MA plan types. (For contract 
year 2020, the average deductible is $454 for MA plans (excluding MA 
MSAs) and $6,000 for MA MSAs.) We note that, under the commercial MLR 
regulations at 45 CFR part 158, a deductible factor applies to the 
credibility adjustment of issuers of employer group and private health 
insurance plans that have an average deductible of $2,500 or higher. 
For contract year 2020, all MA MSAs have deductibles in excess of 
$2,500. These significantly higher deductibles in MSA plans cause MA 
MSA contracts to have more variability in their claims experience 
relative to MA contracts with the same number of enrollees but lower 
deductibles. To the extent that this variability in claims experience 
and its potential impact on the MLR calculation has deterred MA 
organizations from offering an MSA product, the proposed addition of a 
deductible factor to the MLR calculation for MA MSAs would serve to 
encourage the offering of MA MSA plans by eliminating the current 
inconsistency in how the commercial and Medicare MLR rules take into 
account the greater variability of claims experience under health 
insurance policies with high deductibles.
    The proposal to add a deductible factor to the MLR calculation for 
MA MSA contracts also aligns with the directive in Executive Order 
13890 on Protecting and Improving Medicare for Our Nation's Seniors 
(October 3, 2019) for the Secretary to take actions that ``encourage 
innovative MA benefit structures and plan designs, including through 
changes in regulations and guidance that reduce barriers to obtaining 
Medicare Medical Savings Accounts . . . .'' (emphasis added). 
Currently, for many Medicare beneficiaries, the greatest barrier to 
enrolling in an MA MSA is the lack of MA MSA plans in the beneficiary's 
area of residence. For contract year 2020, MA MSA plans are only 
available in 27 states and the District of Columbia. The omission of a 
deductible-based adjustment from the current Medicare MLR regulations 
could contribute to the limited availability of MA MSAs for Medicare 
beneficiaries because the greater variability in the MLR for contracts 
with high average deductibles--and the resulting higher risk of a 
potential remittance to CMS or sanctions under Sec.  422.2410--could 
dissuade MA organizations from offering plans of this type. We believe 
that, if the proposed change is finalized, MA organizations would be 
less likely to be deterred from offering MA MSAs out of concern that 
the MA MSA contract would be at risk of failing to meet the MLR 
requirement due to random variations in claims experience.
    We propose to adopt the same deductible factors that apply under 
the commercial MLR regulations at 45 CFR part 158. As noted in the 
Health Insurance Issuers Implementing Medical Loss Ratio (MLR) 
Requirements Under the Patient Protection and Affordable Care Act 
Interim Final Rule (75 FR 74864, 74881-82, published December 1, 2010), 
the commercial deductible factors were based on an actuarial analysis 
of anticipated claims experience in the commercial market by actuarial 
consultants to the National Association of Insurance Commissioners 
(NAIC). Our preference is to use Medicare data to develop the 
deductible factors that apply to MA MSAs, and we are working to assess 
how to use Medicare data for this purpose. We believe that the 
commercial deductible factors are suitable for adjusting MSA MLRs in 
the absence of Medicare-specific deductible factors because the 
commercial factors are designed to take into account the variability in 
claims experience resulting from similarly high deductibles. In order 
to advance the use of MSAs in the MA program, we are proposing to apply 
the commercial deductible factors in the MLR calculation for MA MSAs. 
We intend to assess the feasibility of developing deductible factors 
using Medicare data. We solicit comment on whether and how Medicare 
data should be used to evaluate whether the difference in variability 
between MLRs for MSA plans and non-MSA plans necessitates the use of 
Medicare-specific deductible factors, as well as how Medicare data 
could be used to develop Medicare-specific deductible factors. We also 
solicit comment on whether and how the proposed deductible factors 
should be adjusted to account for any unique features of the Medicare 
MLR rules (for example, the inclusion of the MA MSA deposit amount in 
the Medicare MLR numerator and denominator), or to reflect any 
differences between the commercial and Medicare MLR rules (such as the 
commercial rules' lower minimum MLR requirement for small group and 
individual health insurance plans (80 percent, compared to the Medicare 
rules' 85 percent MLR requirement for all contracts)). We solicit 
comment on potential consequences of the application of a deductible 
factor to the MLR calculation for MA MSA contracts, such as impacts on 
benefits for enrollees in MSA plans.
    We propose new Sec.  422.2440(e)(2) to specify that the credibility 
adjustment for an MA MSA contract will be the base credibility factor 
determined under proposed paragraph (f), multiplied by the deductible 
factor determined under proposed paragraph (g). At proposed paragraph 
(g), we specify that the applicable deductible factor for an MA MSA 
contract will be based on the enrollment-weighted average deductible 
for all MSA plans under the contract, where the deductible for each 
plan under the contract is weighted by the plan's portion of the total 
number of member months for all plans under the contract during the 
contract year for

[[Page 9069]]

which the MLR is being calculated. (We note that all MA plans under an 
MA MSA contract must be MSA plans, and MSA plans may only be offered 
under MSA contracts.) When the weighted average deductible for a 
contract exactly matches the amount in the ``Weighted average 
deductible'' column in proposed Table 2 to Sec.  422.2440, the value 
associated with that weighted average deductible is the deductible 
factor. The deductible factor for a weighted average deductible between 
the values shown in proposed Table 2 to Sec.  422.2440 is determined by 
linear interpolation.
    To illustrate calculation of the credibility adjustment for a 
partially credible MA MSA contract, if enrollment under an MA MSA 
totals 24,000 member months, the base credibility factor in proposed 
Table 1 to Sec.  422.2440 is 2.6 percent. If the contract's weighted 
average deductible is $5,000, the deductible factor in proposed Table 2 
to Sec.  422.2440 is 1.402. The credibility adjustment is calculated by 
multiplying the base credibility factor by the deductible factor; 0.026 
* 1.402 = 0.036. Thus, the credibility adjustment is 3.6 percent.
    If an MA MSA contract has a weighted average deductible that falls 
between two values in proposed Table 2 to Sec.  422.2440, the 
deductible factor is calculated by first determining where, by 
percentage of the difference between those two values, the weighted 
average deductible falls. Thus, if an MA MSA has a weighted average 
deductible of $8,000, its weighted average deductible falls 60 percent 
of the way between $5,000 and $10,000 (equal to ($8,000-$5,000) / 
($10,000-$5,000)). This percentage is multiplied by the difference 
between the deductible factors corresponding to the weighted average 
deductibles in proposed Table 2 to Sec.  422.2440; 0.60 * (1.736-1.402) 
= 0.200. To find the deductible factor, this amount is added to the 
factor corresponding to the lower weighted average deductible in 
proposed Table 2 to Sec.  422.2440. Thus, 1.402 + 0.2 is equal to 
1.602, which is the deductible factor for a weighted average deductible 
of $8,000.

J. Dismissal and Withdrawal of Medicare Part C Organization 
Determination and Reconsideration and Part D Coverage Determination and 
Redetermination Requests (Sec. Sec.  422.568, 422.570, 422.582, 
422.584, 422.590, 422.592, 422.631, 422.633, 423.568, 423.570, 423.582, 
423.584, and 423.600)

    We are proposing regulations for withdrawing or dismissing Part C 
organization determination and reconsideration requests and Part D 
coverage determination and redetermination requests. We are also 
proposing regulations for withdrawing or dismissing Part C and Part D 
independent review entity (IRE) reconsiderations. A withdrawal of a 
request is when the party that initiated the request voluntarily 
decides that a decision on their request is no longer needed, and the 
party communicates that desire to the plan to stop consideration of the 
request for determination (or reconsideration). A dismissal of a 
request is when a plan decides to stop consideration of a request 
before issuing a decision. The effect of both a withdrawal and a 
dismissal is that the plan does not proceed with making a substantive 
decision on the merits of the coverage request.
    Under Sec.  422.562(d)(1), which provides that unless subpart M 
provides otherwise, and subject to specific exclusions set forth in 
paragraph (d)(2), the regulations in part 405 (concerning the 
administrative review and hearing processes and representation of 
parties under titles II and XVIII of the Act) apply to MA cases to the 
extent they are appropriate. Given that the dismissal requirements in 
Sec.  405.952 apply to withdrawal or dismissal of a request for a 
redetermination (which is the first level of appeal in the Medicare 
fee-for-service (FFS) program), we believe the applicability of those 
provisions is generally limited to Part C plan level reconsiderations 
but not to initial organization determinations. In addition, we believe 
the requirements at Sec.  405.972 are generally applicable to 
withdrawal or dismissal of a reconsideration by the independent review 
entity under the provisions of Sec.  422.562(d)(1). For Part D 
requests, the regulations at part 423, subpart U, apply to cases 
reviewed by the Office of Medicare Hearings and Appeals (OMHA) and the 
Appeals Council. Currently, the Part D withdrawal and dismissal 
procedures applicable to Part D plan sponsors is communicated through 
sub-regulatory guidance.
    In the absence of Part C and Part D regulations related to 
withdrawal and dismissal of requests that are under consideration at 
the plan level, we have observed through plan audits and inquiries that 
MA organizations and Part D plan sponsors utilize Sec.  405.952 as a 
guide for handling the withdrawal and dismissal of initial requests for 
coverage (that is, organization determinations and coverage 
determinations) and plan level appeals from those decisions (that is., 
reconsiderations). Based on the number of inquiries CMS has received 
regarding withdrawal and dismissal of Part C organization 
determinations and reconsiderations and Part D coverage determinations 
and redeterminations, we are proposing rules that would apply when 
these procedural actions are taken. These proposals would codify what 
we believe to be the current practices related to dismissal of Part C 
organization determination and reconsideration requests and Part D 
coverage determination and reconsideration requests, including those 
applicable to the Part C and Part D IRE. The proposals would also apply 
to requests for integrated organization determinations and 
reconsiderations at Sec. Sec.  422.631 and 422.633. The proposals 
specifically address under what circumstances it would be appropriate 
to dismiss a coverage request or appeal at the plan or IRE level. We 
are also proposing rules for how a party may request to withdraw their 
coverage request or appeal at the plan or IRE level. The proposed 
requirements would be consistent across both Part C and Part D and 
would be as follows:
     In proposed new Sec. Sec.  422.568(g), 422.631(e), and 
423.568(i), we are proposing to permit a plan to dismiss a request for 
the initial plan level decision (that is, organization determination, 
integrated organization determination or coverage determination) when 
any of the following apply--
    ++ The individual or entity making the request is not permitted to 
request an organization determination or coverage determination.
    ++ The plan determines that the individual or entity making the 
request failed to make a valid request for an organization 
determination or coverage determination.
    ++ The enrollee dies while the request is pending and the 
enrollee's spouse or estate has no remaining financial interest in the 
case and no other individual or entity with a financial interest in the 
case wishes to pursue the organization determination or coverage 
determination; we note that we interpret having a financial interest in 
the case as having financial liability for the item(s) or service(s) 
underlying the coverage request.
    ++ The individual or entity who requested the review submits a 
timely written request for withdrawal of their request for an 
organization determination or coverage determination with the plan.
     In proposed Sec. Sec.  422.570(g) and 423.570(f), we are 
proposing to permit a plan to dismiss an expedited organization 
determination or coverage determination, consistent with the proposed 
requirements at Sec. Sec.  422.568

[[Page 9070]]

and 423.568, respectively. Applicability of these procedures to 
expedited integrated coverage determinations is described in proposed 
Sec.  422.631(e).
     In proposed Sec. Sec.  422.582(f), 422.633(h), and 
423.582(e), we are proposing to permit a plan to dismiss (either 
entirely or as to any stated issue) a request for the second plan level 
decision (that is, reconsideration, integrated reconsideration or 
redetermination) when any of the following apply--
    ++ The individual or entity making the request is not a proper 
party to the reconsideration, integrated reconsideration, or 
redetermination under the applicable regulation; we mean this to 
authorize dismissal when the individual or entity making the request is 
not permitted to request a reconsideration, integrated reconsideration, 
or redetermination.
    ++ When the plan determines the party failed to make a valid 
request for a reconsideration, an integrated reconsideration, or a 
redetermination that substantially complies with the applicable 
regulation for making a valid request for reconsideration or 
redetermination.
    ++ When the party fails to file the reconsideration, integrated 
reconsideration or redetermination request within the proper filing 
time frame in accordance with the applicable regulation.
    ++ When the enrollee dies while the reconsideration or 
redetermination is pending and the enrollee's spouse or estate has no 
remaining financial interest in the case and no other individual or 
entity with a financial interest in the case wishes to pursue the 
reconsideration or redetermination. We interpret having a financial 
interest in the case as having financial liability for the item(s) or 
service(s) underlying the coverage request.
    ++ When the individual or entity submits a timely written request 
to withdraw their request for a reconsideration or redetermination.
     At new Sec.  422.584(g), we are proposing to permit a plan 
to dismiss an expedited reconsideration using virtually identical 
language as for the proposed requirements at Sec.  422.582. At new 
Sec.  423.584(f), we are proposing to permit a plan to dismiss an 
expedited redetermination by cross referencing Sec.  423.582. 
Applicability of these procedures to expedited integrated coverage 
determinations is described in proposed Sec.  422.633(h).
     At new Sec. Sec.  422.592(d) and 423.600(g), we are 
proposing to permit the Part C and Part D IRE to dismiss a request when 
any of the following apply--
    ++ The individual or entity is not a proper party under Sec.  
422.578(c) in the case of a Part C reconsideration or is not permitted 
to request a reconsideration by the IRE under Sec.  423.600(a) in the 
case of a Part D reconsideration.
    ++ The independent entity determines the party failed to make out a 
valid request for a reconsideration that substantially complies with 
the applicable regulation.
    ++ When the enrollee dies while the reconsideration request is 
pending and the enrollee's spouse or estate has no remaining financial 
interest in the case and no other individual or entity with a financial 
interest in the case wishes to pursue the reconsideration. We interpret 
having a financial interest in the case as having financial liability 
for the item(s) or service(s) underlying the coverage.
    ++ When the individual or entity submits with the independent 
review entity a timely written request for a withdrawal of the 
reconsideration.
     In proposed Sec. Sec.  422.568(h), 422.582(g), 422.592(e), 
422.631(f), 422.633(i), 423.568(j), 423.582(f), and 423.600(h) we are 
proposing that written notice of the dismissal must be delivered to the 
parties (either mailed or otherwise transmitted) to inform them of the 
action; this would include the individual or entity who made the 
request. The notice must include certain information, as appropriate, 
including applicable appeal rights (that is, request to vacate 
dismissal, review of the dismissal).
     In proposed Sec. Sec.  422.568(i), 422.582(h), 422.592(f), 
422.631(g), 422.633(j), 423.568(k), 423.582(g), and 423.600(i), we are 
proposing that a dismissal may be vacated by the entity that issued the 
dismissal (that is, MA organizations, applicable integrated plans, Part 
D plan sponsors, and the IRE) if good cause for doing so is established 
within 6 months of the date of the date of the dismissal.
     In proposed Sec. Sec.  422.568(j), 422.631(h), and 
423.568(l), we are proposing that the dismissal of the organization 
determination or coverage determination is binding unless it is vacated 
by the MA organization, applicable integrated plan, or Part D plan 
sponsor, as applicable.
     At new Sec. Sec.  422.582(i), 422.633(k), and 423.582(h), 
we are proposing that the dismissal of the reconsideration or 
redetermination is binding unless the enrollee or other valid party 
requests review by the IRE or the dismissal is vacated under the 
applicable regulation.
     At new Sec. Sec.  422.592(g) and 423.600(j), we are 
proposing that a dismissal by the IRE is binding and not subject to 
further review unless a party meets the amount in controversy threshold 
requirements necessary for the right to a review by an administrative 
law judge or attorney adjudicator and the party files a proper request 
for review with the Office of Medicare Hearings and Appeals as outlined 
in Sec. Sec.  422.600, 422.602, and 423.600(j), as applicable.
     At new Sec. Sec.  422.568(k), 422.592(h), 422.631(i), 
422.633(g), 423.568(m), and 423.600(f), we are proposing that a party 
that makes a request may withdraw its request at any time before the 
decision is issued by filing a written request for withdrawal. Each 
proposed regulation paragraph identifies the entity (that is, the MA 
organization, the applicable integrated plan, or the Part D plan) with 
which the request for withdrawal must be filed.
    We are also proposing a change that applies to Part C only, given 
that the current rules do not include a process for an enrollee or 
other party to request IRE review of an MA organization's 
reconsideration. Specifically, we are proposing to add a new paragraph 
(h) to Sec.  422.590 that would give the enrollee or another party to 
the reconsideration the right to request review by the independent 
entity of an MA organization's dismissal of a request for a 
reconsideration in accordance with Sec. Sec.  422.582(f) and 
422.584(g). We believe this proposed language is necessary because 
there is currently no process specified in regulation for an MA 
enrollee or another party to request review by the independent entity 
of an MA organization's reconsideration. We are also proposing at new 
paragraph (h) of Sec.  422.590 that a request for review of such a 
dismissal must be filed in writing with the independent entity within 
60 calendar days from the date of the MA organization's dismissal 
notice. Under existing rules at Sec.  422.590(a)(2), (b)(2), (c)(2), 
(d), (e)(5), and (g),\63\ if the MA organization makes a reconsidered 
determination that affirms, in whole or in part, its adverse 
organization determination, it must prepare a written explanation and 
send the case file to the independent entity contracted by CMS as 
expeditiously as the enrollee's health condition requires, but no later 
than 30 calendar days from the date it receives the request for a 
reconsideration (or no later than the expiration of an applicable 
extension). These regulations that require a case to be automatically 
sent to the independent entity do not

[[Page 9071]]

apply in the case of a dismissal of a request for a reconsideration 
because the MA organization is not making a substantive decision on the 
merits of the request. In other words, if the MA organization dismisses 
a reconsideration request, this does not constitute an affirmation of 
an adverse organization determination decision and, therefore, the case 
is not subject to being automatically forwarded to the independent 
entity. Under the current process established through an HPMS memo 
issued September 10, 2013 and effective January 1, 2014, MA 
organizations dismiss reconsideration requests, when appropriate, and 
provide notice of the dismissal, including informing enrollees and 
other parties of the opportunity to request that the independent entity 
review the dismissal. The proposal to add a new paragraph (h) to Sec.  
422.590 seeks to establish in regulation the right of enrollees and 
other parties to request review by the independent entity of the MA 
organization's dismissal of a request for a reconsideration in 
accordance with Sec. Sec.  422.582(f) and 422.584(g).
---------------------------------------------------------------------------

    \63\ We note that Sec.  422.590 was extensively amended by the 
April 2019 final rule, effective January 1, 2020.
---------------------------------------------------------------------------

    As a corollary to this proposal, we are also proposing to revise 
paragraph (a) of Sec.  422.592 to state that, consistent with proposed 
Sec.  422.590(h), the independent entity is responsible for reviewing 
MA organization dismissals of reconsideration requests. Further, we are 
proposing a new paragraph (i) at Sec.  422.592 to state that the 
independent entity's decision regarding an MA organization's dismissal, 
including a decision to deny a request for review of a dismissal, is 
binding and not subject to further review. Under this proposal, if the 
independent entity determines that the MA organization's dismissal was 
in error, the independent entity would vacate the dismissal and remand 
the case to the plan for reconsideration. In such cases, the MA 
organization must accept the remand from the independent entity and 
consider the substance of the reconsideration request. Again, this 
proposal is consistent with existing guidance on the processing of 
dismissals of requests for an MA organization reconsideration and 
should be familiar to MA organizations and the independent review 
entity.
    We are also proposing a change that applies to Part D only, given 
that the current rules do not include a process for enrollees to 
request IRE review of plan sponsor dismissals of redetermination 
requests. Under existing rules at Sec.  423.600(a), an enrollee may 
request reconsideration from the IRE of a plan sponsor's 
redetermination, but there is no existing regulatory mechanism for an 
enrollee to seek IRE review if a plan takes the procedural action of 
dismissing a redetermination request.
    We are proposing to add a new paragraph (f) at Sec.  423.582 to 
establish in regulation the right of enrollees and other parties to 
request review by the independent entity of the Part D plan sponsor's 
dismissal of a request for a redetermination. As a corollary to this 
proposal, we are also proposing to add paragraph (j) at Sec.  423.590 
to state that, consistent with proposed Sec.  423.584(f), an enrollee 
can request review of a Part D plan sponsor's dismissal of a 
redetermination request by the independent entity. Further, we are 
proposing a new paragraph (k) at Sec.  423.600 to state that if the 
independent entity determines that the Part D plan sponsor's dismissal 
was in error, the independent entity would reverse the dismissal and 
remand the case to the plan for a redetermination on the merits of the 
case. We believe this proposed language is necessary because there is 
currently no process specified in regulation for a Part D enrollee or 
another party to request review by the independent entity of a Part D 
plan sponsor's dismissal.
    Although creating a process for enrollees to request IRE review of 
a Part D plan sponsor dismissal of redetermination request is not 
simply codifying current practice, we have not included a Regulatory 
Impact Analysis for this provision in the Collection of Information 
section because this change is technical in nature, but seek comment on 
this assumption. It aligns language for Part C and Part D. For the 
reasons given in the next paragraph, we believe it will have no impact.
    Plan dismissals in Part D are different than plan dismissals in 
Part C. In Part C, a plan may dismiss an organization determination 
request for a number of reasons. However, Part D plan level dismissals 
tend to be purely administrative (for example, pertaining to a lack of 
proper submission). For that reason, the number of plan level 
dismissals in Part D is much lower than in Part C. Additionally, 
because Part D dismissals are administrative, in most cases it will be 
more prudent and expeditious for a party to resubmit their coverage 
determination request with the correct information than to request 
independent review of the dismissal. Requesting independent review of a 
dismissal will add increased paperwork and time. Therefore, while it is 
important to have parity and consistency between the regulations in 
FFF, Part C and Part D, we do not believe there will be many, if any, 
requests for independent review of Part D plan level dismissals.
    These proposed rules generally mirror the current FFS rules at 
Sec. Sec.  405.952 and 405.972 to the extent we believe is appropriate. 
We believe it is appropriate to base these proposed rules on the 
existing FFS rules related to withdrawal and dismissal of requests 
given the applicability, to the extent appropriate, of those rules to 
Part C per Sec.  422.562(d)(1), as well as the observed current 
practices of both MA organizations and Part D plan sponsors. We believe 
that codification of these procedures will reduce confusion and promote 
consistent and proper handling of withdrawals and dismissals. 
Furthermore, we believe these proposals will be beneficial to enrollees 
because there will be clarity and consistency in how plans process 
these actions. We are not scoring this provision in the Regulatory 
Impact Analysis section since it codifies existing guidance, but seek 
comment on this assumption. We believe all stakeholders are already 
following the current guidance. We are also not scoring this provision 
in the Collection of Information section since the filing of an appeal 
is an information collection associated with an administrative action 
pertaining to specific individuals or entities and thus exempt from 
Paperwork Reduction Act requirements under 5 CFR 1320.4(a)(2) and (c). 
We welcome comments on these proposals.
    We believe that the proposed addition of parallel provisions 
regarding dismissals and withdrawals to the integrated organization 
determination and integrated reconsideration procedures at Sec. Sec.  
422.631 and 422.633 also reflect current D-SNP operations. We seek 
comment, however, on whether these rules could create inconsistencies 
with any state-specific Medicaid procedures pertaining to dismissals or 
withdrawals. We note that under Sec.  422.629(c), states have the 
ability through their contracts with D-SNPs to require more stringent 
beneficiary protections regarding timeframes and notices. We encourage 
commenters to consider if any Medicaid-related inconsistencies could be 
addressed through such contractual language and to submit comments on 
this topic.
    We also request comment whether additional clarification or 
regulatory changes are necessary to ensure smooth operations for MA 
organizations, applicable integrated plans, or Part D plans in 
connection with implementing this proposal or if additional beneficiary 
protections need to be addressed. We believe that this proposal would 
streamline and standardize processes

[[Page 9072]]

while empowering beneficiaries in these plans to take steps to withdraw 
their appeals when they like. Further, by clarifying the authority for 
plans and IREs to dismiss coverage requests and appeals where there is 
no longer a financial interest for any enrollee or where the minimum 
standards for the content and timing of a request are not met, we hope 
to minimize administrative burden for plans.

K. Methodology for Increasing Civil Money Penalties (CMPs) (Sec. Sec.  
422.760 and 423.760)

    CMS may impose civil money penalties (CMPs) on MA organizations and 
Part D sponsors for certain regulatory offenses, as described in 
subpart O of 42 CFR parts 422 and 423. Sections 1857(g)(3)(A) and 
1860D-12(b)(3)(E) of the Act provides CMS with the ability to impose 
CMPs of up to $25,000 per determination (determinations are those which 
could otherwise support contract termination, pursuant to Sec.  422.509 
or Sec.  423.510), as adjusted annually under 45 CFR part 102, when the 
deficiency on which the determination is based adversely affects or has 
the substantial likelihood of adversely affecting an individual covered 
under the organization's contract. The current regulations mirror the 
statute with respect to the amount of the penalty that CMS may impose 
for a per determination (contract level) penalty. Additionally as 
specified in Sec. Sec.  422.760(b)(2) and 423.760(b)(2) CMS is 
permitted to impose CMPs of up to $25,000, as adjusted annually under 
45 CFR part 102, for each Part D enrollee directly adversely affected 
or with a substantial likelihood of being adversely affected by a 
deficiency.
    CMS has the authority to issue a CMP up to the maximum amount 
permitted under regulation, as adjusted annually \64\ for each affected 
enrollee or per determination. The statute and the existing regulations 
afford the agency wide discretion to calculate CMPs. CMS does not apply 
the maximum penalty amount authorized under regulation, in all 
instances because the penalty amounts under the current CMP calculation 
methodology are sufficient to encourage compliance with CMS rules. On 
December 15, 2016, CMS released on its website, the first public CMP 
calculation methodology for calculating CMPs for MA organizations and 
Part D sponsors starting with referrals received in 2017. On March 15, 
2019, CMS released for comment a proposed CMP calculation methodology 
on its website that revised some portions of the methodology released 
in December 2016. Subsequently, on June 21, 2019, CMS finalized the 
revised CMP calculation methodology document, made it available on its 
website, and applied it to CMPs issued starting with referrals received 
in contract year 2019 and beyond. CMS also indicated in the revised 
June 2019 CMP calculation methodology that CMS would memorialize the 
approach to increase minimum penalty amounts in regulation, which is 
specified in this proposal.\65\
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    \64\ Per the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, which amended the Federal Civil Penalties 
Inflation Adjustment Act of 1990, the maximum monetary penalty 
amount applicable to 42 CFR 422.760(b), 423.760(b), and 460.46(a)(4) 
will be published annually in 45 CFR part 102. Pursuant to Sec.  
417.500(c), the amounts of civil money penalties that can be imposed 
for Medicare Cost Plans are governed by section 1876(i)(6)(B) and 
(C) of the Act, not by the provisions in part 422. Section 1876 
solely references per determination calculations for Medicare Cost 
Plans. Therefore, the maximum monetary penalty amount applicable is 
the same as Sec.  422.760(b)(1).
    \65\ See the ``Downloads'' section of the following CMS web page 
for the 2019 CMP Methodology and 2019 CMP Methodology Comments 
Responses Document: https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/PartCandPartDEnforcementActions-.
---------------------------------------------------------------------------

    CMS calculates the CMP amount for each deficiency by applying a 
standard formula. Under the standard formula, CMS applies a standard 
penalty amount (based on whether the deficiency should be calculated on 
a per enrollee or per determination basis) to the deficiency, and 
adjusts it for any factors that contributed to the deficiency (that is, 
aggravating factors). If the penalty for a deficiency is calculated on 
a per determination basis pursuant to Sec. Sec.  422.760(b)(1) and 
423.760(b)(1), the penalty amount is multiplied by the number of 
affected contracts. If a penalty for a deficiency is calculated on a 
per enrollee basis pursuant to Sec. Sec.  422.760(b)(2) and 
423.760(b)(2), the penalty amount is multiplied by the number of 
affected enrollees.
    The Federal Civil Penalties Inflation Adjustment Act Improvement 
Act of 2015 (Sec. 701 of Pub. L. 114-74) requires agencies to adjust 
the maximum CMP amounts for inflation annually. The Office of 
Management and Budget (OMB) releases the cost-of-living multiplier 
agencies must use to calculate penalty increases for the following 
year.\66\ CMS, however, has the discretion to set CMP amounts below the 
maximum amount required by law. CMS proposes increasing the per 
determination and per enrollee standard minimum penalty amounts and 
associated aggravating factors by multiplying the standard minimum 
penalty amounts by the cost-of-living multiplier published annually by 
OMB.\67\
---------------------------------------------------------------------------

    \66\ See OMB Memorandum M-19-04 for the 2019 inflation 
adjustment multiplier. Available at: https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf.
    \67\ Per OMB Memoranda M-19-04, Implementation of Penalty 
Inflation Adjustments for 2019, Pursuant to the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, 
published December 14, 2018, the cost-of-living adjustment 
multiplier for 2019 is 1.02522.
---------------------------------------------------------------------------

    CMS proposes to update the minimum penalty and aggravating factor 
amounts no more often than every 3 years. Historically, CMS has audited 
Part C and D organizations on a three-year audit cycle. Therefore, CMS 
proposes to update penalty amounts consistent with this schedule in an 
effort to subject organizations audited within the same audit cycle to 
the same penalty amounts. When the standard penalty amount is updated, 
CMS proposes to increase the penalty amounts that would have been 
applied if CMS had multiplied the standard penalty amounts by the cost-
of-living multiplier each year during the preceding 3-year period. CMS 
also proposes to track the accrual of the standard penalty and 
aggravating factor penalty amounts and announce them on an annual 
basis. CMS proposes to codify this minimum penalty adjustment process 
by adding a new paragraph (b)(3) to Sec. Sec.  422.760 and 423.760, and 
redesignating current paragraphs (b)(3) and (4) as paragraphs (b)(4) 
and (5).

VI. Codifying Existing Part C and D Program Policy

A. Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B 
Services (Sec. Sec.  422.100 and 422.101)

    Section 1852(b)(1) of the Act prohibits discrimination by MA 
organizations on the basis of health status-related factors and directs 
that CMS may not approve an MA plan if CMS determines that the design 
of the plan and its benefits are likely to substantially discourage 
enrollment by certain MA eligible individuals. Under the authority of 
sections 1852(b)(1)(A), 1856(b)(1), and 1857(e)(1) of the Act, CMS 
added Sec. Sec.  422.100(f)(4) and (5) and 422.101(d)(2) and (3), 
effective for coverage in 2011, to require all MA plans (including 
employer group waiver plans (EGWPs) and special needs plans (SNPs)) to 
establish limits on enrollee out-of-pocket cost sharing for Parts A and 
B services that do not exceed the annual limits established by CMS (75 
FR 19709-11). We note that MA EGWPs must follow all relevant MA 
regulations and guidance unless CMS has

[[Page 9073]]

specifically waived a requirement under its 1867(i) statutory 
authority. Section 1858(b)(2) of the Act requires a limit on in-network 
and out-of-pocket expenses for enrollees in Regional Preferred Provider 
Organization (RPPO) MA plans. In addition, MA Local PPO (LPPO) plans, 
under Sec.  422.100(f)(5), and RPPO plans, under section 1858(b)(2) of 
the Act and Sec.  422.101(d)(3), are required to have two maximum out-
of-pocket (MOOP) limits (also called catastrophic limits) established 
by CMS annually, including (a) an in-network and (b) a total 
catastrophic (combined) limit that includes both in-network and out-of-
network items and services covered under Parts A and B. Relying on the 
same authority, we are proposing amendments to the regulations at 
Sec. Sec.  422.100(f)(4) and (5) and 422.101(d)(2) and (3) to specify 
how these MOOP limits will be set for 2022 and subsequent years. In 
addition, our proposals here take into account statutory changes that 
are relevant to how CMS sets benefit category cost sharing limits. As 
discussed in section IV.A. of this proposed rule, section 17006 of the 
Cures Act amended section 1851(a)(3) of the Act to allow Medicare 
eligible beneficiaries with diagnoses of end-stage renal disease (ESRD) 
to choose a MA plan for Medicare coverage starting January 1, 2021, 
without the limits on such enrollment that currently apply.
    CMS proposes to modify the regulations at Sec. Sec.  422.100(f)(4) 
and (5) and 422.101(d)(2) and (3) to establish a methodology for 
setting the MOOP limits that takes into account how Medicare 
beneficiaries with diagnoses of ESRD will have greater access to MA 
plan coverage beginning with contract year 2021. Specifically, CMS 
proposes a multiyear transition that incorporates ESRD costs into the 
methodology for setting the MOOP limits. In addition, CMS proposes to 
provide additional transparency on how CMS determines up to three MOOP 
limits for local and regional plans by codifying the methodology for 
how MOOP limits will be set at Sec. Sec.  422.100(f)(4) and (5) and 
422.101(d)(2) and (3). This proposal, in combination with section VI.B. 
of this proposed rule, aims to address potential stakeholder concerns 
regarding this program change and provide MA organizations with cost 
sharing flexibilities as an incentive to encourage more favorable 
benefit designs for beneficiaries. As noted in the 2020 Final Call 
Letter, CMS has an established policy of affording MA plans greater 
flexibility in establishing cost sharing for Part A and B benefits 
(that is, basic benefits) by adopting a lower, voluntary MOOP limit 
than is available to plans that adopt the higher, mandatory MOOP limit. 
In contract year 2020, CMS provided this flexibility, on varying 
levels, for a number of benefit categories. CMS expects adopting 
greater benefit design flexibilities will incentivize competition and 
result in greater access to MA plans with lower MOOP or cost sharing 
limits for enrollees. Codifying the flexibilities in regulation in 
advance of the 2022 and subsequent contract years to which they will 
apply will provide a measure of transparency and stability for the MA 
program and, we believe, encourage MA organizations to develop plan 
designs to take advantage of the flexibilities. In addition, we discuss 
potential factors that could trigger future rulemaking for determining 
MOOP limits.
    Currently, local and regional PPO plans are required to have two 
MOOP limits consistent with maximum thresholds established by CMS, 
including (a) an in-network and (b) a catastrophic (combined) limit 
that includes both in-network and out-of-network items and services 
covered under Parts A and B. HMO-POS plans may offer out-of-network 
benefits as supplemental benefits, but are not required to have these 
services contribute to the in-network MOOP limit or to a combined in- 
and out-of-network MOOP limit. Although the MOOP limits apply to Parts 
A and B benefits, an MA organization can apply the MOOP limit to 
supplemental benefits as well. MA organizations are responsible for 
tracking out-of-pocket spending incurred by the enrollee (that is, cost 
sharing includes deductibles, coinsurance, and copayments, pursuant to 
Sec.  422.2) and to alert enrollees and contracted providers when the 
MOOP limit is reached.
    As stated in the April 2018 final rule, 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). The 
Office of the Actuary (OACT) conducts an annual analysis to help CMS 
determine the MOOP limits using the most recent complete year's data 
and by projecting cost sharing using trend factors, such as enrollment 
changes and enrollment shifts between MA and original Medicare. The 
OACT bases its projections on actual claims data for Parts A and B 
benefits from the National Claims History files. Setting MOOP limits 
for 2020 was based on current regulation text at Sec. Sec.  
422.100(f)(4) and (5) and 422.101(d)(2) and (3) authorizing CMS to set 
MOOP limits to strike a balance between limiting costs to enrollees and 
changes in benefits, with the goal of ensuring beneficiary access to 
affordable and sustainable benefit packages. The current mandatory MOOP 
limit represents approximately the 95th percentile of projected 
beneficiary out-of-pocket spending for the year to which the MOOP limit 
will apply. Stated differently, using the contract year 2020 MOOP 
limits as examples, 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 current voluntary MOOP 
limit of $3,400 represents approximately the 85th percentile of 
projected Medicare FFS out-of-pocket costs.
    A strict application of the thresholds at the 95th and 85th 
percentile to set the MOOP limits since adoption of the MOOP 
regulations would have resulted in MOOP limits for MA LPPO and RPPO 
plans fluctuating from year-to-year. Therefore, CMS exercised 
discretion in order to maintain stable MOOP limits from year-to-year, 
when the established MOOP limits were approximately equal to the 
appropriate percentile. CMS took this approach in an effort to avoid 
enrollee confusion, allow MA plans to provide stable benefit packages 
year over year, and not discourage MA organizations from adopting the 
lower voluntary MOOP limit because of fluctuations in the amount.
    MA plans may establish MOOP limits that are lower than the CMS-
established maximum amounts. We currently consider any MOOP limit 
within the $0-$3,400 range as a voluntary MOOP and any MOOP limit 
within the $3,401-$6,700 range as a mandatory MOOP limit. The in-
network MOOP limit dictates the combined MOOP range for PPOs (that is, 
PPOs are not permitted to offer a combined MOOP limit within the 
mandatory range, while having an in-network MOOP limit within the 
voluntary range). The combined MOOP limit for PPOs is calculated by 
multiplying the respective in-network MOOP limits by 1.5 for the 
relevant year and rounding to the nearest or lower $50 increment, 
similar to the proposal in paragraph (f)(4)(iii), if necessary.\68\ 
Thus, the voluntary combined MOOP limit for PPOs in contract year 2020 
was calculated as $3,400 x 1.5 = $5,100 (that is, an MA plan that 
establishes a dollar

[[Page 9074]]

limit within the $0-$5,100 range is using a lower, voluntary combined 
MOOP limit). Similarly, the mandatory combined MOOP limit for PPOs in 
contract year 2020 was calculated as $6,700 x 1.5 = $10,050, rounded 
down to the nearest $100 ($10,000) and MA plans that establish a dollar 
limit within the $5,101-$10,000 range are using a mandatory combined 
MOOP limit.
---------------------------------------------------------------------------

    \1\ CMS. ``Benefits Policy and Operations Guidance Regarding Bid 
Submissions; Duplicative and Low Enrollment Plans; Cost Sharing 
Standards; General Benefits Policy Issues; and Plan Benefits Package 
(PBP) Reminders for Contract Year (CY) 2011'' (2010). Retrieved from 
https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/downloads/dfb_policymemo04610final.pdf.
---------------------------------------------------------------------------

    CMS currently affords greater flexibility in establishing Parts A 
and B cost sharing to MA plans that adopt a lower, voluntary MOOP limit 
(including PPO plans with a combined MOOP limit in the voluntary range) 
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 
contract year 2011 to 81.8 percent in contract year 2019. This has 
resulted in the percentage of total enrollees in a voluntary MOOP plan 
decreasing from 51 percent in contract year 2011 to 26 percent in 
contract year 2019.
    We intend to continue use of more than one MOOP limit and are 
proposing, beginning with coverage for the 2022 contract year, to (1) 
establish explicit authority for up to three MOOP limits, including the 
current mandatory and voluntary MOOP limits and a third, intermediate 
MOOP limit; (2) codify the methodology for setting MOOP limits, and (3) 
adjust the methodology to take into account how the MA eligibility for 
Medicare beneficiaries is changing to remove the current limits on MA 
enrollment for Medicare eligible beneficiaries with diagnoses of ESRD. 
We believe that implementing more than two levels of MOOP and cost 
sharing limits will encourage plan offerings that result in more 
favorable benefit designs for beneficiaries. For example, increased 
access to plans with MOOP limits below the mandatory MOOP limit or 
lower cost sharing. We will monitor whether this change results in 
beneficiaries having access to plan offerings with MOOP limits below 
the mandatory MOOP limit or lower cost sharing over time and may 
consider additional changes through future rulemaking. By codifying the 
methodology for how these MOOP limits will be set, we are increasing 
the level of transparency for these policies and providing more 
stability and predictability to the MA program; MA organizations will 
have greater knowledge about how the MOOP limits are set and ability to 
anticipate where the MOOP limits will be in future years. For that 
reason, our proposal codifies our current practice with some revisions. 
In addition, as discussed in section VI.B. of this proposed rule, we 
are proposing to codify specific cost sharing limits and flexibility 
tied to use of the intermediate and lower voluntary MOOP limits by MA 
plans.
    Under our proposal, we would substantially revise and restructure 
Sec. Sec.  422.100(f)(4) and (5) and 422.101(d)(2) and (3). In the 
proposed revisions to these regulations, we are using the term ``basic 
benefits'' instead of referring to Medicare Part A and Part B benefits 
because the term ``basic benefits'' is now defined in Sec.  422.100(c). 
We believe using the shorter, defined term increases the clarity and 
readability of the regulation. The proposed regulation text for these 
paragraphs avoids duplicate language where possible. We propose to 
codify the rules for setting the MOOP limits at Sec.  422.100(f)(4). 
Currently, the same MOOP limits apply to MA local plans and to in-
network limits for MA local and regional PPO plans. Therefore, we are 
proposing that Sec.  422.101(d)(2), which imposes the MOOP limit for 
in-network MA regional plans, be revised to cross-reference the MOOP 
limits set for MA local plans at Sec.  422.100(f)(4). Currently, the 
same MOOP limits apply to combined in-network and out-of-network out-
of-pocket cost sharing for MA LPPO and RPPO plans and we intend to 
continue that policy. Therefore, we are proposing to use a cross-
reference providing that the same MOOP limits apply under both Sec.  
422.100(f)(5) (for MA local PPOs) and Sec.  422.101(d)(3) (for MA 
regional plans) for combined in-network and out-of-network cost 
sharing. By using these cross-references, we intend to clarify how 
certain MOOP limits are the same and to avoid repetitive regulation 
text. We are proposing to amend Sec.  422.100(f)(4) to state the 
general rule that, except as provided in paragraph (f)(5), MA local 
plans must establish MOOP limits for basic benefits; as in the current 
regulation, proposed paragraph (f)(5) would address how the MOOP limits 
apply to the out-of-network coverage provided by local PPO plans. We 
also propose to include in Sec. Sec.  422.100(f)(5) and 422.101(d)(2) 
the rules for PPOs in establishing in-network and combined (or 
catastrophic) MOOP limits. Finally, our proposal would codify in 
Sec. Sec.  422.100(f)(4) and (5) and 422.101(d)(2) and (3) the 
responsibility MA organizations have to track enrolled beneficiaries' 
out-of-pocket spending and to alert enrollees and contracted providers 
when the MOOP limit is reached. This is implicit in how a MOOP limit 
works, but we believe codifying these responsibilities emphasizes for 
MA organizations that these requirements are integral to administration 
of basic benefits.
    As proposed, paragraph (f)(4) authorizes CMS, for 2022 and 
subsequent years, to set up to three MOOP limits using projections of 
beneficiary spending that are based on the most recent, complete 
Medicare FFS data. We would codify the current practice of setting the 
MOOP limits based on a percentile of projected Medicare FFS beneficiary 
out-of-pocket spending. Under this proposal, we would set up to three 
MOOP limits: The lower MOOP limit, the intermediate MOOP limit, and the 
mandatory MOOP limit. CMS uses these terms (lower, intermediate, and 
mandatory) in referencing MOOP limits instead of only ``voluntary'' and 
``mandatory'' MOOP limits. As proposed, paragraph (f)(4) would also 
impose general rules for setting the MOOP limits. We are proposing to 
codify in Sec.  422.100(f)(4)(ii) the current rule for using ranges to 
identify the type of MOOP limit an MA plan has established and applying 
that rule to the three types of MOOP limit. A mandatory MOOP limit is 
any dollar limit that is above the intermediate MOOP limit and at or 
below the mandatory MOOP limit threshold established each year. The 
intermediate MOOP limit is any dollar limit that is above the lower 
MOOP limit and at or below the intermediate MOOP limit threshold 
established each year. The lower MOOP limit is any dollar limit that is 
between $0.00 and up to and including the lower MOOP limit threshold 
established each year. As proposed in paragraph (f)(4)(iii), each MOOP 
limit would be rounded to the nearest whole $50 increment. Further, in 
cases where the MOOP limit is projected to be exactly in between two 
$50 increments, CMS would round to the lower $50 increment (for 
example, $7,125 would be rounded to $7,100) to protect beneficiaries 
from higher increases in costs by rounding down whenever possible.
    We propose to codify in paragraphs Sec.  422.100(f)(4)(iv), (v), 
and (vi) the rules for establishing the MOOP limits for contract year 
2022, 2023, 2024, and for 2025 and subsequent years. In effect, the 
MOOP limits for contract year 2022 would be a recalibration of the MA 
MOOP limits to using a methodology that is adjusted from current 
practice. For contract year 2022, we propose to set the MOOP limits as 
follows:
    (A) The mandatory MOOP limit is set at the 95th percentile of 
projected

[[Page 9075]]

Medicare FFS beneficiary out-of-pocket spending.
    (B) The intermediate MOOP is set at the numeric midpoint of 
mandatory and lower MOOP limits.
    (C) The lower MOOP limit is set at the 85th percentile of projected 
Medicare FFS beneficiary out-of-pocket spending.
    These MOOP limits would be set subject to the rounding rules in 
paragraph (f)(4)(iii). Under our proposal, CMS would use projections 
for the applicable contract year of out-of-pocket expenditures for 
Medicare FFS beneficiaries that are based on the most recent, complete 
Medicare FFS data that incorporates a percentage of the costs incurred 
by beneficiaries with diagnoses of ESRD, using the ESRD cost transition 
schedule proposed in paragraph (f)(4)(vii). We explain in detail that 
transition schedule and the data we propose to use for setting MOOP 
limits later in this section of the proposed rule.
    For future contract years, we propose to set the MOOP limits using 
a methodology that takes into account the amount of change from the 
prior year's MOOP limits in a way that minimizes disruption and change 
for enrollees and plans. Our proposed methodology is designed to allow 
plans to provide stable benefit packages year over year by minimizing 
MOOP limit fluctuations unless a consistent pattern of increasing or 
decreasing costs emerges over time. Again, these MOOP limits would be 
set subject to the rounding rules and using projections based on the 
most recent, complete Medicare FFS data that incorporates a percentage 
of the costs incurred by beneficiaries with diagnoses of ESRD, using 
the transition schedule in paragraph (f)(4)(vii).
    To set the mandatory and lower MOOP limits for contract years 2023 
and 2024 or, if later, until the end of the ESRD cost transition we 
would follow these steps:
     Review OACT projections of out-of-pocket spending for the 
applicable year that is based on updated Medicare FFS data, including 
all spending regardless of ESRD diagnoses;
     Compare the applicable year's projection of the 95th 
percentile and 85th percentiles to the prior year's projections;
     Determine if the prior year's projection for the 95th 
percentile and 85th percentile are within a range, above or below, of 
two percentiles of the applicable percentile in that updatedprojection. 
For example, for the contract year 2023 mandatory MOOP limit, we would 
determine if the contract year 2022 95th percentile projection is 
between or equal to the 93rd and 97th percentiles of the projections 
for 2023 out-of-pocket expenditures;
     If the prior year's 95th and 85th percentile projections 
are between or equal to the two percentile range above or below, we 
would continue the ESRD cost transition schedule proposed in paragraph 
(f)(4)(vii) for one or both of the MOOP limits;
     If one or both of the prior year's 95th and 85th 
percentile projections are not within that range, we would increase or 
decrease one or both of the MOOP limits up to 10 percent of the prior 
year's MOOP limit annually until the MOOP limit reaches the projected 
95th percentile for the applicable year, subject to the rounding rules 
as proposed in paragraph (f)(4)(iii). For example, if the dollar amount 
needed to be transitioned represents 15 percent, then 10 percent would 
be addressed during the first year, while any remaining amount would be 
addressed during the second year, if applicable based on updated data 
projections from the OACT. During this period of time we would delay 
implementation of the next step in the ESRD cost transition schedule 
proposed in paragraph (f)(4)(vii). The ESRD cost transition schedule 
would resume at the rate that was scheduled to occur once the prior 
year's projected 95th and 85th percentile remains within the range of 
two percentiles above or below the projected 95th percentile for the 
upcoming contract year. For example, for the contract year 2023 
mandatory MOOP limit, if the 2023 projected 95th percentile corresponds 
to the projected 98th percentile for contract year 2022 out-of-pocket 
expenditures, we would set the contract year 2023 mandatory MOOP by: 
Increasing the contract year 2022 mandatory MOOP limit by up to 10 
percent and rounding as proposed in paragraph (f)(4)(iii); and
     The intermediate MOOP limit would be set by either 
maintaining it as the prior year's intermediate MOOP limit (if the 
mandatory and lower MOOP limits are not changed) or updating it to the 
new numerical midpoint of the mandatory and lower MOOP limits, and 
rounding as proposed in paragraph (f)(4)(iii). We propose regulation 
text to implement this process for setting the mandatory, intermediate, 
and lower MOOP limits at Sec.  422.100(f)(4)(v), with paragraphs 
(f)(4)(v)(A), (B) and (C) addressing the mandatory, intermediate, and 
lower MOOP limits respectively.
    For contract year 2025 or following the ESRD cost transition 
schedule proposed in paragraph (f)(4)(vii) and for subsequent years, we 
propose to include in the methodology a means to take into account 
trends that are consistent for three years. The proposed regulation 
text includes ``or following the ESRD cost transition'' to clarify that 
the ESRD cost transition schedule may end in 2025 or extend longer due 
to our proposals for how we would handle any sudden increases or 
decreases in costs. For example, if for contract year 2023, the 
projected 95th percentile amount represents the 98th percentile from 
the prior year's (contract year 2022) projections, then we would only 
increase the MOOP limit for contract year 2023 by up to 10 percent of 
the prior year's MOOP amount and extend the ESRD cost transition 
schedule past 2025 by the number of years it takes until the upcoming 
year's projected 95th percentile amount was within two percentiles 
above or below the prior year's projection of the 95th percentile. We 
propose the methodology for the mandatory and lower MOOP limits for 
contract year 2025 or following the ESRD cost transition schedule as 
follows: the prior year's corresponding MOOP limit is maintained for 
the upcoming contract year if: (1) The prior year's MOOP limit amount 
is within the range of two percentiles above or below the projected 
95th or 85th percentile of Medicare FFS beneficiary out-of-pocket 
spending incurred by beneficiaries with and without diagnoses of ESRD 
and (2) the projected 95th or 85th percentile did not increase or 
decrease for three consecutive years in a row. If the prior year's 
corresponding MOOP limit is not maintained because either (1) or (2) 
occur, CMS increases or decreases the MOOP limit by up to 10 percent of 
the prior year's MOOP amount annually until the MOOP limit reaches the 
projected applicable percentile for the applicable year, based on the 
most recent, complete data projections from the OACT. The intermediate 
MOOP limit would be set by either maintaining it as the prior year's 
intermediate MOOP limit (if the mandatory and lower MOOPs are not 
changed) or updating it to the new numerical midpoint of the mandatory 
and lower MOOP limits, and rounding as proposed in paragraph 
(f)(4)(iii). We propose regulation text to implement this process for 
setting the mandatory, intermediate, and lower MOOP limits for contract 
year 2025 or following the data transition schedule and subsequent 
years at Sec.  422.100(f)(4)(vi), with paragraphs (f)(4)(vi)(A), (B), 
and (C) addressing the mandatory, intermediate, and lower MOOP limits 
respectively.
    This approach aims to allow plans to provide stable benefit 
packages year over year by minimizing MOOP limit

[[Page 9076]]

fluctuations unless a consistent pattern of increasing or decreasing 
costs emerges over time. We solicit comment on this approach in light 
of our goal of avoiding enrollee confusion and maintaining stable 
benefit packages. We also solicit comments whether our proposed 
regulation text adequately and clearly specifies the methodology that 
will be used to set the MOOP limits each year. We intend to issue 
annual guidance applying these rules, sufficiently in advance of the 
bid deadline so that MA organizations know and understand the MOOP 
limits for the upcoming year.
    We would continue the current policy of setting the combined MOOP 
limits (that is, the MOOP limits that cover in-network and out-of-
network benefits) for PPOs by multiplying the respective in-network 
MOOP limits by 1.5 for the relevant year and rounding as proposed in 
paragraph (f)(4)(iii) if necessary. We propose to codify this rule for 
MA regional plans in Sec.  422.101(d)(3) and to cross-reference that 
rule for MA local PPOs in Sec.  422.100(f)(5)(i).
    Because of the change in eligibility requirements for MA plans 
regarding beneficiaries with diagnoses of ESRD, we believe that it is 
appropriate that the data we use to set the MOOP limits also reflect 
the out-of-pocket expenditures of such beneficiaries. We therefore 
propose to codify rules for what data CMS would use to set the MOOP 
limits that are consistent with current practice, but revised to take 
into account costs incurred by beneficiaries with diagnoses of ESRD. 
CMS currently sets MOOP limits using projected Medicare FFS beneficiary 
out-of-pocket spending for the upcoming year, which are based on a 
beneficiary-level distribution of Parts A and B cost sharing for 
individuals enrolled in Medicare FFS, excluding all costs for 
beneficiaries with ESRD. For example, for contract year 2020 MOOP 
limits, we used projected out-of-pocket costs for Medicare FFS 
beneficiaries (excluding out-of-pocket costs from beneficiaries with 
diagnoses of ESRD) from the OACT, based on the most recent complete 
Medicare data (from 2018). We excluded the costs for individuals with 
diagnoses of ESRD because of the limits on when and how a Medicare 
beneficiary with diagnoses of ESRD could enroll in an MA plan under 
section 1851(a) of the Act. Under the current enrollment limitations, 
in contract year 2018, 0.6 percent of the MA enrollee population, or 
approximately 121,000 beneficiaries, have diagnoses of ESRD, using CMS 
data.\69\
---------------------------------------------------------------------------

    \69\ See page 14 from the 2020 Rate Notice and Final Call 
Letter, retrieved from https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

    As discussed in section IV.A. of this proposed rule, section 
1851(a)(3) of the Act, as amended by the Cures Act, will allow Medicare 
beneficiaries with diagnoses of ESRD to enroll in MA plans beyond 
current enrollment limitations, beginning in contract year 2021. CMS 
expects this change will result in Medicare beneficiaries with 
diagnoses of ESRD to begin transitioning to or choosing MA plans in 
greater numbers than what has happened so far (in light of the prior 
limitations under section 1851(a) of the Act). To ensure that the MOOP 
limits take into account out-of-pocket costs for beneficiaries with 
diagnoses of ESRD, we propose a multi-year transition from our current 
practice of excluding all costs incurred by beneficiaries with 
diagnoses of ESRD to including all related costs into the Medicare FFS 
data that is used to set the MOOP limits. We propose to codify the 
transition schedule at Sec.  422.100(f)(4)(vii).
    We propose to factor in a percentage of the difference between the 
projected costs that are based on, first, data for beneficiaries 
without diagnoses of ESRD and second, based on data that includes 
beneficiaries with diagnoses of ESRD. We propose to use the term ``ESRD 
cost differential'' to refer to the difference between: (1) Projected 
out-of-pocket costs for beneficiaries using Medicare FFS data excluding 
the costs incurred by beneficiaries with ESRD diagnoses for contract 
year 2021 and (2) the projected out-of-pocket costs for all 
beneficiaries using Medicare FFS data (including the costs incurred by 
beneficiaries with ESRD diagnoses) for each year of the ESRD cost 
transition. We propose a specific schedule for factoring in a 
percentage of the ESRD cost differential annually until 2024 or, if 
later, the final year of the transition and beyond. As shown in Table 
11, for MOOP limits for years after contract year 2022, CMS proposes to 
incorporate an additional 20 percent of the ESRD cost differential, as 
it is updated calculated each year using the most recent, complete data 
projections from the OACT, until contract year 2024 or the final year 
of transition. Table 11 shows MOOP limits calculated following these 
proposed rules and transition schedule, but using the data available at 
this time, to illustrate the impact of factoring in greater portions of 
the ESRD cost differential. In the final year of the transition, 100 
percent of the costs incurred by beneficiaries with diagnoses of ESRD 
would be integrated into the most recent, complete Medicare FFS data 
that is used to project and determine MOOP limits.
    For the 2021 contract year, the projected costs incurred by 
beneficiaries without ESRD diagnoses for the 95th percentile is $7,175 
and for the 85th percentile is $3,360. Each year, we would compare the 
95th and 85th percentiles of the projected out-of-pocket costs for all 
Medicare FFS beneficiaries for the upcoming year to these dollar 
amounts to calculate the ESRD cost differential for that year. We 
therefore propose to identify these dollar amounts in the regulation 
text defining the ESRD cost differential. Using the most recent, 
complete Medicare FFS data without costs incurred by beneficiaries with 
diagnoses of ESRD, the 95th percentile is projected to be $7,175 in 
contract year 2021, compared to $8,174 with related ESRD costs, a 
difference of $999. This is the same type of comparison we will 
complete each year based on complete and updated data projections 
provided by the OACT. Table 11 illustrates the MOOP limits set using 
these proposed rules and is based on projections using 2018 data. For 
example, for the 2022 contract year, we would take 60% of the ESRD cost 
differential ($599.40) and add it to the projected 95th percentile 
without ESRD costs to align with the proposed transition schedule, 
which equals $7,774.40. This rounds to $7,750; this means the mandatory 
MOOP limit range would be $5,601 (because the intermediate MOOP would 
be $5,600) through $7,750, as reflected in Table 11.
    CMS developed this approach in consultation with the OACT to take 
into account the likely increase in enrollment of beneficiaries with 
diagnoses of ESRD in MA while ensuring that there is not a significant 
and sudden shift in the MOOP limits in any given year. CMS and the OACT 
do not expect 100 percent of Medicare beneficiaries with diagnoses of 
ESRD will enroll in the MA program immediately after the current 
enrollment limitations are lifted and as such, CMS is not proposing to 
integrate 100 percent of the costs within one contract year. Our goal 
is to strike a balance between potential increases in plan costs and 
enrollee cost sharing or premiums by scheduling adjustments to the MOOP 
limits to reflect a reasonable transition of ESRD beneficiaries into 
the MA program. Further, using a scheduled transition will allow MA 
organizations to plan for the change and mitigate sudden changes in 
MOOP limits, benefit

[[Page 9077]]

designs, and premiums that could be disruptive to enrollees and MA 
organizations. CMS's goal in the MOOP and Cost Sharing proposals in 
this proposed rule is to provide predictable and transparent MOOP limit 
and cost sharing standards and to set limits at a level that should not 
result in significant new costs for MA plans or enrollees. We solicit 
comment on whether the transition schedule proposed at 
422.100(f)(4)(vii) aligns best to this goal or if the transition should 
be structured differently in terms of annual percentage of ESRD cost 
differential transition (for example, 50 percent in 2022, 70 percent in 
2023 or, if later, the next year of transition, and 100 percent in the 
final year of transition).
    Using the most recent, complete Medicare FFS data available at this 
time (2018 data), the OACT projected the out-of-pocket costs for 
Medicare FFS beneficiaries. CMS developed Table 4 for illustrative 
purposes to show how the most recently available projections of the 
95th and 85th percentiles along with our proposed methodology results 
in mandatory, intermediate, and lower MOOP limits for in-network basic 
benefits for contract years 2022 through 2024. CMS also developed Table 
5 to show the current projections of combined MOOP limits for in-
network and out-of-network basic benefits based on our proposed 
methodology (that is, multiplying the respective in-network MOOP limits 
by 1.5 for the relevant year). Overall, Table 4 and Table 5 illustrate 
examples of potential MOOP limits that integrate the ESRD cost 
differential over multiple years (60 percent by 2022, 80 percent for 
2023 or, if later, the next year of transition, and 100 percent for 
2024 or the final year of transition) and include application of the 
rounding rules as proposed in paragraph (f)(4)(iii). These are only 
illustrative MOOP limits for contract years 2022 through 2024 to show 
the potential impact of our proposal for incorporating the out-of-
pocket costs of FFS beneficiaries with diagnoses of ESRD into the most 
recent, complete Medicare FFS data we currently have to set the MOOP 
limits. We expect these numbers will change when we receive the next 
year's projections from the OACT and CMS will update the MOOP limits 
using the methodology decided upon in the final rule. We intend to 
apply the revised regulations each year to calculate the MOOP limits 
and to publish the annual MOOP limits with a description of how the 
regulation standard is applied (that is, the methodology used) through 
Health Plan Management System (HPMS) memoranda issued prior to bid 
submission each year.

                       Table 4--Illustrative Example of In-Network MOOP Limits Based on Most Recent Medicare FFS Data Projections
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Approximate original
           MOOP limit                Medicare percentile          Contract year 2022              Contract year 2023             Contract year 2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mandatory.......................  95\t\...................  $5,601 to $7,750..............  $5,701 to $7,950.............  $5,801 to $8,150.
Intermediate....................  Approximate numeric       $3,451 to $5,600..............  $3,501 to $5,700.............  $3,501 to $5,800.
                                   midpoint *.
Lower...........................  85th....................  $0 to $3,450..................  $0 to $3,500.................  $0 to $3,500.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The intermediate MOOP limit would be based on the mandatory MOOP limit, less approximately 50 percent of the numeric difference between the mandatory
  and lower MOOP limits.


  Table 5--Illustrative Example of Combined MOOP Limits for LPPO and Catastrophic (MOOP) Limits for RPPO Plans
                               Based on Most Recent Medicare FFS Data Projections
----------------------------------------------------------------------------------------------------------------
        MOOP limit *              Contract year 2022          Contract year 2023          Contract year 2024
----------------------------------------------------------------------------------------------------------------
Mandatory...................  $8,401 to $11,600.........  $8,551 to $11,900.........  $8,701 to $12,200.
Intermediate................  $5,151 to $8,400..........  $5,251 to $8,550..........  $5,251 to $8,700.
Lower.......................  $0 to $5,150..............  $0 to $5,250..............  $0 to $5,250.
----------------------------------------------------------------------------------------------------------------
* Combined MOOP limits are calculated by multiplying the respective MOOP limits by 1.5 for the relevant year.
 

    Under our proposal, we intend to explain how we apply the 
methodology we have proposed to codify at Sec. Sec.  422.100(f)(4) and 
(5) and 422.101(d)(2) and (3) and the resulting MOOP limits for each 
year on a timely basis through HPMS memoranda. We solicit comment 
whether we should codify a specific rule requiring CMS to issue such 
subregulatory guidance applying the methodology in these regulations by 
a specific date each year.
    CMS also seeks comments and suggestions on whether additional 
regulation text or restructuring of Sec. Sec.  422.100(f)(4) and (5) 
and 422.101(d)(2) and (3) is needed to achieve CMS's goal of providing 
additional transparency on how CMS will: (1) Set up to three in-network 
and out-of-network MOOP limits for local and regional MA plans; (2) 
transition ESRD costs into MOOP limit calculations; and (3) calculate 
MOOP limits during and after completion of the transition of data about 
cost sharing expenses for beneficiaries with diagnoses of ESRD.

B. Service Category Cost Sharing Limits for Medicare Parts A and B 
Services and per Member per Month Actuarial Equivalence Cost Sharing 
(Sec. Sec.  422.100 and 422.113)

    Section 1852 of the Act imposes a number of requirements that apply 
to the cost sharing and benefit design of MA plans. First, section 
1852(a)(1)(B) of the Act provides that the MA organization must cover 
the benefits under Parts A and B (that is, basic benefits as defined in 
Sec.  422.100(c)) with cost sharing that is the same or at least 
actuarially equivalent to cost sharing in original Medicare; this is 
repeated in a bid requirement under section 1854(e)(4) of the Act. We 
have addressed and implemented that requirement in several regulations, 
including Sec. Sec.  422.101(e), 422.102(a)(4), and 422.254(b)(4). 
Second, section 1852(a)(1)(B) of the Act also imposes particular 
constraints on the cost sharing for specific benefits, which have been 
implemented in Sec.  422.100(j) for MA plans and extended to cost plans 
under Sec.  417.454(e); the statute explicitly authorizes CMS to add to 
the list of items and services for which MA cost sharing may not exceed 
the cost sharing levels in original Medicare. Third, section 1852(b)(1) 
of the Act prohibits discrimination by MA organizations on

[[Page 9078]]

the basis of health status-related factors and directs that CMS may not 
approve an MA plan if CMS determines that the design of the plan and 
its benefits are likely to substantially discourage enrollment by 
certain MA eligible individuals. The requirements under Sec. Sec.  
422.100(f)(4) and (5) that impose MOOP limits on local MA plans are 
based on this anti-discrimination provision and align with the 
statutory catastrophic limits imposed on regional MA plans under 
section 1858(b) of the Act. Section 422.100(f)(6) provides that cost 
sharing must not be discriminatory and CMS has issued guidance 
addressing discriminatory cost sharing, as applied to specific benefits 
and to categories of benefits, in the annual Call Letter and in Chapter 
4 of the Medicare Managed Care Manual (MMCM) under this regulation. 
Establishing limits on cost sharing for covered services is an 
important way to ensure that the cost sharing aspect of a plan design 
does not discriminate against or discourage enrollment in an MA plan by 
beneficiaries who have high health care needs.
    Currently, CMS annually analyzes Medicare program data to interpret 
and apply the various cost sharing limits from these authorities and to 
publish guidance on MA cost sharing limits in the annual Call Letter. 
The relevant Medicare data includes the most recent, complete Medicare 
FFS data, including cost and utilization data and MA patient 
utilization information from MA encounter data. CMS sets cost sharing 
limits based on analyses of and projections from this data and then 
reviews cost sharing established by MA organizations to determine 
compliance with the cost sharing limits and requirements established in 
the statute and regulations, as interpreted and implemented in sub-
regulatory guidance, including Chapter 4 from the MMCM. The cost 
sharing limits set by CMS reflect a combination of outpatient visits 
and inpatient utilization scenarios based on length of stays typically 
used by average to sicker patients. CMS uses multiple inpatient 
utilization scenarios to guard against MA organizations setting 
inpatient cost sharing amounts in a manner that is potentially 
discriminatory. Review parameters are also established for frequently 
used professional services, such as primary and specialty care 
services. We are proposing to codify our current (and in many cases, 
long-standing) practice and methodology for interpreting and applying 
the limits on MA cost sharing, with some modifications.
    In using the most recent, complete Medicare FFS data for developing 
and applying the reviews of MA cost sharing, CMS excludes the costs for 
individuals with diagnoses of ESRD because of the current restrictions 
on when and how a Medicare beneficiary with diagnoses of ESRD could 
enroll in an MA plan under section 1851(a) of the Act. In contract year 
2018, 0.6 percent of the MA enrollee population, or approximately 
121,000 beneficiaries, have ESRD based on the statutory definition and 
CMS data.\70\ As discussed in more detail in section IV.A. of this 
proposed rule, section 17006 of the Cures Act has amended the Medicare 
statute to allow Medicare beneficiaries with diagnoses of ESRD to 
enroll in MA plans beginning in contract year 2021. CMS expects this 
change will result in Medicare beneficiaries with diagnoses of ESRD 
beginning to transition to, or choosing, MA plans in greater numbers 
than they do currently, but the rate of transition is currently 
unknown. Given the potential increase in enrollment of beneficiaries 
with diagnoses of ESRD in MA, the OACT has conducted an analysis to 
determine the impact of including all costs incurred by beneficiaries 
with diagnoses of ESRD into the most recent, complete Medicare FFS data 
CMS uses to project future out-of-pocket expenditures to establish cost 
sharing standards and limits. Based on the most recent analyses and 
projections, adding in ESRD costs affects MA cost sharing limits for 
inpatient hospital acute length of stay scenarios, with the longer 
length of stay scenarios being the most affected. As discussed in 
section VI.A. of this proposed rule, CMS is proposing, at Sec.  
422.100(f)(4)(vii), a schedule for incorporating use of the most 
recent, complete Medicare FFS data for beneficiaries with diagnoses of 
ESRD into the data used to set MOOP limits. The proposal here to 
codify, with some updates and changes, the current process for 
establishing non-discriminatory cost sharing limits similarly takes 
into account data about out-of-pocket expenditures for beneficiaries 
with diagnoses of ESRD. In addition, CMS is proposing to provide 
additional transparency on how updates are made to inpatient hospital 
acute and psychiatric length of stay scenarios in conjunction with the 
ESRD cost transition, as described in the 2020 Final Call Letter for 
contract year 2021. CMS also proposes to codify the methodology used to 
set the standards for MA cost sharing for professional services and for 
inpatient hospital acute and psychiatric services at Sec.  
422.100(f)(6). Under our proposal, an MA plan must have cost sharing 
that does not exceed the standards set each year using the methodology 
in paragraph (f)(6). The limits in proposed Sec.  422.100(f)(6) would 
be in addition to other limits on cost sharing that apply to MA plans. 
We are also proposing, at Sec.  422.100(j), that MA plans must not 
impose cost sharing that exceeds original Medicare for certain specific 
benefits and for certain categories of benefits on a per member per 
month actuarially equivalent basis. Our proposal would also set 
specific cost sharing requirements for emergency services (including 
post-stabilization service) and urgently needed services, which would 
be codified in Sec.  422.113(b)(2)(v) and (vi).
---------------------------------------------------------------------------

    \70\ See page 14 from the 2020 Rate Notice and Final Call 
Letter, retrieved from https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

    CMS is committed to encouraging plan offerings with more favorable 
MOOP and cost sharing limits. Accordingly, CMS is proposing to modify 
the regulations at Sec. Sec.  422.100(f)(6) and 422.113(b)(2)(v) and 
(vi) to establish a range of cost sharing limits for benefits furnished 
on an in-network basis based on the MOOP limit established by the MA 
plan. Increasing the flexibility MA organizations have in setting cost 
sharing limits based on more favorable MOOP limits should incentivize 
more favorable benefit designs for MA enrollees.
    In addition, this proposal for amending Sec. Sec.  422.100(f)(6) 
and (j) and 422.113(b)(2) implements safeguards to ensure MA enrollees 
are not subject to discriminatory benefits or discriminatory costs for 
basic benefits. These safeguards include codifying a longstanding 
interpretation of the current anti-discrimination provision that 
payment of less than 50 percent of the total MA plan financial 
liability discriminates against enrollees who need those services. 
Specifically, CMS proposes to codify at Sec.  422.100(f)(6)(i)(A) that 
MA plans may not pay less than 50 percent of the total MA plan 
financial liability, regardless of the MOOP limit established, for 
basic benefits that are provided in-network and out-of-network that are 
not explicitly proposed in the cost sharing standards at Sec.  
422.100(f)(6). This proposal as a whole, in combination with the MOOP 
proposal in section VI.A. of this proposed rule, aims to provide MA 
organizations incentives to offer plans with favorable benefit designs 
for beneficiaries. Under sections 1854(a)(1)(A) and 1860D-11(b) of the 
Act, initial bid submissions for all MA organizations are due the first 
Monday

[[Page 9079]]

in June and shall be in a form and manner specified by the Secretary. 
Organizations may design their plan benefits as they see fit so long as 
they satisfy Medicare coverage requirements, including applicable MA 
regulations. MA organizations typically offer benefits with lower cost 
sharing amounts than the limits published in the annual Call Letter; we 
believe this is due to multiple factors, including the principles and 
incentives inherent in managed care, effective negotiations between 
organizations and providers, and competition. CMS also reminds 
organizations that they also must comply with applicable Federal civil 
rights laws that prohibit discrimination on the basis of race, national 
origin, gender, disability, chronic disease, health status, or other 
prohibited basis including section 1557 of the Affordable Care Act, 
title VI of the Civil Rights Act of 1964, section 504 of the 
Rehabilitation Act of 1973, and the Age Discrimination Act of 1975. 
None of the proposed regulations under this rule limit application of 
such anti-discrimination requirements.
1. General Non-Discriminatory Cost Sharing Limits (Sec. Sec.  
422.100(f)(6))
    We are proposing to codify in Sec.  422.100(f)(6) a set of general 
rules for cost sharing for basic benefits. We use the term ``basic 
benefits'' as defined in Sec.  422.100(c) to mean items and services 
(other than hospice care and, beginning 2021, coverage for organ 
acquisitions for kidney transplants) for which benefits are available 
under Parts A and B of Medicare, including additional telehealth 
benefits offered consistent with the requirements at Sec.  422.135. 
Under our proposal, the rules in Sec.  422.100(f)(6) must be followed 
by MA plans in addition to other regulatory and statutory requirements 
for cost sharing. MA organizations have the option to charge either 
coinsurance or a copayment for most benefit category benefits, which 
the proposed regulation text makes clear. Under our proposal, the MA 
plan cannot exceed the coinsurance or copayment limit for benefit 
category standards established by CMS using the various rules in the 
regulation.
    We are proposing to codify our longstanding interpretation of the 
anti-discrimination provisions that payment of less than 50 percent of 
the total MA plan financial liability discriminates against enrollees 
who have high health needs and discourages enrollment in the plan by 
such beneficiaries. We recognize that it is difficult to set a cost 
sharing limit for every possible benefit and believe that this catch-
all rule, which has been longstanding policy used in our review of 
bids, is an important beneficiary protection. This rule would apply 
regardless of the MOOP limit established and regardless whether the 
basic benefit is furnished in-network or out-of-network, to protect 
beneficiaries regardless of the MA plan or MOOP limit they choose. As 
used in the proposed regulation text, the term ``total MA plan 
financial liability'' means the total payment paid and includes both 
the enrollee cost sharing and the MA organization's payment. 
Specifically, CMS proposes to codify at Sec.  422.100(f)(6)(i) that MA 
plans may not pay less than 50 percent of the total MA plan financial 
liability, regardless of the MOOP limit established, for in-network 
benefits and out-of-network benefits for which a cost sharing limit is 
not otherwise specified in proposed paragraph (f)(6), inclusive of 
basic benefits. In order to clarify this policy, we are also proposing 
in paragraphs (f)(6)(i)(B) and (C) how this rule would apply when 
coinsurance or copayment structures are used. Under our proposal, if 
the MA plan uses copayments, the copayment for an out-of-network 
benefit cannot exceed 50 percent of the average Medicare FFS allowable 
cost for that service area and the copayment for in-network benefits 
cannot exceed 50 percent of the average contracted rate of that benefit 
(item or service); if the MA plan uses coinsurance, then the 
coinsurance cannot exceed 50 percent.
    We are also proposing general rules to govern how CMS would set 
copayment limits under this proposal. Proposed paragraph (f)(6)(ii)(A) 
provides that CMS rounds to the nearest whole $5 increment for 
professional services and nearest whole $1 for inpatient acute and 
psychiatric and skilled nursing facility cost sharing limits. Proposed 
paragraph (f)(6)(B) provides that for all cases in which the copayment 
limit is projected to be exactly between two increments, CMS rounds to 
the lower dollar amount. This rounding rule codifies for the most part 
current policy but with slight modification to protect beneficiaries 
from higher increases in costs by rounding down whenever possible.
    In proposed paragraph (f)(6)(iii), we would codify rules to give MA 
plans flexibility in setting cost sharing for professional services, 
including primary care services, physician specialist services, partial 
hospitalization, and rehabilitation services. The proposed flexibility 
is in many respects the same as the flexibility we currently provide 
for MA plans that use the lower, voluntary MOOP limit, but with 
modifications to account for our proposal to set up to three MOOP 
limits each year. Proposed new Sec.  422.100(f)(6)(iii)(A) provides 
that an MA plan may not establish cost sharing that exceeds the limits 
set under paragraph (f)(6)(iii) for basic benefits that are 
professional services furnished in-network (that is, by contracted 
providers). Proposed new Sec.  422.100(f)(6)(iii)(B) specifies the data 
that CMS would use in applying the methodology in paragraph (f)(6)(iii) 
to set the cost sharing limits: Projections of out-of-pocket costs 
representing beneficiaries with and without diagnoses of ESRD based on 
the most recent, complete Medicare FFS data for basic benefits that are 
professional services. Proposed new Sec.  422.100(f)(6)(iii)(C) 
outlines the method for setting the cost sharing limits for 
professional services each year and clarifies that the resulting limits 
(specified as dollar amounts) are subject to the rounding rules in 
paragraph (f)(6)(ii). The cost sharing limits would vary based on the 
type of MOOP limit used by the MA plan and would be as follows:
    (1) Mandatory MOOP limit: 30 percent coinsurance or actuarially 
equivalent copayment values. The MA plan must not pay less than 70 
percent of the total MA plan financial liability.
    (2) Intermediate MOOP limit: 40 percent coinsurance or actuarially 
equivalent copayment values. The MA plan must not pay less than 60 
percent of the total MA plan financial liability.
    (3) Lower MOOP limit: 50 percent coinsurance or actuarially 
equivalent copayment values. The MA plan must not pay less than 50 
percent of the total MA plan financial liability. We are proposing that 
the MA plan must pay a specific percentage of the total financial 
liability for professional services to align with the range of 
flexibility each MOOP limit provides. By specifying this in regulation, 
we are ensuring that there is a clear increase in MA organization 
financial responsibility for professional services if they choose a 
mandatory MOOP limit rather than a lower or intermediate MOOP limit. We 
arrived at the specified percentages discussed previously by assigning 
the highest coinsurance amount that was not discriminatory (50%) to the 
lowest MOOP limit; and 30% coinsurance (which is most closely related 
to limits stated in the CY 2020 Call Letter) to the mandatory MOOP 
limit, to balance the beneficiary incentives for each type of MOOP 
limit. Then, we established the midpoint (40%) for the intermediate 
MOOP limit. These coinsurance percentages also result in reasonable 
differences between expected copayment limits for each of the MOOP

[[Page 9080]]

limits. Overall, we aim to prevent discrimination by setting these 
limits to serve as caps to how much financial responsibility the MA 
organization can transfer to enrollees for professional services. 
Accordingly, 422.100(f)(6) clarifies that MA organizations cannot 
disproportionally increase cost sharing for specific benefit categories 
beyond the specified percentages. To set the actuarially equivalent 
values each year, CMS would work with the OACT to establish copayment 
limits that are approximately equal to the identified coinsurance 
percentage limit based on projections of the most recent, complete 
Medicare FFS data that includes 100 percent of the out-of-pocket costs 
representing all beneficiaries with and without diagnoses of ESRD.
    We propose to base the approximate actuarially equivalent copayment 
limits for primary care, physician specialties, mental health specialty 
services, and physical and speech therapy on the most recent, complete 
Medicare FFS average cost data (including 100 percent of the out-of-
pocket costs incurred by beneficiaries with diagnoses of ESRD), 
weighted by utilization by the applicable provider specialty types for 
each service category. We believe that using an average that is 
weighted by specialty type utilization is consistent with developing 
the actuarially equivalent copayment for the coinsurance percentage 
specified in proposed Sec.  422.100(f)(6)(iii). We solicit comment on 
whether our regulation text should be further revised on this point. 
The applicable provider specialty types include:

A. Primary Care: Family Practice; General Practice; Internal Medicine
B. Physician Specialties: Cardiology; Geriatrics; Gastroenterology; 
Nephrology; Otolaryngology (ENT)
C. Mental Health Specialty Services: Clinical Psychologist; Licensed 
Clinical Social Worker; Psychiatry
D. Physical and Speech Therapy: Physical Medicine and Rehabilitation; 
Speech-language Pathologists

We propose to base the approximate actuarially equivalent copayment 
limits for psychiatric services, occupational therapy, and chiropractic 
care on the most recent, complete Medicare FFS cost data from a single, 
most applicable provider specialty. Respectively, this includes 
Psychiatry, Occupational Therapist, and Chiropractor. We solicit 
comment on whether other provider specialty types should inform our 
proposed actuarially equivalent copayment limits for the various 
professional services. We direct readers to Table 4 for an illustration 
of how cost sharing limits would be developed based on the most recent, 
complete data projected to the applicable contract year for 
professional services, emergency services/post stabilization care, and 
urgent care.
    CMS issued guidance in Chapter 4, section 50.1 ``Guidance on 
Acceptable Cost-sharing'' of the MMCM that cost sharing should appear 
to MA enrollees consistent with MA disclosure requirements at Sec.  
422.111(b)(2). Section 422.111(b)(2) requires MA plans to clearly and 
accurately disclose benefits and cost sharing. Accordingly, MA plans 
must identify (and charge) the enrollee's entire cost sharing 
responsibility as a single copay (if using copayment rather than 
coinsurance) even if the MA plan has differential cost sharing that 
varies by facility setting or contracted arrangements that involves 
separate payments to facilities (or settings) and providers. We are 
aware of situations where a facility or setting charges a separate 
amount from the health care provider that actually furnishes covered 
services, such as an emergency department fee and a fee for the 
emergency room physician. In such situations, those fees should be 
combined (bundled) into the cost sharing amount for that particular 
place of service and be clearly reflected as a total copayment in 
appropriate materials distributed to beneficiaries. We believe that 
this current guidance is an appropriate interpretation of Sec.  422.111 
but solicit comment on whether the existing regulations are 
sufficiently clear or if clarification in the regulation text would be 
helpful to avoid potential confusion on how MA plans should bundle 
copayments.
2. Cost Sharing Limits for Inpatient Hospital Acute and Psychiatric 
Services (Sec.  422.100(f)(6)(iv))
    Since contract year 2011, CMS has annually announced the maximum 
cost sharing permitted for inpatient length of stay scenarios for both 
acute and psychiatric care. For each length of stay scenario, CMS set 
cost sharing limits based on a percentage of estimated Medicare FFS 
cost sharing projected to the applicable contract year. The OACT 
conducts an annual analysis of the most recent, complete Medicare FFS 
data, and uses that data to project costs for the Part A deductible and 
Part B costs based on the length of stay scenarios and the setting of 
the inpatient stay (acute or psychiatric), to help determine the 
inpatient hospital acute and psychiatric cost sharing limit amounts. 
CMS compares the cost sharing for an MA enrollee under the plan design 
for each bid to the projected Medicare FFS cost sharing in each 
scenario; for MA plans with the mandatory MOOP limit, the cost sharing 
limit is 100 percent of the Medicare FFS cost sharing for the 
applicable scenario and for MA plans using the lower, voluntary MOOP 
limit, it is 125 percent of the Medicare FFS cost sharing. If an MA 
plan's cost sharing exceeds the applicable limit for any of the length 
of stay scenarios, CMS considers the MA plans' cost sharing as 
discriminatory under current Sec.  422.100. We are proposing new Sec.  
422.100(f)(6)(iv)(A) through (D) to codify this longstanding policy for 
the cost sharing established by an MA plan for inpatient acute and 
psychiatric services, with modifications to take into account cost 
sharing expenditures for beneficiaries with diagnoses of ESRD in 
setting the limits and to set a limit for MA plans that use the 
intermediate MOOP limit. Under proposed paragraph (f)(6)(iv)(A), an MA 
plan is required to have cost sharing for inpatient acute and 
psychiatric benefits that do not exceed the limits set in Sec.  
422.100(f)(6)(iv). Our proposal aims to provide transparency on how CMS 
will set the thresholds with which MA cost sharing must comply for 
inpatient hospital acute and psychiatric benefits. In reviewing bids, 
we will evaluate MA cost sharing to determine whether it complies with 
the limits set under this proposed new regulation text.
    We propose that the cost sharing limits are set for each of the 
seven inpatient stay scenarios for which cost sharing would apply under 
original Medicare. The inpatient hospital acute stay scenarios are for 
3 days, 6 days, 10 days, and 60 days and the psychiatric inpatient 
hospital stay scenarios are for 8 days, 15 days, and 60 days. Most of 
these are the same scenarios used in the contract year 2020 Call Letter 
and in previous years. Cost sharing limits for each of the seven 
inpatient hospital length of stay scenarios incorporates the estimated 
Medicare FFS inpatient Part A deductible and Part B professional costs. 
Plans may vary cost sharing for different admitting health conditions, 
providers, or services provided, but overall benefit cost sharing must 
satisfy the limits established by CMS. We identify these length of stay 
scenarios in proposed paragraph (f)(6)(iv)(B). Proposed paragraph 
(f)(6)(iv)(C) describes the data CMS would use for establishing the 
Medicare FFS out-of-pocket costs for each scenario. CMS would use 
projected out-of-pocket costs and utilization data based on the most 
recent, complete Medicare FFS data that factors in out-of-pocket costs 
incurred by beneficiaries with diagnoses of ESRD

[[Page 9081]]

on the transition schedule described in paragraphs (f)(4)(vii)(A) 
through (D) and may also use patient utilization information from MA 
encounter data. For purposes of setting these cost sharing limits, the 
Medicare FFS data that factors in the ESRD cost differential would not 
include the exceptions for the MOOP limit calculations that are 
described at Sec.  422.100(f)(4)(v)(A) and (C). In essence, the 
exceptions relate to how the ESRD cost transition would be delayed if 
the prior year's projected 95th or 85th percentile (including costs 
incurred by all Medicare FFS beneficiaries with and without diagnoses 
of ESRD) is two percentiles above or below the projected 95th or 85th 
percentile for the upcoming contract year. This exception is not 
relevant for setting inpatient cost sharing limits as our methodology 
does not utilize percentiles to establish length of stay scenario 
limits.
    OACT conducted an analysis to help determine the impact of 
including all costs incurred by beneficiaries with diagnoses of ESRD 
into the most recent, complete Medicare FFS data used to establish cost 
sharing standards. This analysis found adding in related ESRD costs 
affects inpatient hospital acute cost sharing limits. For example, in 
contract year 2021 the inpatient hospital acute 60 day limit without 
ESRD costs for MA plans that establish a mandatory MOOP limit is 
projected to be $4,645 and with 100 percent of ESRD costs increases to 
$5,073. This is an increase of $428, due to increased Part B 
professional fees ($3,169 for 60 days without ESRD costs and $3,597 
with 100 percent of ESRD costs). The projected Part A deductible of 
$1,476 stays the same in both calculations. Although costs incurred by 
beneficiaries with diagnoses of ESRD costs are not expected to impact 
inpatient hospital psychiatric standards based on current projections, 
we are proposing to update the methodology to consider ESRD costs for 
all inpatient hospital acute and psychiatric standards. Specifically, 
CMS proposes to integrate approximately 60 percent of the difference 
between Medicare FFS costs incurred by all beneficiaries (including 
those with diagnoses of ESRD) and the costs excluding beneficiaries 
with diagnoses of ESRD into the data used to set the inpatient hospital 
acute and psychiatric cost sharing limits for contract year 2022. After 
contract year 2022, CMS will incorporate an additional 20 percent of 
costs incurred by beneficiaries with diagnoses of ESRD each year until 
contract year 2024, when CMS will integrate 100 percent of the costs 
incurred by beneficiaries with diagnoses of ESRD into the most recent, 
complete Medicare FFS data that is used to determine inpatient hospital 
acute and psychiatric cost sharing limits. This is the same as the 
proposed transition schedule of ESRD costs into MOOP limit calculations 
discussed in section VI.A. of this proposed rule. Accordingly, we 
cross-reference that transition at Sec.  422.100(f)(6)(iv)(C) to avoid 
repetitive regulation text.
    We will apply the transition of ESRD costs across all existing and 
new inpatient hospital length of stay scenarios. Specifically, we 
propose to add a 3-day length of stay scenario for acute stays and an 
8-day length of stay scenario for psychiatric care to the scenarios we 
have used for the past several years. The proposed 3-day and 8-day stay 
scenarios for inpatient hospital acute and psychiatric standards were 
determined based on Medicare FFS data and informed by patient 
utilization information from MA encounter data. For example, the 
analysis of Medicare FFS 2015-2017 claims data indicates that 3 days 
was the median length of stay within an inpatient hospital acute 
setting. CMS also reviewed patient utilization during the same 2015-
2017 time period using MA encounter data and noted the median length of 
stay was about the same for MA enrollees. Based on the combined data, 
we believe the addition of a 3-day length of stay cost sharing limit is 
an appropriate addition to our existing inpatient hospital acute cost 
sharing standards (6 days, 10 days, and 60 days). CMS completed similar 
analyses regarding psychiatric stays and is, therefore, proposing to 
add an 8-day length of stay scenario to the existing psychiatric length 
of stay scenarios (15 days and 60 days) used in the past.
    Finally, in paragraph (f)(6)(iv)(D), we are proposing specific cost 
sharing limits for inpatient acute and psychiatric stays that are tied 
to the type of MOOP limit used by the MA plan. These limits are stated 
as percentages of the FFS costs for each length of stay scenario:
    (1) Mandatory MOOP limit: Cost sharing must not exceed 100 percent 
of estimated Medicare Fee-for-Service cost sharing, including the Part 
A deductible and related Part B costs.
    (2) Intermediate MOOP limit: Cost sharing must not exceed the 
numeric mid-point between the cost sharing limits for the mandatory and 
lower MOOP limits.
    (3) Lower MOOP limit: Cost sharing must not exceed 125 percent of 
estimated Medicare Fee-for-Service cost sharing, including the Part A 
deductible and related Part B costs. Consistent with existing policy, 
for inpatient acute 60 day length of stays, MA plans that establish a 
lower MOOP limit have the flexibility to set cost sharing above 125 
percent of estimated Medicare Fee-for-Service cost sharing as long as 
the total cost sharing for the inpatient benefit does not exceed the 
MOOP limit or cost sharing for those benefits in original Medicare on a 
per member per month actuarially equivalent basis.
    This proposal would continue the established percentage of 
estimated Medicare FFS cost sharing for the mandatory and lower MOOP 
limits (100 percent and 125 percent respectively) to determine 
inpatient hospital acute and psychiatric cost sharing limits. Using the 
rule proposed for paragraph (f)(6)(ii)(A), all inpatient hospital acute 
and psychiatric cost sharing limits would be rounded to the nearest or 
lower whole $1 increment. Our proposal for limits on the cost sharing 
an MA plan uses for inpatient acute and psychiatric services aligns 
with our current practice (with some modifications, as discussed) and 
will provide benefit design stability for MA plans. CMS would continue 
to publish acceptable inpatient hospital acute and psychiatric cost 
sharing limits and a description of how the regulation standard is 
applied (that is, the methodology used) through subregulatory means, 
such as Health Plan Management System (HPMS) memoranda, issued prior to 
bid submission each year.
    Table 4 is based on the most recent, complete Medicare FFS data 
available and then projected to contract years 2022 through 2024 to 
provide an illustrative example of how CMS would apply our proposals 
related to inpatient hospital acute standards for the 10-day length of 
stay scenario. As such, the limits for contract years 2022 through 2024 
in Table 4 are illustrations only. The actual cost sharing limits 
developed under the rules we are proposing would change each year as 
OACT will update Part A deductible, Part B professional costs, and 
Medicare FFS cost assumptions annually prior to bid submission; the 
actual cost sharing limits for these future years, applying the final 
rules, could increase or decrease accordingly. In developing Table 4, 
we calculated the proposed contract year 2022 inpatient hospital acute 
10-day length of stay scenario cost sharing limit for a MA plan that 
establishes a mandatory MOOP limit ($2,242 in Table 4) as follows:
    (i) Add the projected Part B professional costs per day, up to a 
10-day inpatient acute hospital stay. The

[[Page 9082]]

first day Part B professional costs are $251.00, followed by, $77.00, 
$49.00, $47.00, $50.00, and $245.00 for the next five days combined. 
This totals to $719.00 for a 10-day stay, regardless of the health 
condition initiating the hospitalization.
    (ii) Add the $719.00 subtotal of projected Part B professional 
costs to the projected Part A deductible ($1,476.00) which equals 
$2,195.00.
    (iii) Add 60 percent of the ESRD cost differential ($46.80) to the 
sum of Part A and B costs ($2,195.00) which equals $2,241.80.
    (iv) Round that sum ($2,241.80) to the nearest whole dollar which 
equals, $2,242.00.

 Table 4--Illustrative Example of Cost Sharing Limits Based on Current Medicare FFS Data for Inpatient Hospital
                                      Acute 10-Day Length of Stay Scenario
----------------------------------------------------------------------------------------------------------------
                                         Percent of estimated      Contract year   Contract year   Contract year
             MOOP limit               medicare FFS cost sharing        2022            2023            2024
----------------------------------------------------------------------------------------------------------------
Mandatory..........................  100........................          $2,242          $2,257          $2,273
Intermediate.......................  Approximate numeric                   2,522           2,540           2,557
                                      midpoint *.
Lower..............................  125........................           2,802           2,822           2,841
----------------------------------------------------------------------------------------------------------------
* The intermediate MOOP limit would be based on the related mandatory MOOP cost sharing limit, less
  approximately 50 percent of the numeric difference between the mandatory and voluntary MOOP cost sharing
  limits.

    We expect to publish the annual inpatient hospital acute and 
psychiatric limits with a description of how the regulation standard is 
applied (that is, the methodology used) through HPMS memos issued prior 
to bid submission each year. We solicit comment on whether additional 
regulation text is necessary to establish when those memos should be 
released. We also refer readers to Table 8, which includes the proposed 
inpatient hospital acute and psychiatric cost sharing limits (for all 
length of stay scenarios) using the methodology we have proposed in 
Sec.  422.100(f)(6)(iv). These are only projections of potential 
inpatient hospital acute and psychiatric cost sharing limits for 
contract years 2022 through 2024 to illustrate the potential impact of 
our proposal for incorporating the out-of-pocket costs of Medicare FFS 
beneficiaries with diagnoses of ESRD into the most recent, complete 
Medicare FFS data used to set the MA inpatient hospital acute and 
psychiatric limits. We intend to apply the proposed revised regulations 
each year to calculate the inpatient hospital acute and psychiatric 
limits.
    CMS requests comments and suggestions on its application and 
implementation of this proposal for these cost sharing standards. CMS 
also seeks comments and suggestions on whether additional regulation 
text or restructuring of Sec.  422.100(f)(6)(iv) is needed to achieve 
CMS's goal of providing additional transparency on how CMS will: (1) 
Develop the seven length of stay scenarios for inpatient hospital acute 
and psychiatric services; (2) transition ESRD costs into inpatient 
hospital acute and psychiatric limit calculations; and (3) calculate 
inpatient hospital acute and psychiatric limits after the ESRD cost 
transition is complete.
3. Basic Benefits for Skilled Nursing Facilities (SNFs), Outpatient, 
and Professional Services Subject to Cost Sharing Limits (Sec. Sec.  
422.100(j))
    We are also proposing to codify and adopt specific cost sharing 
limits for certain benefits (by individual service and by category) 
that are based on a comparison to the cost sharing applicable in the 
Medicare FFS program. For example, the cost sharing limit for days 21-
100 in a SNF is calculated by taking one eighth of the projected Part A 
deductible for the applicable contract year. In addition, the cost 
sharing limit for days 1 to 20 in a SNF is set at $0 for MA plans that 
establish a mandatory MOOP limit and MA plans that establish a lower or 
intermediate MOOP limit are permitted nominal cost sharing limits to 
align with Medicare FFS and balance incentives for the various types of 
MOOP limits. In codifying the current policy and in proposing to add 
new limits, we are relying on both section 1852(a)(1)(B)(iv)(IV) and 
section 1852(b) of the Act. Section 1852(a)(1)(B)(iv)(IV) of the Act 
explicitly authorizes the Secretary to identify services that the 
Secretary determines appropriate (including services that the Secretary 
determines require a high level of predictability and transparency for 
beneficiaries) to be subject to a cost sharing limit that is tied to 
the cost sharing imposed for those services under original Medicare. We 
have traditionally relied on how higher cost sharing for these benefits 
discriminates against the enrollees who need these services in 
establishing limits in the past. Charging higher cost sharing for 
specific services discriminates against and discourages enrollment by 
beneficiaries with a health status that requires those services.
    Following the discussion is a detailed chart (Table 5) which 
illustrate the cost sharing limits based on the methodology proposed 
for contract year 2022, similar to the chart CMS included in the annual 
Call Letter in past years. Table 5 is based on applying the rules we 
have proposed in Sec. Sec.  422.100(f)(6) and (j)(1) and (2) and 
422.113(b)(2)(v) and (vi).
a. Range of Cost Sharing Limits for Certain Outpatient and Professional 
Services
    As noted in the 2020 Final Call Letter, CMS has an established 
policy of affording MA plans greater flexibility in establishing Parts 
A and B cost sharing when the MA plan adopts a lower, voluntary MOOP 
limit; less flexibility is available to plans that adopt the higher, 
mandatory MOOP limit. In contract year 2020, CMS provided this 
flexibility, on varying levels, for a number of service categories. For 
example, service categories where we have allowed greater cost sharing 
flexibility included the first 20 days of a stay at a SNF, emergency 
care/post stabilization care, home health, and all categories of 
durable medical equipment (DME).
    CMS developed this proposal to provide MA organizations with 
benefit design flexibilities and to balance beneficiary incentives for 
each type of MOOP. Accordingly, CMS is proposing to modify the 
regulation at Sec.  422.100(f)(6) to establish a range of cost sharing 
limits based upon the MOOP limit established by the MA plan for 
specific basic benefits (as defined in Sec.  422.100(c)(1)) offered on 
an in-network basis.
    CMS proposes to add Sec.  422.100(f)(6)(iii) to specify that for 
basic benefits that are professional services furnished in-network, MA 
plans may have greater flexibility in setting cost sharing based on the 
MOOP

[[Page 9083]]

limit they establish. In our proposal for paragraph (f)(6)(iii), 
discussed in detail at section VI.B.1. of this proposed rule, we 
address the type of data that will be used to set cost sharing limits 
for those professional services and, in proposed paragraphs 
(f)(6)(iii)(C)(1), (2), and (3) to specify the maximum cost sharing 
limit based on the MOOP limit established by the MA plan. In addition 
to those cost sharing limits, we are also proposing to amend Sec.  
422.100(j) to impose cost sharing limits for specific benefits and 
specific categories of benefits that are based on the cost sharing used 
in original Medicare. Our proposal for Sec.  422.100(j) also takes into 
account the MOOP type used by an MA plan to grant additional cost 
sharing flexibility to MA plans. Therefore, under our proposed rule as 
a whole, multiple standards will apply to the cost sharing for 
professional services and outpatient benefits. Table 5 in this section 
summarizes these proposals by illustrating the copayment limits that 
would be applicable to in-network cost sharing for basic benefits, 
using projections based on the most recent, complete data that is 
currently available.
    CMS will, in its annual review of plan cost sharing, monitor both 
copayment amounts and coinsurance percentages. Although MA plans have 
the flexibility to establish cost sharing amounts as copayments or 
coinsurance, MA plans should keep in mind, when designing their cost 
sharing, that enrollees generally find copayment amounts more 
predictable and less confusing than coinsurance. Copayments are 
expected to reflect specific benefits identified within the PBP service 
category or a reasonable group of benefits or services provided. Some 
PBP service categories may identify specific benefits for which a 
unique copayment would apply (for example, category 7a includes primary 
care services), while other categories include a variety of services 
with different levels of costs which may reasonably have a range of 
copayments based on groups of similar services (for example, category 
15 includes Part B drugs--other which covers a wide range of products 
and costs). We note that MA plans may establish one cost sharing amount 
for multiple visits provided during an episode of care (for example, 
several sessions of cardiac rehabilitation) as long as the overall (or 
total) cost sharing amount satisfies CMS standards. If the proposals 
for Sec. Sec.  422.100(f)(6) and (j) and 422.113(b)(2)(v) and (vi) are 
finalized, contract year 2022 bids must reflect enrollee cost sharing 
for in-network services no greater than the amounts calculated using 
the rules in those regulations. For example, CMS would permit an MA 
plan that establishes a lower MOOP limit to establish up to 50 percent 
coinsurance or actuarial equivalent copayment for cardiac 
rehabilitation (a professional service for which cost sharing is 
subject to Sec.  422100(f)(6)(iii)), and other services included in 
Table 5 where we do not propose a specific actuarially equivalent 
copayment limit. MA organizations have the option to charge either 
coinsurance or a copayment for most service category benefits.
b. Emergency and Urgently Needed Services (Sec.  422.113(b)(2)(v) and 
(vi))
    Most of these proposals for limiting cost sharing for basic 
benefits use methodologies that permit CMS to annually update the 
dollar amount applicable to copayments while the coinsurance limits 
would remain at a specified percentage of the total MA plan financial 
liability. CMS believes a different approach for emergency services is 
appropriate, as our analyses with OACT find shifts in payment trends 
may affect emergency services costs more so than urgently needed 
services and encompass care for a more complex patient. In addition, 
CMS recognizes that MA plans are able to manage urgently needed 
services similar to professional services like primary and specialty 
care in a manner that may not be appropriate or applicable for 
emergency services. Accordingly, we propose to codify in existing 
regulation at Sec.  422.113(b)(2)(v) that a maximum cost sharing limit 
permitted per visit for emergency services corresponds to the MOOP 
limit established by the MA plan. Our proposal also incorporates 
elements from the current rule at Sec.  422.113(b)(2)(v), which 
requires MA organizations to limit cost sharing to enrollees for 
emergency services that is the lesser of what the enrollee would pay 
for the services if they were obtained through the MA organization or 
the amount CMS sets annually.
    We are proposing, at Sec.  422.113(b)(2)(v), effective for contract 
year 2022 and subsequent years, that the MA organization is financially 
responsible for emergency and urgently needed services with a dollar 
limit on emergency services including post-stabilization services costs 
for enrollees that is the lower of--
    (A) The cost sharing established by the MA plan if the emergency 
services were provided through the MA organization; or
    (B) A maximum cost sharing limit permitted per visit that 
corresponds to the MA plan MOOP limit as follows:
    (1) $115 for MA plans with a mandatory MOOP limit.
    (2) $130 for MA plans with an intermediate MOOP limit.
    (3) $150 for MA plans with a lower MOOP limit.
    To develop this proposal, CMS looked to the projected median total 
allowed amount for emergency services (including visit and related 
procedure costs) using the most recent, complete Medicare FFS data that 
includes 100 percent of the out-of-pocket costs incurred by 
beneficiaries with diagnoses of ESRD. We propose to include 100 percent 
of ESRD costs instead of a gradual transition as the difference in 
median amounts without ESRD costs and with 100 percent of ESRD costs 
for contract year 2022 is only $4 ($759 versus $755). The proposal for 
the cost sharing limits for an MA plan with a mandatory MOOP limit and 
an MA plan with a lower MOOP limit are tied to the dollar figures that 
are 15 percent and 20 percent of that median cost, rounded to the 
nearest whole $5 increment. For example, we reached the mandatory MOOP 
limit amount by multiplying the projected median total allowed amount 
for emergency services/post stabilization care with 100 percent of ESRD 
costs ($755) by 15 percent, which equals $113.25. Then we rounded to 
the nearest whole $5 increment ($115). The proposed maximum cost 
sharing limits for MA plans with an intermediate MOOP limit is based on 
the numeric midpoint of the related cost sharing limits for MA plans 
with mandatory and lower MOOP limits, rounded to the nearest whole $5 
increment. In consultation with the OACT, CMS determined that using the 
projected median allowed amounts from the most recent, complete 
Medicare FFS with 100 percent of related ESRD costs (versus projected 
average Medicare FFS allowed amounts) was more appropriate given the 
distribution of emergency services and shifts in payment trends. CMS 
will monitor trends and consider updating cost sharing limits for both 
urgently needed services and emergency services in future rulemaking 
based on emerging trends.
    In addition, CMS believes it can be difficult for enrollees to 
differentiate emergency services from post-stabilization services and 
as such, proposes clarifying updates to the language within paragraph 
(b)(2)(v) to note that cost sharing limits for emergency services 
include post-stabilization service costs. We are also proposing to set 
cost sharing limits for

[[Page 9084]]

urgently needed services that are subject to Sec.  422.113(b)(2)(vi). 
We believe that urgently needed services are most like professional 
services and therefore, are proposing that the same cost sharing limits 
for professional services under Sec.  422.100 will apply to urgently 
needed services, regardless whether those urgently needed services are 
furnished in-network or out-of-network. We are not proposing any 
changes to Sec.  422.113 regarding the MA organization's obligations to 
cover and pay for emergency services, post-stabilization services, and 
urgently needed services but only to codify specific cost sharing 
limits for those services.
c. Services No Greater Than Original Medicare
    Section 1852(a)(1)(B) of the Act specifies that MA plans may not 
charge enrollees higher cost sharing than is charged under original 
Medicare for chemotherapy administration services (which we have 
implemented as including Part B--chemotherapy/radiation drugs integral 
to the treatment regimen), skilled nursing care, and renal dialysis 
services. This rule is currently implemented in Sec. Sec.  417.454(e) 
(for cost plans) and 422.100(j) (for MA plans). We are proposing to 
restructure Sec.  422.100(j) as part of codifying cost sharing limits 
for other services. Under our proposal, cost sharing standards for cost 
plans will remain the same. In our current interpretation and 
application of this requirement for skilled nursing care, we have 
addressed the first 20 days of a SNP stay differently than days 21 
through 100. In Medicare FFS, there is no cost sharing for the first 20 
days of a SNP stay. MA plans that establish a voluntary MOOP limit can 
establish per-day cost sharing for the first 20 days of a SNF stay, but 
the total cost sharing for the overall SNF benefit (that is, days 1 
through 100) must be no higher than the actuarially equivalent cost 
sharing in original Medicare and the per-day cost sharing for days 21 
through 100 must not be greater than the projected original Medicare 
SNF amount. MA plans that establish the higher, mandatory MOOP limit 
must establish $0 per-day cost sharing for the first 20 days of a SNF 
stay and the per-day cost sharing for days 21 through 100 must not be 
greater than the original Medicare SNF amount. Under our proposal for 
Sec.  422.100(j)(1)(iii), the current rule for MA plans that use the 
higher, mandatory MOOP limit will remain the same; we are proposing to 
permit limited cost sharing for the first 20 days of SNF for MA plans 
that establish either the lower or intermediate MOOP limit beginning in 
contract year 2022.
    We propose to add the following services to the requirement that 
cost sharing charged by an MA plan may not exceed cost sharing required 
under original Medicare: (1) Home health services (as defined in 
section 1861(m) of the Act) for MA plans that establish a mandatory or 
intermediate MOOP limit and (2) Durable medical equipment (DME). For 
home health services, we are also proposing that when the MA plan 
establishes the lower MOOP limit, the MA plan may have cost sharing up 
to 20 percent of the total MA plan financial liability. Under our 
proposal, the DME per-item or service cost sharing must not be greater 
than original Medicare for MA plans that establish a mandatory MOOP 
limit. For MA plans that establish a lower or intermediate MOOP limit, 
total cost sharing for all DME PBP service categories combined must not 
exceed original Medicare on a per member per month actuarially 
equivalent basis, but such MA plan may establish cost sharing for 
specific items of DME that exceed the cost sharing under original 
Medicare. In order to codify these changes at Sec.  422.100(j), we are 
proposing to reorganize that paragraph with new text at paragraph 
(j)(1) to provide that for the basic benefits specified, an MA plan may 
not establish in-network cost sharing that exceeds the cost sharing 
required under original Medicare. We are proposing to re-designate 
existing paragraphs (j)(1) through (3) as (j)(1)(i) through (iii) and 
to add new paragraphs (j)(1)(iv) (for home health) and (v) (for DME).
d. In-Network Service Category Cost Sharing Requirements
    To provide context for our proposal to establish the methodology to 
set the various cost sharing limits in proposed Sec. Sec.  
422.100(f)(6) and (j) and 422.113(b)(2)(v) and (vi), we provide 
illustrative cost sharing limits for contract year 2022 in Table 5 
based on that methodology and projections of the most recent, complete 
Medicare FFS data. Table 5 illustrates the coinsurance and copayment 
standards that would apply only to in-network Parts A and B services 
(unless otherwise indicated in the table as an application of the rules 
proposed at Sec. Sec.  422.100(f)(6)(i) and 422.113(b)(2)(v) and (vi)) 
for the corresponding type of combined MOOP limit a MA plan chooses to 
establish. These are only projections of potential cost sharing limits 
for contract year 2022 to illustrate the potential impact of our 
proposal. If the proposal for the various amendments to Sec. Sec.  
422.100(f) and (j) and 422.113(b)(2)(vi) regarding cost sharing limits 
are adopted, we will update these numbers on an annual basis to 
establish the specific cost sharing limits MA organizations would not 
be permitted to exceed in establishing their benefit designs. 
Consistent with our proposal at Sec.  422.113(b)(2)(v), the cost 
sharing limits for emergency services would remain the same each year 
unless the regulation is amended. We intend to apply the proposed 
revised regulations each year to calculate the cost sharing limits 
unless otherwise stated. We expect to publish the annual inpatient 
hospital acute and psychiatric limits with a description of how the 
regulation standard is applied (that is, the methodology used) through 
HPMS memoranda issued prior to bid submission each year. Under our 
proposal, all standards and cost sharing are inclusive of applicable 
service category deductibles, copayments and coinsurance, but do not 
include plan level deductibles. These cost sharing limits are based on 
projections of the most recent, complete Medicare FFS data that 
includes 100 percent of the out-of-pocket costs incurred by 
beneficiaries with diagnoses of ESRD for basic benefits that are 
professional services, emergency services/post stabilization care, and 
urgent care. We propose to include 100 percent of ESRD costs versus a 
transition of ESRD costs over time as there were no significant 
difference when including ESRD for any of the physician specialties 
based on projections of the most, recent complete Medicare FFS from the 
OACT. For the service categories with only coinsurance limits (that is, 
limits defined as not applicable (N/A)), and those with $0 or nominal 
limits (such as SNF), we note that the related ESRD costs are not 
applicable. For example, our methodology of setting the SNF cost 
sharing limit for days 21 to 100 only considers the projected Part A 
deductible from the most recent, complete Medicare FFS data which is 
not affected by beneficiaries with diagnoses of ESRD enrolling in MA.
    In Table 5 we do not include approximate actuarially equivalent 
copayment limits for: Cardiac rehabilitation, intensive cardiac 
rehabilitation, pulmonary rehabilitation, supervised exercise therapy 
(SET) for symptomatic peripheral artery disease (PAD), partial 
hospitalization, home health, therapeutic radiological services, DME, 
dialysis, Part B Drugs Chemotherapy/Radiation Drugs, and Part B Drugs--
Other. In general, we found these categories are subject to a higher 
variation in cost or unique provider contracting arrangements

[[Page 9085]]

which makes using Medicare FFS average or median cost data less 
applicable for developing a standardized actuarially equivalent 
copayment value. As such, in order to monitor and enforce compliance 
with these cost sharing requirements that are based on the contracted 
rates the MA plan uses for in-network services, MA organizations may be 
required to provide information to CMS demonstrating how contracted 
rates comply with the regulation standards we are proposing here at 
Sec.  422.100(f)(6). We solicit comment whether an explicit regulatory 
provision should be added to require MA organizations to demonstrate 
compliance with these standards upon request by CMS; such demonstration 
would include providing CMS with information substantiating the 
contracted rates for basic benefits that are professional services for 
which CMS has not established an approximate actuarially equivalent 
copayment limits, and illustrating how the MA organization determined 
its cost sharing amounts.
BILLING CODE 4120-01-P

[[Page 9086]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.007


[[Page 9087]]


[GRAPHIC] [TIFF OMITTED] TP18FE20.008

BILLING CODE 4120-01-C
    MA organizations with benefit designs using a coinsurance or 
copayment amount for which we are not proposing to publish a specific 
threshold for cost sharing (for example, coinsurance for inpatient or 
copayment for durable medical equipment) must maintain documentation 
that clearly demonstrates how the coinsurance or copayment amount 
satisfies the regulatory requirements for each applicable plan. This is 
consistent with existing MA program monitoring and oversight for MA 
organizations to be able to demonstrate compliance with applicable 
program requirements. Cost sharing and other plan design elements 
remain subject as well to Sec.  422.100(f)(2), which prohibits MA plans 
from designing benefits to discriminate against beneficiaries, promote 
discrimination, discourage enrollment or encourage disenrollment, steer 
subsets of Medicare beneficiaries to particular MA plans, or inhibit 
access to services. This documentation may be used to address potential 
beneficiary appeals, complaints, and/or general oversight activities 
performed by CMS. In addition, MA plans are required to attest when 
they submit their bid that their benefits will be offered in accordance 
with all applicable Medicare program authorizing statutes and 
regulations.
4. Per Member per Month Actuarial Equivalent (AE) Cost Sharing Limits 
for Basic Benefits (Sec.  422.100(j)(2))
    Under the statute and current regulations, total MA cost sharing 
for Parts A and B services must not exceed cost sharing for those 
services in Medicare FFS on an actuarially equivalent basis and must 
not be discriminatory. In order to ensure that cost sharing is 
consistent with both Sec. Sec.  422.254(b)(4) and 422.100(f)(2), and 
current Sec.  422.100(f)(6), CMS has historically evaluated cost 
sharing limits on a per member per month actuarially equivalent basis 
for the following service categories: Inpatient hospital, SNF, DME, and 
Part B drugs.
    In proposed Sec.  422.100(j)(2), we propose a rule requiring that 
total cost sharing for all basic benefits covered by an MA plan, 
excluding out-of-network benefits covered by a regional MA plan, must 
not exceed cost sharing for those benefits in original Medicare on a 
per member per month actuarially equivalent basis. This provision 
implements section 1852(a)(1)(B) of the Act and the carve out of out-
of-network benefits covered by a regional MA plan is to be consistent 
with section 1852(a)(1)(B)(ii) of the Act. CMS is also proposing to 
codify our existing policy regarding the specific benefit categories 
that MA plans must not exceed the cost sharing for those benefit 
categories in original Medicare on a per member per month actuarially 
equivalent basis in Sec.  422.100(j)(2)(i). Consistent with existing 
policy, the services subject to this requirement under our proposal 
are: (A) Inpatient hospital acute and psychiatric services, defined as 
services provided during a covered stay in an inpatient facility during 
the period for which cost sharing would apply under original Medicare; 
(B) DME; (C) Drugs and biologics covered under Part B of original 
Medicare (including both chemotherapy/radiation drugs and other

[[Page 9088]]

drugs covered under Part B); and (D) Skilled nursing care, defined as 
services provided during a covered stay in a SNF during the period for 
which cost sharing would apply under original Medicare.
    This proposal would ensure that MA plans with greater cost sharing 
flexibility in these categories are not designing benefits in a way 
that discriminates against enrollees with health status factors and 
conditions that require these services. Further, limiting cost sharing 
this way will ensure that enrollees with certain conditions or who are 
high utilizers of these basic benefits are not discouraged from 
enrolling in MA plans. We are therefore relying on our authority under 
section 1852(a)(1)(B)(iv) and 1852(a)(2) of the Act to codify these 
rules requiring MA cost sharing to be limited based on cost sharing in 
original Medicare. In addition, we believe that setting copayment 
limits through quantitative formulas (such as those used for our 
inpatient hospital acute and psychiatric standards) may be less 
appropriate for some categories, like DME and Part B drugs. Cost 
sharing for these services may be better evaluated for discrimination 
on an aggregate service category basis. These categories include items 
or services that significantly vary in costs and/or may be subject to 
provider contracting arrangements that makes it difficult and arbitrary 
for CMS to establish a specific copayment amount for the category as a 
whole as opposed to specific items and benefits.
    We are also proposing, at Sec.  422.100(j)(2)(ii) that CMS may 
extend flexibility for MA plans when evaluating actuarial equivalent 
cost sharing limits for those service categories to the extent that the 
per member per month cost sharing limit is actuarially justifiable 
based on generally accepted actuarial principles and supporting 
documentation included in the bid, provided that the cost sharing for 
specific services otherwise satisfies published cost sharing standards. 
We believe that this exception will apply in limited situations, such 
as when the MA plan uses capitated arrangements with provider groups, 
operate their own facilities, or other unique arrangements. This 
flexibility codifies and is consistent with current policy and 
practice.
    This proposal aims to clarify how CMS uses the most relevant and 
appropriate information to determine whether specific cost sharing is 
discriminatory and to set standards and thresholds above which CMS 
believes cost sharing is discriminatory. Similar to current practice, 
CMS intends to use HPMS memoranda to communicate prior to bid 
submission its application of the regulation for future years, as 
appropriate. We solicit comment on the previously discussed proposals.

C. Plan Crosswalks for Medicare Advantage (MA) Plans and Cost Plans 
(Sec. Sec.  417.496 and 422.530)

    We are proposing to codify the current process and conditions under 
which MA organizations and 1876 cost plans can transfer their enrollees 
into the same plan or plan type from year to year when no other 
election has been made (this process is a ``plan crosswalk''), as well 
as when plans can transfer their enrollees to other plans of a 
different type offered by the same MA organization or cost plan (this 
is a ``crosswalk exception''). Our proposal defines plan crosswalks, 
codifies rules that protect a beneficiary's right to choose a plan, and 
specifies the circumstances under which MA organizations and cost plans 
may transfer beneficiaries into another plan of the same type offered 
by the MA organization or, in the case of cost plans, transfer 
enrollees from that cost plan benefit package to another plan benefit 
package (PBP) under the same contract. We generally use the terms 
``plan'' and ``PBP'' interchangeably to refer to a specific plan 
offered under a contract. Specifically, the term PBP is used to 
describe the individual benefits packages that may be offered under a 
singular plan. Section 1851(c)(3)(B) of the Act provides for evergreen 
elections which are when an individual who has made an election is 
considered to have continued to make the same election until the 
individual makes a change to the election, or the MA plan is 
discontinued or no longer serves the area in which the individual 
resides. In many cases, our crosswalk policy is a mechanism for 
operationalizing these evergreen elections.
    Section 1851 of the Act provides that Medicare beneficiaries who 
are entitled to Part A and enrolled in Part B may elect to receive 
benefits through enrollment in an MA plan of their choice and 
authorizes CMS to adopt the process, form and manner for making and 
changing enrollment elections. We are proposing to codify existing 
policy regarding crosswalks and crosswalk exceptions using this 
authority and our authority under sections 1856(b)(1) and 1857(e)(1) of 
the Act to adopt standards and contract terms for MA organizations. In 
furtherance of the beneficiary's right to choose and implementing 
evergreen elections, CMS is proposing to codify existing policy in new 
regulations at Sec. Sec.  417.496 and 422.530 to define plan 
crosswalks, implement rules that protect a beneficiary's right to 
choose a plan, and describe allowable circumstances under which MA 
organizations may transfer beneficiaries from one of its MA plans into 
another of its MA plans or a cost contract may transfer beneficiaries 
from one of its plans into another of its cost plans. With respect to 
cost plans, we are proposing to codify existing enrollment policy 
related to the transfer of enrollees from an entity's cost plan to 
another cost plan, under the authority of section 1876(i)(3)(D) of the 
Act, which requires that cost contracts shall contain such other terms 
and conditions, not inconsistent with the statute, as the Secretary may 
find necessary and appropriate. Our proposal does not include rules for 
deeming enrollment from a cost plan to an MA plan under sections 
1876(h)(5)(C) and 1851(c)(4) of the Act. The statute does not permit 
deeming of enrollees from cost plans to MA plans beyond contract year 
2018.
    We are also proposing, at Sec.  422.530(d), the procedures that an 
MA organization must follow when submitting a crosswalk or a crosswalk 
exception request. An MA organization must submit all allowable 
crosswalks in writing through the bid submission process in HPMS by the 
bid submission deadline announced by CMS. Through the bid submission 
process, the MA organization may indicate if a crosswalk exception 
request is needed at that time, but the MA organization must request a 
crosswalk exception later through the crosswalk exception functionality 
in HPMS by the deadline announced by CMS. CMS verifies the exception 
request and notifies the requesting MA organization of the approval or 
denial of the request after the crosswalk exception deadline has 
expired. These exceptions must be submitted by the MA organization to 
ensure that plan benefit package (PBP) enrollment is allocated 
appropriately. We solicit comment on what, if any, additional 
procedures we should adopt for managing crosswalk exceptions.
    CMS has developed extensive guidance addressing the transfer of 
enrollees from one PBP offered by an organization to another PBP 
offered by that organization under the same contract.\71\ The guidance, 
applicable to MA organizations and cost plans, was developed in light 
of the ability of MA organizations and cost plans to revise their 
benefit offerings and PBPs from year to year. The transfer of enrollees

[[Page 9089]]

from one PBP to another under these circumstances serves to facilitate 
evergreen elections. MA organizations frequently make business 
decisions resulting in changes of their MA plans offered for enrollment 
in the following contract year. Each year, through the bid process for 
plan design and an application process for service area changes, MA 
organizations submit changes in coverage and cost sharing design for 
their MA plans. In addition, MA organizations have the ability to 
terminate existing plans and apply to offer new plans. While cost plan 
organizations may not offer new cost plans, they also may make changes 
in their benefit and cost sharing design and seek service area changes 
through an annual process. CMS has issued annual sub-regulatory 
guidance related to changes of this type for MA and cost plans to 
address how MA organizations and cost plans may transition enrollees 
from a plan that is terminating or changing its service area to another 
plan offered by the same organization. These transitions are useful to 
preserve beneficiary enrollment and are subject to a number of 
beneficiary protections. We are proposing to codify existing crosswalk 
policy to clearly identify the basic rules for plan crosswalks, 
including the parameters for allowable crosswalks, and formalize CMS's 
crosswalk exception review process. Crosswalk exceptions are specific 
circumstances where a crosswalk is not automatically authorized under 
our policies but CMS permits MA organizations and cost plans to 
transfer beneficiaries into another plan of the same type offered by 
the MA organization or cost plan after a review, provided that certain 
requirements are met. The crosswalk exceptions process would allow CMS 
to review and validate the existence of an exception, and then manually 
effectuate the transaction in our system. Crosswalk exceptions are not 
part of the standard, annual PBP renewal process. These new regulations 
would be codified at Sec. Sec.  417.496 and 422.530 to govern, 
respectively, cost plans and MA organizations.
---------------------------------------------------------------------------

    \71\ Chapter 16b of the Medicare Managed Care Manual and Process 
for Requesting an HPMS Crosswalk Exception for Contract Year (CY) 
2020 (released annually).
---------------------------------------------------------------------------

    We are proposing, at Sec. Sec.  417.496(a)(1) and 422.530(a)(1), to 
define a plan crosswalk as the movement of enrollees from one PBP to 
another PBP under the same contract between the MA or cost organization 
and CMS. MA and cost organizations complete these crosswalk 
transactions annually as part of the renewal process. Unlike MA plans, 
however, cost plans do not include different plan types such as PPOs, 
PFFS, and special needs plans, therefore in Sec.  417.496(a)(2), we are 
not specifying, as we are for the MA section, that crosswalks from one 
plan type to another are prohibited.
    In Sec.  422.530(a)(5), we propose to define the types of MA plans 
that we consider different for purposes of crosswalk policy. We propose 
that health maintenance organizations, provider-sponsored 
organizations, and regional and local preferred provider organizations 
coordinated care plans are different plan types, even though they are 
all coordinated care plans. Additionally, we note here that the 
segmented plans are not a ``type'' of plan in MA and that crosswalks 
are permitted between segmented and non-segmented plans. We do not 
include in the cost plan crosswalk regulation that contract 
transactions related to plan types and policies such as segmentation 
and continuation, which are specific to MA contract transactions. The 
majority of crosswalks involve moving enrollees from one contract year 
plan to the corresponding plan for the following contract year. 
Therefore, enrollees are not required to make an enrollment election to 
remain enrolled in their chosen plan. In Sec.  417.496(a)(2)(i), we are 
proposing to codify the general rule, that crosswalks are prohibited 
between different cost contracts and in Sec.  417.496(a)(2)(ii), we are 
proposing to codify that crosswalks are prohibited between different 
cost plan IDs under a cost contract unless the crosswalk qualifies for 
an exception to this requirement. In Sec.  417.496(c)(1)(i) and (ii) we 
propose to codify the exception that cost contracts terminating PBPs 
with optional supplemental benefits may transfer enrollees to another 
PBP with or without optional benefits under the same cost contract as 
long as enrollees who have Part A and B benefits only are not 
transferred to a PBP that includes Part D. In Sec.  
417.496(c)(1)(iii)(A), (B), and (C), we propose to codify that an 
enrollee in a terminating PBP that includes Part D may only be moved to 
a PBP that does not include Part D if the enrollee is notified in 
writing that she/he is losing Part D coverage, the options for 
obtaining Part D, and the implications of not getting Part D through 
some other means. In Sec.  422.530(a)(2), we are proposing to codify 
the general rule that crosswalks are prohibited between different MA 
contracts or different plan types (for example, HMO to PPO). This means 
that crosswalks are only permitted between plans of the same type under 
the same contract. However, we are also proposing, in Sec.  422.530(c), 
the limited circumstances in which CMS will allow a crosswalk 
transaction that does not comply with this general prohibition on 
crosswalks to different contracts. We include in Sec.  422.530(a)(2) a 
reference to these ``exceptions'' permitted under paragraph (c). The 
exceptions we are proposing in Sec.  422.530(c) apply to MA plans only 
as they pertain to MA policies so we are not proposing similar 
regulation text in Sec.  417.496.
    As most plan crosswalks are related to contract renewals and non-
renewals, we are also proposing a general rule at Sec.  422.530(a)(3) 
to require that MA plans must comply with renewal and nonrenewal rules 
in Sec. Sec.  422.505 and 422.506 in order to be eligible to complete 
plan crosswalks. In Sec.  417.496(a)(3), we are proposing that cost 
plans must comply with the renewal and non-renewals per Sec. Sec.  
417.490 and 417.492, in order to be eligible to complete plan 
crosswalks. In Sec.  422.530(a)(4), we are proposing that enrollees 
must be eligible for enrollment under Sec. Sec.  422.50 through 422.54 
in order to be moved from PBP to another PBP.
    In Sec. Sec.  422.530(b) and 417.496(b), we propose to codify the 
existing crosswalk policy by specifying the circumstances under which a 
crosswalk is permitted so that an MA organization or cost plan may move 
enrollees into, respectively, another MA plan or cost plan. For MA 
plans, in proposed paragraph (b)(1), we address permissible crosswalks 
for all plan types and in proposed paragraph (b)(2), we address 
crosswalks that are permissible only for MA special needs plans (SNPs). 
We remind readers that the MA plan types are identified in Sec.  422.4; 
therefore, we specified in Sec.  422.530(a)(5) that the different types 
of coordinated care plans are considered different ``plan types'' for 
purposes of crosswalking policy. For cost plans, in proposed paragraph 
(b), we address permissible crosswalks for cost plans.
1. Cost Plans and All MA Plan Types
a. Renewal Plan
    An MA or cost organization may continue to offer, that is, renew, a 
current PBP that retains all of the same service area for the following 
year; the renewing plan must retain the same PBP ID number as in the 
previous contract year. We are proposing to codify this as a 
permissible crosswalk in paragraph (b)(1)(i) for MA plans and Sec.  
417.496(b)(1) for Cost plans. Current enrollees are not required to 
make an enrollment election to remain enrolled in the renewal PBP, and 
the MA or cost organization will not submit enrollment transactions to 
CMS for current enrollees but will transition all enrollees

[[Page 9090]]

from the current PBP to the new PBP with the same PBP ID number for the 
following year. New enrollees must complete enrollment requests, and 
the MA or cost organization will submit enrollment transactions to CMS 
for those new enrollees. Under Sec. Sec.  422.111 and 417.427 current 
MA and cost enrollees of a renewed PBP, respectively, must receive an 
Annual Notice of Change (ANOC) notifying them of any changes to the 
renewing plan.
b. Consolidated Renewal Plan
    MA and cost organizations may combine two or more PBPs offered 
under the same contract in the current contract year into a single 
renewal plan, as a plan consolidation. When the consolidation includes 
two or more complete PBPs being combined and no PBP being split among 
more than one PBP in the next contract year, the MA or cost 
organization is permitted to transition all enrollees in the combined 
plans under one PBP under that contract, with the same benefits in the 
following contract year; the resulting PBP must have the plan ID of one 
of the consolidated plans. We are proposing to codify this as a 
permissible crosswalk in Sec. Sec.  417.496(b)(2) and 
422.530(b)(1)(ii). Current enrollees of a plan or plans being 
consolidated into a single renewal plan will not be required to take 
any enrollment action, and the MA or cost organization does not submit 
enrollment transactions to CMS for those current enrollees. The renewal 
PBP ID is used to transition current enrollees of the plans being 
consolidated into the designated renewal plan. In operationalizing this 
crosswalk, the MA or Cost organization may need to submit updated data 
to CMS for the enrollees affected by the consolidation. New enrollees 
in the consolidated renewal plan must complete enrollment forms and the 
MA or cost organization must submit the enrollment transactions to CMS 
for those new enrollees. Under Sec. Sec.  422.111 and 417.427 MA and 
Cost plans, respectively, are required to provide an ANOC to all 
current enrollees in the consolidated renewal plan.
c. Renewal Plan With a Service Area Expansion (SAE)
    An MA or cost organization may continue to offer the same cost plan 
or local MA plan but expand the service area to include one or more 
additional counties for the following contract year. To expand the 
service area of its plan(s), an MA or cost organization must submit a 
service area expansion (SAE) application to CMS for review and 
approval; CMS treats service area expansions as applications subject to 
the rules in part 422, subpart K, and Sec.  417.402. An MA or cost 
organization renewing a plan with a SAE must retain the renewed PBP's 
ID number in order for all current enrollees to remain enrolled in that 
plan the following contract year. Current enrollees of a PBP that is 
renewed with a SAE are not required to take any enrollment action, and 
the MA or cost organization does not submit enrollment transactions to 
CMS for those current enrollees but will transition all enrollees from 
the current PBP to the new PBP with the same PBP ID number for the 
following year. We are proposing to codify this as a permissible 
crosswalk in Sec.  422.530(b)(1)(iii) for MA plans and Sec.  
417.496(b)(3) for cost plans. New enrollees must complete enrollment 
forms and the MA or cost organization must submit the enrollment 
transactions to CMS for those new enrollees. Under Sec. Sec.  422.111 
and 417.427 MA and cost plans, respectively, are required to provide an 
ANOC to all current enrollees of a renewed PBP with a SAE.
d. Renewal Plan With a Service Area Reduction
    An MA organization offering a local MA plan may reduce the service 
area of a current contract year PBP; similarly, a cost organization may 
reduce the service area of a cost plan. This service area reduction 
(SAR) means that enrollees who were in the part of the service area 
being reduced will generally not be eligible to remain in the plan 
because of the residence requirement in Sec. Sec.  417.422(b), 
422.50(a)(3), and 422.54. We propose to address crosswalks that may 
occur in connection with a service area reduction in Sec. Sec.  
422.530(b)(1)(iv) and 417.496(b)(4). We are proposing that when there 
is a service area reduction for a plan, the MA organization or cost 
plan may only crosswalk the enrollees who reside in the remaining 
service area to the plan in the following contract year that links to a 
current contract year plan but only retains a portion of the prior 
service area. The following contract year plan must retain the same 
plan ID as the current contract year plan. The crosswalk is limited to 
the enrollees in the remaining service area. MA organizations may have 
different options available to them in terms of notices and the ability 
to offer a continuation of enrollment under Sec.  422.74(b)(3)(ii) 
depending on the other MA plans in the area at the time of the service 
area reduction. We are proposing regulation text to address the 
different scenarios.
    In Sec.  422.530(b)(1)(iv)(C), we propose that enrollees that are 
no longer in the service area of the MA or cost plan will be 
disenrolled at the end of the contract year and will need to elect 
another plan (or default to original Medicare). The MA or cost 
organization must submit disenrollment transactions to CMS for these 
enrollees. In addition, the MA or cost plan organization must send a 
Medigap guaranteed issue rights to the affected enrollees and a non-
renewal notice to enrollees in the reduced portion of the service area 
that includes notification of special election period (SEP). We are 
also proposing to codify, at Sec.  422.530(b)(1)(iv)(D) specific rules 
about what information may be provided by the MA organization about its 
other MA plan options in the area that will no longer be part of the 
service area of the continued plan. Per the marketing and communication 
regulations, we are proposing at Sec. Sec.  422.2263(a) and 423.2263(a) 
and discussed elsewhere in this proposed rule, marketing information 
about other MA plan options offered by the MA organization for the 
prospective plan year can begin October 1 of each year for the 
following contract year.
2. Special Needs Plans (SNPs)
    Under our current crosswalk policies, MA Special Needs Plans (SNPs) 
follow the general rules, which we propose to codify in Sec.  
422.530(b)(1), and are permitted additional flexibility for crosswalks 
in specific situations. We propose to codify regulation text to 
identify the additional crosswalks permitted for SNPs in Sec.  
422.530(b)(2). These additional scenarios vary based on the type of 
SNP. We reiterate that MA organizations may not crosswalk enrollees 
from one SNP type to a different SNP type, as that would constitute 
crosswalking into a different type of plan, which is prohibited by 
proposed Sec.  422.530(a)(2).
    (a) Chronic Condition SNPs (C-SNPs):
    We are proposing to codify four permissible crosswalks specific to 
C-SNPs at Sec.  422.530(b)(2)(ii)(A) through (D). C-SNPs serve and are 
limited to enrolling special needs individuals who have a severe or 
disabling chronic condition(s) and would benefit from enrollment in a 
specialized MA plan. The MA organization offering the C-SNP may target 
one or more specific severe or disabling chronic conditions. When a C-
SNP targets more than one severe or disabling chronic condition, we 
refer to that as a ``grouping'' and we have addressed groupings in 
guidance in Chapter 16b of the Medicare Managed Care Manual. These 
permissible crosswalks reflect the limitations on

[[Page 9091]]

eligibility for C-SNPs, as different C-SNPs serve different populations 
depending on the chronic condition(s) targeted for enrollment 
restriction.
    A. Renewing C-SNP with one chronic condition that transitions 
eligible enrollees into another C-SNP with a grouping that contains 
that same chronic condition.
    B. Non-renewing C-SNP with one chronic condition that transitions 
eligible enrollees into another C-SNP with a grouping that contains 
that same chronic condition.
    C. Renewing C-SNP with a grouping that is transitioning eligible 
enrollees into another C-SNP with one of the chronic conditions from 
that grouping.
    D. Non-renewing C-SNP in a grouping that is transitioning eligible 
enrollees into a different grouping C-SNP if the new grouping contains 
at least one condition that the prior plan contained.
    (b) Institutional-SNPs:
    We are proposing to codify five permissible crosswalks specific to 
I-SNPs at Sec.  422.530(b)(2)(iii)(A) through (E). I-SNPs are limited 
to enrolling individuals who are institutionalized or 
institutionalized-equivalent, as those terms are defined in Sec.  
422.2. I-SNPs may limit their enrollment to either institutionalized or 
institutionalized-equivalent individuals or may enroll both categories 
of individuals. These permissible crosswalks reflect the enrollment 
limitations on I-SNPs.
    A. Renewing Institutional SNP that transitions enrollees to an 
Institutional/Institutional Equivalent SNP.
    B. Renewing Institutional Equivalent SNP that transitions enrollees 
to an Institutional/Institutional Equivalent SNP.
    C. Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional SNP.
    D. Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional Equivalent SNP.
    E. Non-renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to another Institutional/Institutional 
Equivalent SNP.
    (c) Dual Eligible-SNPs (D-SNPs):
    We are not proposing to codify any permissible crosswalks specific 
to D-SNPs.
e. Exceptions
    In some instances, crosswalk actions must be manually reviewed and 
entered by CMS staff. We call these crosswalk exceptions. We propose to 
codify at Sec.  422.530(c) when CMS will approve a request for a 
crosswalk exception and permit crosswalks in situations that are not 
specified in Sec.  422.530(b). These exceptions address certain unusual 
circumstances involving specific types of plans or contract activities. 
Under our proposal, only an exception specified in Sec.  422.530(c) 
would be approved and recognized as an additional circumstance when a 
crosswalk is permitted. We propose the following exceptions to the 
limits on the crosswalk process:
    1. When a non-network or partial network based private fee-for-
service (PFFS) plan is transitioning to either a partial network or a 
full network PFFS plan, we are proposing to permit a crosswalk when CMS 
determines it is in the interest of beneficiaries. CMS will consider 
whether the risks to enrollees are such that they would be better 
served by remaining in the plan, whether there are other suitable 
managed care plans available, and whether the enrollees are 
particularly medically vulnerable, such as institutionalized enrollees. 
We anticipate that granting these exceptions would be extremely rare 
since in the great majority of instances enrollees have choices of 
multiple MA plans or Original Medicare and are able to exercise their 
choice. We are specifically proposing to restrict crosswalks between 
these network and non-network PFFS plans because the way enrollees will 
access health care services is significantly different in each of these 
plans. Section 1852(d)(5) of the Act establishes that in areas that are 
determined to be ``network areas'' PFFS plans can only operate by 
having a network of providers that meets CMS current network adequacy 
standards. The network based PFFS plan functions very much like a MA 
PPO plan in that there is a network of contracted providers through 
which enrollees can obtain Medicare covered services. In addition, an 
enrollee in a network based PFFS plan has the option of also going out-
of-network for plan covered services though their cost sharing may be 
higher. However, in areas of the country that have determined to be 
non-network areas with respect to PFFS plans, the PFFS plan can operate 
without a network and enrollees must seek care from any willing 
provider under the non-network PFFS plans terms and conditions of 
payment. Because these two types of PFFS plans function very 
differently for enrollees obtaining covered health care services, we do 
not believe crosswalks should be generally permitted between these two 
types of PFFS plans.
    2. When MA plans offered by two different MA organizations that 
share the same parent organization are consolidated such that the MA 
plans under separate contracts consolidated under one surviving 
contract, the enrollees from the consolidating plans may be moved to an 
MA plan under the surviving plan. As a result of the consolidation of 
contracts, enrollees from at least one of the PBPs are transitioned to 
another contract; therefore, CMS limits approval of these crosswalks to 
an exception because of the movement across different contracts. As 
part of reviewing a request for this crosswalk exception, CMS reviews 
the contract consolidation to ensure compliance with the change of 
ownership regulations (Sec. Sec.  422.550 through 422.553).
    3. Renewing D-SNP in a multi-state service area that is reducing 
its service area to accommodate a state contract in part of the service 
area. When a renewing D-SNP in a multi-state service area reduces its 
service area to accommodate state contracting efforts in the service 
area, we are proposing to permit a crosswalk exception at Sec.  
422.530(c)(3). Under this proposed crosswalk exception, enrollees who 
are no longer in the service area would be moved into one or more new 
or renewing D-SNPs in their service area, when CMS determines it is 
necessary to accommodate changes to D-SNP state contracts.
    4. Renewing D-SNP that transitions eligible enrollees into another 
D-SNP. We propose a crosswalk exception at Sec.  422.530(c)(4) for 
circumstances where an MA organization renews a D-SNP for the upcoming 
contract year, but has another available new or renewing D-SNP for the 
upcoming contract year, and the two D-SNPs are offered to different 
populations. An MA organization may change--or as part of state 
contracting, may be required to change--a D-SNP's eligibility criteria 
for the upcoming contract year. As a result, some current enrollees may 
no longer be eligible for their current D-SNP. However, the MA 
organization may have a new or renewing D-SNP in the same service area 
with eligibility requirements that can accommodate the enrollees who 
are no longer eligible for their current D-SNP. In such cases, CMS may 
determine it is in the best interests to current enrollees who are no 
longer eligible for their D-SNP to allow such a crosswalk exception.
    5. Renewing C-SNP with a grouping that is transitioning eligible 
enrollees into another C-SNP with one of the chronic conditions from 
that grouping. This crosswalk exception differs from

[[Page 9092]]

the allowable crosswalk in Sec.  422.530(b)(2)(i)(B) because it is a 
renewing C-SNP and not a non-renewing C-SNP. A crosswalk exception is 
required in order for CMS to identify which enrollees are moving from 
the renewing plan C-SNP to the other C-SNP. In a non-renewing C-SNP, 
all enrollees would be crosswalked to another plan or disenrolled.
    CMS crosswalk policies are designed to protect the rights of 
enrollees to make a choice about the plan from which they wish to 
receive Medicare benefits while facilitating how section 1851(c)(3)(B) 
of the Act requires evergreen elections. This proposal would codify 
policies and standards CMS has implemented that allow MA and Cost 
organizations the flexibility to make business decisions about the 
benefit and cost sharing design of a plan while preserving the rights 
of beneficiaries to make informed choices about their health care 
coverage. We invite comments about codifying our existing plan 
crosswalk policies.

D. Medicare Advantage (MA) Change of Ownership Limited to the Medicare 
Book of Business (Sec.  422.550)

    Section 1857 of the Act requires each MA organization to have a 
contract with CMS in order to offer an MA plan. Section 1857(e)(1) of 
the Act authorizes the adoption of additional contract terms that are 
consistent with the statute and that the Secretary finds are necessary 
and appropriate. Consistent with this authority, at the beginning of 
the Part C program we implemented contracting regulations in Sec.  
[thinsp]422.550 which provide for the novation of an MA contract in the 
event of a change of ownership involving an MA organization. (63 FR 
35106) Under the regulations, codified at Sec. Sec.  422.550 through 
422.553, the execution of a novation agreement is required when an MA 
organization is acquired or when it no longer is able or desires to 
continue to participate in the MA program and wants to transfer its 
ownership to a different entity. When an MA organization is no longer 
able or willing to participate in the MA program, a change of ownership 
can provide both the holder of the contract and CMS with an opportunity 
to transfer the ownership of the contract to a different entity with 
little or no disruption to enrolled beneficiaries. In this instance, 
CMS would agree to a novation of the existing MA contract because it 
promotes the efficient and effective administration of the MA program.
    We propose to revise Sec.  422.550 by adding a new paragraph at 
Sec.  422.550(f) to restrict the situations in which CMS will agree to 
an MA contract novation to those transfers involving the selling of the 
organization's entire line of MA business, which would include all MA 
contracts held by the legal entity that is identified as the MA 
organization. It has been long-standing policy in the MA program that 
CMS will only recognize the sale or transfer of a legal entity's entire 
MA line, or book of business, consisting of all MA contracts held by 
the MA organization because we believe that allowing the sale of just 
one contract (when the MA organization has more than one MA contract) 
or pieces of a single contract can have a negative impact on 
beneficiary election rights. The proposed change would codify existing 
policy and also create more consistency in regulations between the Part 
D program and the MA program as stated in Sec.  423.551(g).
    This policy has not been applied in cases where contracts are 
transferred among subsidiaries of the same parent organization. We do 
not wish to interfere with an MA organization's (or parent 
organization's) ability to decide its corporate structure or 
contractual arrangements with its subsidiaries. Therefore, we are also 
proposing, at Sec.  422.550(f)(1) an exception to the proposed limit 
for changes of ownership to only when the entire MA book of business is 
being transferred; that exception would be when the sale or transfer is 
of a full contract between wholly owned subsidiaries of the same parent 
organization.
    We are proposing to codify explicitly in Sec.  422.550(f)(2) that 
CMS will not recognize or allow a sale or transfer that consists solely 
of the sale or transfer of individual beneficiaries, groups of 
beneficiaries enrolled in a plan benefit package, or one MA contract if 
the organization holds more than one MA contract. We reiterate that we 
believe that allowing the sale of just one contract (when the MA 
organization has more than one MA contract) or pieces of a single 
contract can have a negative impact on beneficiary election rights.

E. Medicare Advantage (MA) and Cost Plan Network Adequacy (Sec. Sec.  
417.416 and 422.116)

    Section 1852(d)(1)(A) of the Act establishes that an organization 
offering an MA plan may select the providers from whom the benefits 
under the plan are provided so long as the organization makes such 
benefits available and accessible with reasonable promptness to each 
individual electing the plan within the plan service area. This is 
generally implemented at Sec.  422.112(a), which provides that a 
coordinated care plan must maintain a network of appropriate providers 
that is sufficient to provide adequate access to covered services to 
meet the needs of the population served. In the April 15, 2010, 
Medicare Program; Policy and Technical Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Program Final Rule 
(75 FR 19691), CMS added criteria at Sec.  422.112(a)(10) for 
determining whether an MA plan network is adequate and meets the 
statutory standard by codifying that MA plans must have networks that 
are consistent with the prevailing community pattern of health care 
delivery in the service area. The regulation provides that CMS will 
consider factors that make up the community patterns of health care, 
which CMS will use as a benchmark in evaluating MA plan networks, and 
lists certain examples of those factors in Sec.  422.112(a)(10)(i) 
through (v). CMS explained in the October 22, 2009, Medicare Program; 
Policy and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs Proposed Rule (74 FR 54644) that it 
would develop an automated system for reviewing network adequacy based 
on the elements that define community patterns of health care delivery 
and that we would define through subregulatory guidance how CMS would 
operationalize these factors.
    Since that time, CMS has routinely provided subregulatory guidance 
to MA organizations that defines how CMS measures and assesses network 
adequacy.\72\ We built the Network Management Module (NMM) in HPMS to 
facilitate automated reviews of plan networks and to annually transmit 
information to MA plans about provider/facility specialty types that 
are subject to specific network adequacy standards, maximum time and 
distance standards, minimum number requirements, and other critical 
information needed for the network adequacy reviews. The NMM also gave 
existing MA organizations and new applicants to the MA program the 
opportunity to routinely test their networks against our standards. 
Currently, CMS requires that organizations contract with a sufficient 
number of specified providers/facilities to ensure that 90 percent of 
the beneficiaries have access to at least one provider/facility of each 
specialty type within the published maximum time and distance 
standards. CMS updates and refines the data and information that feed 
into network adequacy

[[Page 9093]]

measures and CMS performs analyses as needed. It is important that CMS 
ensure that MA organizations maintain an adequate network of contracted 
providers that are capable of providing medically necessary covered 
services to beneficiaries, both to ensure compliance with section 
1851(d) of the Act and to protect beneficiaries. The network adequacy 
rules protect beneficiaries by ensuring that most, it not all, of the 
beneficiaries enrolled in a plan have access to providers within a 
reasonable time and distance from where the beneficiaries reside.
---------------------------------------------------------------------------

    \72\ See ``Medicare Advantage and Section 1876 Cost Plan Network 
Adequacy Guidance''--https://www.cms.gov/Medicare/Medicare-Advantage/MedicareAdvantageApps/index.
---------------------------------------------------------------------------

    We propose to codify existing network adequacy standards to provide 
MA organizations with a greater understanding of how CMS measures and 
assesses network adequacy. We propose to codify in Sec.  422.116 the 
list of provider and facility specialty types subject to network 
adequacy reviews, county type designations and ratios, maximum time and 
distance standards, minimum number requirements, and exceptions. The 
proposed regulation would also address CMS's annual publishing of the 
Provider Supply file and Health Service Delivery (HSD) reference file 
to release updated numbers and maximums for these standards in 
subsequent years. We also propose to modify our current network 
adequacy policy to further account for access needs in all counties, 
including rural counties, and to take into account the impact of 
telehealth providers in contracted networks. Section 1876(c)(4) of the 
Act imposes similar requirements for cost plans offered under section 
1876 of the Act to make Medicare-covered services available and 
accessible to each enrollee with reasonable promptness when medically 
necessary. Under this authority, we are also proposing to amend Sec.  
417.416(e) to require 1876 cost organizations to also comply with the 
network adequacy standards described in proposed Sec.  422.116.
    We propose in Sec.  422.116(a) that each network-based MA plan 
demonstrate that it has an adequate contracted provider network that is 
sufficient to provide access to medically necessary covered services 
consistent with standards in section 1851(d) of the Act, the 
regulations at Sec. Sec.  422.112(a) and 422.114(a), and the rules in 
new Sec.  422.116. Under our proposal, an MA plan would demonstrate its 
compliance as part of our triennial evaluation using the adequacy 
standards identified in Sec.  422.116. In addition, we are proposing 
that, when required by CMS, an MA organization must attest that it has 
an adequate network for access and availability of a specific provider 
or facility type that CMS does not independently evaluate in a given 
year. We anticipate that we would require such attestation in the MA 
organization's application or contract for a given year but we might 
require the attestation when performing other network adequacy reviews, 
such as when there is a significant change in the MA plan's provider 
network.
    We are proposing to cross-reference Sec.  422.114(a)(3)(ii) to 
identify the network-based plan types that would be subject to these 
network adequacy requirements. Network-based MA plans include all 
coordinated care plans in Sec.  422.4(a)(1), network-based MA private-
fee-for-service (PFFS) plans in Sec.  422.4(a)(3), and 1876 cost 
organizations. Generally, network-based MA medical savings account 
(MSA) plans are considered coordinated care plans in accordance with 
Sec.  422.4(a)(1)(iii)(D), which includes ``other network plans'' as a 
type of coordinated care plan. However, since MSA plans do not require 
contracted networks, we propose to exclude MSA plans from the 
requirements in Sec.  422.116. By cross-referencing Sec.  
422.114(a)(3)(ii), our proposal would carve out an MA regional plan 
that meets access requirements substantially through deemed 
contracting, so local and regional PFFS plans operating in CMS defined 
network areas must meet CMS network adequacy requirements at Sec.  
422.116 under our proposal.
    We are also proposing, at paragraph (a)(2), to codify the general 
rule underlying Sec.  422.116 that an MA plan must meet maximum time 
and distance standards and contract with a specified minimum number of 
each provider and facility specialty type, with each contract provider 
type within maximum time and distance of at least one beneficiary in 
order to count toward the minimum number. Under our proposal, the 
minimum number criteria and the time and distance criteria vary by the 
county type. We propose to establish the specific provider and facility 
types; county types; specific time and distance standards by county 
designation; and specific minimum provider number requirements in 
paragraphs (b), (c), (d) and (e), respectively, of Sec.  422.116. 
Regardless of whether CMS evaluates a plan's network against the access 
and adequacy standards in a given year, a plan's network must meet 
these standards and will be held to full compliance with the standards. 
At paragraphs (a)(3) through (4), we are proposing to codify additional 
general rules about the network adequacy requirements in this section. 
At paragraph (a)(3), we propose general rules for which provider types 
are not counted in evaluating network adequacy; we discuss this 
specific proposal in connection with proposed paragraph (b). In 
paragraph (a)(4), we are proposing to codify certain administrative 
practices we have instituted over the past several years. Specifically, 
we propose to codify that CMS will annually update and make available 
Health Service Delivery (HSD) reference files in advance of our review 
of plan networks. These HSD files contain the minimum provider and 
facility number requirements, minimum provider ratios, and the minimum 
time and distance standards. We are also proposing to codify that CMS 
will annually update and make available a Provider Supply file that 
identifies available providers and facilities with office locations and 
specialty types. The Provider Supply file is updated annually based on 
information from the Integrated Data Repository (IDR), which has 
comprehensive claims data, as well as information from public sources. 
CMS may also update the Provider Supply file based on findings from 
validation of provider information.
    We propose to codify at Sec.  422.116(b) the list of provider and 
facility specialty types that have been subject to CMS network adequacy 
standards in the past, as not all specialty types are included in 
network adequacy reviews. The proposed regulation text identifies the 
27 provider specialty types and 14 facility specialty types that are 
currently used in the evaluation of network adequacy in each service 
area. CMS has identified these provider and facility specialty types as 
critical to providing services based on review of Medicare FFS) 
utilization patterns, utilization of provider/facility specialty types 
in Medicare FFS and managed care programs, and the clinical needs of 
Medicare beneficiaries. We propose to codify at Sec.  422.116(a)(3) 
existing policy identifying provider and facility types that are not 
counted in evaluating network adequacy: Specialized, long-term care, 
and pediatric/children's hospitals and providers and facilities 
contracted with the organization only for its commercial, Medicaid, or 
other non-MA plans. In paragraph (a)(3), we also propose that hospital-
based dialysis may count in network adequacy criteria for the facility 
type of Outpatient Dialysis. We clarify that primary care providers, 
the first provider specialty in our proposed list in paragraph (b)(1), 
are measured as a single specialty by combining provider specialty 
codes (001-006) in the HSD reference file. Otherwise, we believe that 
the list of

[[Page 9094]]

provider and facility types in proposed paragraphs (b)(1) and (2) are 
fairly self-explanatory.
    Section 2005 of the SUPPORT Act establishes a new Medicare Part B 
benefit for OUD treatment services furnished by Opioid Treatment 
Programs (OTPs) on or after January 1, 2020. OTPs provide medication-
assisted treatment for people diagnosed with an Opioid Use Disorder and 
must be certified by the Substance Abuse and Mental Health Services 
Administration (SAMHSA) and accredited by an independent, SAMHSA-
approved accrediting body. We have not proposed to include OTPs as a 
facility type in Sec.  422.116(b)(2) due to the newness of the benefit 
and we may consider adding OTPs to the facility type list in future 
proposals. However, we remind MA organizations that they are required 
to pay for medically necessary care from certified OTPs, regardless of 
the location of the OTP.
    The lists of provider and facility specialty types that we have 
used in the network adequacy evaluations have seen very few changes 
over the past 5 years, so we believe that codifying the lists currently 
in use is appropriate. However, we expect that, from time to time, it 
may not be necessary to evaluate the number and accessibility of each 
of the 27 specialty and 14 facility types in a particular year. 
Therefore, we propose at Sec.  422.116(b)(3) that CMS may remove a 
specialty or facility type from the network adequacy evaluation for a 
particular year by not including the type in the annual publication of 
the HSD reference file. For example, in the past CMS removed oral 
surgery from the HSD reference file, and replaced home health and 
durable medical equipment with an attestation in its application about 
the plan's network ensuring access to providers of these types. Under 
our proposed authority at Sec.  422.116(a)(1) to require an MA plan to 
submit an attestation when required by CMS, we would require an MA 
organization to complete an attestation that it has an adequate network 
that provides the required access to and availability of provider 
specialty or facility types even where we do not evaluate access 
ourselves. Network adequacy criteria are measured for each individual 
specialty type and do not roll up into an aggregate score. Therefore, 
the removal of a specialty type from the network review will not affect 
the outcome of an MA plan's network review and use of an attestation in 
lieu of evaluation will permit us some necessary flexibility. In light 
of the lack of change to the list we have used over the past several 
years, we are not proposing any means for CMS to add new provider 
specialty or facility types to the network adequacy evaluation without 
additional rulemaking.
    We propose at Sec.  422.116(c) to codify our current policy 
regarding county designations. Network adequacy is assessed at the 
county level, and counties are classified into five county type 
designations: Large Metro, Metro, Micro, Rural, or CEAC (Counties with 
Extreme Access Considerations). These metrics provide the means by 
which the various network adequacy criteria are differentiated to 
represent large geographic variations across the United States and its 
territories. They are based on the population size and the population 
density of each county. We propose to codify at Sec.  422.116(c) the 
five county type designations using population size and density 
parameters. We propose to codify the population size and density 
parameters in Table 6.
[GRAPHIC] [TIFF OMITTED] TP18FE20.009

    A county must meet both the population and density parameters for 
inclusion in a given county type designation. These parameters are 
consistent with those we have used in conducting network adequacy 
reviews in prior years. We have based the parameters on approaches used 
by the United States Census Bureau in its classification of ``urbanized 
areas'' and ``urban clusters,'' and by the Office of Management and 
Budget (OMB) in its classification of ``metropolitan'' and 
``micropolitan.'' To calculate population density at the county level, 
we divided the latest county-level population \73\ estimate by the land 
area \74\ for that county. This county designation methodology was 
designed specifically for MA network adequacy and may not be 
appropriate for other purposes.
---------------------------------------------------------------------------

    \73\ United States Census Bureau. American Factfinder. Annual 
Estimates of the Resident Population: April 1, 2010 to July 1, 2018: 
2018 Population Estimates. Retrieved from: https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=PEP_2017_PEPANNRES&src=pt.
    \74\ United States Census Bureau. American Factfinder. 
Population, Housing Units, Area, and Density: 2010--United States--
County by State; and for Puerto Rico: 2010 Census Summary File 1. 
Retrieved from: https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=DEC_10_SF1_GCTPH1.US05PR&prodType=table.
---------------------------------------------------------------------------

    We propose in Sec.  422.116(a)(2) that network adequacy is measured 
using both maximum time and distance standards and minimum number 
requirements that vary by county type. In Sec.  422.116(d), we propose 
that CMS determines maximum time and distance

[[Page 9095]]

standards by county type and specialty type and publishes these 
standards annually in the HSD Reference file. Maximum time and distance 
standards are set by county designation, referred to as the ``base'' 
time and distance standards, or by a process referred to as 
``customization.'' We propose to codify the base time and distance 
standards by county designation that are in current practice with 
recent network reviews. See Table 7.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP18FE20.010


[[Page 9096]]


[GRAPHIC] [TIFF OMITTED] TP18FE20.011


[[Page 9097]]


[GRAPHIC] [TIFF OMITTED] TP18FE20.012

BILLING CODE 4120-01-C
    CMS established the base time and distance standards proposed here 
by mapping the various specialty types' practice locations from the 
National Provider and Plan Enumeration System (NPPES) National Provider 
Identifier (NPI) file compared with Medicare beneficiary locations from 
CMS enrollment data. We then tested different options for combinations 
of beneficiary coverage percentages and maximum travel distances to 
determine what was feasible and practical for the majority of counties 
given the trade-off between beneficiary coverage and travel distance. 
The travel time standards were calculated according to the average 
driving speeds in each of the ZIP code types (urban, suburban, rural) 
that beneficiaries would traverse between their homes and the provider 
locations.
    While the base time and distance criteria are not updated 
regularly, criteria for some specialty types within some county types 
have been updated over the past few years. These updates generally have 
been done to reflect a significant change in the supply of providers in 
an area, and when the new county designation methodology was 
implemented (that is, moving from classifying counties based on 
metropolitan statistical areas to the current county designations). In 
our current practice and under our proposal, the designation of each 
particular county is not static but is based on the application of 
specific population size and density standards. If a county designation 
changes as a particular type under the rules proposed in Sec.  
422.116(c), the time and distance standards for that county will also 
change, consistent with the standards we are proposing in Sec.  
422.116(d). In the annual HSD Reference File that CMS publishes, and 
would continue to publish under our proposal at paragraph (a)(4)(i), 
the county designation and applicable time and distance standards for 
each county will be identified for the applicable year.
    CMS currently requires that organizations contract with a 
sufficient number of providers/facilities to ensure that 90 percent of 
the beneficiaries have access to at least one provider/facility of each 
specialty type within the published maximum time and distance 
standards. The location of a contracted provider specialty or facility 
is not required to be within the county or state boundaries to be 
considered within the time and distance standards.
    In recent years, we have added flexibility to expand the time (in 
minutes) and distance (in miles) standards beyond the base standards, 
in cases where, due to a shortage of supply of providers or facilities, 
it is not possible to meet the base time and distance standards. We 
propose to codify this process at Sec.  422.116(d)(3) and refer to it 
as ``customization.'' To customize distance standards, we use software 
to map provider location data from the Provider Supply file against the 
population distribution data in CMS's MA Medicare Sample Census.\75\ 
For each specialty and county where there are insufficient providers 
within the base distance standard, we use mapping results to identify 
the distance at which 90% of the population would have access to at 
least one provider or facility in the applicable specialty type. The 
resulting distance is then rounded up to the next multiple of five 
(51.2 miles would be rounded up to 55 miles), and a multiplier specific 
to the county designation is applied to determine the analogous maximum 
time criterion. We request comment on our customization methodology and 
whether we should adjust factors in the distance calculation to achieve 
outcomes that are more equitable. For example, CMS could adjust the 
percentage of the population from 90%, or we could require more than 
one provider or facility to be within distance of the designated 
percentage of the population.
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    \75\ CMS built the MA Medicare Sample Census, which derives from 
information maintained by CMS on the residence of Medicare 
beneficiaries. CMS built the Sample Census to be an adequate 
representative sample of Medicare beneficiaries in each applicable 
county. This file is only available to CMS and is only utilized for 
the purposes of measuring network adequacy.
---------------------------------------------------------------------------

    Customization of base criteria may be triggered based on 
information received through exception requests from plans, or from 
other sources, such as certificates of need (CON) from state 
departments of health. However, we propose that CMS may only use 
customization to increase time and distance standards from the base 
standards, and may not reduce time and distance standards below the 
base standards. CMS may consider relevant information when creating 
network adequacy standards in accordance with Sec.  422.112(a)(10)(i)-
(v), and therefore, we solicit comment from the industry on other 
sources of information that CMS should consider and how it would work 
within the structure of our network adequacy standards.
    Historically, CMS has required that at least 90 percent of the 
beneficiaries residing in a particular county have access to at least 
one provider/facility of each specialty type within the published 
maximum time and distance standards for that county. In this rule, and 
in an effort to encourage more MA offerings in rural areas, we propose 
to reduce this percentage to 85 percent in Micro, Rural, and CEAC 
counties. In these generally ``rural'' counties, there is evidence of a 
lower supply of physicians, particularly specialists, compared to urban 
areas.\76\ In order to account for this shortage, two state Medicaid 
programs that utilize network adequacy criteria have adjusted 
percentages in rural counties to require that standards be met for less 
than 100 percent of enrollees. New Jersey allows an 85 percent coverage 
requirement for primary care in ``non-urban counties''

[[Page 9098]]

but 90 percent in urban counties.\77\ Tennessee's Medicaid Managed Care 
program takes a slightly different approach, requiring that 60 percent 
of enrollees have access within 60 miles and 100 percent within 90 
miles.\78\ Additionally, the Part D program has a 90 percent retail 
pharmacy network coverage requirement in urban and suburban areas that 
drops to 70 percent for rural areas.\79\ Further, our data indicates 
that existing failures in MA plans' meeting the time and distance 
standards frequently occur at the range between 80-89 percent of 
beneficiaries. As a result, we propose to adopt a similar change in our 
MA network adequacy approach to account for access challenges in Micro, 
Rural, and CEAC counties; we are proposing at Sec.  422.116(d)(4)(i) to 
require that at least 85 percent of the beneficiaries have access to at 
least one provider/facility of each specialty type within the published 
time and distance standards in Micro, Rural, and CEAC counties. We 
estimate that approximately 14 percent of contracts (96 contracts) 
operating in these county designations will benefit from the reduced 
percentage and will no longer need to submit an exception request. We 
propose to codify the existing policy of using a 90 percent threshold 
for Large Metro and Metro counties in Sec.  422.116(d)(4)(ii). We note 
that this specific proposal does not include a change from current 
policy requirements for a minimum number of provider specialties and 
facilities and that we are proposing, at paragraph (e), that MA plans 
will still be required to maintain contracts with a minimum number of 
providers in each county.
---------------------------------------------------------------------------

    \76\ Department of Health and Human Services, National Advisory 
Committee on Rural Health and Human Services (2018) ``Rural Health 
Insurance Market Challenges: Policy Brief and Recommendations.'' 
Retrieved April 3, 2019, from: https://www.hrsa.gov/sites/default/files/hrsa/advisory-committees/rural/publications/2018-Rural-Health-Insurance-Market-Challenges.pdf.
    \77\ State of New Jersey Dept of Human Services. ``Contract 
Between State of New Jersey Department of Human Services Division of 
Medical Assistance and Health Services and _______, Contractor'' 
Sec. 4.8.8 ``Provider Network Requirements'' Retrieved April 5, 
2019, from: https://www.state.nj.us/humanservices/dmahs/info/resources/care/hmo-contract.pdf.
    \78\ State of Tennessee, Department of Finance and 
Administration, Division of Health Care Finance and Administration, 
Division of TennCare (2019) ``Statewide Contract with Amendment 9--
January 1, 2019'' Attachment IV. Retrieved April 3, 2019, from: 
https://www.tn.gov/content/dam/tn/tenncare/documents/MCOStatewideContract.pdf.
    \79\ Section 423.120(a)(1).
---------------------------------------------------------------------------

    We also propose to give an MA plan a 10-percentage point credit 
towards the percentage of beneficiaries residing within the applicable 
time and distance standards for certain provider specialty types when 
the plan contracts with telehealth providers for those specified 
specialty types. For example, in a rural county where an MA plan must 
have 85 percent of beneficiaries residing within applicable time and 
distance standards, the MA plan will receive an additional 10 
percentage points towards the 85 percent requirement should they 
contract with applicable telehealth providers under Sec.  422.135. This 
is not currently part of the network adequacy evaluation, but we 
believe it is appropriate in light of the expanding coverage in the MA 
program of additional telehealth benefits. In the April 2019 final 
rule, we adopted Sec.  422.135 to implement the option for MA plans to 
offer additional telehealth benefits as part of their coverage of basic 
benefits under section 1852(m) of the Act, as amended by section 50323 
of the BBA of 2018. In that rulemaking, we solicited feedback from the 
industry concerning the impact, if any, that telehealth should have on 
network adequacy policies. We received thirty-five responses from 
stakeholders in managed care, provider, advocacy, and government 
sectors. While health plans clearly favored taking into account 
telehealth access while evaluating network adequacy, providers had more 
concerns that telehealth services could be used to replace in-person 
healthcare delivery. One commenter stated that it is imperative that 
beneficiaries continue to have the choice to access services in-person 
not only as a matter of preference, but to ensure those that do not 
have access to the required technologies aren't left without care. 
Section 1852(m)(4) of the Act and the regulation at Sec.  422.135(c)(1) 
require that an enrollee in an MA plan offering additional telehealth 
benefits must retain the choice of receiving health care services in 
person rather than through electronic exchange (that is, as 
telehealth). With that in mind, and emphasizing the importance of 
maintaining an in-person network, we are not proposing any changes to 
how we currently calculate minimum provider requirements. Under our 
proposal, MA plans must still contract with a minimum number of 
providers for each specialty type. We believe this is imperative for MA 
plans to be able to provide in-person care when needed or when 
preferred by the beneficiary. However, contracting with telehealth 
providers as a supplement to an existing in-person contracted network 
will give enrollees more choices in how they receive health care. We 
believe it is important and appropriate to account for contracted 
telehealth providers in evaluating network adequacy consistent with 
reflecting how MA plans supplement, but do not replace, their in-person 
networks with telehealth providers. We are proposing, at Sec.  
422.116(d)(5) to provide a 10-percentage point credit towards the 
percentage of beneficiaries residing within time and distance standards 
for specific provider specialty types by county when the MA plan 
includes one or more telehealth providers that provide additional 
telehealth benefits, as defined in Sec.  422.135, in its contracted 
network. Since additional telehealth benefits described at Sec.  
422.135 only apply to MA plans, cost plans will not be eligible for 
this 10-percentage point credit.
    We believe a 10-percentage point credit is an appropriate amount 
that proportionately supplements a plan's percentage score because 
telehealth providers add value to a contracted provider network, but 
should not have the same level of significance or value as an in-person 
provider. Additionally, information from prior network adequacy reviews 
show that many failures in meeting time and distance standards occur in 
this 80-89% range. Therefore, our proposal for a 10-percentage point 
credit is significant enough to have an impact on MA plans and 
encourage the use of telehealth, and proportionate to the role that 
telehealth providers have in a contracted network. Further, we propose 
to apply this telehealth credit only to specific provider specialty 
types: Dermatology, psychiatry, neurology, otolaryngology and 
cardiology. We believe this limited approach will allow CMS to 
appropriately monitor the effectiveness of the proposal, while also 
allowing us to determine whether there may be access or quality of care 
impacts. As we discussed in the April 2019 final rule, additional 
telehealth benefits are monitored by CMS through account management 
activities, complaint tracking and reporting, and auditing activities. 
These oversight operations will alert CMS to any issues with access to 
care and CMS may require MA organizations to address these matters if 
they arise.
    CMS considered feedback from industry stakeholders, publicly 
available studies, and analyses of Medicare claims data for telehealth 
services in determining applicable provider specialty types. We 
considered not only the potential that telehealth has within a 
specialty type, but also the observed access challenges for provider 
specialty types over the years of our network adequacy reviews. CMS has 
observed that most MA plans do not have challenges meeting time and 
distance standards for primary care as compared to non-primary care 
provider specialty types. We also believe that it is critical to 
quality health care that Medicare beneficiaries have a primary care 
provider that they can visit in

[[Page 9099]]

person and within a suitable time and distance. Therefore, despite the 
potential and prevalence of telehealth for furnishing primary care 
services, we do not believe that it is necessary to take telehealth 
access into account when measuring and setting minimum standards for 
access to primary care providers. CMS solicits comments on the 
appropriateness of the provider specialty types eligible for the 
telehealth credit and whether CMS should expand or limit this list to a 
different set of provider specialties.
    CMS has received comments from providers and physician groups about 
the limitations of current network adequacy policies on dialysis 
treatment when performed in a hospital, at home, or in an outpatient 
facility. Some research suggests that home-based dialysis may offer 
advantages over in-center hemodialysis, including patient convenience, 
reduction in costs associated with dialysis, and potentially improved 
patient quality of life and blood pressure control with greater 
survival and fewer hospitalizations.\80\ We recognize that there is 
more than one way to access medically necessary dialysis care and we 
want plans to exercise all of their options to best meet a 
beneficiary's health care needs. Therefore, we are considering several 
options about how to improve our proposal as it relates to measuring 
and setting minimum standards for access to dialysis services. We 
solicit comment on: (1) Whether CMS should remove outpatient dialysis 
from the list of facility types for which MA plans need to meet time 
and distance standards; (2) allowing plans to attest to providing 
medically necessary dialysis services in its contract application (as 
is current practice for DME, home health, and transplant services) 
instead of requiring each MA plan to meet time and distance standards 
for providers of these services; (3) allowing exceptions to time and 
distance standards if a plan is instead covering home dialysis for all 
enrollees who need these services; and (4) customizing time and 
distance standards for all dialysis facilities.
---------------------------------------------------------------------------

    \80\ Comparative Effectiveness of Home-Based Kidney Dialysis 
Versus In-Center or Other Outpatient Kidney Dialysis Locations--A 
Systematic Review [internet]: https://www.ncbi.nlm.nih.gov/books/NBK344417/.
---------------------------------------------------------------------------

    CMS has also received comments concerning patterns of provider 
consolidation and its impact on higher costs for patients. CMS has 
heard from stakeholders that providers in concentrated areas may 
leverage network adequacy requirements in order to negotiate prices 
well above Medicare FFS rates. We solicit comment on existing problems 
and behavior in non-rural, consolidated provider markets and 
recommendations that CMS could take to encourage more competition in 
these markets.
    President Trump's Executive Order 13890 on Protecting and Improving 
Medicare for Our Nation's Seniors (October 3, 2019) calls for 
adjustments to network adequacy requirements to account for the 
competitiveness of state health care markets, including taking into 
account whether states maintain Certificate of Need (``CON'') laws or 
other anticompetitive restrictions. Many states began adopting CON laws 
in the 1960s and 1970s in part to promote resource savings and to 
prevent investments that could raise hospital costs.\81\ A number of 
studies have found no evidence that CON programs have led to resource 
savings, and in some instances, may raise health care costs. In one 
study published in 2013, researchers studied whether states that 
dropped CON programs experienced changes in costs or reimbursements 
from coronary artery bypass graft surgery or percutaneous coronary 
interventions.\82\ In this study, the cost savings from removing the 
CON requirements slightly exceeded the total fixed costs of new 
facilities that entered after deregulation. Another study published in 
2016 concluded that there is no evidence that CON requirements limit 
health care price inflation and little evidence that they reduce health 
care spending.\83\ It further concluded that CON laws are associated 
with higher per unit costs and higher total healthcare spending. Most 
relevant here, other studies suggest that the removal of these laws 
that serve as a barrier to entry into the market lead to greater access 
to providers and a redistribution of health care services to higher 
quality providers, improving the overall quality of health 
outcomes.\84\
---------------------------------------------------------------------------

    \81\ Daniel Sherman, ``The Effect of State Certificate-of-Need 
Laws on Hospital Costs: An Economic Policy Analysis,'' Federal Trade 
Commision, January 1988.
    \82\ Vivian Ho, Meei-Hsiang Ku-Goto, ``State Deregulation and 
Medicare Costs for Acute Cardiac Care,'' Med Care Res Rev., April 
2013.
    \83\ Matthew D. Mitchell, ``Do Certificate-of-Need Laws Limit 
Spending? '' Mercatus Working Paper, Mercatus Center at George Mason 
University, Arlington, VA, September 2016.
    \84\ David M. Cutler, Robert S. Huckman, and Jonathan T. 
Kolstad, ``Input Constraints and the Efficiency of Entry: Lessons 
from Cardiac Surgery,'' American Economic Journal: Economic Policy, 
February 2010.
---------------------------------------------------------------------------

    As this research points out, CON laws restrict the supply and 
competition for healthcare services and increases costs. Therefore, CON 
laws adversely affect access in states and counties where they are in 
effect, including for MA organizations that operate in those areas. CMS 
pays MA organizations a capitated amount in each county for the 
provision of Medicare benefits based on the expected costs to provide 
benefits. When MA organizations must pay more for benefits, as the 
research demonstrates happens when there are fewer providers or 
facilities with which to contract, that reduces the access to benefits 
offered by MA organizations. In order to take into account the adverse 
effects that CON laws have on access, we propose in Sec.  422.116(d)(6) 
to provide that MA organizations may receive a 10-percentage point 
credit towards the percentage of beneficiaries residing within 
published time and distance standards for affected provider and 
facility types in states that have CON laws, or other state imposed 
anti-competitive restrictions, that limit the number of providers or 
facilities in a county or state. As discussed below, under our 
proposal, where appropriate, CMS may instead address network adequacy 
by customizing base time and distance standards in States with CON 
laws. We believe this proposal is justified based on the studies cited 
previously that have shown that CON laws adversely affect competition 
and free market entry in states and that our network adequacy policy 
thus should provide for us to consider this factor when evaluating the 
adequacy of an MA organization's contracted network.
    We propose to make this credit equal to and in addition to, if 
applicable, the telehealth credit (10 percentage points) discussed 
earlier in this proposal. We chose a 10-percentage point credit for CON 
laws for reasons similar to those that we selected the 10-percentage 
point credit for the telehealth specialties; that is information from 
prior network adequacy reviews show that many failures in meeting time 
and distance standards occur in the 80-89% range. Under our proposal, 
CMS may elect to grant this credit instead of customizing time and 
distance standards depending on a number of factors like the speed of 
implementing customized standards, operational and timing constraints, 
and the amount of work required to calculate customized time and 
distance standards. We solicit comment on additional criteria or 
factors we should consider when deciding whether to apply the 10-
percentage point credit or customize time and distance standards in the 
impacted states or counties. Additionally, we solicit comment about 
what other actions CMS could take in markets with state CON laws.
    We are also considering whether there are circumstances where a 
more limited

[[Page 9100]]

application of network adequacy flexibility might be more appropriate. 
We solicit comment as to how and under what circumstances we should 
refrain from applying the 10 percentage point credit, should mitigate 
the size of this credit, or other actions we might undertake to apply 
this flexibility in a more limited manner.
    We are proposing to codify the current policy that MA plans must 
contract with a specified minimum number of each provider and facility 
specialty type in Sec.  422.116(e). The MA plan must have a minimum 
number of in-person providers and facilities in each county for each 
specialty type specified in paragraph (b). We propose at Sec.  
422.116(e)(1) the general rules that the provider or facility must be 
within the maximum time and distance of at least one beneficiary in 
order to count towards the minimum number requirement and cannot be a 
telehealth-only provider. We are also proposing to codify the 
methodology for establishing the minimum number requirements for 
specific contracted provider and facility specialty types per county. 
Under our proposal, CMS will use this methodology each year to 
determine and publish the updated minimum provider standards on an 
annual basis. Certain standards for the minimum number of providers are 
updated annually to account for changes in the Medicare population, MA 
market penetration, and county designations. Under our current policy 
and our proposal, the provider/facility must be within the maximum time 
and distance of at least one beneficiary in order to count towards the 
minimum number requirements.
    We proposed to codify our existing practice in Sec.  
422.116(e)(2)(iii) that all facilities, except for acute inpatient 
hospitals facilities, have a minimum number requirement of one. We are 
proposing to limit the methodology for establishing and changing the 
required minimum number standard to acute inpatient hospitals and other 
non-facility provider specialties. We propose the methodology at Sec.  
422.116(e)(3): CMS determines the minimum number requirement for all 
provider specialty types and Acute Inpatient Hospitals by multiplying 
the ``minimum ratio'' by the ``number of beneficiaries required to 
cover,'' dividing the resulting product by 1,000, and rounding up to 
the next whole number. The steps and components of the methodology are 
proposed in paragraphs (e)(3)(i) and (ii).
    The Minimum Ratio is the number of providers required per 1,000 
beneficiaries, and for Acute Inpatient Hospitals, the number of beds 
per 1,000 beneficiaries. CMS established minimum ratios in 2011 using a 
number of data sources, including, Medicare fee-for-service claims 
data, American Medical Association (AMA) and American Osteopathic 
Association (AOA) physician workforce data, US Census population data, 
National Ambulatory Medical Care Survey data, AMA data on physician 
productivity, and published literature. We propose to codify the 
Minimum Ratios at Sec.  422.116(e)(3)(i) as shown in Table 8.
BILLING CODE 4120-01-P

[[Page 9101]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.013


[[Page 9102]]


[GRAPHIC] [TIFF OMITTED] TP18FE20.014

BILLING CODE 4120-01-C
    The Number of Beneficiaries Required to Cover is also calculated by 
CMS based on an established methodology. The Number of Beneficiaries 
Required to Cover is the minimum population that an MA plan's network 
should be able to serve and represents the potential number of 
beneficiaries an organization may serve within a county. We propose at 
Sec.  422.116(e)(3)(ii)(A) that the Number of Beneficiaries Required to 
Cover is calculated by multiplying the ``95th Percentile Base 
Population Ratio'' times the total number of Medicare beneficiaries 
residing in a county. CMS uses its MA State/County Penetration data to 
calculate the total beneficiaries residing in a county. For counties 
with lower populations, and particularly for specialties with lower 
minimum ratios, the minimum number is usually one.
    The 95th Percentile Base Population Ratio is calculated annually 
for each county type. Several years ago, CMS allowed MA organizations 
to provide their expected enrollment and then define their networks 
based on that number, but we later developed a more objective means to 
measure network adequacy for all MA plans consistently. The 95th 
Percentile Base Population Ratio is a fair and consistent enrollment 
estimate that can be applied to new and current plans. While it varies 
over time as MA market penetration and plan enrollment changes across 
markets, the 95th Percentile Base Population Ratio currently ranges 
between 0.073 and 0.145 depending on county type, indicating that MA 
plans are expected to have networks at least sufficient to cover 
between 7.3 percent (Large Metro) and 14.5 percent (CEAC) of the 
Medicare beneficiaries in the county. This ratio represents the 
proportion of Medicare beneficiaries enrolled in the 95th percentile MA 
plan (that is, 95% of plans have enrollment lower than this level).
    To calculate the 95th Percentile Base Population Ratio, we use the 
List of PFFS Network Counties \85\ to exclude PFFS plans in non-
networked counties \86\ from the calculation at the county type level. 
We use the MA State/County Penetration data \87\ to determine the 
number of eligible Medicare beneficiaries in each county, and our 
Monthly MA Enrollment data \88\ to determine enrollment at the contract 
ID and county level, including only enrollment in RPPO, LPPO, HMO, HMO/
POS, healthcare prepayment plans under section 1833 of the Act, and 
network PFFS plan types. We calculate penetration at the contract ID 
and county level by dividing the number of enrollees for a given 
contract ID and county by the number of eligible beneficiaries in that 
county. Finally, we group counties by county designation to determine 
the 95th percentile of penetration among MA plans for each county type. 
We propose to codify the methodology for calculating the 95th 
Percentile Base Population Ratio at Sec.  422.116(e)(3)(ii)(B).
---------------------------------------------------------------------------

    \85\ CMS. PFFS Plan Network Requirements. Retrieved from: 
https://www.cms.gov/Medicare/Health-Plans/PrivateFeeforServicePlans/NetworkRequirements.html.
    \86\ Non-networked counties in this context means there are not 
at least two networked plans operating in that county.
    \87\ CMS. MA State/County Penetration. Retrieved from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/MA-State-County-Penetration.html.
    \88\ CMS. Monthly MA Enrollment by State/County/Contract. 
Retrieved from: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-MA-Enrollment-by-State-County-Contract.html.
---------------------------------------------------------------------------

    Finally, we are also proposing to codify in paragraph (f) a process 
by which an MA plan may request and receive an exception from the 
network adequacy standards in Sec.  422.116. CMS conducts network 
adequacy reviews through an automated process, but also allows for 
exceptions to that process when failures are detected in the submitted 
network. We propose to codify the exceptions process, the basis upon 
which an MA plan may request an exception, and the factors that CMS may 
consider when evaluating an MA organization's request for an exception 
to our network standards. An MA organization may request an exception 
when certain providers or facilities are not available for the MA 
organization to meet the network adequacy criteria as shown in the 
Provider Supply file for the year for a given county and specialty 
type, and the MA organization has contracted with other providers and 
facilities that may be located beyond the limits in the time and 
distance criteria, but are currently available and accessible to most 
enrollees, consistent with the local pattern of care. For

[[Page 9103]]

example, certain providers/facilities may not be available for 
contracting when the provider has moved or retired, or when the 
provider/facility does not contract with any organizations or 
exclusively with another organization. The MA plan should contract with 
telehealth providers, mobile providers, or providers outside the time 
and distance standards, but accessible to most enrollees (or consistent 
with the local pattern of care) to qualify for an exception by CMS. In 
evaluating exception requests, CMS will consider: (i) Whether the 
current access to providers and facilities is different from the HSD 
reference and Provider Supply files for the year; (ii) whether there 
are other factors present, in accordance with Sec.  422.112(a)(10)(v), 
that demonstrate that network access is consistent with or better than 
the original Medicare pattern of care; and (iii) whether approval of 
the exception is in the best interests of beneficiaries.
    Currently, CMS collects information for purposes of testing an MA 
organization's network adequacy in the PRA-approved collection titled, 
``Triennial Network Adequacy Review for Medicare Advantage 
Organizations and 1876 Cost Plans, CMS-10636, OMB 0938--New.'' CMS 
relies on this collection of information to evaluate whether an MA 
organization maintains a network of appropriate providers and 
facilities that is sufficient to provide adequate access to covered 
services based on the needs of the population served. In the collection 
of information, CMS explains that organizations must comply with the 
current CMS network adequacy criteria posted in the HSD reference file 
on CMS's website and updated annually. Our proposal aims to formalize 
the use of criteria posted in the HSD reference file by codifying and 
explaining the standards and, where necessary, the formulas used to 
calculate network adequacy standards (that is, provider/facility types, 
maximum time and distance standards, minimum provider/facility 
numbers). CMS will continue to use the HSD reference file as a means to 
communicate these standards to MA organizations, and therefore, this 
proposal requires no changes to the collection of information needed 
for CMS to assess network adequacy. The proposed provisions would not 
impose any new or revised information collection requirements (that is, 
reporting, recordkeeping, or third-party disclosure requirements) or 
burden. Consequently, the provisions are not subject to the PRA.
    We thank commenters in advance for their input on our proposed 
network adequacy policies.

F. Supplemental Benefit Requirements (Sec. Sec.  422.100 and 422.102)

    CMS has released guidance on supplemental benefits several times 
since April 2, 2018, including the 2019 Call Letter \89\ and a 
subsequent HPMS memo \90\ concerning the definition of `primarily 
health related' with respect to supplemental benefits. Under a 
longstanding interpretation of the MA statute and regulations, CMS 
defines a mandatory or optional supplemental health care benefit as an 
item or service (1) not covered by original Medicare, (2) that is 
primarily health related, and (3) for which the plan must incur a non-
zero direct medical cost. Only an item or service that meets all three 
conditions could be proposed as a supplemental benefit in a plan's PBP. 
We are proposing to codify this policy at Sec.  422.102(c)(2)(ii) by 
setting forth these criteria as requirements that supplemental benefits 
must meet.
---------------------------------------------------------------------------

    \89\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf.
    \90\ https://hpms.cms.gov/hpms/upload_area/NewsArchive_MassEmail/000011202/HPMS%20Memo%20Primarily%20Health%20Related%204-27-18.pdf.
---------------------------------------------------------------------------

    The current regulation text at Sec.  422.100(c)(2) focuses on 
distinguishing between mandatory supplemental benefits and optional 
supplemental benefits. We are proposing to re-designate the substance 
of that current regulation text as new paragraphs (c)(2)(i)(A) and (B). 
We are proposing to codify our longstanding definition of supplemental 
benefits as three requirements that must be met by a supplemental 
benefit at paragraph (c)(2)(ii). In proposed paragraph (c)(2)(ii)(A), 
we would codify that a supplemental benefit must be primarily health 
related, using a standard discussed in more detail in this section of 
this proposed rule and with specific text to address SSBCI, discussed 
in more detail in section II.A. of this proposed rule. In proposed 
paragraph (c)(2)(ii)(B), we would codify that a MA organization must 
incur a non-zero direct medical cost in furnishing or covering the 
supplemental benefit to verify that the benefit is medically related, 
with specific text to address SSBCI, discussed in more detail in 
section II.A. of this proposed rule. Finally, in proposed paragraph 
(c)(2)(ii)(C), we would codify the requirement that the supplemental 
benefit is not covered by Medicare. By this, we mean that the 
supplemental benefit is not covered by Parts A, B or D. More generous 
or greater coverage of a Medicare Part A or Part B benefit--such as 
coverage of more inpatient days or coverage with lower cost sharing 
compared to Medicare--is a supplemental benefit. However, an MA plan 
may not cover a part D drug or reduce Part D cost sharing as an MA 
supplemental benefit. Under Sec.  422.500, an MA plan that covers any 
Part D benefit must comply with the Part D regulations in part 423 and, 
therefore, must be a Part D sponsor of a Part D plan. In addition, 
Sec.  422.266(b)(1) provides that an MA plan may use its rebates to buy 
down a Part D premium, including the premium for supplemental drug 
coverage described at Sec.  423.104(f)(1)(ii).
1. Primarily Health Related
    As discussed in the 2019 Call Letter and April 2018 HPMS memo, CMS 
currently interprets ``primarily health related'' as meaning that the 
item or service is used to diagnose, compensate for physical 
impairments, acts to ameliorate the functional/psychological impact of 
injuries or health conditions, or reduces avoidable emergency and 
healthcare utilization. Using this interpretation, CMS has provided MA 
plans with flexibility in designing and offering supplemental benefits 
that may enhance beneficiaries' quality of life and improve health 
outcomes. We are proposing to codify this definition of a supplemental 
benefit at Sec.  422.102(c)(2)(ii)(A).
    Examples of supplemental benefits include: Dental, vision, adult 
day health services, home-based palliative care, in-home support 
services, support for caregivers of enrollees, stand-alone memory 
fitness, expanded home & bathroom safety devices & modifications, 
wearable items such as compression garments and fitness trackers, over-
the-counter items, and expanded transportation. A supplemental benefit 
is not primarily health related under this definition if it is an item 
or service that is solely or primarily used for cosmetic, comfort, 
general use, or social determinant purposes. Also, to be primarily 
health related, the benefit must focus directly on an enrollee's health 
care needs and should be recommended by a licensed medical professional 
as part of a care plan, if not directly provided by one. Enrollees are 
not currently required to get physician orders for supplemental 
benefits (for example, OTC items) and requiring it now would impose new 
restrictions on MA plans and potentially cause large administrative 
burden and interruptions in care. Therefore, CMS

[[Page 9104]]

uses the ``recommended'' standard as part of interpreting and applying 
this component of the definition of supplemental benefit. We note that 
supplemental benefits must also be medically appropriate to be 
primarily health related; if a service or item is not medically 
appropriate, it is not primarily health related. This is consistent as 
well with our longstanding guidance in Chapter 4, section 30.2, of the 
Medicare Managed Care Manual that supplemental benefits that extend 
Part A or Part B benefits must be medically necessary. We will continue 
our current interpretations and guidance in codifying existing policy 
on this issue.
    We note that the BBA of 2018 amended section 1852(a)(3) of the Act 
to permit MA plans to offer additional supplemental benefits for 
chronically ill enrollees (SSBCI) in contract year 2020. We discuss 
implementation of that legislation in section II.A. of this proposed 
rule. The new legislation permits supplemental benefits that are not 
primarily health related, but limited these benefits to chronically ill 
enrollees, using a statutory definition. It added new supplemental 
benefit options for the chronically ill that are in addition to the 
existing supplemental benefit options available to all MA enrollees 
effective contract year 2020. The expansion of supplemental benefits 
for chronically ill enrollees does not affect the expanded scope of the 
primarily health related supplemental benefit standard discussed here 
because supplemental benefit standard requires more than just a 
reasonable expectation of improving overall health and instead requires 
supplemental benefits to address specific illnesses and/or injuries.
2. Uniformity Requirements
    As explained in the April 2018 final rule (83 FR 16440, 16480-85), 
CMS determined that providing access to supplemental benefits that are 
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 MA regulations. We solicited comments 
on this reinterpretation and finalized it in that prior rulemaking. In 
response to those comments and our further consideration of this issue, 
we provided guidance to MA organizations in both the April 2018 final 
rule and a subsequent HPMS memo \91\ released April 27, 2018. We are 
proposing now to codify this reinterpretation specifically in 
regulation text at Sec.  422.100(d)(2)(i).
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    \91\ https://hpms.cms.gov/hpms/upload_area/NewsArchive_MassEmail/000011207/HPMS%20Memo%20Uniformity%20Requirements%204-27-18.pdf.
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    The regulatory requirement that MA plans provide uniform benefits 
implements both section 1852(d) of the Act, which requires that 
benefits under the MA plan are 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. In 2018, in issuing a final rule and guidance 
for contract year 2019, we determined that these statutory provisions 
and the regulation at Sec.  422.100(d) meant that we had the authority 
to permit MA organizations the ability to reduce cost sharing for 
certain covered benefits, including lower deductibles, and offer 
specific tailored supplemental benefits for enrollees that meet 
specific medical criteria, provided that similarly situated enrollees 
(that is, all enrollees who meet the medical criteria identified by the 
MA plan for the benefits) are treated the same. In addition, we stated 
that our interpretation means that there must be some nexus between the 
health status or disease state and the specific benefit package 
designed for enrollees meeting that health status or disease state. We 
propose to redesignate (d)(2) as (d)(2)(i) and add new paragraph 
(d)(2)(ii) to specifically state that MA organizations may reduce cost 
sharing for certain covered benefits, including lower deductibles, and 
offer specific tailored supplemental benefits for enrollees that meet 
specific medical criteria, provided that similarly situated enrollees 
are treated the same and that there is some nexus between the health 
status or disease state and the tailored benefits. We 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. This provision codifies already 
existing guidance and practices and therefore is not expected to have 
additional impact above current operating expenses.

G. Rewards and Incentives Program Regulations for Part C Enrollees 
(Sec.  422.134 and Subpart V)

    CMS authorized MA organizations, including those offering a 
Medicare Medical Savings Account (MSA) plan option, to offer rewards 
and incentives (R&I) programs in a regulation adopted in 2014 (79 FR 
29956, May 23, 2014). We briefly review the history of that rulemaking 
and our policies and goals for authorizing R&I programs. We relied on 
our authority under sections 1856(b)(1) and 1857(e)(1) of the Act to 
adopt the regulation; in addition, several of the provisions of the 
regulation, such as the anti-discrimination requirement, were 
consistent with statutory provisions governing the MA program. We 
adopted the regulation that authorized Part C R&I programs for a number 
of reasons. In some cases, MA organizations wished to extend rewards 
and incentives already offered to their commercial members to their 
Medicare enrollees; and many MA organizations wished to sustain their 
current R&I programs as well as stay competitive with other MA 
organizations with comparable offerings. Further, there was some 
evidence to suggest that health-driven reward and incentive programs 
may lead to meaningful and sustained improvement enrollee health 
behaviors and outcomes.\92\
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    \92\ Ali Shirvani-Mahdavi, Ph.D. & Melissa Haeffner Ph.D., 
Rewarding Wellness: The Science Behind Effective Wellness Incentive 
Programs (2014).
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    Over the years we have also been asked by many plans to clarify how 
to start an R&I program. Our experience has shown that most R&I 
programs fall into the following four areas:
    (i) Specified use of plan benefits, for example, rewards provided 
for obtaining preventive benefits at specified intervals;
    (ii) Following a specified program that promotes exercise and/or 
good nutrition;
    (iii) Participating in specified programs that educate on health 
matters and/or self-management of nutrition and exercise;
    (iv) Specified utilization of plan resources such as hotlines, 
patient portals, and similar items that facilitate promotion of health.
    Having reviewed the history of the program, we next describe its 
current state. Over the past 5 years, MA R&I programs have grown. We 
have benefitted greatly from partnership with our stakeholders who 
continually provide fresh and innovative ideas. We continue to 
encourage MA organization flexibility in rewards and incentives that is 
nonetheless consistent with the basic protections and parameters in the 
current regulation. Over the past 5 years we have also received many 
inquiries about how the regulation applies to specific R&I programs, 
including questions about the types of rewards that may be offered, 
types of health related activities that may be rewarded, and targeting 
R&I programs to specific

[[Page 9105]]

disease states. To address these questions and based on our experience 
implementing the current regulation, we are proposing to amend Sec.  
422.134 to codify the guidance we have given, unify principles 
governing MA rewards and incentive programs, clarify the requirements 
of the regulation, and clarify flexibilities available to MA 
organizations under the regulation.
    Under our proposal, we would move the substance of current 
paragraph (a) to new paragraph (c)(1)(iii). New paragraph (c) deals 
with the requirements of the target activity and therefore the current 
paragraph (a) which enumerates three categories promoting improved 
health, preventing injuries and illness, and promoting efficient use of 
health care resources is moved to paragraph (c) since being health 
related is a requirement of the target activity. In this way the 
purposes and goals of R&I programs, to improve health incomes, is still 
mentioned in the regulatory text albeit as an attribute of target 
activities.
    We are proposing a new paragraph (a) to define several terms used 
in Sec.  422.134. We propose to define a ``Reward and Incentive 
program'' as a program offered by an MA organization which allows 
qualified individuals (as defined later in this section) to voluntarily 
perform target activities in exchange for which the plan provides 
reward items. This definition of R&I program replaces certain aspects 
of current paragraph (a). The health related requirements in current 
paragraph (a) are requirements on target activities (not on for example 
reward items) and hence these health-related requirements were moved 
and placed in new paragraph (c). We propose to define ``target 
activity'' as that activity for which the reward is provided to the 
enrollee by the MA plan. We propose to define the term ``reward item'' 
as the item furnished to an enrollee who performs a target activity as 
specified by the plan. Further, we propose to revise the regulation to 
explicitly provide that when referring to the entire R&I program 
offered by a plan (that is, the target activity, its reward, and any 
requirements) the following terms are synonymous: ``reward and 
incentive program,'' ``reward(s) program'', ``incentive program'', and 
``R&I program''. We also propose to clarify that when referring to the 
particular items used as rewards the following terms are synonymous: 
``reward(s)'', ``incentive(s)'', ``R&I'', and ``rewards and 
incentives''. Similarly, we propose that the terms ``reward item'' and 
``incentive item'' are synonymous. We are also proposing a definition 
for the term ``qualifying individual'' as that term is used throughout 
proposed Sec.  422.134. This term has different meanings depending on 
whether the context of the target activity is a plan-covered health 
benefit or not: (1) If the target activity is not a plan-covered 
benefit (for example adherence to a particular diet), the term means a 
plan enrollee who satisfies the plan criteria to participate in that 
target activity; and (2) If the target activity is a plan-covered 
benefit (for example obtaining a mammograms), the term means a plan 
enrollee who qualifies for the target activity and satisfies all plan 
criteria to participate in the target activity.
    For clarity, we are proposing to reorganize the order and structure 
of how the regulation addresses the requirements for R&I programs. We 
are proposing to address the substance of current paragraph (b) 
regarding non-discrimination and current paragraph (c) regarding 
prohibitions and requirements in new text in the revised regulation. As 
part of our reorganization, we are proposing to address the 
requirements for target activities in paragraph (c) and the 
requirements for reward items in paragraph (d).
    In paragraph (b) we propose to state that MA programs are allowed 
to offer R&I programs consistent with the requirements of the section. 
This allowance is in current paragraph (a). Since the majority of (a) 
has been moved to new paragraph (c) it is important to explicitly state 
the allowance for MA plans to offer R&I programs.
    Proposed paragraph (c) sets forth the requirements for a target 
activity to be used in an R&I program; compliance with these 
requirements is necessary in order for the MA organization to provide a 
reward item to a qualifying individual for participating in the 
activity. We propose to organize paragraph (c) by whether the proposed 
standard is something the target activity must do (or meet) or is 
something the target activity must not do. Additionally, proposed 
paragraph (c) will incorporate the current health-related requirements 
of current paragraph (a), since, although health improvement is the 
goal of the R&I program, these health-requirements are requirements in 
target activities (not for example in reward items) and therefore 
should be listed in (c).
    Proposed paragraph (c)(1)(i), requires the qualifying individual be 
directly involved and perform the target activity. CMS recognizes there 
is growing involvement of caregivers, such as immediate family, with 
enrollees. However, the purpose of R&I programs is to provide a way for 
plans to influence positive behavioral changes of qualifying 
individuals through the performance of target activity designed to 
achieve at least one of the stated goals under (c)(1)(iii). Therefore, 
under our proposal, the qualifying individual must perform the activity 
and not the caregiver or other third party individual. Similarly, we 
propose in paragraph (d)(1)(i) that the reward item must be a direct 
tangible benefit to the enrollee. This means that the reward item may 
not be offered to or for the benefit of caregivers or other third party 
individuals. For example, under these proposed provisions, an MA 
organization may not offer a gift card to caregiver (such as family 
members) that attend an educational class about services provided to 
enrollees.
    We are proposing a new paragraph (c)(1)(ii) to require that a 
target activity must be specified, in detail, as to the level of 
completion needed in order to qualify for the reward item. We are 
proposing (c)(1)(ii) as a replacement for the current requirement (at 
paragraph (c)(1)(i)) that a reward be available only in connection with 
an entire service or activity as it has caused confusion and generated 
numerous inquiries over the past 5 years. The current formulation, 
``entire'' activity, could be misread that a plan could not 
simultaneously reward both the completion of a multi-part activity and 
one of its components. That was not our original intent. Rather, the 
intent was to require specificity: If the plan only specified the 
entire activity then it could not reward completion of a component 
activity; but if the plan wanted to reward both the completion of the 
entire activity as well as one of its components (possibly with 
different rewards) then it could do so provided it specified in detail 
the level of completion needed in order to qualify for the reward item.
    A typical application of this principle occurs with an R&I program 
rewarding multi-session health management classes (for example weight 
management). The proposed formulation allows the following: (1) An MA 
organization targets an 8 session weight management class and provides 
rewards to those enrollees who complete the entire 8 sessions; and (2) 
An MA organization targets an 8 session weight management class and 
provides a separate reward for each session enrollees attend. Both of 
these are permissible because of how the plan (or R&I program) defines 
the completed activity or what is an entire activity to be completed. 
To allow plan flexibility we are proposing to clarify that an MA 
organization must specify, in detail, the

[[Page 9106]]

level of completion of a target activity in order for the qualifying 
individual to receive the reward item. Each scenario discussed 
previously would be permissible under our proposal provided the MA 
organization has clearly indicated completion criteria. We believe our 
proposed text at (c)(1)(ii) clarifies our desired policy. Therefore, we 
propose that the language at current (c)(1)(i) be eliminated and be 
replaced by the proposed (c)(1)(ii).
    We propose to add paragraph (c)(1)(iii) which moves the health-
related requirements currently in paragraph (a). These health-related 
requirements encompass the goals of the R&I program, that is, the R&I 
program should include at least one of three health-related 
requirements as its stated goal: (1) The improvement of health; (2) 
prevention of injures and illness or (3) promotion of efficient use of 
health care resources. The target activity must be designed to achieve 
at least one of the health-related requirements. To illustrate this, we 
note that (c)(1)(iii)(B), preventing injuries and illness, would allow 
an MA organizations to reward wearing seat belts. The wearing of the 
seat belt is considered health related since its purpose is to prevent 
injury. Paragraph (c)(1)(iii)(C), promoting efficient use of health 
care resources, would allow MA plans to reward use of online secure web 
portals that track exercise or weight management.
    Next, we propose a new paragraph (c)(2) to list prohibitions 
connected with target activities. Proposed paragraph (c)(2)(i) 
specifies that a target activity must not be related to Part D 
benefits. In other words, Part D benefits may not be targeted for 
rewards. Our regulations at Sec.  422.134 are only applicable to the MA 
program, therefore activities that are tied to Part D benefits may not 
be part of an R&I program under Sec.  422.134. Examples of targeting a 
Part D benefit or tying a reward to Part D benefits that are prohibited 
under this proposed regulation text include providing a reward based on 
filling a prescription, and medication adherence.
    We propose new (c)(2)(ii) to prohibit discriminatory use of R&I 
programs against enrollees. The current regulations prohibit 
discrimination at (b)(1) and (2) and (c)(2)(ii) but we are concerned 
that the current regulation text does not adequately address several 
issues specific to the provision of rewards and incentives. Paragraph 
(c)(2)(ii) proposes to supplement the general anti-discrimination 
prohibitions applicable throughout the MA program (currently in Sec.  
422.134(b)(1)) by proposing three new anti-discrimination requirements. 
These three requirements are in response to inquiries CMS has received.
    An MA organization may design an R&I program that targets a 
specific illness or disease state. There are many cases where the 
target activity of an R&I program is a healthcare service predominately 
available to or medically necessary for a specific group, such as a 
reward for enrollees who obtain mammograms at recommended periodic 
intervals. For example, a high statistical frequency of only women (who 
are the primary recipients of mammograms) receiving rewards would, in 
and of itself, raise concerns of possible discrimination. To avoid this 
possible complication, and to facilitate an environment in which plans 
may propose R&I programs to address the need for target activities such 
as mammograms we propose three new requirements designed to assure that 
R&I programs are not discriminatory.
    First, we propose to require R&I programs be uniformly offered to 
any qualifying individual at new paragraph (c)(2)(ii)(A). We also 
propose to add to paragraph (a) (``Definitions'') that in the context 
of a discussion of a plan-covered health benefit or service, the term 
``qualifying individual'' means any plan enrollee who would qualify for 
coverage of the benefit and also satisfies any other plan criteria to 
participate in the target activity. By this, we mean to be clear that a 
target activity that is a covered benefit would be medically necessary 
for the particular enrollee who is seeking to receive the reward and 
that other conditions on coverage by the MA plan are met. Some 
illustrations of the use of the term qualifying individual are as 
follows:
    (1) A plan that rewards mammograms can deny, without violating the 
discrimination prohibition under this proposed regulation, a reward to 
a man without gynecomastia who obtained a mammogram. The reason for the 
denial is that mammograms by males without gynecomastia are not plan 
covered because the mammogram is not medically necessary;
    (2) A plan that rewards mammograms can deny, without implicating 
the anti-discrimination prohibition in this proposed regulation, a 
reward to a woman not at risk and in good health for obtaining a 
mammogram one month after previously obtaining a mammogram. The reason 
for the denial is because the woman is not a qualifying individual for 
this mammogram since the plan's coverage criteria for Original Medicare 
benefits must be consistent with Original Medicare and the Original 
Medicare frequency requirements for coverage of mammograms has not been 
met; therefore this mammogram taken one month after a previous 
mammogram does not meet the criteria for a plan-covered benefit.
    (3) A plan would reward a man suffering from gynecomastia for 
obtaining a mammogram since this is a plan-covered service for this 
individual.
    By proposing to require R&I programs be formulated in terms of any 
qualifying individual, we hope to broaden the rewards and incentives 
available without permitting discriminatory activity. To avoid 
misunderstanding we emphasize that this requirement is in addition to 
all other anti-discrimination prohibitions in this regulation and in 
the MA program.
    The second anti-discrimination requirement we are proposing is 
related to the requirement currently in (b)(2) that all members may 
earn rewards. We intended this current regulatory provision to require 
accommodations for target activities. We continue to believe that 
providing accommodations to enrollees so that there is fair and 
equitable ability to earn a reward is important. We are proposing, at 
paragraph (c)(2)(ii)(B), to require the MA organization to provide 
accommodations to qualifying individuals who would otherwise be 
eligible for the reward but are unable to perform the target activity. 
We intend an accommodation to be something such as permitting the 
enrollee to engage in a comparable activity in a manner that satisfies 
the intended goal of the target activity or providing additional access 
to the target activity for the enrollee. For example, if a target 
activity encourages individuals with high blood pressure to go to a 
gym, we propose that accommodations must be made for institutionalized 
enrollees are not able to access a gym such that they are still engaged 
in a comparable activity with the same goal, namely engaging in 
physical activity for purposes of blood pressure management. Similarly, 
if the MA plan tracks participation in a target activity in a way that 
involves web access, we propose that accommodations must be made for 
enrollees without web access, such as by permitting other means to 
prove participation. We solicit comments from our stakeholders if this 
requirement of accommodations as formulated is sufficient and ask if 
some restrictions should be included in the regulatory requirement. To 
assist in solicitation of comments on the need for accommodations, we 
note that this proposed requirement for accommodation is intended to be 
consistent with requirements of HIPAA

[[Page 9107]]

wellness programs \93\ and at the Appendix to 29 CFR 1630.14(d).
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    \93\ https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/caghipaaandaca.pdf.
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    The third anti-discrimination requirement we are proposing 
addresses the achievement of desirable measurable health statuses. We 
are proposing to add, at paragraph (c)(2)(ii)(C), a specific 
requirement that MA plans must not design a R&I program based on the 
achievement of a specific health status measurement. CMS recognizes 
that MA organizations designing R&I programs are interested in 
achieving desirable, measurable health outcomes, such as achieving a 
desirable blood pressure or target weight. However, if the target 
activity is formulated this way, it would discriminate against 
enrollees based on health status. There may be individuals who will 
never reach a specific blood pressure level or target weight due to 
circumstances beyond their control (for example, medication side 
effects). For plans wishing to create such R&I programs, we propose 
that target activities must be formulated without reference to 
achieving a specific outcome and focus on a desired behavior instead, 
such as checking one's blood pressure or exercising regularly. Thus, we 
propose that the MA organization must not tie or limit the availability 
of the reward to the achievement of a health status measurement. Under 
this proposal, an MA organization may reward behaviors such as taking 
and reporting measurements at particular intervals, undergoing lab 
tests providing such measurements, or other activities reflecting a 
motivation to reach desirable measurements of health status or 
desirable health outcomes.
    In summary, we proposed in paragraph (c)(2)(ii) to set out specific 
anti-discrimination requirements for an R&I program by requiring the 
program be offered to all qualifying individuals, making accommodations 
for otherwise qualifying individuals, and be based on enrollee 
behaviors rather than on desired measurements of health outcomes. As 
indicated, we believe this approach simultaneously guarantees necessary 
protections, allows maximum MA organization flexibility, and provides 
clarity. Finally, we also make explicit that anti-discrimination is a 
requirement of the entire MA program and these three requirements are 
in addition to other requirements. This statement is indicated in 
(c)(2)(ii) by cross-referencing the new proposed (g)(1) which mentions 
the general requirement of anti-discrimination throughout the MA 
program.
    We believe the new proposed paragraph (c) unifies all current 
guidance on target activities, clarifies appropriate distinctions, and 
will facilitate MA organizations in their quest for new innovative 
designs. We solicit comments whether additional specific prohibitions 
or requirements for target activities are necessary to meet our 
described goals for revising the authority for MA organizations to 
establish and use R&I programs.
    We propose a new paragraph (d) address requirements and 
prohibitions for reward items. Our proposal summarizes and clarifies 
existing CMS guidance on reward items. We propose to divide new 
paragraph (d) into three paragraphs: (d)(1) Addressing requirements of 
reward items, (d)(2) addressing prohibitions associated on reward 
items, and (d)(3) addressing allowances and flexibilities for reward 
items.
    New paragraph (d)(1)(i) reflects the principles of current 
paragraph (b)(2); we propose to require that the reward items be 
offered uniformly to any qualifying individual who performs the target 
activity. As indicated earlier, the term qualifying individual is 
defined in new paragraph (a). New paragraph (d)(1)(ii) codifies 
subregulatory guidance; we propose that the reward item should be a 
direct tangible benefit to the qualifying individual (as defined in 
paragraph (a)) who performs the target activity. In a situation where 
it was suggested that an R&I program provide charitable donations as a 
reward for enrollees fulfilling a target activity, we denied approval 
of the R&I program because the charitable donation was not a direct 
tangible benefit to the enrollee. We believe that the ``charitable 
donation on behalf of the enrollee'' was somewhat misleading because 
the charity, not the enrollee, actually benefitted from the reward. In 
new paragraph (d)(1)(iii), we propose to require rewards be provided, 
such as through transfer of ownership or delivery, to the enrollee in 
the contract year in which the activity is completed, regardless of 
whether the enrollee is likely to use the reward item after the 
contract year. For example, if an enrollee earns a $25 gift card as a 
reward in late December, as long as the MA organization transfers that 
gift card to the enrollee before the contract year is over, the MA 
organization has fulfilled its obligation under this proposed 
provision. Consequently, since the enrollee now owns the reward item 
the plan would not be allowed to erase the card or invalidate the 
reward in the next contract year because the proposed provision 
requires transfer of ownership to the enrollee, who would retain the 
right to use the card whenever he or she wants. We believe that this is 
an important beneficiary protection to ensure that rewards are timely 
provided to the enrollee. Provision of the reward item to a third party 
or caregiver would be prohibited under this regulation.
    Proposed new paragraph (d)(2) summarizes prohibitions connected 
with reward items. Proposed paragraphs (d)(2)(i) prohibits reward items 
consisting of cash, cash equivalents or monetary rebates (current 
paragraph (c)(2)(i)). In proposed (d)(2)(i)(A) and (B), we adopt the 
definition of ``cash equivalent'' formulated by the Office of the 
Inspector General (OIG) (81 FR 88368, December 7 2016), which defines 
``cash equivalent'' to be items convertible to cash (such as a check) 
or that can be used like cash (such as a general purpose debit card, 
but not a gift card that can be redeemed only at certain stores, 
certain store chains, or for a specific category of items like a 
gasoline gift card).
    Current paragraph (c)(1)(iii) says that reward items must ``have a 
monetary cap as determined by CMS,'' However, over the past five years, 
CMS has never calculated or published such a cap. We are therefore 
replacing this requirement with paragraph (d)(2)(ii) which requires 
that a reward item have a value that does not exceed the value of the 
target activity itself. This new proposed cap, the value of the target 
activity, is objectively determined and does not require a CMS 
determination.
    We propose to codify a new paragraph (d)(2)(iii) to prohibit a 
target activity from involving elements of chance, for example 
lotteries. We believe this protects enrollees who may be misled by the 
chance of winning when such chance may be very small.
    Plans know that items such as tickets allowing entry to events with 
a cost or discount coupons for specific items allowing purchases at 
reduced prices are allowed for rewards under our current guidance. 
Furthermore, paragraph (d) adequately outlines the requirements for 
rewards. In new paragraph (d)(3) we propose to present two additional 
examples of permissible reward items for a target activity. These two 
examples have arisen from plan inquiries.
    In new paragraph (d)(3)(i) we codify current practice to allow 
reward items to consist of points or tokens which can be redeemed for 
tangible items. This is unlike a lottery where you only win if you 
obtain a certain event (like a number coming up) with the winning

[[Page 9108]]

event having a small probability. Here, the value of the point and 
token is determined and known in advance. More specifically, it is 
known in advance that with so many points you can redeem them for 
tangible items listed by the plan. There is no element of chance. The 
redeemed item, however, must be a tangible and must otherwise comply 
with all other R&I program requirements.
    In new paragraph (d)(3)(ii) we codify the current practice of 
allowing gift cards for reward items with the added qualification that 
a gift card is only permissible if it is designated for specific 
stores, specific store chains, or for specific categories of items or 
services (such as a gasoline card). There is no requirement that the 
store, store chain, or category of items or services be health related. 
Additionally, CMS acknowledges receiving inquiries from plans in states 
where a gift card must be converted to cash by a retailer if it only 
has a minimal value. Here, we clarify an MA plan may still offer gift 
cards as a reward in states with such laws because when the gift card 
was given to the enrollee it could only be used in certain locations or 
for certain purposes. We consider this allowable because the gift card 
is not immediately convertible to cash. The fact that later on it may 
be worth a nominal amount does not retroactively cancel its non-cash-
equivalent status.
    We believe the restructured paragraph (d) provides greater clarity, 
unifies all known guidance, and facilitates MA organizations seeking 
innovation. We solicit comment on our proposed standards for the reward 
items that are used in R&I programs authorized by Sec.  422.134. 
Specifically, we seek comment whether our requirements need to be 
further clarified or if additional standards or examples are needed as 
enrollee protections.
    As part of our reorganization, we are proposing to move the 
marketing requirements that are currently addressed at Sec.  
422.134(c)(2)(ii) to new provisions in proposed subpart V of 42 CFR 
part 422, which are discussed in section VI.H. of this proposed rule. 
We propose to codify, at new paragraph (e) of Sec.  422.134, a 
requirement that MA organizations, in connection with an R&I program 
offered under Sec.  422.134, must comply with all communications and 
marketing requirements as specified in subpart V of part 422.
    We are also proposing, at new paragraph (f), that an MA 
organization must make information available to CMS upon request about 
the form and manner of any R&I programs the MA organization offers and 
any evaluations of the effectiveness of such programs. We solicit 
comment on this proposal and whether specific reporting should be 
required to support program monitoring and oversight.
    Finally, we are proposing to add paragraphs (g)(1) through (3) for 
miscellaneous provisions from the current regulation. New paragraph 
(g)(1) proposes to codify the general requirement of anti-
discrimination, applicable throughout the MA program (current paragraph 
(b)(1)). Additionally, the existing requirement that the reward and 
incentive program comply with all relevant fraud abuse laws including, 
when applicable the anti-kickback statute and civil monetary penalty 
prohibiting inducements to beneficiaries is moved to (g)(1).
    Proposed new paragraph (g)(2) codifies that violations of R&I 
regulatory requirements can lead to sanctions (current paragraph 
(b)(3)). We note that current paragraph (b)(3) discusses sanctions in 
the context of violations of anti-discrimination. However, sanctions 
could also be imposed if, for example, an MA organization promised an 
R&I program (not a benefit) and then reneged on its commitment. This 
would violate Sec.  422.752(a)(5) and (11) since the plan falsely 
communicated to enrollees and made misleading marketing about its R&I 
program. It also might violate (a)(4) since such false communications 
might be construed as discouraging enrollment. By proposing to codify 
the sanction provision as a stand-alone provision in proposed new 
paragraph (g), we clarify our intentions.
    We are also proposing to codify, at new paragraph (g)(3), current 
guidance that an R&I program is not a benefit. We also are proposing, 
at new paragraph (g)(3)(i), that the MA organization must include all 
costs associated with the reward and incentive program as an 
administrative cost and non-benefit expense in the bid for the year in 
which the reward and incentive program operates. Similarly, we are 
proposing, at new paragraph (g)(3)(ii), that disputes on rewards and 
incentives must be treated as a grievance under Sec.  422.564.
    We are also proposing, at paragraph (g)(4), to add a prohibition on 
mid-year changes to an R&I program. This because R&I programs must be 
included in the plan bid each year as a non-benefit expense. However, 
we also believe this is an important beneficiary protection and will 
ensure that beneficiaries are aware when they enroll in a plan what R&I 
may be available to them.
    For the most part, our proposal to revise Sec.  422.134 unifies and 
codifies existing guidance. We therefore do not believe this provision 
creates new cost or savings impact for the MA program.

H. Requirements for Medicare Communications and Marketing (Sec. Sec.  
422.2260-422.2274; 423.2260-423.2274)

    Sections 1851(h) and (j) of the Act provide a structural framework 
to define how Medicare Advantage (MA) organizations may market to 
beneficiaries and direct CMS to adopt additional standards related to 
review of marketing materials and limitations on marketing activities. 
Section 1860D-1(b)(1)(B)(vi) of the Act directs that the Secretary use 
rules similar to and coordinated with the MA rules at section 1851(h) 
for approval of marketing material and application forms for Part D 
plan sponsors. Section 1860D-4(l) of the Act applies certain 
prohibitions under section 1851(h) to Part D sponsors in the same 
manner as such provisions apply to MA organizations. CMS has adopted 
regulations related to marketing by MA organizations and Part D 
sponsors in Sec.  422.111; 42 CFR part 422, subpart V; Sec.  423.128; 
and 42 CFR part 423, subpart V; these regulations include the specific 
standards and prohibitions in the statute as well as additional 
standards and prohibitions promulgated under the statutory authority 
granted to the agency. Additionally, under the implementation of 
section 1876(c)(3)(C) of the Act through regulations at Sec.  417.428, 
the marketing requirements in subpart V of part 422 apply to section 
1876 cost plans as well. CMS has long provided sub-regulatory guidance, 
building upon and intended to provide further interpretation and 
guidance for these regulations, in the form of a marketing manual 
titled the Medicare Communications & Marketing Guidelines (MCMG), 
previously known as the Medicare Marketing Guidelines.
    CMS now proposes to codify the additional guidance contained in the 
MCMG by combining the guidance set forth within the MCMG with the 
current regulations. In doing so, some reorganization and renumbering 
of existing regulations is necessary, as the proposed revised 
regulations are organized according to the topics in the MCMG, rather 
than fitting into the existing regulation order and flow, as we believe 
plans are more accustomed to the detailed additional guidance in the 
MCMG and we intend for the proposed regulations to closely mirror this 
long-standing sub-regulatory guidance. As part of the reorganization, 
the proposal in some cases also reorganizes existing regulations, even 
though CMS does not intend to change

[[Page 9109]]

the policy expressed in those regulations. To be clear, the policies we 
are proposing to codify are not new to the industry; they are already 
in place in the MCMG and were developed over time in concurrence with 
industry comments weighing in on the best way to implement marketing 
requirements in the context of operating the MA, Part D, and cost 
programs, and plans are accustomed to conforming to these policies. 
Because this proposal is applicable to MA organizations, Part D plan 
sponsors and cost plans, we refer to the regulated entity in this 
proposed rule as a ``plan'' and intend this term to refer to all three 
of these entities.
    The first of the policies that CMS intends to codify, in Sec. Sec.  
422.2260 and 423.2260, is the guidance related to the definitions of 
``marketing'' and ``communications,'' as well as additional definitions 
from the MCMG. CMS has amended and expanded our marketing regulations 
for both the MA and the Part D programs at 42 CFR parts 422 and 423, 
subparts V, respectively, several times since their original 
implementation, and have provided additional sub-regulatory guidance in 
the MCMG each time, to ensure beneficiaries receive the necessary 
information to make informed choices. Recently, in the April 2018 final 
rule, we updated 42 CFR parts 422 and 423, subpart V, including 
establishing new definitions for communications materials and 
activities and marketing materials and activities in 42 CFR 422.2260 
and 423.2260, which set out the scope of materials and activities 
subject to our regulations. In the 2019 MCMG, we provided additional 
guidance that further clarified these definitions based on our 
interpretation that the regulations used ``intent'' and ``content'' as 
the deciding factors for when a communication activity or material was 
marketing.
    We now propose to codify the additional guidance we provided in the 
MCMG and revise the regulation text at Sec. Sec.  422.2260 and 423.2260 
to align more closely with our interpretation. Specifically, we 
propose, at Sec. Sec.  422.2260 and 423.2260, that ``marketing'' means 
communications materials and activities that meet certain standards for 
intent and content that we enumerate in the regulation text. For the 
intent standard, we use the same intent language that is in the current 
regulation with a technical change to separately list out two different 
intent standards (paragraphs (1)(ii) and (iii) in the proposed 
definition of marketing) that were previously combined in one paragraph 
(paragraph (3) in the current definition of marketing materials). As 
previously practiced, when evaluating the intent or an activity or 
material, as previously, CMS will consider objective and contextual 
information (for example, audience, timing, etc.) and is not limited by 
the plan's statements about its intent.
    Under the content standard, we propose in the revised regulations 
to state affirmatively what must be included for a communications 
activity or material to be a marketing activity or material, rather 
than stating what is excluded (as the current regulation does). The 
first two types of content listed (paragraphs (2)(i) and (ii) under the 
definition of marketing) are derived from the current regulation 
(although we specify ``premiums,'' as in the MCMG). The third type of 
content we enumerate is information on rewards and incentives programs, 
as we wanted to be clear that while rewards and incentives themselves 
are not a benefit, they are used as a means of prompting a beneficiary 
to use a specific benefit, and therefore our policy has been that 
information on rewards and incentives fall within the definition of 
marketing. We now propose to explicitly list this as a type of content 
to avoid any confusion, so that plans continue to be aware that in 
providing any information on rewards and incentives they should follow 
the same requirements as for other marketing. We also propose to make 
some revisions to Sec. Sec.  422.2260 and 423.2260 to streamline the 
definitions, such as by removing the list in the current regulation of 
examples of materials (for example, brochures; posters). We no longer 
believe this list of examples is necessary, as we have consistently 
evaluated whether a material is marketing based on intent and content, 
and not based on its particular form. Additionally, we propose to 
combine the definitions for ``communications'' and ``communications 
materials,'' as well as ``marketing'' and ``marketing materials''; this 
will streamline the definitions section and be consistent with how we 
have interpreted the current regulations that both activities and 
materials are subject to the same intent and content standards. We also 
propose to state explicitly in the definition of ``communications'' 
that communications activities and use of materials are those ``created 
or administered by the MA organization or any downstream entity.''
    Finally, we propose to codify at Sec. Sec.  422.2260 and 423.3360 
additional definitions that apply to plan marketing. Specifically, we 
propose to define ``advertisement (ad),'' ``alternate format,'' 
``banner,'' ``banner-like advertisements,'' and ``Outdoor Advertising 
(ODA).'' These definitions are familiar terms that CMS has previously 
defined and used throughout the MCMG; while we make some technical and 
clean-up edits primarily to reflect their new form as regulation text, 
rather than manual guidance, our proposal does not change these 
definitions in a substantive manner. With the codification of much of 
the rest of the MCMG, it becomes important to also codify these 
definitions, which are used throughout the MCMG and are now used 
throughout the proposed regulations.
    We next propose to codify in new Sec. Sec.  422.2261 and 423.2261 
requirements for plans to submit certain materials to CMS for review, 
the process for CMS review, and the standards by which CMS will perform 
the review. These requirements are currently found in Sec. Sec.  
422.2262, 422.2264, 423.2622, and 423.2264, as well as in section 90 of 
the MCMG, which builds upon those sections and includes more detailed 
operational instructions to plans regarding submission, review, and 
distribution of marketing materials (including election forms). In 
particular, we propose at Sec. Sec.  422.2261(a)(1) and 423.2261(a)(1) 
that the Health Plan Management System (HPMS) is the primary system of 
record and the mechanism by which CMS collects and stores submitted 
plan materials for review and evaluation. Additionally, we propose to 
codify, at Sec. Sec.  422.2261(a)(2) and 423.2261(a)(2), our current 
policy that only plans can submit materials to CMS for review and 
approval for use. We also propose to specify that this policy prohibits 
third parties/downstream entities (as they currently are) from 
submitting materials directly to CMS. Additionally, in new Sec. Sec.  
422.2261(d) and 423.2261(d), we propose to codify that CMS reviews 
submitted materials for compliance with all applicable requirements in 
Sec. Sec.  422.2260 through 422.2267 and Sec. Sec.  423.2260 through 
423.2267, respectively, and that the benefit and cost information is an 
accurate reflection of what is contained in the MA organization's bid. 
These standards are consistent with our current policy and how we 
review marketing materials.
    We next propose to codify general standards for plan 
communications, including requirements related to product endorsements 
and testimonials and standardization of certain materials 
(specifically, certain telephone numbers and material IDs) at proposed 
new Sec. Sec.  422.2262 and 423.2262. These general standards are 
currently found in Sec. Sec.  422.2268(a) and 423.2268(a), which

[[Page 9110]]

also include some examples of what plans may not do. While our proposal 
retains the general standards prohibiting MA plans from misleading, 
confusing, or providing inaccurate information to current or potential 
enrollees, we are expanding the lists of examples of what plans may not 
do (in paragraph (a)(1)), and incorporating examples of what plans are 
explicitly permitted to do (in paragraph (a)(2)), all consistent with 
our current guidance in section 30 of the MCMG.
    We also propose to codify at Sec. Sec.  422.2262(b)(2) and 
423.2262(b)(2) requirements regarding endorsements and testimonials 
currently found in section 30.8 of the MCMG. We propose to explicitly 
note in Sec. Sec.  422.2262(b)(1) and 423.2262(b)(1) that, consistent 
with our current policy, product endorsements and testimonials may take 
different forms. We also propose to codify in Sec. Sec.  422.2262(c) 
and 423.2262(c) requirements currently found in section 30 of the MCMG 
related to including telephone numbers (specifically, customer service 
numbers and 1-800-MEDICARE) in materials. These additional parameters 
for how telephone numbers are communicated and included in 
communications and marketing ensure that beneficiaries get useful and 
accurate information. And finally, we propose to codify requirements 
related to standardized material identification, currently found in 
section 90.1 of the MCMG, in Sec. Sec.  422.2262(d) and 423.2262(d).
    We next propose to codify, at Sec. Sec.  422.2263 and 423.2263, 
requirements related to how plans may conduct marketing, which is 
explicitly specified as a subset of communications and therefore also 
subject to the requirements proposed in Sec. Sec.  422.2262 and 
423.2262. First, we are proposing to clarify that October 1 is the date 
plans may begin marketing for the upcoming plan year. This is 
consistent with the longstanding guidance, but we believe that the 
current regulation with this date (at Sec. Sec.  422.2274(b)(4) and 
423.2274(b)(3)) lacks specificity on this point. We therefore propose 
to codify this long-standing policy in Sec. Sec.  422.2263(a) and 
423.2263(a). We also codify, in Sec. Sec.  422.2263(b) and 423.2263(b), 
a list of examples of what plans may not do in plan marketing. This 
list is drawn from existing Sec. Sec.  422.2268(b), 423.2268(b) and 
section 40.1 of the MCMG, although we have made some technical clean-up 
edits. We note that a number of the prohibitions that are currently 
stated in Sec. Sec.  422.2268(b) and 423.2268(b) are codified elsewhere 
in these proposed regulations where they topically fit under the new 
subpart organization. Finally, at Sec.  422.2263(c), we codify 
requirements related to marketing of Star ratings that are currently 
found in section 40.6 of the MCMG.
    We next propose to codify, at revised 42 CFR 422.2264 and 423.2264, 
requirements related to plan contact with Medicare beneficiaries and a 
beneficiary's caregivers. As used in this proposed regulation, 
``beneficiary contact'' includes all outreach activities to a 
beneficiary or a beneficiary's caregivers by the plan or its agents and 
brokers. First, in 42 CFR 422.2264(a)(1) and 423.2264(a)(1), we propose 
to codify the policy for when unsolicited contact is permitted, 
including direct mail and email which are currently found in the MCMG. 
Under 42 CFR 422.2264(a)(2) and 423.2264(a)(2), we propose to codify 
the rules for when unsolicited direct contact with beneficiaries is and 
is not permitted. Currently, Sec. Sec.  422.2268(b)(13) and 
423.2268(b)(13) explicitly prohibit plans from soliciting door-to-door 
or engaging in other unsolicited contact and our guidance in section 
40.2 of the MCMG addresses this prohibition with additional detail 
about activities we consider and do not consider to be unsolicited 
contact. Additionally, under 42 CFR 422.2264(a)(2) and 423.2264(a)(2) 
we also propose to codify that unsolicited direct messages from social 
media platforms are also prohibited, which is currently housed in 
section 30.6 of the MCMG. We also propose to clarify that plans may 
contact their current members (including those individuals enrolled in 
commercial plans who are becoming eligible for Medicare) regarding plan 
business. Finally, in Sec. Sec.  422.2264(c) and 423.2264(c), we 
propose to codify requirements regarding events (such as meetings) with 
beneficiaries, currently found in section 50 of the MCMG; in doing so, 
we include some additional statements consistent with our current 
policies of what plans may do. We note that the policy currently housed 
in Sec. Sec.  422.2264 and 423.2264, ``Guidelines for CMS Review,'' 
have been incorporated into the newly proposed Sec. Sec.  422.2267 and 
423.2267. However, whereas the current Sec. Sec.  422.2264 and 423.2264 
provide general guidance on important information that plans must 
provide to a beneficiary interested in enrolling, Sec. Sec.  422.2267 
and 423.2267 are structured to provide more detailed information on the 
specific materials or content that a plan is required to produce. 
Collectively, the required materials and content outlined in Sec. Sec.  
422.2267 and 423.2267 account for the requirements in the current 
Sec. Sec.  422.2264 and 423.2264.
    We next propose to codify requirements for plan websites at new 
Sec. Sec.  422.2265 and 423.2265. The current regulations at Sec. Sec.  
422.111(h)(2) and 423.128(d)(2) establish the requirement for Part C 
and Part D plans to have an internet website and include requirements 
regarding content that must be posted on the website. The MCMG has 
historically provided additional detail on required website content, 
together with the dates in which the content was required to be posted 
on a yearly basis. These proposed regulations would redesignate the 
requirement to have a website at Sec. Sec.  422.2265 and 423.2265 and 
supplement that requirement with the additional standards and 
requirements for websites that are currently in section 70 of the MCMG.
    We next propose to codify, in Sec. Sec.  422.2266 and 423.2266, 
requirements plans must follow for activities in a healthcare setting, 
including requirements for provider-initiated activities, plan-
initiated provider activities, and plan activities. These requirements 
are currently articulated in Sec. Sec.  422.2268(b)(7) and 
423.2268(b)(7) and expanded upon in section 60 of the MCMG.
    We next propose to codify, at new Sec. Sec.  422.2267 and 423.2267, 
instructions for how plans should submit required materials to CMS for 
review. Specifically, we propose to codify the guidance regarding 
benchmarks for standardizing and monitoring the production of required 
documents, including a listing of these required documents, currently 
found in section 100 and Appendices 2, 3, 4, and 5 of the MCMG. Some of 
these required materials are discussed in the current regulations (for 
example, the Annual Notice of Change (ANOC) and the Evidence of 
Coverage (EOC)). There are some, however, that are only described in 
the MCMG (for example, the Summary of Benefits (SB)). We propose to 
codify all of the required materials and content in Sec. Sec.  
422.2267(e) and 423.2267(e); in doing so, we refer to current 
established regulatory authority when relevant.
    Finally, we propose to consolidate, at Sec. Sec.  422.2274 and 
423.2274, requirements related to plan compensation to agents, brokers 
and other third parties currently found at Sec. Sec.  422.2272, 
422.2274, 423.2272, and 423.2274, and section 110 of the MCMG. For the 
most part, we do not propose to change the policies currently laid out 
in these sections but we are proposing significant technical and 
organizational edits that were

[[Page 9111]]

necessary to improve clarity and reduce duplication in the process of 
consolidation. We refer readers to section V.D. of this proposed rule, 
where we propose a new policy regarding referral and finder's fees for 
agents and brokers. Additionally, we are codifying our method for 
calculating fair market value for agent/broker compensation, as current 
regulations limit compensation to fair market value but do not further 
define it or provide the methodology CMS uses for calculating it. CMS 
first developed the FMV calculation used for purposes of regulating the 
compensation paid to agents and brokers by plans for contract year 2009 
and published these rates in an HPMS memo on December 24, 2008. To 
develop the FMV, we requested that plans submit the broker fees they 
paid for 2006 and 2007, as well as the fees planned to be paid in 2009. 
Plans submitted approximately 19,000 records that we analyzed based on 
geographic location and organization type. Following this analysis, we 
developed the FMV for MA plans, 1876 cost plans and Part D plans. The 
MA FMV rates for enrolling a single beneficiary were established at a 
national rate of $400, with exceptions for Connecticut, Pennsylvania, 
and DC ($450), and California and New Jersey ($500), based on higher 
rates being reported in those geographic areas. The PDP rate was set at 
$50 for a single enrollment nationally. For years after contract year 
2009, we calculated the FMV based on the National Per Capita MA Growth 
Rate for aged and disabled beneficiaries for Part C and 1876 Cost plans 
and the Annual Percentage Increase for Part D. The formula is as 
follows: Current Year FMV + (Current Year FMV * National Per Capita MA 
Growth Rate for aged and disabled beneficiaries) for MA and 1876 cost 
plans and Current Year FMV + (Current Year FMV * Annual Percentage 
Increase for Part D) for PDP plans.
    Additionally, section 110.7.1 of the MCMG clarifies when the 
regulations at Sec. Sec.  422.2274(b)(2) and 423.2274(b)(2) that 
require recovery of agent compensation when a newly-enrolled individual 
disenrolls within the first three months of enrollment (rapid 
disenrollment) don't apply. We propose to codify those clarifications 
at Sec. Sec.  422.2274(g)(2)(ii)(C) and 423.2274(g)(2)(ii)(C).
    To reiterate and summarize, the proposed new and revised regulatory 
sections and their content are as follows:
     Sections 422.2260 and 423.2260 revise and streamline the 
current definitions of ``communications'' and ``marketing,'' and codify 
definitions for additional key terms used throughout the proposed 
regulations from the MCMG.
     Sections 422.2261 and 423.2261 contain requirements for 
plans to submit certain materials to CMS for review, the process for 
CMS review and the standards by which CMS will perform the review, 
taken from current Sec. Sec.  422.2262, 422.2264, 423.2622, and 
423.2264 and section 90 of the MCMG.
     Sections 422.2262 and 423.2262 specify the general 
standards for plan communications materials and activities, including 
endorsements and testimonials, and examples of what plans may and may 
not do. These sections also contain requirements related to 
standardization of certain key elements of communications materials 
(specifically, telephone numbers and material IDs). These sections 
include policies currently articulated in Sec. Sec.  422.2268 and 
423.2268 as well as sections 30 and 90.1 of the MCMG.
     Sections 422.2263 and 423.2263 contain requirements for 
how plans must conduct marketing. These sections will incorporate 
requirements currently in Sec. Sec.  422.2268 and 423.2268 as well as 
additional guidance from section 40 of the MCMG.
     Sections 422.2264 and 423.2264 address the rules for plan 
contact with Medicare beneficiaries. These sections include guidance 
currently in Sec. Sec.  422.2268 and 423.2268 and further expanded upon 
in sections 40 and 50 of the MCMG.
     Sections 422.2265 and 423.2265 explain the requirements 
for plans to have a website as well as what must, can, and must not be 
on the website. These sections include material currently in section 70 
of the MCMG.
     Sections 422.2266 and 423.2266 contain the requirements 
plans must follow for activities in a healthcare setting. These 
sections include material from current Sec. Sec.  422.2268 and 423.2268 
and from section 60 of the MCMG.
     Sections 422.2267 and 423.2267 provide instructions on 
materials and content that CMS requires plans to deliver or make 
available to beneficiaries, including required disclaimers. These 
sections include material from section 100 and Appendices 2, 3, 4, and 
5 of the MCMG.
     Sections 422.2274 and 423.2274 consolidate requirements 
from Sec. Sec.  422.2272, 422.2274, 423.2272, and 423.2274 and section 
110 of the MCMG regarding agents, brokers, and compensation to third 
parties Except as specifically described in the section of the proposed 
rule, these provisions would codify already-existing guidance and 
policies and therefore are not expected to have impact.
    Finally, we request comment on how CMS should implement 
prohibitions related to plan marketing during the open enrollment 
period (OEP). Section 1851(e)(2)(G)(3)(iv) of the Act, as added by 
section 17005 of the Cures Act, prohibits marketing the opportunity 
afforded by the open enrollment period (OEP). The current regulations 
implementing the statutory prohibition on plan marketing during the OEP 
are at Sec. Sec.  422.2268(b)(10) and 423.2268(b)(10). The MCMG 
includes some additional guidance about what activities fall within 
this prohibition. Specifically, plans are prohibited from sending 
unsolicited materials that call out the opportunity afforded by the 
OEP, using mailing lists or other anecdotal information to target 
individuals who made enrollment requests during the annual coordinated 
enrollment period (AEP), or leveraging agent/broker activities that 
target the OEP as a way to make further sales.

I. Past Performance (Sec. Sec.  422.502 and 423.503)

    Since the publication of the first Medicare Advantage (MA) and Part 
D program regulations in 2005, CMS has established, at Sec. Sec.  
422.502(b) and 423.503(b), that we may deny an application submitted by 
an organization seeking an MA or Part D sponsor contract if that 
organization has failed to comply with the requirements of a previous 
MA or Part D contract. In the April 2011 final rule, we completed 
rulemaking that placed limits on the period of contract performance CMS 
would review (that is, 14 months preceding the application deadline) 
and established that CMS would evaluate contract compliance through a 
methodology that would be issued periodically through sub-regulatory 
guidance (75 FR 19684 through 19686). In the April 2018 final rule, we 
reduced the review period to 12 months (83 FR 16638 through 16639).
    In this proposed rule, CMS seeks to add clarity and predictability 
to our review of MA and Part D applicants' prior MA or Part D contract 
performance by identifying in the regulation text the criteria we will 
use to make a determination to deny an application based on prior 
contract performance. This approach will replace the past performance 
methodology that CMS developed and issued annually through sub-
regulatory guidance.
    CMS' overall policy with respect to past performance remains the 
same. We have an obligation to make certain that MA organizations and 
Part D sponsors

[[Page 9112]]

can fully manage their current contracts and books of business before 
further expanding. CMS may deny applications based on past contract 
performance in those instances where the level of previous non-
compliance is such that granting additional MA or Part D business 
opportunities to the responsible organization would pose a high risk to 
the success and stability of the MA and Part D programs and their 
enrollees. Accordingly, we propose to adopt three factors, each of 
which, on its own, represents significant non-compliance with an MA or 
Part D contract, as bases for denying an MA or Part D application: (A) 
The imposition of civil money penalties or intermediate sanctions, (B) 
low Star Ratings scores, and (C) the failure to maintain a fiscally 
sound operation. We propose that the presence of any one of these 
factors in an applicant's record during the past performance review 
period could subject it to the denial of its MA or Part D application. 
Once finalized, these three bases would be added to our already 
codified authority and may be used to deny an application based on CMS' 
termination of an applicant's previous contract under Sec. Sec.  
422.502(b)(3) and 423.503(b)(3). Also, we decline to consider an 
application from an organization still covered by the 2-year period 
during which it had agreed, pursuant to Sec. Sec.  422.508(c) and 
423.508(e), not to submit applications for new MA or Part D contracts 
as part of a mutual termination agreement entered into with CMS 
pursuant to Sec. Sec.  422.508(a) and 423.508(a).
    In the Medicare Program; Changes to the Medicare Advantage and the 
Medicare Prescription Drug Benefit Programs for Contract Year 2103 and 
Other Changes Final Rule, CMS established through rulemaking that MA 
organizations and Part D sponsors are required to achieve Part C or 
Part D summary ratings scores, respectively, of at least three stars 
(77 FR 22108 through 22115). In addition, we established that an 
organization's failure over three consecutive years to achieve Part C 
or Part D summary ratings of at least three stars is a basis for a CMS-
initiated contract termination. In effect, through this rulemaking, CMS 
established that the failure to achieve at least three stars 
constitutes a substantial failure to comply with an MA or Part D 
contract, forming the basis for a CMS-initiated termination. Given the 
significant impact of low Star Ratings on an organization's ability to 
continue to hold an MA or Part D contract, we propose to adopt failure 
to achieve at least a three-star Part C or Part D summary rating in the 
set of Star Ratings CMS issued during the 12-month review period (CMS 
currently issues ratings in October of each year) as a basis for 
denying an application based on past performance. (For example, an 
application for contract year 2022 would be denied if the organization 
received less than a three-star rating for contract year 2021, as 
issued by CMS in October 2020.) In the event that an MA organization 
requests a review of its eligibility for a Quality Bonus Payment (QBP) 
under Sec.  422.260, we will use the summary rating that results from 
the completion of the review process, even if the final decision is not 
issued until after the expiration of the 12-month review period.
    Inherent in a current MA organization or Part D sponsor's 
submission of a contract qualification application is a representation 
that it has the financial resources necessary to administer additional 
lines of Medicare business. A sponsor that CMS has determined does not 
comply with the financial solvency requirements of Sec.  422.504(b)(14) 
or Sec.  423.505(b)(23) is not only not in compliance with its current 
MA or Part D contract, but also would place enrollees of future plans, 
if it were awarded a new contract, in immediate risk of being unable to 
gain access to covered benefits should the contracting organization 
fail to pay legitimately submitted claims. Therefore, CMS believes that 
an applicant's failure to comply with the solvency requirements also 
provides a basis, on its own, for the denial of the application based 
on poor past contract performance.
    CMS-imposed intermediate sanctions (for example, suspension of 
marketing and enrollment activities) and civil money penalties (CMPs) 
are based on findings of substantial contract compliance failures, 
consistent with the standards established in sections 1857(g) and 
1860D-12 (b)(3)(E) of the Act. For example, the statute (and the 
corresponding regulations at part 422, subpart O, and part 423, subpart 
O) provide for the imposition of sanctions or CMPs when a contracting 
organization substantially fails to provide medically necessary items 
that are required to be provided to plan enrollees, charges enrollees 
excess premiums, or contracts with excluded providers. Given the 
significance of any conduct that would meet these standards, it follows 
that CMS would consider the imposition of an intermediate sanction or 
CMP as a failure to comply with an MA or Part D contract warranting the 
denial of a contract application from that same organization.
    In Sec.  422.502(b)(1)(i)(A), we propose to exclude intermediate 
sanctions imposed on dual eligible special needs plans (D-SNPs) under 
Sec.  422.752(d) as a basis for denying a MA or Part D application. In 
the April 2019 final rule, CMS established standards, effective 2021, 
for the integration of Medicare and Medicaid benefits for D-SNPs 
pursuant to section 50311(b) of the BBA of 2018, which amends section 
1859 of the Act (84 FR 15696 through 15720). We also codified in the 
April 2019 final rule a requirement at Sec.  422.752(d) that CMS impose 
an enrollment suspension during plan years 2021 through 2025 when we 
find that a D-SNP is non-compliant with those integration standards, 
pursuant to section 50311(b) of the BBA of 2018, which amended section 
1859(f) of the Act. As discussed in the April 2019 final rule preamble 
(84 FR 15719 through 15720), while the new statutory language in 
section 1859(f)(8)(D)(ii) of the Act permits the Secretary to impose 
intermediate sanctions for D-SNPs that failed to meet the integration 
standards, CMS proposed and finalized a requirement that sanctions 
always be imposed in this case, rather than initiating outright 
termination. Additionally Sec.  422.752(d) requires that, in cases 
where CMS imposes such a sanction, the MA organization submit to CMS a 
corrective action plan.
    To achieve compliance with CMS' integration requirements, D-SNPs 
must work with the states in which they currently operate to negotiate 
new contractual terms in their state Medicaid agency contracts required 
under Sec.  422.107. We recognize that states' experience with Medicare 
and Medicaid integration efforts, and their capacity to facilitate D-
SNP compliance with the new integration requirements, varies 
significantly. While CMS is engaged in capacity building efforts with 
D-SNPs and states to ensure successful implementation of the D-SNP 
integration requirements beginning in 2021, the possibility remains 
that some D-SNPs--despite good faith efforts--may be unsuccessful in 
meeting their state Medicaid agency contract requirements timely and 
will therefore be subject to an enrollment sanction under Sec.  
422.752(d).
    Our proposed policy at Sec.  422.502(b) to deny applications based 
on past contract performance applies at the MA organization level. 
However, D-SNP integration requirements apply at the plan level. In 
most cases, D-SNP PBPs are commingled in contracts that include 
multiple other non-D-SNP PBPs, such that a sanction imposed on just one 
D-SNP that is part of an MA

[[Page 9113]]

organization with many other plans could result in an inability for the 
entire MA organization to expand if the proposal were finalized at 
Sec.  422.502(b)(1)(i)(A), even if that sanctioned D-SNP is working in 
good faith with a state to meet the relevant integration requirements. 
Additionally, as noted earlier, Sec.  422.752(d) requires that D-SNPs 
sanctioned for not meeting the integration criteria submit to CMS a 
corrective action plan, and CMS retains the ability to terminate a 
contract or plan for failure to submit such a corrective action plan or 
to abide by its terms. Therefore, we believe that excluding from the 
proposed requirement at Sec.  422.502(b)(1)(i)(A) any sanctions CMS 
imposes on an MA organization with one or more D-SNPs sanctioned 
specifically under Sec.  422.752(d), during plan years 2021 through 
2025, is reasonable given the established mechanism for D-SNPs to be 
penalized for failure to meet integration requirements established in 
the April 2019 final rule.
    For one of these proposed bases for application denial to be 
considered, the relevant non-compliance must be documented by CMS 
(through the issuance of a letter, report, or other publication) during 
the 12-month review period established at Sec. Sec.  422.502(b)(1) and 
423.503(b)(1). Thus, CMS may include in our analysis conduct that 
occurred prior to the 12-month past performance review period but 
either did not come to light, or was not documented, until sometime 
during the review period.
    In evaluating applications submitted by organizations with no 
recent MA or Part D contracting history, we propose to consider the 
performance of contracts held by the applicant's parent organization or 
another organization controlled by the same parent and ascribe that 
performance to the applicant. Specifically, we propose to identify 
applying organizations with no recent prior contracting history with 
CMS (that is, a legal entity brand new to the Medicare program, or one 
with prior Medicare contract experience that precedes the 12-month 
review period). We would then determine whether that entity is held by 
a parent of other MA organizations or Part D sponsors or otherwise 
shares common control with another contracting organization. In these 
instances, it is reasonable in the absence of any recent actual 
contract performance by the applicant due to a lack of recent Part C or 
Part D participation, to impute to the applicant the performance of its 
sibling organizations as part of CMS' application evaluation. This 
approach would prevent parent organizations with subsidiaries that are 
poor Part C or Part D performers, or the parties that otherwise control 
poor performing entities, from evading CMS' past performance review 
authority by creating new legal entities to submit Part C or Part D 
applications. It would also force organizations responsible for a poor 
past performance record to direct their attention away from acquiring 
new Medicare business when their focus should be on bringing their 
current Medicare contract performance up to an acceptable level. Should 
one or more of the sibling organizations meet one of the bases for 
denial stated in (b)(1)(i), the application from the new legal entity 
would be denied.
    We propose to codify the new bases for application denial based on 
past contract performance as paragraphs (b)(1)(i)(A)--low star ratings, 
(b)(1)(i)(B)--intermediate sanction or CMP, and (b)(1)(i)(C)--failure 
to maintain fiscally sound operation under Sec. Sec.  422.502 and 
423.503. The provision governing the consideration of applicant's 
parent organizations or sibling entities will be stated at Sec. Sec.  
422.502(b)(1)(ii) and 423.503(b)(1)(ii).

J. Prescription Drug Plan Limits (Sec.  423.265)

    Section 1857(e)(1) of the Act, incorporated for Part D by section 
1860D-12(b)(3)(D) of the Act, provides CMS with the authority to 
establish additional contract terms, not inconsistent with Part D, that 
CMS finds ``necessary and appropriate.'' Section 1860D-11(d)(2)(B) of 
the Act provides CMS with the authority to negotiate bids and benefits 
that is ``similar to'' the statutory authority given to the Office of 
Personnel Management (OPM) in negotiating health benefit plans. We 
interpreted this authority to mean that we can negotiate a plan's 
administrative costs, aggregate costs, benefit structure and plan 
management (70 FR 4296). CMS regulations at Sec. Sec.  423.272(a) and 
423.272(b) require Part D sponsors to submit bids and benefit plans for 
CMS approval. As stated in Sec.  423.272(b), CMS approves the plan only 
if the plan's offerings comply with all applicable Part D requirements. 
Similarly, regulations at Sec.  423.265(b)(2) require that multiple 
plan offerings by Part D sponsors represent meaningful differences to 
beneficiaries with respect to beneficiary out-of-pocket costs or 
formulary structures.
    As we have gained experience with the Part D program, we have made 
consistent efforts to ensure that the number and type of PBPs PDP 
sponsors may market to beneficiaries are no more numerous than 
necessary to afford beneficiaries choices from among meaningfully 
different plan options. CMS has declined to approve more than three 
stand-alone prescription drug plans offered by a Part D sponsor in a 
PDP region--one basic plan and (at most) two enhanced plans. A basic 
plan consists of the following: (1) Standard deductible and cost-
sharing amounts (or actuarial equivalents), (2) an initial coverage 
limit based on a set dollar amount of claims paid on the beneficiary's 
behalf during the plan year, (3) a coverage gap phase, and (4) a 
catastrophic coverage phase that applies once a beneficiary's out-of-
pocket expenditures for the year have reached a certain threshold. An 
enhanced plan is an optional plan offering, which provides additional 
value to beneficiaries in the form of reduced deductibles, reduced cost 
sharing, additional coverage of some or all drugs while the beneficiary 
is in the gap phase 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. Section 423.104(f)(2) prohibits a Part D sponsor (as 
defined in Sec.  423.4) from offering enhanced alternative coverage in 
a service area unless the sponsor also offers a prescription drug plan 
in that service area that provides basic prescription drug coverage.
    Prior to adopting regulations requiring meaningful differences 
between each plan sponsor's plan offerings in a PDP Region, our 
guidance allowed sponsors to offer additional basic plans in the same 
region as long as they were actuarially equivalent to the basic plan 
structure described in statute. However, under Sec.  423.265(b)(2), PDP 
sponsors are no longer permitted to offer two basic plans in a PDP 
Region because Part D sponsors cannot demonstrate a meaningful 
difference between two basic plans and still satisfy statutory 
actuarial equivalence requirements. In addition, we believe that 
allowing more than one basic plan could result in sponsor behaviors 
that adversely affect the program, such as the creation of plan options 
designed solely to engage in risk segmentation whereby one basic plan 
would target enrollment of the LIS beneficiaries and the second basic 
plan would target a lower risk population. As it stands, healthier 
beneficiaries are increasingly being incentivized to enroll in low 
premium enhanced plans, leading to a higher risk pool in the basic 
plans. Permitting a sponsor to offer two basic plans in a region could 
ultimately result in increasing bids and premiums

[[Page 9114]]

for basic plans, given that LIS auto-enrollment is limited to basic 
plans. Total government costs would likely increase because CMS pays 
most of the premium for LIS beneficiaries.
    Since the beginning of the Part D program, CMS has consistently 
tried to ensure that Part D sponsors only market the number and type of 
PBPs necessary to offer beneficiaries meaningfully different plan 
options and allow them to carefully examine all of the plan offerings. 
However, allowing sponsors to offer enhanced prescription drug plan 
offerings that are not meaningfully different with respect to 
beneficiary out-of-pocket costs can lead to more innovation and provide 
sponsors with added flexibility to offer health care options that can 
be tailored to different beneficiary choices with a portfolio of plan 
options with different benefits, pharmacy networks, and premiums. As 
such CMS eliminated the meaningful difference requirement between a 
plan sponsor's enhanced alternative benefit offerings effective for 
contract year 2019. As a result of eliminating this requirement, we 
have seen a greater number of enhanced plan offerings.
    CMS has examined Part D plan payment data in cases and markets with 
different numbers of enhanced plans. When looking at this data, we 
noted that markets with a greater number of enhanced plans have higher 
costs than basic plans. This was true even when controlling for other 
factors, such as population health and age. In these cases, the basic 
component of enhanced plans' bids was found to trend higher than basic 
plan bids themselves. Given the upward impact to program costs, CMS 
proposes to codify our policy of limiting number of allowed enhanced 
plan offerings by a Part D sponsor in a PDP region.
    We believe that limiting a Part D sponsor to three plan offerings 
per region, (that is, one basic and, at most, two enhanced plans), 
strikes the right balance between encouraging robust competition and 
flexibility for plan sponsors to innovate with the need to limit the 
potential for significant risk segmentation and provide beneficiaries 
with only clear options that do not create confusion and allow for 
careful examination of the available choices. Based on our review of 
current and past plan offerings and our actuarial models, we believe 
that permitting more than 3 plan options likely would lead to more 
enhanced plans that offer only the minimum level of supplemental 
coverage required to meet our meaningful differences tests. These ``low 
value enhanced plans'' sometimes have lower premiums than basic plans 
because of the risk profile of the enrollees, as low income subsidy 
(LIS) enrollees with more serious health issues and higher utilization 
of prescription drugs generally are not enrolled in these plans because 
they would be responsible for paying the supplemental premium out of 
pocket (even though the total premium is less than the basic plan). 
When many healthy individuals are not included in the basic plans, the 
cost of the basic plans is increased, and this in turn increases low-
income premium subsidies.
    We do not believe such risk segmentation is consistent with the 
design of the Part D program, which has been put in place to save 
taxpayers' and Medicare beneficiaries' money on prescription drug 
costs. We do not believe such risk segmentation obtains the best value 
for the government or the taxpayer. We believe sponsors compete in the 
Part D market by offering their best bids for basic plans, in order to 
attract the greatest enrollment through the lowest premiums, and that 
this competition maintains downward pressure on Part D bids and 
government subsidies. Our proposal to codify a 3 plan limit would not 
eliminate the potential for some risk segmentation, but would limit 
risk segmentation and would prevent any potential growth in plan 
offerings that could further segment risk.
    We are proposing to limit Part D sponsors to offering no more than 
three prescription drug plans per PDP region by adding a new paragraph 
at Sec.  423.265(b)(2). Since this proposed change would codify our 
existing practice, this proposed change would not alter any existing 
processes or procedures within the Part D bid submission and approval 
process. Therefore, this provision is not expected to have a budgetary 
impact.
    We seek stakeholder input as to the impact of limiting the number 
of enhanced plan offerings to two. In addition, we are seeking 
information on what type of impact expanding the number of enhanced 
plan alternatives would have and whether there is any real need for 
more than two standalone enhanced plan options per PDP sponsor per PDP 
region.

K. Definition of a Parent Organization (Sec. Sec.  422.2 and 423.4)

    Pursuant to our authority under sections 1856(b) and 1860D-12(f)(1) 
of the Act, we propose to codify our definition of parent organization 
for purposes of the MA and Part D programs as the legal entity 
exercising controlling interest in an MA organization or Part D 
sponsor. We propose adding a definition for the term ``parent 
organization'' to Sec.  422.2 in part 422, subpart A, and Sec.  423.4 
in part 423, subpart A, to reflect this understanding.
    This proposal is to ensure that the MA and Part D programs apply a 
consistent definition of parent organization. CMS uses the identity of 
an MA organization's or Part D sponsor's parent organization in a 
variety of operational contexts, including, but not limited to:

--Determining whether an individual can be deemed to have elected an MA 
dual eligible special needs plan based in part on his enrollment in an 
affiliated Medicaid managed care plan (Sec.  422.66(c)(2));
--Accounting for contract consolidations in assigning Star Ratings 
under the Quality Rating System for health and/or drug services of the 
same plan type under the same parent organization (Sec. Sec.  422.162 
and 423.182);
--Determining whether a new MA contract constitutes a new MA plan for 
calculation of star ratings, benchmarks, quality bonus payments, and 
beneficiary rebates, (Sec.  422.252).
--Recognizing an individual's appointment as an MA organization's or 
Part D sponsor's compliance officer based on his or her status as an 
employee of the organization, its parent organization, or a corporate 
affiliate (Sec. Sec.  422.503(b)(4)(vi)(B)(1) and 
423.504(b)(4)(vi)(B)(1));
--Determining whether an applicant for a new PDP contract is eligible 
to receive a contract in a particular service area (Sec.  
423.503(a)(3)) after evaluating whether the approval of an application 
would result in a parent organization, directly or through its 
subsidiaries, holding more than one PDP contract in a PDP region;
--Determining whether to administer an essential operations test to a 
Part D contract applicant new to the Part D program (Sec. Sec.  
423.503(c)(4) and 423.505(b)(27)), taking into account the exemption 
for subsidiaries of parent organizations that have existing Part D 
business from the essential operations test;
--Releasing summary Part D reconciliation payment data at the parent 
organization level (Sec.  423.505(o)); and
--Determining whether CMS will recognize the sale or transfer of an 
organization's PDP line of business, where CMS regulations require the 
transfer of all PDP contracts held by the selling or transferring 
sponsor unless the sale or transfer is between wholly owned 
subsidiaries of the

[[Page 9115]]

same parent organization (Sec.  423.551(g)).

    We currently define the term ``parent organization'' for purposes 
of applying the prohibition against approving an application that would 
result in a parent organization holding more than one PDP sponsor 
contract in a region as an entity that exercises a controlling interest 
in the sponsor. (See Sec.  423.503(a)(3)). Because we are proposing a 
more detailed definition that would apply throughout the MA and Part D 
programs, we are proposing to delete that language in Sec.  
423.503(a)(3).
    Under the proposed definition, a parent organization is the legal 
entity that holds a controlling interest in the MA organization or Part 
D sponsor, whether it holds that interest directly or through other 
subsidiaries. The controlling interest can be represented by share 
ownership, the power to appoint voting board members, or other means. 
Control of the appointment of board members is particularly relevant 
with respect to not-for-profit organizations, where there is often no 
direct corollary to the ownership of corporate shares in for-profit 
organizations. We recognize that the many ways that one legal entity 
may have a controlling interest in another legal entity are varied and 
could take many forms too numerous for us to create an exhaustive list. 
Therefore, our proposal includes the ability for us to look at other 
means of control to be exercised or established. We invite comment on 
other examples of the form a controlling interest might take.
    We further propose to specify that the parent organization cannot 
itself be a subsidiary of another entity. This ensures that each MA 
organization or Part D sponsor has a single parent organization for 
purposes of the MA and Part D programs. For example, if Company A owns 
80 percent of Company B, which in turn owns 100 percent of an MA 
organization, Company A would be the parent organization of the MA 
organization under the proposed definition.
    We believe that the proposed definition will codify current policy 
and ensure continued consistency throughout the MA and Part D programs. 
We note that this definition of parent organization would apply in 
implementing the proposed change to Sec.  422.550 regarding the type of 
change of ownership that CMS would permit for MA contracts; we discuss 
that proposal in section VI.D. of this proposed rule.

L. Call Center Requirements (Sec. Sec.  422.111 and 423.128)

    In implementing sections 1851(d) and 1860D-4(a)(3) of the Act, CMS 
established, at Sec. Sec.  422.111(h) and 423.128(d), that MA 
organizations and Part D sponsors are required to have in place a 
mechanism for providing, on a timely basis, specific information to 
current and prospective enrollees, and for a Part D plan also to 
pharmacies in the plan network, upon request. One of these enumerated 
mechanisms includes operating a toll-free customer service call center. 
In this proposed rule, CMS seeks to add greater specificity and clarity 
to our requirements for MA and Part D plans by delineating more 
explicit performance standards for MA and Part D customer service call 
centers, as well as ensuring greater protections for beneficiaries. 
This approach will enhance the current approach, providing plans clear 
standards under which to operate their customer service call centers 
and eliminating uncertainty with regard to CMS's expectations. Customer 
service call centers include call centers operated for current 
enrollees, prospective enrollees, and for pharmacies in plans' networks 
that are seeking information on drug coverage for customers enrolled in 
a particular plan. For the most part, this proposal would codify 
existing guidance. Under our proposal, CMS's overall policy with 
respect to operating a toll-free customer service call center would 
remain largely the same. We have always expected MA organizations and 
Part D sponsors to operate customer service call centers in a way that 
ensures beneficiaries and pharmacies have timely and accurate access to 
information about benefits in a manner that they can understand and 
use. Providing specific performance standards in regulation text will 
clearly lay out the performance requirements and our expectations for 
customer service call centers. Additionally, beneficiaries will benefit 
from CMS holding plans to clearly defined call center standards. 
Accordingly, we propose to adopt the following performance requirements 
for call center functionality. Failure to comply with any of these 
requirements would represent significant deviation from acceptable call 
center operational practices and a significant risk to beneficiaries' 
well-being under our enforcement policies and applicable regulations.
    In Sec. Sec.  422.111(h)(1)(i) and 423.128(d)(1)(i), we propose 
that customer service call centers must be open from at least 8:00 a.m. 
to 8:00 p.m., local time, in all service areas and regions served by 
the MA or Part D plan, and for Part D plans, that any call center 
serving network pharmacies or pharmacists employed by those pharmacies 
must be open any time a pharmacy in the plan service area is open. We 
remind stakeholders that MA-PD plans are Part D plans that must comply 
with Part 423 requirements. These proposed timeframe standards lend 
greater specificity to the previous iteration of this regulation which 
only required a call center to be open during ``normal business 
hours.'' We believe that 8:00 a.m.-8:00 p.m. constitutes normal 
business hours for beneficiary access, based both on our knowledge of 
industry-wide practices and our experience with MA and Part D plans' 
call center operations in particular. The requirement for call centers 
serving network pharmacies to be open any time a pharmacy in that 
network in the plan's service area is open reflects the need to resolve 
questions about benefits and coverage promptly at the point of sale. 
The vast majority of current MA and Part D plans meet these standards. 
By requiring plans to be open from 8:00 a.m. to 8:00 p.m. in all 
service areas or regions served by that Part C or D plan, CMS is 
ensuring that in instances in which plans operate in service areas that 
straddle multiple time zones, all beneficiaries and pharmacists have 
equal access to call center services.
    We are proposing in Sec. Sec.  422.111(h)(1)(ii) and 
423.128(d)(1)(ii) a series of minimum requirements that define specific 
operational requirements for customer service call centers. In 
paragraph (h)(1)(ii)(A), CMS proposes to codify the requirement that 
the average hold time be two minutes or less. We are proposing specific 
text to explain when the two minute count starts to ensure consistent 
application of the metric by defining the hold time as the time spent 
on hold by callers following the interactive voice response (IVR) 
system, touch-tone response system, or recorded greeting, before 
reaching a live person. In paragraph (h)(1)(ii)(B), CMS proposes to 
codify the requirements that the call center answer 80 percent of 
incoming calls within 30 seconds after the Interactive Voice Response 
(IVR), touch-tone response system, or recorded greeting interaction. In 
paragraph (h)(1)(ii)(C), CMS proposes to codify the requirement that 5 
percent or less of incoming call calls be disconnected or unexpectedly 
dropped by the plan customer call center. These standards both ensure 
that beneficiaries can consistently access call centers in a timely 
manner and set thresholds that plans can reasonably attain. Data

[[Page 9116]]

gathered from our call center monitoring studies indicates that 90 
percent of MA organizations and Part D sponsors have average hold times 
of less than two minutes, 87 percent answer 80 percent incoming calls 
within 30 seconds, and 82 percent have disconnect rates of less than 5 
percent. Longstanding CMS policy interpreting the current regulatory 
requirement for the call center to meet standard business practices 
requires call centers to answer calls within 30 seconds and plans 
overwhelmingly comply with this requirement.
    CMS also proposes to amend Sec. Sec.  422.111(h)(1)(iii) and 
423.128(d)(1)(iii) to further delineate accessibility requirements for 
non-English speaking and limited English proficient (LEP) individuals. 
Plans have always been required to provide interpreters as that is 
consistent with existing civil rights laws. We propose to further 
require that interpreters be available within 8 minutes of reaching the 
customer service representative and that the interpreter be available 
at no cost to the caller. These requirements are consistent with our 
interpretation of the requirement for call centers to meet standard 
business practices and performance is measured against this standard in 
our current monitoring and oversight activities. Data from our call 
center monitoring indicates that 95% of plans already meet this 
standard.
    CMS proposes to add Sec. Sec.  422.111(h)(1)(iv) and 
423.128(d)(1)(v), explicitly requiring that call centers respond to 
TTY-to-TTY calls, consistent with standards established under existing 
law governing access for individuals with disabilities at 47 CFR part 
604, subpart F. The Rehabilitation Act and the Americans with 
Disabilities Act already require the provision of accessibility 
services for individuals with disabilities, such as deaf or hard-of-
hearing individuals. We are also proposing, at Sec. Sec.  
422.111(h)(1)(v) and 423.128(d)(1)(v), that when using automated-
attendant systems, MA and Part D plans must provide effective real-time 
communication with individuals using auxiliary aids and services, 
including TTYs and all forms of FCC-approved telecommunications relay 
systems. See 28 CFR 35.161, 36.303(d). The requirements proposed at 
Sec. Sec.  422.111(h)(1)(ii) and 423.128(d)(1)(ii) also apply to TTY-
to-TTY calls. CMS will hold plans accountable for complying with the 
requirements of Sec. Sec.  422.111(h)(1)(ii) and 423.128(d)(1)(ii) when 
receiving TTY-to-TTY calls. These standards are consistent with current 
CMS interpretation and implementation of the requirement that plans 
have a call center that meets standard business practices. CMS data 
shows that 91 percent of plans currently respond to TTY-to-TTY calls 
within 7 minutes. CMS solicits comments on adopting the 7 minute 
response time as a TTY-to-TTY standard.
    We propose to codify our existing interpretations and policies 
regarding MA and Part D plan call centers as explicit requirements for 
operating a toll-free customer service call center in Sec. Sec.  
422.111 and 423.128. We are proposing this codification to ensure 
transparency for plans about the performance standards they must meet. 
Further, codification of these policies will provide stability for 
these plans going forward.

M. Special Election Periods (SEPs) for Exceptional Conditions 
(Sec. Sec.  422.62 and 423.38)

1. Part C Special Election Periods (Sec.  422.62)
    Section 1851(e)(4) of the Act establishes special election periods 
(SEPs) during which, if certain circumstances exist, an individual may 
request enrollment in a Medicare Advantage (MA) plan or discontinue the 
election of an MA plan and change his or her election to original 
Medicare or to a different MA plan. We have codified SEPs for the 
following circumstances specifically addressed in section 1851(e)(4) of 
the Act:
     When CMS terminates the MA organization's contract for the 
plan, or the MA organization terminates the plan or discontinues 
offering the plan in the service or continuation area in which the 
individual resides, or the MA organization has notified the individual 
of the impending termination of the plan or the impending 
discontinuation of the plan in the area in which the individual resides 
(Sec.  422.62(b)(1) and section 1851(e)(4)(A) of the Act).
     When the individual is no longer eligible to be enrolled 
in a certain plan due to a change of residence or other change in 
circumstances as specified by CMS but not including terminations 
resulting from a failure to make timely payment of an MA monthly or 
supplemental beneficiary premium, or from disruptive behavior (Sec.  
422.62(b)(2) and section 1851(e)(4)(B) of the Act).
     When the individual demonstrates to CMS, in accordance 
with guidelines established by CMS that the MA organization has 
substantially violated a material provision of its contract or 
materially misrepresented the plan's provisions in marketing the plan 
in relation to the individual (Sec.  422.62(b)(3) and section 
1851(e)(4)(C) of the Act).
    Section 1851(e)(4)(D) of the Act also grants the Secretary the 
authority to create SEPs for individuals who meet other exceptional 
conditions. This authority is codified at Sec.  422.62(b)(4). CMS has 
historically included in regulation those SEPs that the statute 
explicitly authorizes and has established the SEPs for exceptional 
circumstances in our subregulatory guidance rather than through 
regulation. We are now proposing to codify a number of SEPs that we 
have adopted and implemented through subregulatory guidance as 
exceptional circumstances SEPs. Except where noted in this proposed 
rule, our intent is to codify the current policy, as reflected in 
section 30.4.4 of Chapter 2 of the Medicare Managed Care Manual. As 
with all MA enrollments, enrollments into a new MA plan using a SEP 
require that the individual be otherwise eligible for that MA plan 
under Sec. Sec.  422.50 through 422.57. For example, the individual 
must reside in the service area of the new MA plan. We seek specific 
comment as to whether we have overlooked any feature of the current 
policy that should be codified and if there are other exceptional 
circumstances we have not identified for which we should consider 
establishing a special election period. Codifying our current policy 
for these SEPs will provide transparency and stability for stakeholders 
about the MA program and about the nature and scope of these SEPs by 
ensuring that the SEPs are changed only through additional rulemaking. 
Consistent with Sec.  422.68(c), we are also proposing to revise Sec.  
422.68(d) to clarify that for SEPs that are described in Sec.  
422.62(b), elections are effective as of the first day of the first 
calendar month following the month in which the election is made, 
unless otherwise noted. In addition, we note that, consistent with 
longstanding subregulatory guidance, the organization is not required 
to contact an applicant to confirm SEP eligibility if the enrollment 
request includes the applicant's attestation of SEP eligibility.
     SEP for Employer/Union Group Health Plan (EGHP) Elections. 
We are proposing to revise Sec.  422.62(b)(4) to codify a SEP for 
individuals making MA enrollment requests into or out of employer 
sponsored MA plans, for individuals to disenroll from an MA plan to 
take employer sponsored coverage of any kind, and for individuals 
disenrolling from employer sponsored coverage (including COBRA 
coverage) to elect an MA plan.

[[Page 9117]]

    This SEP is available to individuals who have (or are enrolling in) 
an employer or union sponsored plan for the duration of that enrollment 
and ends 2 months after the month the employer or union coverage ends. 
The individual may choose an effective date of up to three months after 
the month in which the individual completed an enrollment or 
disenrollment request; however, the effective date may not be earlier 
than the first of the month following the month in which the request 
was made.
     SEP for Individuals Who Disenroll in Connection With a CMS 
Sanction. At new Sec.  422.62(b)(5), we are proposing to codify the SEP 
for individuals enrolled in an MA plan offered by an MA organization 
that is sanctioned by CMS. Such enrollees would be eligible for a SEP 
to elect another MA plan, or disenroll to original Medicare and enroll 
in a PDP, if they believe they are affected by the matter(s) that gave 
rise to that sanction. We propose that, consistent with Sec.  
422.111(g), CMS may require the MA organization to notify the current 
enrollees that if they believe they are affected by the matter(s) that 
gave rise to the sanction, they are able to choose another MA plan or 
enroll in original Medicare and a PDP. The SEP would start with the 
imposition of the sanction and end when the sanction ends or when the 
individual makes an election, whichever occurs first.
     SEP for Individuals Enrolled in Cost Plans That Are Non-
Renewing Their Contracts. At new Sec.  422.62(b)(6), we are proposing 
to codify the SEP for individuals enrolled in cost plans that are non-
renewing their contracts for the area in which the enrollee lives. Such 
individuals would be eligible for a SEP to elect an MA plan. This SEP 
would be available only to Medicare beneficiaries who are enrolled with 
an HMO or CMP under a section 1876 cost plan that will no longer be 
offered in the area in which the beneficiary lives.
    This SEP would begin December 8 of the current contract year, which 
is the day after the end of the Annual coordinated election period, and 
end on the last day of February of the following year. Therefore, 
applying the general rule we propose to codify that elections are 
effective the first of the month after they are made, enrollment 
requests received before December 31 would have an effective date of 
January 1, enrollment requests received between January 1 and January 
31 would be effective February 1, and enrollment requests received 
between February 1 and February 28 (or 29, as the case may be) would be 
effective March 1.
     SEP for Individuals in the Program of All-Inclusive Care 
for the Elderly (PACE). At new Sec.  422.62(b)(7), we are proposing to 
codify the SEP allowing an MA plan enrollee to disenroll from an MA 
plan at any time in order to enroll in PACE. The MA plan enrollee who 
disenrolls from an MA plan would have a SEP for 2 months after the 
effective date of MA plan disenrollment to elect a PACE plan. In 
addition, a PACE enrollee who disenrolls from PACE would have an SEP 
for 2 months after the effective date of PACE disenrollment to elect an 
MA plan.
     SEP for Individuals Who Terminated a Medigap Policy When 
They Enrolled For the First Time in an MA Plan and Who Are Still in a 
Trial Period. For Medicare beneficiaries who terminated a Medigap 
policy when they enrolled for the first time in an MA plan, section 
1882(s)(3)(B)(v) of the Act provides a guaranteed right to purchase 
another Medigap policy if they disenroll from the MA plan while they 
are still in a trial period. In most cases, a trial period lasts for 12 
months after a person enrolls in an MA plan for the first time. The 
right to guaranteed issue of a Medigap policy under section 
1882(s)(3)(B)(v) of the Act would be meaningless if individuals covered 
by this provision could not disenroll from the MA plan while they were 
still in a trial period.
    Accordingly, we are proposing, at new Sec.  422.62(b)(8), to codify 
the SEP for individuals who are eligible for guaranteed issue of a 
Medigap policy under section 1882(s)(3)(B)(v) of the Act upon 
disenrollment from the MA plan in which they are enrolled. This SEP 
would allow a qualified individual to make a one-time election to 
disenroll from their first MA plan to join original Medicare at any 
time of the year. The SEP would begin upon enrollment in the MA plan 
and would end after 12 months of enrollment or when the beneficiary 
disenrolls, whichever is earlier.
     SEP for Individuals With ESRD Whose Medicare Entitlement 
Determination Was Made Retroactively. If a Medicare entitlement 
determination based on ESRD is made retroactively, an individual has 
not been provided the opportunity to elect an MA plan during his or her 
ICEP. Therefore, we are proposing to codify at new Sec.  422.62(b)(9) 
that these individuals would have a SEP to prospectively elect an MA 
plan offered by the MA organization, provided:
    ++ They were enrolled in a health plan offered by the same MA 
organization the month before their entitlement to Parts A and B;
    ++ They developed ESRD while a member of that health plan; and
    ++ They are still enrolled in that health plan.

This SEP could also be used in cases when there is an administrative 
delay and the entitlement determination is not made timely. For 
example, an individual who performs self-dialysis would have his or her 
entitlement date adjusted to begin at the time of dialysis, rather than 
the customary 3-month period after dialysis begins.
    This SEP would begin the month the individual receives the notice 
of the Medicare entitlement determination and would continue for 2 
months after the month the notice is received. This SEP would be 
necessary only through the 2020 plan year, as section 17006 of the 
Cures Act amended section 1851 of the Act to remove the prohibition for 
beneficiaries with ESRD from enrolling in an MA plan. Although this 
statutory change is not discussed in current sub-regulatory guidance, 
we have included this in proposed new Sec.  422.62(b)(9) for clarity.
     SEP for Individuals Whose Medicare Entitlement 
Determination Was Made Retroactively. If a Medicare entitlement 
determination is made retroactively, an individual has not been 
provided the opportunity to elect an MA plan during his or her ICEP. 
Therefore, we are proposing, at new Sec.  422.62(b)(10), to codify the 
SEP for these individuals to elect an MA plan. This SEP could also be 
used in cases when there is an administrative delay and the entitlement 
determination is not made timely by SSA or received by the individual 
in a timely manner.
    The SEP would begin the month the individual receives the notice of 
the Medicare entitlement determination and would continue for 2 months 
after the month the notice is received. Consistent with our general 
rule regarding the effective dates for elections made during an SEP, 
the election made using this SEP would be effective on the first of the 
month following the MA organization's receipt of the election but no 
earlier than the first day of the month in which the notice of 
entitlement is received. A beneficiary would receive coverage under 
original Medicare from the date of entitlement until the MA enrollment 
is effective.
     SEP for Individuals Who Lose Special Needs Status. At new 
Sec.  422.62(b)(11), we are proposing to codify the SEP for individuals 
enrolled in an MA special needs plan (SNP) who are no longer eligible 
for the SNP because they no longer meet the applicable special needs 
status. This SEP would begin the month the individual's special needs 
status

[[Page 9118]]

changes. The SEP would end when the beneficiary makes an enrollment 
request or the end of the third month after the month of the effective 
date of involuntary disenrollment from the SNP, whichever is earlier.
     SEP for Individuals Who Belong to a Qualified SPAP or Who 
Lose SPAP Eligibility. At new Sec.  422.62(b)(12), we are proposing to 
codify a SEP for individuals who belong to a qualified State 
Pharmaceutical Assistance Program (SPAP) to make one election to enroll 
in an MA-PD plan each calendar year. SPAP members may use this SEP to 
enroll in an MA-PD plan outside of existing enrollment opportunities, 
allowing them, for example, to join an MA-PD plan upon becoming a 
member of an SPAP. Because SPAP eligibility may influence an 
individual's choice of MA-PD plan, we have adopted a SEP for MA 
enrollment to coordinate with the change in SPAP eligibility.
    In addition to being available while the individual belongs to the 
SPAP, the SEP remains available for individuals no longer eligible for 
SPAP benefits for 2 months. The SEP continues until the month they lose 
SPAP eligibility or the month they are notified of the loss of SPAP 
eligibility, whichever is later, and then for an additional 2 months.
     SEP for Enrollment Into a Chronic Care SNP and 
for Individuals Found Ineligible for a Chronic Care SNP. At new Sec.  
422.62(b)(13), we are proposing to codify the SEP allowing individuals 
with severe or disabling chronic conditions to enroll in a Chronic Care 
SNP (C-SNP) designed to serve individuals with those conditions. This 
SEP would be available as long as the individual has the qualifying 
condition and would end once he or she enrolls in a C-SNP. Once the SEP 
ends, that individual would be able to make enrollment changes only 
during applicable election periods. In addition, individuals enrolled 
in a C-SNP who have a severe or disabling chronic condition that is not 
a focus of their current C-SNP would be eligible for this SEP to change 
to a C-SNP that does focus on the condition that the individual has. 
Eligibility for this SEP would end at the time the individual enrolls 
in the new C-SNP.
    Individuals who are found after enrollment not to have the 
qualifying condition necessary to enroll in a C-SNP would have a SEP to 
enroll in a different MA plan. This would normally occur when the 
required post enrollment verification with a provider did not confirm 
the information provided on the pre-enrollment assessment tool. This 
SEP would begin when the plan notifies the individual of the lack of 
eligibility and would extend through the end of that month, plus 2 
additional months. The SEP would end when the individual makes an 
enrollment election or on the last day of the second month following 
notification.
     SEP for Disenrollment From Part D To Enroll in or Maintain 
Other Creditable Coverage. At new Sec.  422.62(b)(14), we are proposing 
to codify the SEP that provides an opportunity for individuals to 
disenroll from an MA-PD plan (only by electing Original Medicare or an 
MA-only plan) in order to enroll in or maintain other creditable drug 
coverage (such as TriCare or VA coverage) as defined in Sec.  
423.56(b). This SEP may not be used to disenroll from an MA-PD plan by 
electing another MA-PD plan.
     SEP to Enroll in an MA Plan With a Star Rating of 5 Stars. 
At new Sec.  422.62(b)(15), we are proposing to codify the SEP allowing 
an eligible individual to enroll in an MA plan with a Star Rating of 5 
stars during the plan contract year in which that plan has the 5-star 
overall rating. A rating of 5 stars is considered ``excellent'' and is 
the highest performance rating that a plan can achieve. Because these 
plans have demonstrated exceptional performance, and because there 
tends to be only a small number of 5 Star plans in a given contract 
year, we believe a SEP is warranted to allow beneficiaries with access 
to these plans the opportunity to enroll during the plan year for which 
the 5 Star rating is applicable. The SEP is available beginning the 
first day after the Annual Election Period (AEP), December 8, prior to 
the plan contract year for which the 5 Star Rating is applicable, 
through November 30 of the plan contract year the 5 Star Rating is 
applicable. The enrollment effective date would be the first of the 
month following the month in which the MA organization receives the 
enrollment request.
    An individual using this SEP would be able to enroll in an MA plan 
with a 5-star overall rating even if coming from original Medicare 
(with or without concurrent enrollment in a standalone Medicare 
prescription drug plan). Individuals enrolled in a plan with a 5-star 
overall rating may also switch to a different plan with a 5-star 
overall rating. Consistent with our general rules for how enrollment 
eligibility and elections for Part D and MA work, an individual in a 
MA-only or MA-PD coordinated care plan who switches to a PDP with a 5-
star overall rating would lose MA coverage and will revert to original 
Medicare for basic medical coverage.
     SEP for Non-U.S. Citizens Who Become Lawfully Present. At 
new Sec.  422.62(b)(16), we are proposing to codify the SEP for non-
U.S. citizens who become lawfully present in the United States. The 
individual would be able to use this SEP to request enrollment in any 
MA plan for which he or she is eligible. This SEP would begin the month 
the lawful presence starts and would end when the individual makes an 
enrollment election or at the end of the second calendar month after 
the month it begins, whichever occurs first.
     SEP for Providing Individuals Who Requested Materials in 
Accessible Formats Equal Time To Make Enrollment Decisions. As outlined 
in section 504 of the Rehabilitation Act of 1973, organizations are 
required to comply with requirements of that Act and provide materials 
in accessible formats to members. This generally includes formats such 
as Braille, data, and audio files, or other formats accepted by the 
member in place of, or in addition to, the original print material.
    We are proposing to codify, at new Sec.  422.62(b)(17), the SEP in 
situations where the MA organization or CMS was unable to provide 
required notices or information in an accessible format, as requested 
by an individual, within the same timeframe that it was able to provide 
the same information to individuals who did not request an accessible 
format. This limited SEP would ensure that beneficiaries who have 
requested information in accessible formats are not disadvantaged by 
any additional time necessary to fulfill their request, including 
missing an election period deadline.
    The SEP would begin at the end of the election period during which 
the beneficiary was seeking to make an election. The start of the SEP, 
as well as the enrollment effective date, would be dependent upon the 
situation, and the length is at least as long as the time it took for 
the information to be provided to the individual in an accessible 
format. An individual would be eligible for this SEP when the 
conditions described in this section are met. MA organizations would be 
required to maintain adequate documentation of the situation, including 
records indicating the date of the individual's request, the amount of 
time taken to provide accessible versions of the requested materials 
and the amount of time it takes for the same information to be provided 
to an individual who does not request an accessible format.
     SEP for Individuals Affected by a FEMA-Declared Weather-
Related

[[Page 9119]]

Emergency or Major Disaster. We are proposing to codify, at new Sec.  
422.62(b)(18), the SEP for individuals affected by a weather-related 
emergency or major disaster who were unable to make an election during 
another valid election period. This would include both enrollment and 
disenrollment elections. Individuals would be eligible for this SEP if 
they:
    ++ Reside, or resided at the start of the incident period, in an 
area for which Federal Emergency Management Agency (FEMA) has declared 
an emergency or a major disaster and has designated affected counties 
as being eligible to apply for individual or public level assistance;
    ++ Had another valid election period during the incident period; 
and
    ++ Did not make an election during that other valid election period 
due to the emergency or disaster.
    In addition, the SEP would be available to those individuals who do 
not live in the affected areas but rely on help making healthcare 
decisions from friends or family members who live in the affected 
areas. The SEP would be available from the start of the incident period 
and for 4 months after the start of the incident period.
     SEP for Significant Change in Provider Network. At new 
Sec.  422.62(b)(23), we are proposing to codify the SEP that is 
available when CMS determines that mid-year changes to an MA plan's 
provider network are significant, based on the effect on, or potential 
to affect, current plan enrollees' continued access to covered 
benefits. Mid-year changes are those that are effective other than on 
January 1. We note that pursuant to Sec.  422.111, an MA plan must 
furnish information to enrollees before the annual election period 
about changes in the plan, including changes in the network, that are 
effective for the next plan year. Because this notice and the annual 
election period give enrollees the opportunity to change plans for the 
new year, we have historically limited this SEP to mid-year changes in 
the network.
    CMS considers significant changes to provider networks to be those 
that go beyond individual or limited provider terminations that occur 
during the routine course of plan operations and affect, or have the 
potential to affect, a large number of the MAO's enrollees. CMS will 
use a variety of criteria for determining whether or not the network 
terminations are substantial, such as: (1) The number of enrollees 
affected; (2) the size of the service area affected; (3) the timing of 
the termination; (4) whether adequate and timely notice is provided to 
enrollees, (5) and any other information that may be relevant to the 
particular circumstance(s).
    The SEP would be in effect once CMS makes its determination and 
enrollees have been notified. As with current guidance, we are 
proposing that the SEP begins the month the individual is notified of 
the network change and would continue for an additional 2 calendar 
months after the month in which the enrollee is notified of the SEP. We 
are proposing for the SEP to begin the month the individual is notified 
of eligibility for the SEP, as the MA organization may notify members 
of the network change prior to CMS making its determination, which 
under current guidance would result in a SEP start date that precedes 
the existence of the SEP. The SEP would continue for an additional 2 
calendar months after the month in which the enrollee is notified of 
the SEP. Enrollment in the new plan would be effective the first day of 
the month after the plan receives the enrollment request. This SEP can 
be used only once per significant change in the provider network.
    The scope of individuals eligible for the SEP would be determined 
by CMS, applying the standards in the regulation, and would include 
enrollees who have been affected, or who may be affected, by the 
network change. We propose to define an ``affected enrollee'' as an 
enrollee who is assigned to, currently receiving care from, or has 
received care within the past 3 months from a provider or facility 
being terminated. Individuals eligible for the SEP would be able to 
disenroll from the MA plan and elect original Medicare or another MA 
plan, including an MA-PD plan, even if they did not have prescription 
drug coverage previously. CMS will provide specific instructions 
directly to the MA organization with the significant network change, 
including instructions on required beneficiary notifications and 
information to be provided to affected beneficiaries regarding other 
enrollment options, if applicable.
     SEP for Individuals Enrolled in a Plan Placed in 
Receivership. We propose to establish a new SEP, at new Sec.  
422.62(b)(24), for individuals enrolled in plans offered by MA 
organizations experiencing financial difficulties to such an extent 
that a state or territorial regulatory authority has placed the 
organization in receivership. We believe this SEP constitutes an 
exceptional circumstance because receiverships have the potential to 
cause disruption in access to healthcare services and individuals 
should have the ability to take action to prevent any future disruption 
to care. The SEP would allow an individual to discontinue the election 
of an MA plan and change his or her election to a different MA plan or 
to original Medicare, with or without enrollment in a standalone 
Medicare prescription drug plan. We propose that the SEP begin the 
month the receivership is effective and continue until the enrollee 
makes an election or the receivership is no longer in effect, whichever 
occurs first.
    Also, we propose that when instructed by CMS, the MA plan that has 
been placed under receivership, or the entity operating the 
organization in receivership, must notify its enrollees, in the form 
and manner directed by CMS, of their eligibility for this SEP and how 
to use the SEP.
     SEP for Individuals Enrolled in a Plan That Has Been 
Identified by CMS as a Consistent Poor Performer. We propose to 
establish a new SEP, at new Sec.  422.62(b)(25), for individuals who 
are enrolled in plans identified with the low performing icon (LPI) in 
accordance with Sec.  422.166(h)(1)(ii). The LPI is assigned to 
contracts that have summary ratings of less than 3 Stars for three or 
more years. We believe this SEP constitutes an exceptional circumstance 
because these contracts have demonstrated performance considered 
``below average'' or ``poor'' for a sustained period of time based on 
critical factors such as beneficiary complaints and access to care. To 
ensure that beneficiaries are not adversely affected, we believe that 
beneficiaries enrolled in these contracts should have the ability to 
enroll in plans rated ``average'' or higher during the year. The SEP 
would allow an individual to discontinue the election of a consistently 
poor performing MA plan and change his or her election to an MA plan 
with an overall Star Rating of 3 or more stars or to original Medicare, 
with or without enrollment in a standalone Medicare prescription drug 
plan. We propose that the SEP exist while the individual is enrolled in 
the consistently poor performing MA plan.
     SEP for Individuals Affected by a Federal Employee Error. 
At new Sec.  422.62(b)(21), we are proposing to codify a SEP for 
individuals whose enrollment or non-enrollment in an MA-PD plan is 
erroneous due to an action, inaction or error by a federal employee to 
permit enrollment in, or disenrollment from, an MA-PD plan. Requests 
for this SEP would have to be developed and presented to the MA 
organization's CMS account manager. The CMS account manager will review 
each case and determine if the enrollment or non-enrollment was caused 
by the action, inaction or error on the part of a federal employee. 
This

[[Page 9120]]

SEP would begin the month that CMS determines an individual eligible 
for this SEP and would continue for 2 months.
     SEP for Other Exceptional Circumstances. Lastly, we 
propose to retain the authority currently at Sec.  422.62(b)(4) to 
create SEPs for individuals who meet other exceptional conditions 
established by CMS and move it to new Sec.  422.62(b)(26). SEPs 
established under this authority would be done on a case-by-case basis 
and in situations which we determine it is in the best interest of the 
beneficiary to have an enrollment (or disenrollment) opportunity. While 
our experience with the MA program has informed the SEPs that we have 
established to date, and are proposing to codify in this regulation, we 
are mindful that exceptional circumstances may arise which may also 
warrant a SEP, and we note that this list is not meant to be 
exhaustive.
    Also based on the Secretary's authority to create SEPs for 
individuals who meet exceptional conditions, we propose to codify the 
following SEPs currently outlined in subregulatory guidance that 
coordinate with Part D election periods:
     SEP for Individuals Who Experience an Involuntary Loss of 
Creditable Prescription Drug Coverage. At new Sec.  422.62(b)(19), we 
are proposing to codify the SEP for individuals who experience an 
involuntary loss of creditable prescription drug coverage, including a 
reduction in the level of coverage so that it is no longer creditable 
but not including any such loss or reduction due to a failure to pay 
premiums, to enroll in an MA-PD plan. The SEP would begin the month in 
which the individual is advised of the loss of creditable coverage and 
would end 2 months after either the loss (or reduction) occurs or the 
individual received notice, whichever is later. The effective date of 
this SEP may be the first of the month after the request or, at the 
beneficiary's request, may be up to 3 months prospective.
     SEP for Individuals Who Are Not Adequately Informed of a 
Loss of Creditable Prescription Drug Coverage. At new Sec.  
422.62(b)(20), we are proposing to codify a SEP for individuals who are 
not adequately informed of a loss of creditable prescription drug 
coverage, or that they never had creditable coverage, to permit one 
enrollment in, or disenrollment from, an MA-PD plan, on a case-by-case 
basis. CMS will review each case and determine whether an entity 
offering prescription drug coverage failed to provide accurate and 
timely disclosure of the loss of creditable prescription drug coverage 
or whether the prescription drug coverage offered is creditable. This 
SEP would begin the month that CMS determines an individual eligible 
for this SEP and would continue for 2 months.
     SEP for Individuals Eligible for an Additional Part D IEP. 
At new Sec.  422.62(b)(22), we are proposing to codify the SEP for an 
individual who is eligible for an additional Part D Initial Enrollment 
Period (IEP) to have an MA SEP to coordinate with the additional Part D 
IEP. One example of a Part D IEP is the one for an individual currently 
entitled to Medicare due to a disability and who is attaining age 65. 
The IEP for Part D permits enrollment in a Part D plan, which includes 
a standalone Part D plan or an MA-PD plan. This proposed coordinating 
MA SEP may be used to disenroll from an MA plan to original Medicare, 
or to enroll in a MA plan that does not include Part D benefits, 
regardless of whether the individual uses the Part D IEP to enroll in a 
standalone Part D plan. The SEP would begin and end concurrently with 
the additional Part D IEP.
    These previously proposed revisions would codify existing 
subregulatory guidance for SEPs that MA organizations have previously 
implemented and are currently following, except the SEP for Individuals 
Enrolled in a Plan Placed in Receivership and the SEP for Individuals 
Enrolled in a Plan that has been identified by CMS as a Consistent Poor 
Performer. We would also note that we are taking this opportunity to 
propose minor editorial changes in Sec.  422.62(b) and (c), such as 
changing ``Original Medicare'' to ``original Medicare.''
2. Part D Special Election Periods (Sec.  423.38)
    Section 1860D-1(b)(3) of the Act establishes special election 
periods (SEPs) during which, if certain circumstances exist, an 
individual may enroll in a stand-alone Part D prescription drug plan 
(PDP) or disenroll from a PDP and enroll in another PDP or in an MA 
plan that includes Part D benefits (MA-PD plan). We have codified SEPs 
for the following circumstances, which are explicitly discussed in the 
Act:
     The individual involuntarily loses creditable prescription 
drug coverage or such coverage is involuntarily reduced so that it is 
no longer creditable coverage (Sec.  423.38(c)(1) and section 1860D-
1(b)(3)(A) of the Act).
     The individual was not adequately informed that he or she 
has lost his or her creditable prescription drug coverage that he or 
she never had credible prescription drug coverage, or the coverage is 
involuntarily reduced so that it is no longer creditable prescription 
drug coverage (Sec.  423.38(c)(2) and section 1860D-1(b)(3)(A) of the 
Act).
     The individual's enrollment or non-enrollment in a Part D 
plan is unintentional, inadvertent, or erroneous because of the error, 
misrepresentation, or inaction of a federal employee, or any person 
authorized by the federal government to act on its behalf (Sec.  
423.38(c)(3) and section 1860D-1(b)(3)(B) of the Act).
     The individual is a full subsidy-eligible individual or 
other subsidy-eligible individual as defined in Sec.  423.772, who is 
making an allowable one time-per-calendar-quarter election between 
January through September (Sec.  423.38(c)(4)) and section 1860D-
1(b)(3)(D) of the Act).
     The individual elects to disenroll from a MA-PD plan and 
elects coverage under Medicare Part A and Part B in accordance with the 
MA special election period for individuals age 65 (Sec.  423.38(c)(5) 
and section 1860D-1(b)(3)(E) of the Act).
    Section 1860D-1(b)(1)(B) of the Act directs us to adopt enrollment 
rules ``similar to (and coordinated with)'' those under Part C. 
Accordingly, in addition to those SEPs as previously described, we have 
applied certain SEPs established under the MA program to the Part D 
program. The SEPs from the MA program that have been codified for Part 
D include the following:
     The Part D plan sponsor's contract is terminated by the 
plan sponsor or by CMS or the plan is no longer offered in the area 
where the individual resides (Sec.  423.38(c)(6)).
     The individual is no longer eligible for the Part D plan 
because of a change in his or her place of residence to a location 
outside of the Part D plan region(s) in which the plan is offered 
(Sec.  423.38(c)(7)).
     The individual demonstrates to CMS that the plan sponsor 
substantially violated a material provision of its contract in relation 
to the individual (Sec.  423.38(c)(8)).
    Section 1860D-1(b)(3)(C) of the Act also grants the Secretary the 
authority to create SEPs for individuals who meet other exceptional 
conditions, which is reflected at Sec.  423.38(c)(8)(ii). Pursuant to 
this authority, we have previously codified SEPs for the following 
circumstances:
     The individual is making an election within 3 months after 
a gain, loss, or change to Medicaid or LIS eligibility, or notification 
of such a

[[Page 9121]]

change, whichever is later (Sec.  423.38(c)(9)). This would include 
becoming eligible for additional Medicaid benefits, for example, when 
an individual newly qualifies as needing nursing home level of care and 
thus becomes eligible for certain Medicaid long term supports and 
services, or becomes eligible for full Medicaid benefits after having 
previously been eligible only for Medicaid coverage of Medicare 
premiums or cost-sharing.
     The individual is making an election within 3 months after 
notification of a CMS or state-initiated enrollment action or that 
enrollment action's effective date, whichever is later (Sec.  
423.38(c)(10)).
    CMS now proposes to codify the following SEPs for exceptional 
circumstances, which are currently outlined in subregulatory guidance. 
Except as noted in this proposed rule, 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 
and if there are other exceptional circumstances we have not identified 
for which we should consider establishing a special election period. 
Codifying our current policy for these SEPs will provide transparency 
and stability for stakeholders about the Part D program and about the 
nature and scope of these SEPs by ensuring that the SEPs are changed 
only through additional rulemaking. We are also proposing to revise 
Sec.  423.40(c) to clarify that for SEPs that are described in Sec.  
423.38(c), elections are effective as of the first day of the first 
calendar month following the month in which the election is made, 
unless otherwise noted. In addition, we note that, consistent with 
longstanding subregulatory guidance, the organization is not required 
to contact an applicant to confirm SEP eligibility if the enrollment 
request includes the applicant's attestation of SEP eligibility.
     SEP for Employer/Union Group Health Plan (EGHP) Elections. 
At new Sec.  423.38(c)(11), we are proposing to codify that individuals 
making enrollment requests into or out of employer sponsored Part D 
plans (PDPs), for individuals to disenroll from a PDP to take employer 
sponsored coverage of any kind, and for individuals disenrolling from 
employer sponsored coverage (including COBRA coverage) would be 
eligible for a SEP to elect a PDP.
    This SEP is available to individuals who have (or are enrolling in) 
an employer or union plan for the duration of that enrollment and ends 
2 months after the month the employer or union coverage ends. The 
individual may choose the effective date of enrollment or 
disenrollment, up to 3 months after the month in which the individual 
completes an enrollment or disenrollment request. However, the 
effective date may not be earlier than the first of the month following 
the month in which the request was made.
     SEP for Individuals Who Disenroll in Connection With a CMS 
Sanction. At new Sec.  423.38(c)(12), we are proposing to codify the 
SEP for individuals enrolled in a PDP offered by a Part D plan sponsor 
that is sanctioned by CMS. Such enrollees would be eligible for a SEP 
to elect another PDP if they believe they are affected by the matter(s) 
that gave rise to that sanction. Once the sanction is imposed, we 
propose that CMS may require the sponsor to notify the current 
enrollees that if they believe they are affected by the matter that 
gave rise to the sanction, they are able to choose another PDP. The SEP 
starts with the imposition of the sanction and ends when the sanction 
ends or when the individual makes an election, whichever occurs first.
     SEP for Individuals Enrolled in Cost Plans That Are Non-
Renewing Their Contracts. At new Sec.  423.38(c)(13), we are proposing 
to codify the SEP for individuals enrolled in cost plans that are non-
renewing their contracts for the area in which the enrollee lives. Such 
individuals would be eligible for a SEP to elect a PDP. This SEP would 
be available only to Medicare beneficiaries who are enrolled with an 
HMO or CMP under a section 1876 cost plan that will no longer be 
offered in the area in which the beneficiary lives. Beneficiaries 
electing to enroll in a PDP via this SEP must meet Part D plan 
eligibility requirements.
    This SEP would begin December 8 of the current contract year and 
end on the last day of February of the following year. Therefore, 
applying the general rule we propose to codify that elections are 
effective the first of the month after they are made, enrollment 
requests received before December 31 would have an effective date of 
January 1, enrollment requests received between January 1 and January 
31 would be effective February 1, and enrollment requests received 
between February 1 and February 28 (or 29, as the case may be) would be 
effective March 1.
     SEP for Individuals in the Program of All-Inclusive Care 
for the Elderly (PACE). At new Sec.  423.38(c)(14), we are proposing to 
codify the SEP allowing individuals to disenroll from a PDP at any time 
in order to enroll in PACE. The PDP enrollee who disenrolls from a PDP 
would have a SEP for 2 months after the effective date of PDP 
disenrollment to elect a PACE plan. In addition, individuals who 
disenroll from PACE would have a SEP for 2 months after the effective 
date of PACE disenrollment to elect a PDP.
     SEP for Institutionalized Individuals. At new Sec.  
423.38(c)(15), we are proposing to codify the SEP allowing individuals 
who move into, reside in, or move out of an institution, as defined at 
Sec.  422.2, to enroll in or disenroll from a PDP. Individuals who move 
out of one of these facilities would have a SEP to enroll in or 
disenroll from a Part D plan for 2 calendar months after they move out 
of the facility.
     SEP for Individuals Who Enroll in Part B During the Part B 
General Enrollment Period (GEP). At new Sec.  423.38(c)(16), we are 
proposing to codify the SEP for individuals who are not entitled to 
premium free Part A and who enroll in Part B during the GEP for Part B 
(January-March) for an effective date of July 1st to enroll in a PDP. 
The SEP would begin April 1st and end June 30th, with an enrollment 
effective date of July 1st.
     SEP for Individuals Who Belong to a Qualified SPAP or Who 
Lose SPAP Eligibility. At new Sec.  423.38(c)(17), we are proposing to 
codify a SEP for individuals who belong to a qualified SPAP to make one 
election to enroll in a Part D plan each calendar year. SPAP members, 
or the state acting as the authorized representative of members, may 
use this SEP to enroll in a Part D plan outside of existing enrollment 
opportunities, allowing them, for example, to join a Part D plan upon 
becoming a member of an SPAP or to switch to another Part D plan.
    In addition to being available while the individual is enrolled in 
the SPAP, the SEP remains available for individuals no longer eligible 
for SPAP benefits for 2 months. The SEP continues until the month they 
lose SPAP eligibility or the month they are notified of the loss of 
SPAP eligibility, whichever is later, and then for an additional 2 
months.
     SEP for Disenrollment From Part D To Enroll in or Maintain 
Other Creditable Coverage. At new Sec.  423.38(c)(18), we are proposing 
to codify the SEP that provides an opportunity for individuals to 
disenroll from a Part D plan in order to enroll in or maintain other 
creditable drug coverage (such as TriCare or VA coverage) as defined in 
Sec.  423.56(b). This SEP is available to a Part D plan enrollee who is 
enrolled in, or is enrolling in, other creditable drug coverage.

[[Page 9122]]

     SEP for Individuals Disenrolling From a Cost Plan Who Also 
Had the Cost Plan Optional Supplemental Part D Benefit. At new Sec.  
423.38(c)(19), we are proposing to codify that individuals who 
disenroll from a cost plan and the cost plan's optional supplemental 
Part D benefit would have a SEP to enroll in a PDP. This SEP would 
begin the month the individual requests disenrollment from the cost 
plan and end when the individual makes an enrollment election or on the 
last day of the second month following the month cost plan membership 
ended, whichever is earlier.
     SEP To Enroll in a PDP with a Star Rating of 5 Stars. At 
new Sec.  423.38(c)(20), we are proposing to codify the SEP allowing an 
eligible individual to enroll in a PDP with a Star Rating of 5 stars 
during the plan contract year in which that plan has the 5-star overall 
rating. A rating of 5 stars is considered ``excellent'' and is the 
highest performance rating that a PDP can achieve. Because these PDPs 
have demonstrated exceptional performance, and because there tend to be 
only a small number of 5 Star PDPs in a given contract year, we believe 
a SEP is warranted to allow beneficiaries with access to these PDPs the 
opportunity to enroll during the plan year for which the 5 Star rating 
is applicable. The SEP is available beginning the first day after the 
AEP, December 8, prior to the plan contract year for which the 5 Star 
Rating is applicable, through November 30 of the plan contract year the 
5 Star Rating is applicable. The enrollment effective date would be the 
first of the month following the month in which the plan sponsor 
receives the enrollment request.
    An individual using this SEP would be able to enroll in a PDP with 
a 5-star overall rating even if coming from original Medicare. 
Individuals enrolled in a plan with a 5-star overall rating may also 
switch to a different plan with a 5-star overall rating.
     SEP for Non-U.S. Citizens Who Become Lawfully Present. At 
new Sec.  423.38(c)(21), we are proposing to codify the SEP for non-
U.S. citizens who become lawfully present in the United States. The 
individual may use this SEP to request enrollment in any PDP for which 
he or she is eligible. This SEP would begin the month the lawful 
presence starts and ends when the individual makes an enrollment 
election or at the end of the second calendar month after the month it 
begins, whichever occurs first.
     SEP for Providing Individuals Who Requested Materials in 
Accessible Formats Equal Time To Make Enrollment Decisions. As outlined 
in section 504 of the Rehabilitation Act of 1973, plan sponsors are 
required to comply with requirements of that Act and provide materials 
in accessible formats to members. This generally includes formats such 
as Braille, data, and audio files, or other formats accepted by the 
member in place of, or in addition to, the original print material.
    At new Sec.  423.38(c)(22), we are proposing to codify the SEP in 
situations where the Part D plan sponsor or CMS was unable to provide 
required notices or information in an accessible format, as requested 
by an individual, within the same timeframe that it was able to provide 
the same information to individuals who did not request an accessible 
format. This limited SEP ensures that beneficiaries who have requested 
information in accessible formats are not disadvantaged by any 
additional time necessary to fulfill their request, including missing 
an election period deadline.
    The SEP would begin at the end of the election period during which 
the beneficiary was seeking to make an election. The start of the SEP, 
as well as the enrollment effective date, would be dependent upon the 
situation, and the length is at least as long as the time it took for 
the information to be provided to the individual in an accessible 
format. An individual would be eligible for this SEP when the 
conditions described in this section are met. Part D plan sponsors 
would be required to maintain adequate documentation of the situation, 
including records indicating the date of the individual's request, the 
amount of time taken to provide accessible versions of the requested 
materials and the amount of time it takes for the same information to 
be provided to an individual who does not request an accessible format.
     SEP for Individuals Affected by a FEMA-Declared Weather 
Related Emergency or Major Disaster. We are proposing to codify, at new 
Sec.  423.38(c)(23), the SEP for individuals affected by a weather-
related emergency or major disaster who were unable to make an election 
during another valid election period. This includes both enrollment and 
disenrollment elections. Individuals would be eligible for this SEP if 
they:
    ++ Reside, or resided at the start of the incident period, in an 
area for which FEMA has declared an emergency or a major disaster and 
has designated affected counties as being eligible to apply for 
individual or public level assistance;
    ++ Had another valid election period during the incident period; 
and
    ++ Did not make an election during that other valid election period 
due to the emergency or disaster.
    In addition, the SEP would be available to those individuals who do 
not live in the affected areas but rely on help making healthcare 
decisions from friends or family members who live in the affected 
areas. The SEP would be available from the start of the incident period 
and for 4 months after the start of the incident period.
     SEP for Individuals Enrolled in a Plan Placed in 
Receivership. We propose to establish a new SEP, at new Sec.  
423.38(c)(31), for individuals enrolled in a Part D plans offered by a 
plan sponsor that is experiencing financial difficulties to such an 
extent that a state or territorial regulatory authority has placed the 
sponsor in receivership. We believe this SEP constitutes an exceptional 
circumstance because receiverships have the potential to cause 
disruption in access to prescription drug coverage and that individuals 
should have the ability to take action to prevent any future disruption 
to drug coverage. The SEP would allow an individual to discontinue the 
election of a PDP and change his or her election to a different PDP. We 
propose that the SEP begin the month the receivership is effective and 
continue until the enrollee makes an election or the receivership is no 
longer in effect, whichever occurs first.
    Also, we propose that when instructed by CMS, the Part D plan 
sponsor that has been placed under receivership, or the entity 
operating the organization in receivership, must notify its enrollees, 
in the form and manner directed by CMS, of their eligibility for this 
SEP and how to use the SEP.
     SEP for Individuals Enrolled in a Plan That Has Been 
Identified by CMS as a Consistent Poor Performer. We propose to 
establish a new SEP, at new Sec.  423.38(c)(32), for individuals who 
are enrolled in plans identified with the low performing icon (LPI) in 
accordance with Sec.  423.186(h)(1)(ii). The LPI is assigned to 
contracts that have summary ratings of less than 3 Stars for three or 
more years. We believe this SEP constitutes an exceptional circumstance 
because these contracts have demonstrated performance considered 
``below average'' or ``poor'' for a sustained period of time based on 
critical factors such as beneficiary complaints and access to care. To 
ensure that beneficiaries are not adversely affected, we believe that 
beneficiaries enrolled in these contracts should have the ability to 
enroll in plans rated ``average'' or higher during the year. The SEP 
would allow an

[[Page 9123]]

individual to discontinue the election of a consistently poor 
performing Part D plan and change his or her election to a Part D plan 
with an overall Star Rating of 3 or more stars. We propose that the SEP 
exist while the individual is enrolled in the consistently poor 
performing Part D plan.
     SEP for Other Exceptional Circumstances. Lastly, we 
propose to retain the authority currently at Sec.  423.38(c)(8)(ii) to 
create SEPs for individuals who meet other exceptional conditions 
established by CMS and move it to new Sec.  423.38(c)(33). SEPs 
established under this authority would only be done on a case-by-case 
basis and in situations which we determine it is in the best interest 
of the beneficiary to have an enrollment (or disenrollment) 
opportunity. While our experience with the Part D program has informed 
the SEPs that we have established to date, and are proposing to codify 
in this regulation, we are mindful that exceptional circumstances may 
arise which may also warrant a SEP, and we note that this list is not 
meant to be exhaustive.
    Also based on the Secretary's authority to create SEPs for 
individuals who meet exceptional conditions, we propose to codify the 
following SEPs currently outlined in manual instructions that 
coordinate with Part C election periods:
     SEP for Individuals Who Terminated a Medigap Policy When 
They Enrolled For the First Time in an MA Plan, and Who Are Still in a 
Trial Period. Individuals who dropped a Medigap policy when they 
enrolled for the first time in an MA plan are provided a guaranteed 
right to purchase another Medigap policy if they disenroll from the MA 
plan while they are still in a ``trial period.'' In most cases, a trial 
period lasts for 12 months after a person enrolls in an MA plan for the 
first time. If the individual is using the SEP proposed at Sec.  
422.62(b)(8) to disenroll from a MA-PD plan, we are proposing to codify 
at new Sec.  423.38(c)(24) a coordinating Part D SEP to permit a one-
time enrollment into a PDP. This SEP opportunity may only be used in 
relation to the MA SEP described here and would begin the month he or 
she disenrolls from the MA plan and continue for 2 additional months.
     SEP for an Individual Using the MA Open Enrollment Period 
for Institutionalized Individuals (OEPI) To Disenroll From a MA-PD 
plan. Individuals who meet the definition of ``institutionalized'' as 
defined by CMS are eligible for the MA OEPI election period. At new 
Sec.  423.38(c)(25), we are proposing to codify that an individual 
disenrolling from an MA-PD plan has a SEP to request enrollment in a 
PDP. This SEP would begin the month the individual requests 
disenrollment from the MA-PD plan and end on the last day of the second 
month following the month MA enrollment ended.
     Medicare Advantage Open Enrollment Period (MA OEP). At new 
Sec.  423.38(c)(26), we are proposing to codify that MA enrollees using 
the MA OEP would have a SEP to add or change Part D coverage. Annually, 
the MA OEP is available from January 1 to March 31. It is also 
available for the first 3 months an individual has Medicare 
entitlement. An individual who elects original Medicare during the MA 
OEP would be able to request enrollment in a PDP during this time.
     SEP To Request Enrollment Into a PDP After Loss of Special 
Needs Status or To Disenroll From a PDP in Order To Enroll in an MA 
SNP. In new Sec.  423.38(c)(27), we propose to codify the SEP to 
request enrollment in a PDP for those who are no longer eligible for a 
SNP because they no longer meet the plan's special needs criteria. In 
addition, CMS would provide a SEP to allow for disenrollment from a PDP 
at any time in order to request enrollment in an MA SNP. For example, 
if state eligibility criteria for a D-SNP is limited to individuals who 
are enrolled in a Medicaid MCO affiliated with the D-SNP, then 
disenrollment from the Medicaid MCO would trigger eligibility for this 
SEP. This SEP would begin the month the individual's special needs 
status changes and end when he or she makes an election or 3 months 
after the effective date of the involuntary disenrollment, whichever is 
earlier.
     SEP for Enrollment Into a Chronic Care SNP and for 
Individuals Found Ineligible for a Chronic Care SNP. At proposed Sec.  
423.38(c)(28), we propose to codify the SEP for both Part C and Part D 
for those individuals with severe or disabling chronic conditions to 
enroll in a Chronic Care SNP (C-SNP) designed to serve individuals with 
those conditions. This SEP would apply as long as the individual has 
the qualifying condition and will end once s/he enrolls in a C-SNP. 
Once the SEP ends, that individual may make enrollment changes only 
during applicable election periods. In addition, individuals enrolled 
in a C-SNP who have a severe or disabling chronic condition that is not 
a focus of their current C-SNP would be eligible for this SEP to change 
to a C-SNP that does focus on the condition that the individual has. 
Eligibility for this SEP would end at the time the individual enrolls 
in the new C-SNP.
    Individuals who are found after enrollment into a Chronic Care SNP 
not to have the required qualifying condition would have a SEP to 
enroll in a different MA-PD plan or an MA-only plan with accompanying 
Part D coverage, if allowed. This SEP would begin when the plan 
notifies the individual of the lack of eligibility and extends through 
the end of that month, plus 2 additional months. The SEP would end when 
the individual makes an enrollment election or on the last day of the 
second month following notification.
     SEP for Individuals Using the 5-Star SEP To Enroll in a 5-
Star Plan without Part D Coverage. At new Sec.  423.38(c)(29), we are 
proposing to codify that individuals who use the 5-star SEP proposed to 
be codified at Sec.  422.62(b)(15) to enroll in a 5-star MA plan that 
does not include Part D benefits or a 5-star cost plan would have a SEP 
to enroll in a PDP or in the cost plan's optional supplemental Part D 
benefit. The PDP selected using this coordinating SEP does not have to 
be 5-Star rated. However, individuals may not use this coordinating SEP 
to disenroll from the plan in which they enrolled using the 5-star SEP.
    This SEP would begin the month the individual uses the 5-Star SEP 
and continue for 2 additional months. Individuals who use the 5-Star 
SEP to enroll in an MA coordinated care plan would not be eligible for 
this coordinating Part D SEP and must wait until their next valid 
election period in order to enroll in a plan with Part D coverage.
     SEP To Enroll in a PDP for MA Enrollees Using the ``SEP 
for Significant Change in Provider Network'' To Disenroll From an MA 
Plan. We are proposing to codify at new Sec.  423.38(c)(30) that MA 
enrollees using the ``SEP for Significant Change in Provider Network'' 
to disenroll from an MA plan (proposed at Sec.  422.62(b)(23)) would be 
able to request enrollment in a PDP. This coordinating SEP would begin 
the month the individual is notified of eligibility for the SEP and 
continue for an additional 2 calendar months. This SEP would permit one 
enrollment and end when the individual has enrolled in the PDP. An 
individual may use this SEP to request enrollment in a PDP subsequent 
to having submitted a disenrollment to the MA plan or may simply 
request enrollment in the PDP, resulting in automatic disenrollment 
from the MA plan. Enrollment in the PDP is effective the first day of 
the month after the plan sponsor receives the enrollment request.

[[Page 9124]]

    These proposed revisions would codify existing subregulatory 
guidance for SEPs that Part D sponsors have previously implemented and 
are currently following, except for the SEP for Individuals Enrolled in 
a Plan Placed in Receivership and the SEP for Individuals Enrolled in a 
Plan that has been Identified by CMS as a Consistent Poor Performer. We 
would also note that we are taking this opportunity to propose a few 
minor editorial changes in Sec.  423.38(c), such as changing ``3'' to 
``three.''

VII. Proposed Changes to the Programs of All-Inclusive Care for the 
Elderly (PACE)

    The intent of this proposed rule is to revise and update the 
requirements for the Programs of All-Inclusive Care for the Elderly 
(PACE) under the Medicare and Medicaid programs. The PACE program is a 
unique model of managed care service delivery for the frail elderly, 
most of whom are dually-eligible for Medicare and Medicaid benefits, 
and all of whom are assessed as being eligible for nursing home 
placement according to the Medicaid standards established by their 
respective states. The proposals address reassessments, service 
delivery requests, appeals, participant rights, required services, 
excluded services, interdisciplinary team requirements, medical record 
documentation, access to data and records, safeguarding communications, 
and service delivery requirements. The proposed changes would reduce 
unnecessary burden on PACE organizations, provide more detail about CMS 
expectations and provide more transparent guidance.

A. Service Delivery Request Processes Under PACE (Sec. Sec.  460.104 
and 460.121)

    Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify that 
PACE organizations must have in effect written safeguards of the rights 
of enrolled participants, including procedures for grievances and 
appeals. We issued regulations on grievances at Sec.  460.120, and we 
issued regulations on appeals at Sec.  460.122. Additionally, CMS 
created a process under Sec.  460.104(d)(2) to allow participants or 
their designated representatives to request that the interdisciplinary 
team (IDT) conduct a reassessment, when the participant or designated 
representative believes the participant needs to initiate, eliminate or 
continue a service. The process under Sec.  460.104(d)(2) is commonly 
referred to by CMS and industry as the service delivery request 
process. This process serves as an important participant protection, as 
it allows a participant to advocate for services. As we stated in the 
Medicare and Medicaid Programs; Programs of All-Inclusive Care for the 
Elderly (PACE); Program Revisions; Final Rule (hereinafter referred to 
as the 2006 PACE final rule), ``[t]he provisions for reassessment at 
the request of a participant [were] intended to serve as the first 
stage of the appeals process.'' 71 FR 71292. Section 460.104(d)(2) 
currently sets out the responsibilities of a PACE organization in 
processing each request. Currently, a participant or their designated 
representative initiates a service delivery request when they request 
to initiate, eliminate, or continue a service. Once the IDT receives 
the request, the appropriate members of the IDT, as identified by the 
IDT, must conduct a reassessment. The IDT member(s) may conduct the 
reassessment via remote technology when the IDT determines that the use 
of remote technology is appropriate and the service request will likely 
be deemed necessary to improve or maintain the participant's overall 
health status and the participant or their designated representative 
agrees to the use of remote technology. However, the appropriate 
member(s) of the IDT must perform an in-person reassessment when the 
participant or their designated representative declines the use of 
remote technology, or before a PACE organization can deny a service 
request. Following the reassessment, the IDT must notify the 
participant or designated representative of its decision to approve or 
deny the request as expeditiously as the participant's condition 
requires, but generally no later than 72 hours from the date of the 
request for reassessment. If the request is denied, the PACE 
organization is responsible for explaining the denial to the 
participant or the participant's designated representative both orally 
and in writing. The PACE organization is also responsible for informing 
the participant of his or her right to appeal the decision, including 
the right to request an expedited appeal, as specified in Sec.  
460.122. If the IDT fails to provide the participant with timely notice 
of the resolution of the request, or does not furnish the services 
required by the revised plan of care, the failure constitutes an 
adverse decision and the participant's request must be automatically 
processed as an appeal in accordance with Sec.  460.122.
    While this section provides an important participant protection, we 
have heard from stakeholders that the language in Sec.  460.104(d)(2) 
is overly broad as written, and that even simple requests to initiate a 
service require a reassessment and a full review of the request by the 
PACE organization's IDT. Stakeholders have also noted that addressing 
the service delivery request process in the section of the regulation 
governing participant assessments undercuts the importance of the 
requirements for processing these requests. Additionally, through CMS 
oversight and monitoring, we have identified a need to better define 
what constitutes a service delivery request and create clearer guidance 
on how PACE organizations must identify and process these requests.
    We are proposing to move the requirements for service delivery 
requests at Sec.  460.104(d)(2) to a new section of the regulations at 
Sec.  460.121, titled ``Service Delivery Requests.'' While we are 
proposing to use the term ``service delivery request'' because that is 
the term typically used by industry and CMS to describe these actions, 
we are soliciting comments on whether we should utilize this term or 
consider something different. For example, the initial decision to 
cover a drug in Part D is a coverage determination (Sec.  423.566), and 
the initial decision to cover an item or service in Part C is an 
organization determination (Sec.  422.566). We would appreciate 
feedback on whether a term other than ``Service Delivery Request,'' 
such as ``PACE Organization Determination,'' ``Coverage 
Determination,'' or ``Service Determination,'' would be preferable.
    In addition to proposing that the requirements for processing 
service delivery requests would be moved from Sec.  460.104(d)(2) into 
a new section, we are also proposing to modify these requirements based 
on industry feedback and lessons learned through our experience 
operating the PACE program and monitoring PACE organizations. First, we 
are proposing to reorganize the requirements for clarity and to better 
align them with the appeals regulations in subpart M of parts 422 and 
423, for Medicare Advantage (MA) and Part D respectively, while also 
ensuring the requirements address the specific features of the PACE 
program, which is a unique combination of payer and direct care 
provider. We believe aligning the layout of the regulation and the 
notification requirements of the initial determination processes in 
PACE, MA, and Part D would allow us to minimize confusion for 
participants, who are often familiar with the initial determination and 
appeals processes in the Parts C and D programs, and would also 
increase transparency for PACE organizations regarding CMS' 
expectations.

[[Page 9125]]

    While the current regulation at Sec.  460.104(d)(2) begins with the 
requirements for processing a request for reassessment, we are 
proposing to add Sec.  460.121(a) to require that a PACE organization 
must have formal written procedures for identifying and processing 
service delivery requests in accordance with the requirements of 
proposed Sec.  460.121. We believe it is important to ensure that PACE 
organizations develop internal processes and procedures to properly 
implement this process.
    At Sec.  460.121(b), we are proposing to define what constitutes a 
service delivery request and what does not. We are proposing to define 
what constitutes a service delivery request at Sec.  460.121(b)(1). 
Currently, the process in Sec.  460.104(d)(2) is triggered if the 
participant (or his or her designated representative) believes the 
participant needs to initiate, eliminate, or continue a particular 
service. At Sec.  460.121(b)(1), we are proposing to specify that the 
process for service delivery requests would apply to three distinct 
types of service delivery requests, specifically, a request to (1) 
initiate, (2) modify, or (3) continue a service.
    We note that the term ``services'' is already defined at 460.6 to 
include ``items,'' and we are proposing, as discussed in section VII.I. 
of this proposed rule, to make explicit that this definition is meant 
to reflect the full scope of the PACE benefit package, and thus also 
includes ``items'' and ``drugs.'' Therefore, our use of ``service'' or 
``services'' throughout newly proposed 460.121 always includes any type 
of PACE-covered services, items, or drugs, and participants have the 
right to advocate with respect to all types of PACE-covered services, 
items, or drugs that they believe may be necessary. The proposed 
language at Sec.  460.121(b)(1) would retain the existing concepts of 
```initiating'' and ``continuing'' services but would replace the term 
``eliminate'' with the term ``modify.''
    We are proposing at Sec.  460.121(b)(1)(i) that the first type of 
service delivery request would be a request to initiate a service. This 
first type of request is based on the existing language at Sec.  
460.104(d)(2). We are proposing at Sec.  460.121(b)(1)(ii) that the 
second type of service delivery request would be a request to modify an 
existing service. We are proposing to specify that requests to modify 
an existing service include requests to increase, reduce, eliminate, or 
otherwise change a particular service. We believe that defining service 
delivery requests to include requests to modify an existing service is 
an important protection, as participants may believe that the services 
they are currently receiving are not sufficient to meet their needs. 
For example, a participant may request to increase their home care from 
3 hours a week to 6 hours a week because they believe that they are 
becoming less steady in their gait and they are afraid to be alone for 
long periods.
    The third type of service delivery request we are proposing, at 
Sec.  460.121(b)(1)(iii), is a request to continue a service that the 
PACE organization is recommending be discontinued or reduced. We are 
proposing that this type of request would apply to circumstances where 
the PACE organization is recommending to discontinue or reduce a 
service that the participant is already receiving, and the participant 
wishes to continue receiving that service. An example of this type of 
request would be a participant that is attending the PACE center 5 days 
a week and the PACE organization decides to reduce attendance to 4 days 
a week. If the participant requests to continue attending the center 5 
days a week, this request must be processed as a service delivery 
request under our proposal. Another example would be if a participant 
is receiving a specific drug, and the IDT makes a decision to stop 
providing that drug. Under this proposal, the participant's request to 
continue receiving the drug would be processed as a service delivery 
request. Through our monitoring of PACE organizations, we have 
identified instances where a participant requests to continue receiving 
a service that has been reduced or discontinued, and the PACE 
organization provides the participant appeal rights under Sec.  460.122 
instead of conducting a reassessment as required under the current 
Sec.  460.104(d)(2). We are proposing to include requests to continue 
coverage of a service in part to ensure that PACE organizations 
understand that they must process a service delivery request for these 
situations before processing an appeal under Sec.  460.122. Our 
proposed revisions to this section, as well as our proposed revisions 
to the appeals regulation discussed in section VII.B. of this proposed 
rule, would establish that the service delivery request process is the 
first level of the appeals process, and requests to continue a service 
must first be processed under the service delivery request process 
prior to an appeal being initiated under Sec.  460.122. We discuss the 
scope of the appeals process in greater depth in our proposals to 
update the appeals process in section VII.B. of this proposed rule. We 
are also proposing that participants would be allowed to make this type 
of service delivery request before a service was actually discontinued, 
to permit the participant to advocate for a continuation of the 
service. This requirement is reflected in the language we propose for 
Sec.  460.121(b)(1)(iii), where we emphasize that this provision 
relates to a service that the PACE organization is recommending be 
discontinued or reduced. We believe by wording this requirement in this 
way, we would make clear that the participant could make a service 
delivery request as soon as a PACE organization recommends reducing or 
discontinuing a service. For example, if the IDT was recommending 
reducing center attendance from three days a week to two days a week, 
and the participant wanted to continue coming to the center three days 
a week, the participant could request a service delivery request once 
the IDT recommended the reduction, even if the reduction in days had 
not yet been implemented.
    We recognize that our proposals define what constitutes a service 
delivery request broadly. We also understand that there are 
circumstances that are unique to PACE where a request may not 
constitute a service delivery request based on the role of a PACE 
organization as a direct care provider that is responsible for 
coordinating and delivering care. We are therefore proposing an 
exception to the definition of a service delivery request. In paragraph 
(b)(2) we are proposing that certain requests to initiate, modify, or 
continue a service would not constitute a service delivery request, 
even if the request would otherwise meet the definition of a service 
delivery request under (b)(1). Specifically, at Sec.  460.121(b)(2) we 
are proposing that if a request is made prior to the development of the 
initial care plan the request would not constitute a service delivery 
request. This exemption would apply any time before the initial care 
plan was finalized (and discussions amongst the IDT ceased). We believe 
this approach would be beneficial to the participant and the PACE 
organization as the IDT and the participant or caregiver continue to 
discuss the comprehensive plan of care taking into account all aspects 
of the participant's condition as well as the participant's wishes. For 
example, if the PACE organization is developing the initial plan of 
care and actively considering how many home care hours the participant 
should receive, and the participant makes a request for a

[[Page 9126]]

particular number of home care hours, that request would not be a 
service delivery request because the IDT was actively considering that 
question in developing the plan of care. Once the initial plan of care 
is developed, if a service was not incorporated into the plan of care 
in a way that satisfies the participant, the participant would always 
have the right to make a service delivery request at that time.
    While drafting this proposal, we considered other ways to 
potentially limit the application of the service delivery request 
process to account for situations where it is possible to adequately 
address a request without undertaking the full service delivery request 
process. First, we considered excluding requests for services made 
during the course of a treatment discussion with a member of the IDT 
from the service delivery request process, so long as the IDT member is 
able to immediately approve the service. Ultimately we decided these 
situations should constitute service delivery requests, in order to 
avoid confusion by requiring PACE organizations to distinguish between 
requests for services that constitute service delivery requests and 
those that do not. However, in an effort to reduce burden, we 
determined that it would be appropriate to process service delivery 
requests that an IDT member is able to approve in full at the time the 
request is made in a more streamlined manner than other service 
delivery requests. We discuss our proposals on this point in more 
detail in the section relating to proposed Sec.  460.121(e)(2) in this 
proposed rule.
    We also considered whether we could exclude other types of requests 
from the service delivery request process. For example, we have 
received questions from PACE organizations about requests that do not 
relate to health care or to a participant's medical, physical, 
emotional, and social needs, such as a participant requesting lemons in 
their water, or a participant requesting a particular condiment at 
lunch. We considered proposing to exclude requests that are not related 
to health care or to the participant's medical, physical, emotional, 
and social needs, and therefore would not constitute a service delivery 
request. We strongly believe that any time a service may be necessary 
to maintain or improve the participant's overall health status, taking 
into account the participant's medical, physical, emotional, and social 
needs, that request should be processed as a service delivery request. 
We similarly understand that some requests are completely unrelated to 
the participant's health care or condition. However, we believe that 
adding a provision to address this relatively insignificant issue would 
potentially cause confusion for PACE organizations and participants and 
therefore we are not proposing such a provision at this time. We are, 
however, soliciting comments on whether specifying that requests 
unrelated to a participant's medical, physical, emotional, and social 
needs need not be processed using the proposed service delivery request 
process would benefit PACE organizations without restricting 
participants' ability to advocate for any service they believe may be 
necessary, regardless of whether that is meals, transportation, drugs, 
home care, or other services provided as part of the PACE benefit, and 
if so, how we should word such a provision.
    We are also proposing at Sec.  460.121(c) to specify the 
individuals who can make a service delivery request. Under the current 
requirements in Sec.  460.104(d)(2), only the participant or the 
participant's designated representative may request to initiate, 
eliminate, or continue a particular service. We are proposing to expand 
the number of individuals who can make a service delivery request on 
behalf of a PACE participant to include the participant, the 
participant's designated representative, or the participant's 
caregivers. We believe that this proposal would be consistent with the 
current practice of most PACE organizations, in part because caregivers 
are often also participants' designated representatives; however, we 
are proposing to affirmatively state in regulation that these 
individuals may make service delivery requests. We believe this would 
provide an important safeguard for participants, as caregivers are 
usually aware of the participant's situation and have valuable insight 
into what services would be beneficial. For example, if a PACE 
participant's wife believes that the participant needs more home care 
to assist with toileting, bathing and dressing, we are proposing that 
she would be able to make a service delivery request to the PACE 
organization and advocate for that service delivery request, regardless 
of whether she is her spouse's designated representative. This proposal 
also aligns with current care plan regulations which state that the IDT 
must develop, review, and reevaluate the plan of care in collaboration 
with the participant or caregiver or both. (Sec.  460.106(e)) Because 
caregivers are involved in the care planning process and determining 
what care may be necessary, we believe that it is also appropriate for 
these individuals to be able to advocate for services as necessary on 
behalf of a participant, regardless of whether these service delivery 
requests result in changes to the plan of care. While a designated 
representative or caregiver such as a family member may initiate the 
service delivery request process, the PACE organization remains 
responsible for issuing a decision based on the individual needs of the 
participant regardless of the party that initiated the request. We are 
soliciting comments on this proposal to expand the number of 
individuals who can make a service delivery request on behalf of a PACE 
participant. In addition we are soliciting comment regarding whether or 
not there are other individuals that should be allowed to make service 
delivery requests on behalf of a participant. For example, in MA and 
Part D, providers or prescribers can initiate a request for coverage 
(either coverage determination or organization determination) on behalf 
of a beneficiary, which allows prescribers or other providers to 
advocate for drugs or services that are unique to their discipline or 
scope of practice. In PACE, this would mean that if a participant went 
to a contracted specialist, that specialist would be allowed to 
advocate or request a service specific to their discipline. We are 
specifically soliciting comments on whether we should specify that 
prescribers or providers, outside of the IDT, can make a service 
delivery request on behalf of a participant in PACE.
    We are also proposing at Sec.  460.121(d) to specify how a service 
delivery request may be made. The current regulation at Sec.  
460.104(d)(2) is silent regarding how a participant or his or her 
designated representative may request to initiate, eliminate, or 
continue a particular service. We are proposing at Sec.  460.121(d)(1) 
to permit service delivery requests to be made either orally or in 
writing. We believe this is consistent with current practice for all 
PACE organizations. The right to request an initial determination 
either orally or in writing is provided as an enrollee safeguard in 
both MA and Part D (see Sec. Sec.  422.568(a)(1), 422.570(b), 
423.568(a)(1), and 423.570(b)), and given the vulnerability of the PACE 
population, we believe it is important that PACE participants also have 
the ability to submit service delivery requests in either form. We are 
proposing at Sec.  460.121(d)(2) that service delivery requests may be 
made to any individual who provides direct care to a participant on 
behalf of the PACE organization, whether as an employee or a 
contractor, as contemplated in

[[Page 9127]]

Sec.  460.71. All employees and contractors that provide direct 
participant care should be trained to recognize and document these 
requests when they are made by a participant. Because of the 
comprehensive nature of the PACE program and the requirement that PACE 
organizations provide care across all care settings, participants may 
not know whom they should communicate with when making a service 
delivery request. For example, certain participants may not attend the 
PACE center on a routine basis and a home care aide may be the only 
representative of the PACE organization the participant has contact 
with frequently. Under our proposal, the participant could make service 
delivery requests to the home care aide, and those requests would be 
considered to have been made to the PACE organization. All individuals 
providing direct care to participants, whether contractors or 
employees, should be trained to recognize service delivery requests and 
ensure such requests are documented appropriately and brought to the 
IDT as part of the training employees and contractors receive under 
Sec.  460.71(a)(1). While we are proposing to require that all 
contractors and employees that provide direct care be able to receive 
service delivery requests from participants, we are soliciting comment 
on whether this requirement should be limited to a smaller subset of 
individuals. For example, we seek comment on whether we should instead 
require only those contractors or employees who provide direct 
participant care in the participant's residence, the PACE center, or 
while transporting participants to receive service delivery requests.
    CMS is also proposing to establish new requirements at Sec.  
460.121(e) specifying how service delivery requests must be processed. 
We are proposing at Sec.  460.121(e)(1) that all service delivery 
requests must be brought to the IDT as expeditiously as the 
participant's condition requires, but no later than 3 calendar days 
after the date the request was made. The existing requirement at Sec.  
460.104(d)(2)(iii) specifies that the IDT must generally notify the 
participant or designated representative of its decision in regard to a 
request to initiate, eliminate, or continue a particular service no 
later than 72 hours after the date the IDT receives the request for 
reassessment. Stakeholders have asked CMS to explain if the current 72-
hour timeframe begins when any member of the IDT receives the service 
delivery request, or when the full IDT receives the request. In order 
to avoid similar questions about the new service delivery request 
process we are proposing, we have also proposed to establish two 
distinct timeframes. Specifically, we are proposing an initial 
timeframe for the PACE organization to bring a service delivery request 
to the IDT, and a second timeframe for the IDT to make a decision and 
provide notice of the decision to the participant. We are proposing to 
include this second timeframe at Sec.  460.121(i), and discuss this 
proposal in more detail later in this section. We believe that creating 
these distinct timeframes would benefit both PACE organizations and 
participants. We also believe it is necessary to ensure that once a 
service delivery request is made, it is brought to the IDT for 
processing as expeditiously as the participant's condition requires but 
no later than 3 calendar days from when the request was actually made. 
In monitoring PACE organizations, we have seen organizations take a 
week or longer after a request was first made to bring the request to 
the IDT for consideration. By establishing a requirement that service 
delivery requests must be brought to the IDT as expeditiously as the 
participant's condition requires but no later than 3 calendar days from 
the time the request is made, we believe this would ensure participant 
requests are handled expeditiously while still ensuring the IDT has 
sufficient time to process the service delivery request and consider 
all relevant information when making a decision. We are soliciting 
comments on this proposal to establish a new timeframe for PACE 
organizations to bring service delivery requests to the IDT.
    We are also proposing at Sec.  460.121(e)(2) to specify an 
exception to the processing requirements for service delivery requests. 
Specifically, if a member of the IDT receives a service delivery 
request and is able to approve the request in full at the time the 
request is made, the PACE organization would not be required to follow 
certain processing requirements. We understand that PACE organizations, 
as direct care providers, routinely interact with participants when 
providing care and services. These interactions often include treatment 
discussions between an IDT member and a participant about what care may 
or may not be appropriate for the participant to receive. During these 
discussions, a participant may request a service that the IDT member 
receiving the request is able to immediately approve as requested based 
on their knowledge of the participant and the participant's condition. 
For example, during a physical therapy session, a participant may 
request a walker to assist in his or her daily activities. If the 
physical therapist, who is a member of the IDT, determines that the 
item is necessary and can approve the walker at the time the 
participant requests it, then the request would not need to be 
processed as a normal service delivery request. The exception would not 
apply if the IDT member cannot approve exactly what is requested. For 
example, if a participant requested 20 hours per week of home care but 
the IDT member is only willing to approve 15 hours per week, the 
exception would not apply because the participant's request would be 
partially denied. Specifically, we are proposing at Sec.  
460.121(e)(2)(i) to require that when a member of the IDT can approve a 
service delivery request in full at the time the request is made, the 
PACE organization must fulfill only the requirements in proposed 
paragraphs (j)(1), (k), and (m). These proposed paragraphs are 
discussed in more detail later in this section, and generally relate to 
notice of a decision to approve a service delivery request, 
effectuation requirements, and record keeping. We are also proposing at 
Sec.  460.121(e)(2)(ii) that PACE organizations would not be required 
to process these particular service delivery request in accordance with 
paragraphs (f) through (i), paragraph (j)(2), or paragraph (l) of this 
new section, all of which are discussed in more detail in this section 
of this proposed rule.
    We are proposing this exception to how a service delivery request 
is processed based on feedback from stakeholders that IDT members often 
have treatment discussions with participants about modifying services 
and make decisions to accommodate the participants' requests in full at 
the time the requests are made. Additionally, we have seen situations 
where a caregiver requests an item or service that an IDT member is 
able to immediately approve at the time the request is made. In these 
situations, it is important that the decision to approve the service is 
communicated to the participant or the requestor at the time the 
request is made so that the participant/requestor understands the 
outcome of their request. If a decision to approve a requested service 
cannot be made in full at the time of the request, the PACE 
organization must fully process the service delivery request in 
accordance with all relevant paragraphs of this new section. If an IDT 
member can quickly approve a service as being necessary for the 
participant, we do not believe that

[[Page 9128]]

it would benefit the participant or the organization to have to fully 
process a service delivery request, since the participant or requestor 
has already been successful in advocating for the service. Instead, the 
participant would be better served by the IDT member quickly 
communicating the approval, and working to provide the requested 
service as expeditiously as the participant's condition requires. We 
want to note that pursuant to our proposal in Sec.  460.121(d)(2), a 
service delivery request may be made to any contractor or employee who 
provides direct care to a participant, and that all individuals 
providing direct care to participants, whether contractors or 
employees, should be trained to recognize and receive service delivery 
requests pursuant to Sec.  460.71(a)(1). However, we are proposing to 
specifically limit the exception in Sec.  460.121(e)(2) to requests 
made to IDT members, where the receiving member of the IDT is able to 
approve the service delivery request in full at the time the request is 
made. This will ensure that the IDT remains responsible for determining 
the benefits a participant should receive, and that contractors or 
employees, such as a home care aide, are not authorizing services 
without the IDT's review.
    We also believe this proposed exception at Sec.  460.121(e)(2) 
would reduce the current burden on PACE organizations in three primary 
ways. First, PACE organizations would not have to bring requests that 
can be quickly approved by one IDT member to the full IDT for 
consideration and discussion, which would allow the IDT to use that 
time for other purposes, including to focus on requests that require 
in-depth consideration. Second, because the IDT would not have to 
conduct a reassessment in each case, we expect that this change would 
improve the overall speed with which PACE organizations are able to 
provide necessary services. Third, the IDT would not have to provide 
separate notification to the participant because the IDT member would 
inform the participant or requestor that the request was approved in 
the initial discussion.
    Currently the IDT is required to process requests for reassessments 
from participants and/or designated representatives under Sec.  
460.104(d)(2). The IDT is responsible for selecting the appropriate IDT 
members to conduct the reassessment under Sec.  460.104(d)(2), and for 
issuing a decision to approve or deny a request under Sec.  
460.104(d)(2)(iii). At proposed Sec.  460.121(f), we would require that 
all service delivery requests, other than those under proposed Sec.  
460.121(e)(2), must be brought to the full IDT for review and 
discussion before the IDT makes a determination to approve, deny or 
partially deny the request. As required by Sec.  460.102(b), each PACE 
organization's IDT must, at a minimum, be composed of members qualified 
to fill the roles of 11 disciplines, each of which offers a unique 
perspective on the participant's condition. CMS commonly refers to this 
group as the full IDT. Because service delivery requests not processed 
under proposed Sec.  460.121(e)(2) are processed only for services that 
cannot be approved in full at the time the request is received, we 
believe that it is important that the IDT, as a whole, discuss the 
service delivery request in order to determine whether the request 
should be approved or denied. A discussion by the full IDT would allow 
each discipline to offer their perspective on the participant's 
condition as it relates to the requested service, and ensure that the 
IDT is best equipped to determine what services are necessary to 
improve or maintain the participant's health status. As previously 
discussed, service delivery requests that are approved in full by a 
member of the IDT at the time the request is made would not have to be 
brought to the full IDT for review.
    We are also proposing at Sec.  460.121(g) to require that the IDT 
must consider all relevant information when evaluating a service 
delivery request. Currently, the regulation is silent on what the IDT 
must consider when making a decision under Sec.  460.104(d)(2). We are 
proposing that the IDT must consider, at a minimum, the findings and 
results of any reassessment(s) conducted in response to a service 
delivery request, as well as the criteria used to determine required 
services specified in proposed Sec.  460.92(b), as discussed in section 
VII.D. of this proposed rule. We have seen through our monitoring 
efforts that certain IDTs do not always consider the reassessments 
conducted in response to a service delivery request when making a 
decision. For example, a physical therapist and occupational therapist 
may both indicate in their discipline-specific reassessments that a 
participant would benefit from additional home care hours, but the IDT 
might deny the request without explaining why the recommendations 
resulting from those reassessments were not followed. We believe it is 
important that an IDT is able to demonstrate that it took any 
reassessments performed in the process of reviewing a service delivery 
request into consideration when making a decision on that service 
delivery request. Additionally, we believe that IDT decision making for 
service delivery requests should be aligned with the IDT's decision 
making for what constitutes a required service under Sec.  460.92(b). 
Specifically, we believe that a decision by the IDT to provide or deny 
services must be based on an evaluation of the participant that takes 
into account the participant's medical, physical, emotional and social 
needs. We have encountered situations where the IDT made its decision 
based on one aspect of the participant's condition, for example, their 
physical health related to their ability to perform activities of daily 
living, but disregarded other aspects of the participant's condition, 
such as their medical, emotional, and social needs. We believe that the 
IDT must consider all aspects of the participant's condition in order 
to make an appropriate decision. For example, if the participant is 
requesting to attend the PACE center on additional days due to feelings 
of social isolation and depression, it would be inappropriate for the 
IDT to make a decision based on the participant's physical needs 
without considering their emotional and social needs. Additionally, 
under the proposed modifications to Sec.  460.92, we would also expect 
PACE organizations to utilize current clinical practice guidelines and 
professional standards of care when rendering decisions, as applicable 
to a requested service. We discuss this decision making process and use 
of these guidelines in more detail in section VII.D. of this proposed 
rule.
    Based on feedback from PACE organizations and advocacy groups, we 
are proposing at Sec.  460.121(h) to require an in-person reassessment 
only prior to an IDT's decision to deny or partially deny a service 
delivery request. Currently, the IDT must perform a reassessment as 
part of its consideration of any request to initiate, eliminate, or 
continue a service under Sec.  460.104(d)(2), regardless of whether the 
request is approved or denied. We modified the requirements related to 
conducting reassessments in response to a participant or designated 
representative's request to initiate, eliminate, or continue a service 
in the 2019 PACE Final Rule (84 FR 25644 through 25646). The 
regulations now permit the IDT to conduct that reassessment via remote 
technology if certain requirements are met, but the IDT must conduct an 
in-person reassessment prior to denying a request. However, since that 
rule was published on June 3, 2019, we have continued to receive 
feedback from PACE

[[Page 9129]]

organizations requesting further action to address the burden of 
conducting reassessments in response to service delivery requests, 
specifically when the IDT can approve a request without performing a 
reassessment. Under our proposal, if a service delivery request is 
brought to the full IDT and the IDT determines that it can approve the 
request based on the information available, the IDT would not be 
required to conduct a reassessment of the participant prior to making a 
decision to approve the service delivery request. We understand that 
many IDTs have frequent interactions with PACE participants and may be 
able to make a decision to approve a request without having to conduct 
another reassessment based on internal consultation and knowledge of 
the participant. As we indicated in our discussion for the proposed 
Sec.  460.121(e)(2), we do not believe that delaying the provision of a 
requested service the IDT has determined is necessary, in order to 
conduct a reassessment, benefits the PACE organization or the 
participant. We believe the IDT, with its knowledge of the participant, 
is in the best position to determine if a reassessment is necessary 
prior to approving a service delivery request. Therefore CMS would only 
require a reassessment prior to the IDT denying or partially denying a 
request under this proposal.
    If, after consideration of all available information, the full IDT 
expects to make a decision to deny or partially deny a service delivery 
request, we are proposing that the IDT would be required to perform an 
unscheduled in-person reassessment pursuant to proposed Sec.  
460.121(h)(1), prior to making a final decision. We are proposing to 
consider a request denied or partially denied whenever the IDT makes a 
decision that does not fully approve the service delivery request as 
originally requested. For example, if a participant requested 3 hours 
of home care a week, and the IDT made a decision that the participant 
only required 2.5 hours of home care each week, we are proposing that 
such a decision by the IDT would constitute a partial denial because 
the request was not fully approved as requested by the participant. In 
other words, any decision to offer a compromise, an alternative 
service, or to grant only a portion of the request would constitute a 
partial denial. We are proposing that this in-person reassessment must 
be conducted by the appropriate members of the IDT, as identified by 
the IDT, in order to align with the current requirement under Sec.  
460.104(d)(2) that the IDT is responsible for identifying the 
appropriate members to conduct the reassessment. We believe this change 
would strike an appropriate balance between protecting participants and 
ensuring that the process for handling service delivery requests is not 
overly burdensome for PACE organizations.
    We are also proposing in Sec.  460.121(h)(1) to require that any 
reassessment conducted for a service delivery request must evaluate 
whether the requested service is necessary to meet the participant's 
medical, physical, emotional, and social needs in a manner consistent 
with Sec.  460.92, as we are proposing to revise those provisions. We 
have seen through our monitoring efforts that in conducting 
reassessments as a result of requests to initiate, eliminate or 
continue particular services, the IDTs are not always evaluating 
whether the requested service would actually improve or maintain the 
participant's condition, taking into account all relevant aspects of 
the participant's condition, including assessing the participant's 
medical, physical, emotional and/or social needs as applicable. We 
believe this information is vital, and must be considered by the full 
IDT in making its decision. For example, if a participant is requesting 
more days at the PACE center for social reasons, the IDT should ensure 
that the appropriate members of the IDT conduct the reassessment in 
order to evaluate the participant's social needs, and whether 
additional center days are necessary to meet the participant's needs, 
including improving the participant's social condition. We discuss our 
proposals for Sec.  460.92 in greater detail in section VII.D. of this 
proposed rule.
    In accordance with our belief that the IDT is in the best position 
to determine if a reassessment is necessary prior to approving a 
service delivery request, we are proposing at Sec.  460.121(h)(2) that 
the IDT may choose to conduct a reassessment (via either remote 
technology or in-person) before approving a service delivery request, 
but we do not believe we should require one as part of the process for 
approving service delivery requests. If the IDT determines a 
reassessment should be conducted prior to approving the request, the 
IDT would still be responsible for processing the service delivery 
request, and notifying the participant, in the timeframe specified at 
Sec.  460.121(i).
    We are proposing at paragraph (i) to establish a time frame in 
which the IDT must make its determinations regarding service delivery 
requests and provide notification of its decisions. The current 
requirement under Sec.  460.104(d)(2)(iii) states that the IDT must 
notify the participant or designated representative of its decision to 
approve or deny a service delivery request as expeditiously as the 
participant's condition requires, but no later than 72 hours after the 
date the IDT receives the request, unless the IDT extends the 
timeframe. CMS has interpreted this language as requiring that the IDT 
must notify the participant or their designated representative within 3 
calendar days of receiving a request, based on the wording of the 
requirement which states ``72 hours from the date'' and thus requires 
that the timeframe starts on the day received.
    We are proposing a similar timeframe at Sec.  460.121(i), to 
require that the IDT make its determination and notify the participant 
or their designated representative of the determination as 
expeditiously as the participant's health condition requires, but no 
later than 3 calendar days after the date the IDT receives the request. 
We continue to believe this is a reasonable timeframe for the IDT to 
discuss the request, conduct reassessments when required, and make a 
decision. The IDT is currently allowed to extend the timeframe for 
notifying a participant or their designated representative by no more 
than 5 additional days under Sec.  460.104(d)(2)(iv). Extensions are 
currently permitted when the participant or designated representative 
requests an extension, or when the IDT documents its need for 
additional information and how the delay is in the interest of the 
participant. We are proposing in Sec.  460.121(i)(1) to include a 
similar provision for extensions, which would allow the IDT to extend 
the timeframe for review by up to 5 calendar days beyond the original 
deadline in certain circumstances. We are proposing at Sec.  
460.121(i)(1)(i) that the IDT may extend the timeline for review and 
notification if the participant or other requestor listed in Sec.  
460.121(c)(2) or (3) requests the extension. We are proposing to change 
designated representative to requestor to account for the proposed 
change we made in Sec.  460.121(c) regarding who can make a service 
delivery request, and including caregivers in situations where that 
person may not already be a designated representative. We believe that 
the participant or other requestor should be able to request an 
extension. For example, the participant may be out of town and the 
caregiver may request the IDT to take an extension in order for the 
participant to be in-person for the reassessment related to the 
request.
    We are proposing at Sec.  460.121(i)(1)(ii) that the IDT can extend 
the timeframe

[[Page 9130]]

for review and notification when the extension is in the best interest 
of the participant due to the IDT's need to obtain additional 
information from an individual who is not directly employed by the PACE 
organization, and that information may change the IDT's decision to 
deny a service. We believe it is important that the IDT does not 
routinely take extensions when the participant or other requestor has 
not asked for one. We understand that when the IDT has to obtain 
information from individuals not employed directly by the organization, 
it may be difficult to get timely responses. We also understand that 
obtaining this information is beneficial for the IDT and the 
participant in order to ensure that the IDT has sufficient information 
to make a decision on whether or not a service should be approved. For 
example, if the IDT is considering a request for dentures, information 
from the participant's dentist would be relevant to the review, and the 
IDT may need to take an extension if the dentist does not respond 
within the initial 3 calendar days. However, we believe it is important 
that PACE organizations develop processes to ensure prompt decisions 
about service delivery requests, and that IDTs do not routinely or 
unnecessarily rely on extensions of the notification timeframe, such as 
when information can be obtained from an employee of the PACE 
organization. We are also proposing, for extensions based on the need 
for additional information, to apply the requirements currently in 
Sec.  460.104(d)(2)(iv)(B) that require the IDT to document the 
circumstances that led to the extension and to demonstrate why the 
extension is in the participant's interest. We are proposing to add a 
new requirement at Sec.  460.121(i)(2) to require the IDT to notify the 
participant or the designated representative in writing, as 
expeditiously as the participant's condition requires but no later than 
24 hours after the IDT extends the timeframe, and to explain the 
reason(s) for the delay. We are proposing to require that the 
notification of the extension must occur within 24 hours from the time 
the IDT makes the decision to extend the timeframe because we believe 
it is important that participants or their designated representatives 
understand that a decision may be delayed and why, especially if the 
extension was taken by the IDT.
    In addition, we are proposing to add requirements at Sec.  
460.121(j) related to notifying the participant or the designated 
representative of the IDT's decision to approve, deny, or partially 
deny a service delivery request. Currently, IDTs are required to notify 
the participant or their designated representative of the decision to 
approve or deny a request under Sec.  460.104(d)(2)(iii). As we 
previously discussed, in relation to our proposals under Sec.  
460.121(c), we are proposing to expand the number of individuals who 
can make a service delivery request. However, we are not proposing to 
change the individuals whom the IDT would notify of its decision to 
approve or deny the service delivery request. We believe that in all 
circumstances, the participant (or designated representative) should 
receive the notification of the IDT's decision to approve or deny the 
service delivery request. In the rare situation where a caregiver, such 
as a family member, is not the designated representative, notification 
of the service delivery request would be sent to either the participant 
or designated representative, and not the family member. As always, 
under current Sec.  460.102(f), the PACE organization remains 
responsible for establishing, implementing and maintaining documented 
internal procedures that govern the exchange of information between 
participants and their caregivers consistent with the requirements for 
confidentiality in Sec.  460.200(e). We would expect that PACE 
organizations, as a part of that documented process, have a method for 
determining when notification should go to the participant versus a 
representative (including a caregiver).
    We are proposing at paragraph (j)(1) to specify the notification 
requirements when the IDT approves a service delivery request. 
Specifically, we are proposing to require the IDT to notify the 
participant or the designated representative of that decision either 
orally or in writing. We are proposing that the notification must 
explain any conditions for the approval in understandable language, 
including when the participant may expect to receive the approved 
service. We believe it is important that the IDT explain to the 
participant or their designated representative any conditions that may 
apply whenever the IDT approves a service delivery request. For 
example, if the IDT is approving a service delivery request for home 
care, the IDT should indicate the days and hours that are being 
approved and when the home care would start.
    For service delivery requests that can be approved in full at the 
time the request is made under proposed Sec.  460.121(e)(2), the IDT 
member who approves the request would be responsible for ensuring that 
the notification satisfies the proposed requirements in new Sec.  
460.121(j)(1). Because a request must be able to be approved in full at 
the time the participant makes the request under this provision, the 
IDT member who approves the service would be responsible for providing 
notification, and ensuring that the conditions of the approval (if any) 
are explained to the participant. While we allow for the IDT to provide 
approval notification either orally or in writing, because decisions 
under Sec.  460.121(e)(2) are made in real time, and communicated to 
the participant at the time the request is made, we do not believe 
written notification would be necessary in these instances; however, a 
PACE organization may always choose to send written notification 
following the oral notification in order to memorialize any conditions 
of the approval.
    We are also proposing at Sec.  460.121(j)(2) provisions similar to 
those currently set forth in Sec.  460.104(d)(2)(v), to require that 
PACE organizations must notify participants or the designated 
representative of a decision to deny or partially deny a service 
delivery request both orally and in writing. We believe that the 
requirement to notify the participant or their designated 
representative both orally and in writing should be maintained to 
ensure participants or their designated representatives receive and 
understand the denial. We are also proposing to expand upon the 
specific requirements for what a denial notice must contain. At Sec.  
460.121(j)(2)(i) we are proposing to require that the IDT state the 
specific reasons for the denial, including an explanation of why the 
service is not necessary to improve or maintain the participant's 
overall health status. Under this proposal, the rationale for the 
denial would have to be specific to the participant, taking the 
participant's medical, physical, emotional, and social needs into 
account, and it would include the results of any reassessment(s) 
conducted by the PACE organization. The rationale would have to be 
stated in understandable language so that the participant or designated 
representative can comprehend why the request was denied. We believe 
that it is important to continue to require that the IDT provide the 
specific reasons for a denial. However, based on our experiences 
monitoring PACE organizations, we believe we need to propose more 
detailed requirements about what the explanation of the specific 
reason(s) for the denial should include. Providing

[[Page 9131]]

this explanation for a denial would allow the participant or their 
designated representative to more fully understand why the IDT 
determined a requested service was not necessary. This would also allow 
a participant or designated representative to better understand what 
information they may need to provide if they appeal the denial.
    At Sec.  460.121(j)(2)(ii) and (iii), we are proposing to retain 
the requirements currently codified in Sec.  460.104(d)(2)(v)(A) and 
(B) that the PACE organization inform the participant or designated 
representative of the right to appeal any denied service delivery 
request as specified in Sec.  460.122; and that the PACE organization 
must also describe the process for both standard and expedited appeals, 
and the conditions for obtaining an expedited appeal. Additionally, 
with minor modifications, we are proposing to retain a requirement 
similar to current Sec.  460.104(d)(2)(v)(C): The PACE organization 
would be required to notify Medicaid participants about their right to, 
and the conditions for, continuing to receive a disputed service 
through the duration of the appeal. Medicaid participants include all 
participants that are enrolled in Medicaid only or both Medicaid and 
Medicare (dually eligible). Currently, Sec.  460.104(d)(2)(v)(C) cross-
references all of Sec.  460.122(e), but we believe that a more tailored 
reference to Sec.  460.122(e) would be preferable. We are therefore 
proposing to cross-reference only Sec.  460.122(e)(1) at proposed Sec.  
460.121(j)(2)(iv), because the information provided in Sec.  
460.122(e)(2) relates to the PACE organization's continued 
responsibility to continue to furnish to participants all required 
services other than the disputed service, and is not specifically about 
continuing to receive the disputed service. We do not believe we need 
to require that the IDT include information from Sec.  460.122(e)(2) in 
a service delivery request denial notification because this concept is 
widely understood and could potentially confuse participants if they 
received notification of that requirement. However, we solicit comments 
on whether it would be preferable to retain a cross-reference to all of 
Sec.  460.122(e).
    We are proposing at Sec.  460.121(k) to specify the timeframe in 
which the PACE organization must provide services approved, in whole or 
in part, through the service delivery request process. We are proposing 
to require the PACE organization to provide the requested service as 
expeditiously as the participant's condition requires, taking into 
account the participant's medical, physical, emotional, and social 
needs. We are not proposing a specific timeframe due to the many 
varying types of services that PACE organizations provide. However, we 
expect PACE organizations to develop processes to help them identify 
how quickly they need to provide a service based on the participant's 
condition. For example, we would generally expect that a drug used to 
treat a participant's diabetes would be provided much more quickly than 
we would expect a dental cleaning to be provided. That is because a 
treatment for diabetes may require a more immediate response, whereas a 
dental cleaning may not be as urgent. We recognize that not all 
services can be physically provided in a rapid timeframe, however, we 
do expect that the PACE organization take prompt action to ensure the 
approved service is provided as expeditiously as needed. Additionally, 
for services that can be approved under proposed Sec.  460.121(e)(2), 
while we require that the IDT member be able to approve the request in 
full at the time the request is made, we do not require that the 
approved service be physically provided at the time the request is 
made. Instead, we are proposing that those approved service delivery 
requests must also be effectuated under the requirements in this 
proposed section.
    The current requirement at Sec.  460.104(d)(2)(vi) states that the 
PACE organization must automatically process a participant's request as 
an appeal when the IDT fails to provide the participant with timely 
notice of the resolution of the request or does not furnish the 
services required by the revised plan of care. We are proposing to 
retain this requirement, unaltered, at Sec.  460.121(l). We continue to 
believe that this is an important safeguard for participants to ensure 
they have access to the appeals process, even when a PACE organization 
does not adhere to the processing requirements under the rules of this 
part.
    We are proposing at paragraph (m) to add requirements that would 
address record keeping for service delivery requests. While PACE 
organizations are currently required to document all assessments under 
Sec.  460.104(f), we believe that it would be important to have a 
separate section in the new Sec.  460.121 that more specifically 
addresses the record keeping requirements, to help ensure that PACE 
organizations accurately document and track all service delivery 
requests and have a complete and accurate record of each request and 
how it was resolved. We are proposing at Sec.  460.121(m) that PACE 
organizations must establish and implement a process to document, 
track, and maintain records related to all processing requirements for 
service delivery requests. We are also proposing to specify that PACE 
organizations must account for, and document, requests received both 
orally and in writing. PACE participants often call PACE organizations 
and request a service over the phone, and it is important for the PACE 
organization to have an established process to accurately document and 
track those verbal requests, along with requests submitted to the 
organization in writing. Once a PACE organization receives a service 
delivery request, the PACE organization would be responsible for 
documenting, tracking and maintaining all records that relate to the 
processing of the service delivery request, including but not limited 
to, the IDT discussion, any reassessments conducted, all notification 
that was provided to the participant or designated representative, and 
the provision of the approved service, when applicable. These 
documentation requirements would apply to all service delivery 
requests, including service delivery requests that can be approved in 
full at the time the request is made per proposed Sec.  460.121(e)(2). 
Additionally, as we mention in our discussion of Sec.  460.200(d) at 
section VII.C. of this proposed rule, we are proposing to require that 
documentation be safeguarded against alteration, and that written 
requests for services must be maintained in their original form. We are 
also proposing to require that these records must be available to the 
IDT to ensure that all members remain alert to pertinent participant 
information.
    Because we are proposing to define the requirements for service 
delivery requests in the new Sec.  460.121, we propose to remove all 
requirements relating to service delivery requests from the current 
Sec.  460.104(d)(2). Specifically, we are removing Sec.  
460.104(d)(2)(i) through (v) and we are proposing to modify the 
existing language in Sec.  460.104(d)(2) to reiterate that the PACE 
organization must conduct an in-person reassessment if it expects to 
deny or partially deny a service delivery request. Additionally, as we 
discussed in Sec.  460.121(h)(2), the IDT may conduct a reassessment as 
determined necessary for services it intends to approve. We are 
proposing to modify language in 460.104(d)(2) to direct readers to the 
new Sec.  460.121(h) for the requirements regarding conducting 
reassessments in response to service delivery requests.

[[Page 9132]]

B. Appeals Requirements Under PACE (Sec. Sec.  460.122 and 460.124)

    As discussed previously, sections 1894(b)(2)(B) and 1934(b)(2)(B) 
of the Act require PACE organizations to have in effect written 
safeguards of the rights of enrolled participants, including procedures 
for grievances and appeals. In the preamble to Medicare and Medicaid 
Programs; Programs of All-Inclusive Care for the Elderly (PACE) Interim 
Final Rule (hereinafter referred to as the 1999 PACE interim final 
rule), which was published in the Federal Register on November 24, 1999 
(64 FR 66234), CMS explained that we considered the appeals 
requirements under what is now MA when creating the appeals 
requirements for PACE (see 64 FR 66257-66258). CMS established the 
requirements for PACE organizations' appeals processes in Sec. Sec.  
460.122 (PACE organization's appeals process) and 460.124 (Additional 
appeal rights under Medicare or Medicaid). Over time, PACE 
organizations have asked CMS to explain certain aspects of the appeals 
processes described in Sec. Sec.  460.122 and 460.124. We are therefore 
proposing certain changes to Sec. Sec.  460.122 and 460.124 that would 
provide additional detail about the appeals process and help ensure 
consistency in the administration of the appeals process among PACE 
organizations. We are also proposing a few other changes to increase 
beneficiary awareness of and access to the appeals process, and to 
align with other changes proposed in this rule. The term ``appeal'' is 
currently defined in Sec.  460.122 as a participant's action taken with 
respect to the PACE organization's noncoverage of, or nonpayment for, a 
service including denials, reductions, or termination of services. We 
are proposing to add a sentence after the definition to require that 
PACE organizations must process all requests to initiate, modify or 
continue a service as a service delivery request before processing an 
appeal under Sec.  460.122. As we discussed in VII.A. of this proposed 
rule, we have seen through audits that some PACE organizations will 
process an appeal instead of processing a service delivery request when 
a participant makes a request to continue receiving a service that the 
PACE organization is discontinuing or reducing. We are proposing to add 
a sentence to this introductory paragraph in order to affirmatively 
require that all requests that satisfy the definition of a service 
delivery request under Sec.  460.121(b) must first be processed as such 
before a PACE organization may process an appeal. Section 460.122(b) 
currently provides that upon enrollment, at least annually thereafter, 
and whenever the IDT denies a request for services or payment, the PACE 
organization must give a participant written information on the appeals 
process. Consistent with the changes that we are proposing to existing 
Sec.  460.104(d)(2) and new Sec.  460.121, which are discussed in 
section VII.A. of this proposed rule, we are proposing to modify Sec.  
460.122(b) to specify that PACE organizations must provide participants 
with written information on the appeals process at enrollment, at least 
annually thereafter, and whenever the IDT denies a service delivery 
request or other request for services or payment. By proposing this 
change, CMS is seeking to ensure that participants consistently and 
timely receive information about their appeal rights, including when 
PACE organizations deny their service delivery requests.
    Section 460.122(c) provides requirements for the minimum written 
procedures that PACE organizations must establish for their appeals 
process. We have heard that these requirements have created confusion 
among PACE organizations, which has led to inconsistent implementation 
among PACE organizations and a lack of participant awareness of and 
participation in the appeals process. As a result, we are proposing a 
number of changes to decrease confusion and increase beneficiary 
awareness of and access to the appeals process.
    We are proposing two modifications at paragraph (c)(2). First, we 
are proposing to add a participant's designated representative as 
someone who has the right to appeal on the participant's behalf. We 
believe that this is an important participant safeguard because it 
allows for assistance in navigating the appeals process. Additionally, 
we are proposing that in developing procedures for how a participant or 
a participant's designated representative files an appeal, PACE 
organizations would be required to include procedures for receiving 
oral and written appeal requests. Because of the comprehensive nature 
of the care PACE organizations provide, participants are likely to have 
more verbal interactions with staff of the PACE organization and may 
express their desire to appeal a decision, but may be unsure or 
confused as to how. We believe that by requiring PACE organizations to 
accept appeal requests made both orally and in writing, we would create 
an important safeguard for the participant population enrolled in the 
PACE program. By allowing both oral and written requests for appeals, 
this proposal would enhance participant access to the appeals process, 
and to services covered under the PACE benefit.
    Second, in response to questions received from PACE organizations, 
we are proposing to add language in paragraph (c)(4) to specify the 
qualifications required of an appropriate third party reviewer or 
members of a review committee. Specifically, we are proposing changes 
to require PACE organizations to ensure appeals are reviewed by an 
appropriate reviewer or committee. This includes separating the 
requirements that an appropriate third party reviewer and the members 
of a review committee must be ``independent'' and ``appropriately 
credentialed'' to emphasize the fact that an appropriate third party 
reviewer or member of a review committee must be both independent and 
appropriately credentialed. We discuss the use of a review committee in 
the preamble to the 2006 PACE final rule (see 71 FR 71302) and PACE 
organizations currently utilize review committees in their review 
processes; therefore, we have proposed to incorporate review committees 
in regulation at this time and require the members of review committees 
to satisfy the same requirements as appropriate third party reviewers. 
Employees or contractors may participate in review committees as long 
as they meet the requirements set forth in proposed Sec.  
460.122(c)(4). Consistent with the current requirements at Sec.  
460.122(c)(4), we are proposing to specify that in order to be an 
appropriate third party reviewer or member of a review committee, an 
individual must be an impartial third party who was not involved in the 
original action and does not have a stake in the outcome of the appeal. 
We are also proposing to add language that more clearly defines an 
appropriately credentialed reviewer. As we discussed in the preamble to 
the 2006 final rule, the appropriate third party reviewer must be 
someone with expertise in the appropriate field. Thus it would not be 
appropriate for a social worker to review an appeal related to a 
physical therapy denial; nor would it be appropriate for a gynecologist 
to review a denial of services relating to coronary surgery. 71 FR 
71302.
    Therefore, we are proposing to modify the language in paragraph 
(c)(4) to specify that an appropriate third party reviewer is one who 
is credentialed in a field or discipline related to the appeal. We do 
not believe that these proposals would affect the way PACE 
organizations currently choose their third party reviewers since the 
existing

[[Page 9133]]

regulation at Sec.  460.122(c)(4) requires the appointment of an 
appropriately credentialed and impartial third party that was not 
involved in the original action and who does not have a stake in the 
outcome of the appeal to review the participant's appeal. By proposing 
amendments to expressly state that the same requirements also apply to 
the members of a review committee, we believe that this proposal would 
give PACE organizations more clarity and flexibility to utilize 
resources within the organization as well as contracted employees.
    PACE organizations have expressed confusion about the third party 
review process, and we are aware of inconsistent decisions made by 
third party reviewers. In order to reduce confusion, create a more 
consistent application of Medicare and Medicaid coverage requirements 
under PACE, and increase consistency for participants, we are proposing 
additional modifications to the requirements under Sec.  460.122(c). 
Specifically, we are proposing to add a new paragraph (c)(5) that would 
require PACE organizations to take specific steps to ensure their third 
party reviewers understand the PACE benefit package and the coverage 
requirements under the PACE program, and how to review requests in a 
manner consistent with both. As noted in the preamble to the 2006 PACE 
final rule at 71 FR 71302, PACE organizations should ensure that 
credentialed and impartial third party reviewers are trained to make 
decisions in a manner similar to the determinations under section 
1862(a)(1)(A) of the Act. Such determinations would be based on the 
participant's medical needs and not on other reasons such as the cost 
of the disputed care, who is paying the third party reviewer's salary 
or fee, an individual's reputation, or other factors. We are therefore 
proposing, in new paragraph (c)(5), to require PACE organizations to 
provide written or electronic materials to an appropriate third party 
reviewer(s) that, at a minimum, explain that services must be provided 
in a manner consistent with the requirements in Sec. Sec.  460.92 and 
460.98, the need to make decisions in a manner consistent with 
determinations made under section 1862(a)(1)(A) of the Act, and the 
requirements in Sec.  460.90(a) that specify that many of the 
limitations on the provision of services under Medicare or Medicaid do 
not apply in PACE.
    The requirements for providing appeal notifications are at Sec.  
460.122(d) and currently provide that a PACE organization must give all 
parties involved in the appeal (1) appropriate written notification and 
(2) a reasonable opportunity to present evidence related to the 
dispute, in person, as well as in writing. However, PACE organizations 
have expressed that this section of the regulation is confusing because 
it discusses both the notification requirements and the participant's 
opportunity to submit evidence during an appeal. To reduce confusion, 
we are proposing to separate these requirements. Accordingly, we are 
proposing to redesignate paragraph (g) as (h) and also change the title 
of paragraph (h) to ``Actions following a favorable decision.'' This 
redesignation allows for the addition of the proposed new paragraph (g) 
that sets forth notification requirements. We also propose to modify 
paragraph (d) to address the existing requirement that the PACE 
organization must give all parties involved in the appeal a reasonable 
opportunity to present evidence related to the dispute in person as 
well as in writing. At new paragraph (g), we are proposing to revise 
the notice requirements for appeals to more closely align with the 
proposed notice requirements for service delivery requests at Sec.  
460.121(j) by specifying the content of the notice in order to ensure 
consistency and minimize confusion for PACE organizations and 
participants. We are proposing that PACE organizations would be 
required to give all parties involved in the appeal (for example 
participants or their designated representatives) appropriate written 
notice of all appeal decisions. In the case of appeal decisions that 
are favorable to the participant, the PACE organization would be 
required to explain any conditions on the approval in understandable 
language. For partially or fully adverse decisions, the PACE 
organization would be required to state the specific reason(s) for the 
denial, explain the reason(s) why the service would not improve or 
maintain the participant's overall health status, inform the 
participant of his or her right to appeal the decision, and describe 
the additional appeal rights under Sec.  460.124. Conditions of 
approval may include, but are not limited to, the duration of the 
approval, limitations associated with an approval such as dosage or 
strength of a drug, or any coverage rules that may apply. We are also 
proposing to revise and move the current requirements at paragraph (h) 
into new paragraph (g)(2)(ii). These requirements specify that for 
determinations that are wholly or partially adverse to a participant, 
at the same time the decision is made, the PACE organization must 
notify CMS, the State administering agency, and the participant. 
Because this paragraph includes additional notification requirements 
that PACE organizations must follow after a decision is made to deny an 
appeal, we believe that this belongs in proposed Sec.  460.122(g)(2) 
for notice of adverse decisions. We are also proposing to revise this 
requirement to use terminology consistent with our other proposed 
amendments to Sec.  460.122, specifically, to refer to ``partially or 
fully adverse'' decisions and to refer to an appeal decision rather 
than to a determination for consistency with proposed Sec.  
460.122(g)(2)(i) and other sections of this regulation.
    We are also proposing a few minor changes to align with other 
changes proposed in this rule. First, we are proposing to change the 
reference to Sec.  460.104(d)(2)(iv) in Sec.  460.122(c)(1) to 
reference the service delivery request requirements in Sec.  460.121(i) 
and (m). The current citation references the extension requirements for 
unscheduled reassessments; however, we believe that this reference 
should have been to the general timeframes for processing service 
delivery requests. We are also proposing to redesignate the current 
paragraphs (c)(5) and (6) as (c)(6) and (7) in Sec.  460.122 to allow 
for the addition of a new paragraph (c)(5), as discussed earlier in 
this section.
    Lastly, we are proposing to add language to Sec.  460.124 that 
delineates the additional appeal rights that PACE participants are 
entitled to receive under Medicare or Medicaid and add processing 
requirements for the PACE organization. In response to comments CMS 
received on the 1999 PACE interim final rule, CMS discussed stakeholder 
concerns about the PACE appeals process in the preamble to the 2006 
PACE final rule and reiterated the intended process in the preamble. 
See 71 FR 71303-71304. Specifically, CMS stated in the preamble to the 
2006 PACE final rule that Medicare beneficiaries have access to the 
Medicare external appeals route through the IRE that contracts with CMS 
to resolve MA appeals, while Medicaid eligible participants have access 
to the State Fair Hearing (SFH) process. See 71 FR 71303. However, 
despite this clarification, CMS's audits have revealed that PACE 
organizations continue to misinterpret the requirements under Sec.  
460.124 relating to participants' additional appeal rights under 
Medicare or Medicaid. To address this issue, we are proposing several 
changes to Sec.  460.124. First, we are proposing to add new paragraphs 
(a) and (b) at Sec.  460.124. We are proposing at Sec.  460.124(a) to 
specify that Medicare

[[Page 9134]]

participants have the right to a reconsideration by an independent 
review entity (IRE). We recognize that there are differences in the 
terminology used in PACE versus MA and therefore have proposed to add 
similar language at new Sec.  460.124(a)(1), (2), and (3) to establish 
in regulation the requirements for how an appeal may be made to the 
independent, outside entity, the timeframe in which the independent 
outside entity must conduct the review, and who are the parties to the 
appeal. At proposed Sec.  460.124(a) introductory text and (a)(1) we 
have intended to parallel the requirements at Sec.  422.592(a) with 
minor differences. Under MA there is automatic escalation to the 
independent review entity at this level of appeal if the organization 
upholds its adverse decision, in whole or in part. However, in PACE, 
appeals are not automatically escalated because most PACE participants 
are dually eligible for Medicare and Medicaid benefits and these 
participants may choose to utilize the Medicaid or Medicare route for 
independent review. For these dually eligible individuals, it may be 
more appropriate to pursue an appeal through the Medicaid path rather 
than the Medicare path. The provisions relating to automatic-escalation 
in MA ensure that the beneficiary receives a review by an independent 
reviewer; however, this protection is not necessary in PACE as the PACE 
participant has already received an independent review on the appeal 
during the internal appeal processed in accordance with Sec.  460.122. 
We are therefore proposing at Sec.  460.122(a)(1) to specify that a 
written request for a reconsideration must be filed with the 
independent review entity within 60 calendar days of the decision by 
the third party reviewer. We did not specify who must file the request 
because we discuss at Sec.  460.124 that the PACE organization must 
assist the participant in choosing which appeal rights to pursue (that 
is, Medicaid SFH or Medicare IRE) and as such, we believe that the PACE 
organization is also responsible for ensuring that the request is filed 
with the appropriate external entity. However, a participant always 
maintains the right to file a request without assistance from the PACE 
organization. At Sec.  460.124(a)(2) we are proposing to add a 
requirement that the independent review entity must conduct the review 
as expeditiously as the participant's health condition requires but 
must not exceed the deadlines specified in the contract. The 
independent review entity is currently operating under these 
timeframes, consistent with the requirements at Sec.  422.592(b), and 
participants are currently utilizing the independent review entity to 
exercise their external appeal right, consistent with CMS's historical 
interpretation that these requirements are applicable to the PACE 
program. We have also proposed the addition of language at Sec.  
460.124(a)(3) that would parallel the requirement at Sec.  422.592(c), 
to specify that when the independent review entity conducts a 
reconsideration, the parties to the reconsideration are the same 
parties described in Sec.  460.122(c)(2), with the addition of the PACE 
organization. We are seeking to enhance transparency and we believe it 
is important to make PACE organizations aware that they are considered 
a party to the appeal once it reaches the independent review entity. We 
are also proposing to add a new paragraph (b) that specifies that 
Medicaid participants have the right to a SFH as described in part 431, 
subpart E. Finally, we are proposing a new paragraph (c) to specify 
that participants who are dually eligible for both Medicare and 
Medicaid have the right to external review by means of either the IRE 
or the SFH process. This provision would specify that dually eligible 
participants may choose to pursue an appeal through either the Medicare 
or Medicaid process. In accordance with Sec.  460.124, PACE 
organizations must assist dual eligible participants in choosing which 
route to pursue if both the IRE and the SFH review processes are 
applicable. For example, if the appeal is related to an enrollment 
dispute, the Medicaid SFH process would be the appropriate route for a 
participant to pursue. Whereas for a dispute related to a Part D 
medication, the IRE would be the appropriate route for a participant to 
pursue. By codifying these appeal rights in regulation, we are seeking 
to enhance transparency for PACE organizations to ensure that 
participants are able to access additional levels of appeal in order to 
receive services they believe that they are entitled to under the PACE 
benefit.

C. Access to Data and Safeguarding Records Under PACE (Sec.  460.200)

    In accordance with sections 1894(e)(3)(A) and 1934(e)(3)(A) of the 
Act, Sec.  460.200 requires PACE organizations to collect data, 
maintain records, and submit reports, as required by CMS and the State 
Administering Agency (SAA). The current requirement at Sec.  460.200(b) 
requires that PACE organizations must allow CMS and the SAA access to 
data and records, including but not limited to, participant health 
outcomes data, financial books and records, medical records, and 
personnel records. Some PACE organizations have asked for clarification 
on whether access is limited to allowing CMS or the SAA to view 
requested information. CMS has long interpreted this provision to 
require that CMS and the SAA must be able to obtain, examine, or 
retrieve information as needed to administer and evaluate the program 
and fulfill their oversight obligations. Therefore, we are proposing to 
codify CMS' interpretation of this requirement. Specifically, we are 
proposing to redesignate current Sec.  460.200(b)(1) through (4) as 
Sec.  460.200(b)(1)(i) through (iv), in order to add a new paragraph 
(b)(2) to state that CMS and the State administering agency (SAA) must 
be able to obtain, examine, or retrieve the information described under 
Sec.  460.200(b)(1). This may include CMS or the SAA reviewing 
information at the PACE site or remotely. It may also include CMS 
requiring a PACE organization to upload or electronically transmit 
information, or send hard copies of required information by mail.
    PACE organizations are also required to safeguard data and records 
in accordance with Sec.  460.200(d). This section currently provides 
that a PACE organization must establish written policies and implement 
procedures to safeguard all data, books, and records against loss, 
destruction, unauthorized use, or inappropriate alteration. Through our 
monitoring of PACE organizations, CMS has discovered that PACE 
organizations do not always maintain and safeguard important records 
such as communications related to a participant's care from family 
members, caregivers, and the participant's community. In fact, CMS has 
discovered that organizations may summarize written communications and 
sometimes destroy or lose original written communications. When CMS has 
obtained copies of original communications from an outside source (such 
as the family or caregiver), we have noted that organizations are not 
accurately summarizing information or retaining the relevant 
information in the communication. In light of these findings, we 
believe that any written communication received from a participant or 
their informal support (for example, a family member, caregiver, 
designated representative, or other member of the community) that 
relates to the participant's care, health or safety must be safeguarded 
and maintained in its original form. Therefore, we are proposing to 
modify Sec.  460.200(d) to require PACE organizations to maintain all 
written communications received

[[Page 9135]]

from a participant or other parties in their original form when the 
communication relates to the participant's care, health, or safety. We 
would expect that this would include most, if not all, communications 
that an organization receives on these topics. For example, the 
following types of communications would need to be protected under this 
provision: Written requests for services that the participant, 
designated representative or caregiver believes are necessary; 
grievances or complaints relating to the participant's care or health; 
and communications from the community that indicate concerns over the 
well-being of a PACE participant. We are proposing corresponding 
changes to Sec.  460.210(b)(6), to require PACE organizations to 
maintain original written communications in the participant's medical 
record, as discussed at section VII.F. of this proposed rule.
    We believe the burden associated with this provision is related to 
the documentation of these original communications in the medical 
record. We discuss and account for the burden of documenting these 
communications in the medical record in the regulatory impact analysis.
    We are soliciting comments on these proposals.

D. PACE Services, Excluded PACE Services, and the Interdisciplinary 
Team (Sec. Sec.  460.92, 460.96, and 460.102)

1. Required Services
    Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act state that the 
PACE program provides comprehensive health care services to PACE 
participants in accordance with the PACE program agreement and 
regulations under those sections. Sections 1894(b) and 1934(b) of the 
Act set forth the scope of benefits and beneficiary safeguards under 
PACE. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in 
part that PACE organizations must provide participants, at a minimum, 
all items and services covered under titles XVIII and XIX of the Act 
without any limitation or condition as to amount, duration, or scope, 
and all additional items and services specified in regulations, based 
upon those required under the PACE protocol.\94\ CMS codified these 
required services in Sec.  460.92 of the regulations, which provides 
that the PACE benefit package for all participants, regardless of the 
source of payment, must include all Medicare covered items and 
services, all Medicaid covered items and services, as specified in the 
State's approved Medicaid plan, and other services determined necessary 
by the interdisciplinary team (IDT) to improve and maintain the 
participant's overall health status.
---------------------------------------------------------------------------

    \94\ The original PACE protocol was replaced by the PACE program 
agreement (84 FR 25613).
---------------------------------------------------------------------------

    We are proposing to modify the requirements at Sec.  460.92 to more 
clearly define required services, and to specify CMS' expectations for 
making decisions about the services that are required under the PACE 
benefit package. First, we are proposing to create a new paragraph (a) 
and include under (a) the current requirements in Sec.  460.92. In 
order to do that, we propose to renumber existing paragraphs (a), (b), 
and (c) as (a)(1), (2), and (3). We are proposing to add a new 
paragraph (b) that provides the standards that the IDT must consider 
when evaluating whether to provide or deny services described under (a) 
for a participant.
    In addition to redesignating Sec.  460.92(a) as Sec.  460.92(a)(1), 
we are proposing to modify the language to refer to all Medicare-
covered services. In light of our proposed amendments to the definition 
of ``services'' in Sec.  460.6, and the current definition of that 
term, PACE organizations should understand that providing necessary 
drugs, whether they are covered under Medicare Parts A, B, or D, is an 
important part of the PACE benefit package. See section VII.I. of this 
proposed rule for a more detailed discussion of the definition of 
``services.''
    CMS is also proposing to add a new paragraph (b) in order to 
specify the standards that the IDT must consider when evaluating 
whether to provide or deny services required under Sec.  460.92(a) for 
a participant. Under proposed Sec.  460.92(b)(1) we are proposing to 
require the IDT to take into account all aspects of a participant's 
condition, including the participant's medical, physical, emotional, 
and social needs, when determining whether to approve or deny a request 
for a service. As we discussed in section VII.A. of this proposed rule, 
the determination for a service should be based on all aspects of the 
participant's care. For example, additional center days may not be 
necessary when considering the participant's physical needs, but when 
taking into account the participant's social needs, the IDT may find 
that those services become necessary in order to improve the 
participant's social or emotional condition. We have discovered through 
audits that PACE organizations sometimes only consider the medical or 
physical needs of a participant but do not consider their social or 
emotional needs when those social or emotional needs are relevant to 
the request.
    We are also proposing to add language at Sec.  460.92(b)(2) that 
would require organizations to utilize current clinical practice 
guidelines and professional standards of care when making a decision, 
so long as those guidelines and standards are applicable to the 
particular service. PACE organizations are currently required to 
utilize current clinical practice guidelines and professional practice 
standards when developing the outcome measures for their quality 
improvement programs at Sec.  460.134(b). When we discussed this 
requirement in the preamble to the 1999 PACE interim final rule, we 
stated that we expect that PACE organizations will utilize current 
clinical standards as a routine part of their daily operations and care 
management strategies. (See 64 FR 66260). However, we have discovered 
through our PACE audits that decisions to deny services are sometimes 
not based on accepted clinical guidelines or standards. We understand 
that current clinical practice guidelines and professional standards of 
care may vary based on the type of service that is being considered. 
For example, when determining if a participant requires a cardiac 
catheterization, the organization may reference clinical practice 
guidelines issued by the American Heart Association. On the other hand, 
when determining the appropriate insulin for a participant the 
organization may appropriately refer to guidelines published by the 
American Diabetic Association. We also understand that certain services 
may not have an applicable clinical practice guideline. For example, 
determining the frequency of PACE center attendance may not be based on 
clinical practice guidelines, but may instead be based on the medical, 
physical, emotional, and social needs of the participant. Therefore, we 
are proposing to add language to (b)(2) to require the IDT to take into 
account current clinical practice guidelines and professional standards 
of care if applicable to a particular service. By adding this 
requirement, we do not intend to restrict a PACE organization's ability 
to determine what service is appropriate or necessary for a 
participant: The IDT would remain responsible for determining the 
participant's overall health status and needs, and ensuring those needs 
are met through the provision of necessary services.
    We are not scoring this provision in the Regulatory Impact Analysis 
section because PACE organizations are already required to utilize 
current clinical

[[Page 9136]]

practice guidelines as a part of their quality improvement program, and 
they are required to consider the participant's physical, medical, 
emotional and social needs as a part of care planning discussions. We 
believe that by modifying this provision we will not be increasing 
burden on PACE organizations, as they already consider these items on a 
routine basis.
2. Excluded Services
    As we stated earlier in this section, in the discussion regarding 
Required Services, the PACE benefit package includes all Medicare-
covered items and services, all Medicaid-covered items and services, as 
specified in the state's approved Medicaid plan, and other services 
determined necessary by the IDT to improve or maintain the 
participant's overall health status. The regulations at Sec.  460.96 
list a number of services that are excluded from coverage under PACE. 
Currently, paragraph (a) states that any service that is not authorized 
by the IDT, even if it is a required service, is an excluded service 
unless it is an emergency service. In addition, paragraph (b) states 
that in an inpatient facility, private room and private duty nursing 
services (unless medically necessary), and nonmedical items for 
personal convenience such as telephone charges and radio or television 
rental are also excluded from coverage under PACE unless specifically 
authorized by the IDT as part of the participant's plan of care. We are 
proposing to remove Sec.  460.96(a) and (b).
    These proposals are consistent with our authority to amend the 
regulations. The exclusions in Sec.  460.96 are not specifically listed 
in the PACE statute. They were included in the 1999 PACE interim final 
rule that implemented the PACE program in part because they were 
included in section A.6 of the PACE Protocol included as Addendum A to 
the 1999 PACE interim final rule. See 64 FR 66247 and 66301 and 
subparagraphs 1894(f)(2)(A) and 1934(f)(2)(A) of the Act. Sections 
1894(f)(1) and 1934(f)(1) of the Act give the Secretary the authority 
to issue regulations to carry out the PACE program created under 
sections 1934 and 1894 of the Act. Sections 1894(f)(2) and 1934(f)(2) 
of the Act state that, in issuing such regulations the Secretary shall, 
to the extent consistent with the provisions of sections 1894 and 1934 
of the Act, incorporate the requirements applied to PACE demonstration 
waiver programs under the PACE protocol. As we stated in the 2019 PACE 
final rule, we believe sections 1894(f) and 1934(f) of the Act 
primarily apply to issuance of the initial interim and final PACE 
program regulations because they refer to the PACE Protocol,\95\ which 
has now been replaced by the PACE program agreement.\96\ 84 FR 25613. 
Sections 1894(f)(2)(B) and 1934(f)(2)(B) of the Act permit the 
Secretary to modify or waive provisions of the PACE Protocol as long as 
any such modification or waiver is not inconsistent with and does not 
impair any of the essential elements, objectives, and requirements 
under sections 1894 or 1934 of the Act, but precludes the Secretary 
from modifying or waiving any of the following provisions:
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    \95\ https://www.gpo.gov/fdsys/pkg/FR-1999-11-24/pdf/99-29706.pdf.
    \96\ https://www.cms.gov/Medicare/Health-Plans/pace/downloads/programagreement.pdf.
---------------------------------------------------------------------------

     The focus on frail elderly qualifying individuals who 
require the level of care provided in a nursing facility.
     The delivery of comprehensive integrated acute and long-
term care services.
     The IDT approach to care management and service delivery.
     Capitated, integrated financing that allows the PACE 
organization to pool payments received from public and private programs 
and individuals.
     The assumption by the PACE organization of full financial 
risk.
    Taking this authority into account, we are proposing to remove 
460.96(a) for the following reasons. CMS has gained a significant 
amount of experience with the PACE program since the 1999 PACE interim 
final rule, and we now believe that a number of PACE organizations are 
interpreting the exclusion under Sec.  460.96(a) in a manner that is 
not consistent with sections 1894 and 1934 of the Act. Many PACE 
organizations appear to be interpreting Sec.  460.96(a) to allow an IDT 
to exclude from coverage any service that the IDT does not authorize 
for a participant, even if it is clearly covered under the Medicare or 
Medicaid programs and is medically necessary. For example, CMS has 
identified through audits that some PACE organizations have denied 
certain types of covered Part D drugs for participants, even when the 
drug is medically necessary and the participant is qualified to receive 
the drug under Medicare.
    These denials are inconsistent with the statutory requirement under 
sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act to provide all 
items and services covered by Medicare and Medicaid, as well as all 
additional items and services specified in regulations. As we stated in 
the 2006 PACE final rule, in accordance with sections 1894 and 1934 of 
the Act, PACE organizations shall provide all medically necessary 
services including prescription drugs, without any limitation or 
condition as to amount, duration, or scope and without application of 
deductibles, copayments, coinsurance, or other cost sharing that would 
otherwise apply under Medicare or Medicaid. 71 FR 71248. PACE 
organizations are required to provide all Medicare covered services and 
all Medicaid covered services in accordance with the State's approved 
Medicaid plan under current Sec.  460.92(a) and (b). In addition, PACE 
organizations are required to cover other items and services that are 
determined necessary by the IDT to improve and maintain the 
participant's overall health status under current Sec.  460.92(c). In 
order to ensure that IDTs continue to make decisions that are 
consistent with the statutory requirements, we are proposing to remove 
paragraph (a) from Sec.  460.96. We believe that removing paragraph (a) 
is necessary in order to ensure that participants receive the services 
to which they are entitled under PACE.
    By proposing to remove paragraph (a), we do not intend to waive or 
eliminate the IDT approach to care management and service delivery. The 
IDT's authority and responsibility are defined throughout the PACE 
regulations, and under this proposed amendment, the IDT would retain 
its ability to determine which services are appropriate for a 
participant, and would remain responsible for coordinating the care of 
participants 24 hours a day, every day of the year. Additionally, as 
discussed in our proposed changes to Sec.  460.92, we are proposing 
that the IDT's decision to provide or deny required services must be 
based on an evaluation of the participant that takes into account the 
participant's current medical, physical, emotional and social needs, 
along with any current clinical practice guidelines and professional 
standards of care that are applicable to the particular service. We do 
not believe that the current provision at Sec.  460.96(a) affects an 
IDT's authority for determining what services are required under Sec.  
460.92, or changes the IDT's responsibility for coordinating 24 hour 
care delivery. However, we are concerned that the current language at 
Sec.  460.96(a) is confusing and implies that there are some required 
services that are not covered under the PACE program because they are 
excluded. The term ``excluded'' implies that a service is outside of 
the benefit package or never covered. The term ``excluded'' could also 
suggest that services that are not authorized are not appealable, which 
runs counter to our historical

[[Page 9137]]

interpretation of the PACE statutes and regulations and the policies we 
have promulgated to safeguard participants' right to appeal adverse 
decisions by the IDT. While the IDT remains responsible for determining 
the needs of each participant, and then implementing services that 
would meet those identified needs, PACE participants should always have 
the ability to advocate for services, through the service delivery 
request and appeal process, including any services the IDT determines 
not to be necessary (or does not authorize).
    We are proposing to eliminate paragraph (b) from Sec.  460.96 for 
the following reasons. Currently, this paragraph generally excludes 
from PACE coverage private rooms and private duty nursing services, and 
non-medical items for personal convenience, in an inpatient facility, 
but notes that a private room or private duty nursing services would be 
covered if medically necessary, and non-medical items for personal 
convenience would be covered if specifically authorized by the IDT as 
part of the participant's plan of care. We continue to believe that 
services such as a private room, private nursing services, or non-
medical personal care items would not be covered under PACE, unless 
they were medically necessary or authorized by the IDT as part of the 
participant's plan of care. However, we believe that including this 
provision under a section of the regulation titled ``Excluded 
Services'' may give a false impression that the IDT would not have to 
consider whether those services are medically necessary or necessary to 
improve and maintain the participant's overall health status. As we 
previously indicated, the IDT is responsible for comprehensively 
assessing each individual participant to determine their needs, and 
then providing services that would meet those needs. If the IDT 
determines that private nursing services or a telephone are necessary 
to improve and maintain the participant's health status, those services 
would be covered for that participant under PACE. Therefore, these are 
not always or by definition excluded services, and we are proposing to 
eliminate paragraph (b) from the excluded services provision for that 
reason.
    In addition to proposing to eliminate paragraphs (a) and (b), we 
are proposing to redesignate paragraphs (c) through (e) as (a) through 
(c).
    We are not scoring this provision in the Regulatory Impact Analysis 
section because PACE organizations are already required to cover all 
PACE required services under Sec.  460.92, and by modifying excluded 
services we are hoping to increase compliance with existing 
requirements.
3. Responsibilities of the Interdisciplinary Team
    A multidisciplinary approach to care management and service 
delivery is a fundamental aspect of the PACE model of care (see for 
example, the 1999 PACE interim final rule at 64 FR 66254). The 
regulations at Sec.  460.102 require in part that the IDT must 
comprehensively assess and meet the needs of each participant, and that 
the IDT members must remain alert to pertinent input about participants 
from team members, participants, and caregivers. While we believe many 
IDTs appropriately apply the multidisciplinary approach to providing 
care, we have learned through our monitoring efforts that some IDTs may 
not consider pertinent input about participants from specialists and 
other clinical and non-clinical staff, whether employees, or 
contractors (for example, home health service providers). Because these 
individuals have direct contact with participants, including in the 
participant's home, and may have a similar level of expertise as the 
members of the IDT listed in Sec.  460.102(b) or expertise in another 
medical field, they are likely to be in the best position to provide 
input that may contribute to a participant's treatment plan. An IDT 
could not comprehensively assess a participant and provide a 
multidisciplinary approach to care management if it did not consider 
pertinent input about a participant from any individual with direct 
knowledge of or contact with the participant, including caregivers, 
employees, or contractors of the PACE organization, or a specialist. 
For example, if a home care aide informed the organization that a 
participant seems more confused than normal, the IDT might not be able 
to fully meet the participant's needs if it did not take this 
information into consideration. While the IDT is responsible for many 
aspects of care provided to their participants, it might not interact 
with their participants on a regular basis. It is important that the 
IDT consider input from other individuals that have more regular or 
direct contact with the participant population, in order to inform its 
ability to appropriately meet participants' needs. Therefore, we are 
proposing to revise Sec.  460.102(d)(2)(ii) by adding employees, 
contractors, and specialists to the individuals from whom the IDT must 
remain alert to pertinent input. We are proposing to include 
specialists because there may be circumstances in which a participant 
is receiving care or seeking treatment options from a provider that 
specializes in a particular area and we believe that input from these 
medical professionals is vital in order for a PACE organization to 
provide comprehensive care to its participants. We are also proposing 
to add these individuals as unique sub-paragraphs under Sec.  
460.102(d)(2)(ii) in order to emphasize that these are unique groups of 
individuals, each of whom may provide information that is pertinent to 
the IDT. As part of the requirement that the IDT members remain alert 
to pertinent input from these individuals, we expect that the IDT 
members would consider all recommendations for care or services made by 
other team members, participants, caregivers, employees, contractors, 
or specialists for a participant when making treatment decisions.
    We are proposing a minor change to redesignate the provisions at 
Sec.  460.102(d)(1) under a new (d)(1)(i), where we are proposing to 
retain the current requirement that the IDT is responsible for the 
initial assessment, periodic reassessment, plan of care, and 
coordination of 24 hour care delivery. We are also proposing to add a 
new Sec.  460.102(d)(1)(ii) to require the IDT to document all 
recommendations for care and services and, if the service is not 
approved, the reasons for not approving or providing that care or 
service in accordance with the requirements in Sec.  460.210(b). By 
requiring the IDT to document all recommendations for care or services 
and, if not approved or provided, the rationale supporting the IDT's 
decisions, we believe our proposals under Sec.  460.102(d) would better 
position the PACE organization and the IDT to remain alert to pertinent 
information and to share that information with participants, 
caregivers, and appeal entities when applicable.
    We believe the burden associated with this provision is related to 
the documentation of the recommendations in the medical record. We 
discuss and account for the burden of documenting these recommendations 
in the medical record in the regulatory impact analysis.

E. Documenting and Tracking the Provision of Services Under PACE (Sec.  
460.98)

    As discussed at section VII.D. of this proposed rule, under 
sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act, PACE organizations 
provide comprehensive health care services to PACE participants in 
accordance with the PACE program agreement and regulations under those 
sections. Sections 1894(b)(1)(A) and 1934(b)(1)(A)

[[Page 9138]]

of the Act specify in part that PACE organizations must provide 
participants, at a minimum, all items and services covered under titles 
XVIII and XIX of the Act without any limitation or condition as to 
amount, duration, or scope, and all additional items and services 
specified in regulations, based upon those required under the PACE 
protocol.\97\ Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act also 
specify that, under a PACE program agreement, a PACE organization must 
furnish items and services to PACE participants directly or under 
contract with other entities. Additionally, sections 1894(b)(1)(B) and 
1934(b)(1)(B) of the Act require that a PACE organization must provide 
participants access to all necessary covered items and services 24 
hours per day, every day of the year. These statutory provisions ensure 
that a PACE participant can receive all PACE covered services, as 
needed, 24 hours a day, every day of the year. This includes the full 
range of services required under the PACE statute and regulations. We 
have implemented these requirements in several sections of the PACE 
regulations. For example, we require in Sec.  460.70 that PACE 
organizations must have written contracts that meet specific regulatory 
requirements with any outside entity furnishing administrative or care-
related services not furnished directly by the PACE organization, 
except for emergency services as described in Sec.  460.100. We also 
require PACE organizations to establish and implement a written plan to 
furnish care that meets the needs of each participant in all care 
settings 24 hours a day, every day of the year at Sec.  460.98(a). 
Through oversight and monitoring, we recognized that some PACE 
organizations are not appropriately implementing these requirements. 
CMS routinely sees PACE organizations deny or restrict necessary 
services. PACE organizations have also documented in participants' 
medical records that they do not provide access to care and services 24 
hours a day, regardless of participant need. CMS has also learned 
through monitoring of PACE organizations that some organizations are 
not providing all care and services through employees or contractors of 
the organization. Instead, these organizations purport to rely on 
caregivers such as family members to provide necessary care and 
services to participants.
---------------------------------------------------------------------------

    \97\ The original PACE protocol was replaced by the PACE program 
agreement (84 FR 25613).
---------------------------------------------------------------------------

    We are proposing to make several modifications to Sec.  460.98 
``Service Delivery'' in response to failure by certain PACE 
organizations to fulfill their responsibilities to provide all 
necessary care and services, through the use of employees or 
contractors, as expeditiously as the participant's health condition 
requires, and ensure access to those services 24 hours a day, every day 
of the year. Currently, Sec.  460.98(a) requires that PACE 
organizations establish and implement a written plan to furnish the 
care that meets the needs of each participant in all care settings 24 
hours a day, every day of the year. We are concerned that the current 
version of this paragraph places more emphasis on the requirement to 
establish a written plan than it does on the requirement that the PACE 
organization actually implement such a plan by furnishing services. 
Therefore, we are proposing to modify paragraph (a) to more clearly 
emphasize that PACE organizations must not only have a plan to furnish 
care as described in existing Sec.  460.98(a), but must also carry it 
out. We propose to change the title of Sec.  460.98(a) from ``Plan'' to 
``Access to services'' in order to emphasize that the requirement is 
that PACE organizations provide access to services and not just have a 
plan. We also propose to revise the language of Sec.  460.98(a) to 
emphasize that PACE organizations are responsible for providing care 
that meets the needs of each participant, across all care settings, 24 
hours a day, every day of the year, as well as establishing a written 
plan to ensure that care is appropriately furnished. We believe the 
proposed amendments would align with the statutory requirement that 
PACE organizations provide access to necessary care and services at all 
times. We are also proposing to retain the requirement that PACE 
organizations must establish and implement a written plan to furnish 
care, with one modification to specify that the plan must ensure that 
care is appropriately furnished. Additionally, we want to emphasize 
that, both under the current regulation and the proposed amendments, 
the PACE organization is (and would remain, if our proposed amendments 
are finalized) responsible for providing this care regardless of the 
care setting. In other words, regardless of whether the participant 
receives care in the home, at the PACE center, or in an inpatient 
facility, the PACE organization is (and would remain) responsible for 
furnishing care in all care settings, 24 hours a day, every day of the 
year.
    Currently, Sec.  460.98(b) specifies in part that the PACE 
organization must furnish comprehensive medical, health, and social 
services that integrate acute and long term care to each participant, 
and must furnish these services in at least the PACE center, the home, 
and inpatient facilities. We are proposing to make three changes to 
Sec.  460.98(b) by modifying paragraph (b)(1) and adding new paragraphs 
(b)(4) and (5). Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act, 
and the PACE regulations at Sec.  460.70(a), require PACE organizations 
to furnish administrative and care-related services by employees or 
contractors of the organization. Through monitoring and oversight we 
have identified instances where PACE organizations have relied on 
individuals other than employees or contractors to provide necessary 
care and services to participants. To address these concerns we are 
proposing to add a reference to Sec.  460.70(a) at Sec.  460.98(b)(1) 
to reiterate the requirement that PACE organizations furnish all 
services through employees or contractors, regardless of whether the 
services relate to medical, health, or social services, including both 
acute and long term care.
    We are also proposing to add a new paragraph at Sec.  460.98(b)(4), 
to require that all services must be provided as expeditiously as the 
participant's health condition requires, taking into account the 
participant's overall medical, physical, emotional and social needs. 
While there is a similar requirement in Sec.  460.104(e)(4), that 
services that result in a change to the care plan must be provided as 
expeditiously as the participant's health condition requires, we have 
identified through monitoring and oversight that participants routinely 
receive care that is determined necessary but is not formally 
incorporated into the care plan, and is instead handled through 
discipline-specific progress notes or treatment plans. For example, the 
primary care provider may order pain medication for a participant, but 
not incorporate that order into the participant's plan of care. 
Regardless of whether the service is in the plan of care, we believe 
that the PACE organization retains the responsibility of ensuring that 
participants receive all recommended or ordered treatment or care as 
expeditiously as the participant requires. We are proposing to specify 
at Sec.  460.98(b)(4) that services must be provided as expeditiously 
as the participant's health condition requires, taking into account the 
participant's medical, physical, emotional, and social needs. We do not 
believe that we could implement a specific timeframe given the vast 
array of services that PACE organizations provide. Additionally, 
determining how quickly a service must

[[Page 9139]]

be provided would depend on more than just the physical health of the 
participant, and PACE organizations should consider all aspects of the 
participant's condition, including their social, emotional, and medical 
needs, when determining the provision of services. For example, if the 
participant has a high risk of falling, the provision of a service that 
mitigates that risk may be necessary within a very short window of 
time. However, if the necessary service is a preventative trip to the 
dentist for routine care, the provision of that service may not be as 
urgent. These decisions must be made on a case by case basis and the 
PACE organization will be expected to demonstrate that services were 
provided as expeditiously as the participant's medical, physical, 
emotional, and social needs require through monitoring efforts by CMS.
    Lastly, we are proposing adding a new paragraph (b)(5) to Sec.  
460.98 to require PACE organizations to document, track, and monitor 
the provision of services across all care settings, regardless of 
whether services are formally incorporated into the participant's plan 
of care. We are proposing that PACE organizations would be required to 
document, track and monitor necessary services in order to ensure that 
they are actually provided in accordance with Sec.  460.98(b)(4). CMS' 
audits have revealed that in practice, certain PACE organizations do 
not routinely track the services provided and often lack documentation 
that services have been rendered. In order for the IDT to remain alert 
to pertinent information and coordinate care appropriately, we believe 
the PACE organization must be capable of ensuring that all approved 
services are tracked and documented, regardless of whether they are 
formally incorporated into the participant's plan of care. This means 
that not only should a PACE organization document that a service has 
been ordered, but that the PACE organization should also document when 
and how the approved service was provided. We believe that monitoring 
the provision of services is vital for a PACE organization in order to 
ensure their participants are receiving appropriate services, and that 
those services are achieving the desired effect. In addition, CMS 
regulations at Sec.  460.134 require that PACE organizations use 
objective measures to demonstrate improvement across a range of areas, 
such as the utilization of PACE services and the effectiveness and 
safety of staff-provided and contracted services, including the 
promptness of service delivery, among other requirements. We believe 
that this proposal will ensure that PACE organizations are able to more 
effectively meet the minimum requirements established at Sec.  460.134.

F. Documentation in Medical Records Under PACE (Sec.  460.210)

    In accordance with Sec.  460.210(a), a PACE organization must 
maintain a single, comprehensive medical record for each participant, 
in accordance with accepted professional standards, that is accurately 
documented and available to all staff, among other requirements. We 
have previously discussed the importance of maintaining a complete 
record for each participant. In the preamble to the 2006 PACE final 
rule, we stated that, because care for the PACE population will be 
provided by a variety of sources (for example, PACE center employees, 
contracted personnel, hospital staff, nursing home staff, etc.), it is 
critical that all information on the participant be documented in the 
medical record to ensure quality and continuity of care. 71 FR 71326. 
CMS currently specifies at Sec.  460.210(b) the minimum required 
contents of a medical record. Based on audit and oversight experience, 
we have identified additional requirements that we believe should be 
added under Sec.  460.210(b) to ensure that participant medical records 
are fully comprehensive.
    We are proposing to redesignate Sec.  460.210(b)(4) through (12) as 
(7) through (15), and to add three new paragraphs under Sec.  
460.210(b) to address how recommendations for care and treatment, 
decisions regarding those recommendations, and communications relating 
to a participant's care, health or safety should be documented in the 
medical record. Specifically, we are proposing to add a new paragraph 
(b)(4) that would require the PACE organization to document all 
recommendations for services made by employees and contractors of the 
PACE organization, including by all specialists such as dentists, 
neurologists, cardiologists, and others, in the participant's medical 
record. We believe that all recommendations for services from these 
sources must be documented in order for the IDT to remain alert to all 
pertinent information, even if the IDT decides not to pursue the 
recommendations, for example based on a determination that the service 
is not necessary. Recommendations are made based on the employee or 
contractor's determination that a participant might benefit from a 
particular service given the participant's health status or condition. 
Even if the IDT ultimately decides that the recommended service would 
not be necessary to improve and maintain the participant's health 
status, the IDT should document that recommendation in order to remain 
alert to why a particular contractor or employee believed that service 
was necessary as required by Sec.  460.102(d)(2)(ii).
    Additionally, we are proposing to add a new paragraph (b)(5) that 
would require the IDT to document in the medical record the reason(s) 
for not approving or providing a service recommended by one of these 
sources. When an employee, contractor, or specialist recommends a 
service within the scope of their authority to practice, we believe 
that it is necessary for the IDT to consider this information and 
document any decision against providing the recommended service in the 
medical record. For example, if a gastroenterologist recommends that a 
participant receive drug therapy for Hepatitis C, and after reviewing 
the recommendation the IDT determines that treatment is not medically 
necessary or is contraindicated, we are proposing to require the IDT to 
document in the participant's medical record the rationale for not 
providing the recommended drug therapy, including the clinical criteria 
used as the basis for that determination. This would not only ensure 
that the IDT can review the information used to make the decision, but 
also that the participant has access to information about the basis of 
the decision not to provide a recommended service. This proposal would 
also align with the requirement we finalized in the 2019 PACE final 
rule that requires the IDT to document the rationale for determining 
certain services are not necessary in the participant's plan of care 
following the initial comprehensive assessment. 84 FR 25643. While the 
2019 PACE final rule required the IDT to follow this process during the 
development of the initial care plan, we are expanding the requirement 
to account for situations that arise after the initial plan of care is 
developed. For example, a participant may be diagnosed with diabetes 
after the development of the initial care plan, and should the PACE 
organization determine that treatment is not necessary, we would expect 
that it document that decision and the reasons for that decision in the 
participant's medical record.
    We are also proposing to require PACE organizations to maintain 
certain written communications received by the PACE organization in the 
participant's medical record. The PACE program presents unique 
challenges in terms of providing care to participants. PACE

[[Page 9140]]

participants require a nursing facility level of care and often have 
complex medical needs. When a Medicare or Medicaid beneficiary is in a 
nursing home, they have daily interactions with staff, and their needs, 
including changes in condition, are noted by the staff and acted upon. 
PACE participants, on the other hand, largely remain in their own homes 
and might not be seen on a daily basis by PACE organization staff. PACE 
participants do, however, often have regular interactions with 
caregivers, family members, neighbors, and other members of their 
communities, as well as with social service organizations like a local 
Area Agency on Aging (AAA) or Adult Protective Services (APS) agency. 
We believe that maintaining a comprehensive, complete, and accurate 
medical record allows a PACE organization to remain alert to all 
information that is relevant to a participant's care, health, or safety 
and to provide appropriate and timely care to the participant. We also 
believe information about a participant's care, health, or safety 
provided to a PACE organization by any of the sources previously noted 
could be a critical part of providing comprehensive care to the 
participant. We are therefore proposing to add a new paragraph (b)(6) 
to Sec.  460.210, to require PACE organizations to maintain in a 
participant's medical record original documentation of any written 
communication relating to the care, health, or safety of a participant 
that the PACE organization receives from certain sources in any format 
(for example, emails, faxes, letters, etc.). At a minimum, PACE 
organizations would be required to maintain communications from the 
participant, his or her designated representative, family members, 
caregivers, or any other individual who provides information pertinent 
to a participant's care, health or safety, as well as communications 
from advocacy or governmental agencies like an AAA or APS. As we 
indicated in the discussion regarding Sec.  460.200 at section VII.C. 
of this proposed rule, we are also requiring that the PACE organization 
maintain this information in its original written form rather than 
summarizing the information in the participant's record.

G. PACE Participant Rights: Contact Information and Access Requirements 
(Sec.  460.112)

    Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify in part 
that PACE organizations must have in effect written safeguards of the 
rights of enrolled participants including a patient bill of rights. 
Previously, we established in Sec.  460.112 certain rights to which a 
participant is entitled. This includes the participant's right to 
receive accurate, easily understood information and to receive 
assistance in making informed health care decisions under Sec.  
460.112(b); and the participant's right to a choice of health care 
providers, within the PACE organizations network, that is sufficient to 
ensure access to appropriate high-quality health care under Sec.  
460.112(c). CMS is proposing to add three new participant rights in 
Sec.  460.112 to increase beneficiary protections: The right to contact 
1-800-MEDICARE for information or to make a complaint; the right to 
have reasonable and timely access to specialists as indicated by the 
participant's health condition and consistent with current clinical 
practice guidelines; and the right to receive necessary care across all 
care settings, up to and including placement in a long term care 
facility when the PACE organization can no longer maintain the 
participant safely in the community through the support of PACE 
services.
    Section 1804(b) of the Act requires CMS to provide information on 
Medicare programs through 1-800-MEDICARE, as a means by which 
individuals may seek information and assistance for Medicare programs. 
This number may be utilized by Medicare beneficiaries to address 
coverage questions, find plan information, or make complaints related 
to the Medicare program. While PACE organizations are responsible for 
providing to all participants all services covered under Medicare and 
Medicaid, including prescription drugs, and other services determined 
necessary by the IDT to improve and maintain the participant's overall 
health status, PACE organizations are not required to provide this 
toll-free number to participants in any current communication. In the 
MA program, MA organizations must provide this information to 
beneficiaries in their Annual Notice of Change (ANOC) and Evidence of 
Coverage (EOC) under Sec.  422.111 as well as longstanding guidance 
under the Medicare Communications and Marketing Guidelines.\98\ We have 
discovered through oversight and monitoring efforts that PACE 
participants and/or their caregivers are often not aware that, in 
addition to the internal grievance process under Sec.  460.120, 
participants also have the right to contact 1-800-MEDICARE; for 
example, to file quality of care complaints, including filing a 
complaint regarding the delivery of a necessary service. For example, 
if the IDT approved treatment for a specific condition, but the 
participant never received that treatment, the participant or caregiver 
could call 1-800-Medicare to lodge a complaint. Given the frailty of 
the PACE population, we believe it is important that these participants 
be explicitly notified of their right to have their complaints heard 
and resolved by calling 1-800-MEDICARE. When a participant files a 
complaint with 1-800-MEDICARE, the complaint gets logged and routed to 
a CMS account manager or case worker in order to ensure it is 
appropriately responded to and resolved. To ensure PACE participants 
are notified about 1-800-MEDICARE, we are proposing to amend Sec.  
460.112 by adding a new paragraph (b)(4) which would specify that 
participants have the right to contact 1-800-MEDICARE for information 
and assistance, including to make a complaint related to quality of 
care or delivery of a service. PACE organizations are required under 
Sec.  460.116(c)(2) to display the PACE participant rights in a 
prominent location in the PACE center, and to include the participant 
bill of rights in the enrollment agreement under Sec.  460.154(m). 
Thus, we believe adding (b)(4) would ensure each PACE organization 
makes the 1-800-MEDICARE number available to participants by posting it 
in an accessible location at the PACE center and including it in the 
enrollment agreement.
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    We also propose to include a participant's right to have reasonable 
and timely access to specialists as indicated by the participant's 
health condition and consistent with current clinical practice 
guidelines at new Sec.  460.112(c)(3). PACE organizations are 
responsible for ensuring participants receive all necessary care from 
specialists, which is coordinated through the primary care provider and 
IDT in accordance with Sec.  460.102(c)(2)(ii) and (d)(1). In addition, 
as noted in the preamble to the 1999 PACE interim final rule that 
implemented the PACE program (see 64 FR 66260) and the preamble to the 
2006 PACE final rule that implemented Sec.  460.92 of the regulations 
(see 71 FR 71305), PACE organizations must utilize clinical practice 
guidelines to ensure the quality of care for PACE participants. CMS has 
also historically required the use of clinical practice guidelines and 
professional standards in determining outcome measures applicable to 
the care

[[Page 9141]]

of PACE participants as part of the PACE organizations quality 
improvement program (see Sec.  460.134(b)). The 1999 PACE interim final 
rule also established the expectation that PACE organizations will 
utilize current clinical standards as a routine part of their daily 
operations. 64 FR 66260. Because part of the purpose of the quality 
improvement program is to identify areas to improve or maintain the 
delivery of services and patient care, CMS believes that these same 
guidelines and standards should be used as part of care planning and in 
making determinations about services as discussed in section VII.D. of 
this proposed rule. However, CMS' audits of PACE organizations have 
shown that some PACE participants have not received timely access to 
appropriate specialists as necessary to improve and maintain the 
participant's overall health status and in accordance with current 
clinical practice guidelines. Instead, the IDTs at some PACE 
organizations seem to be making their decisions based on factors not 
related to the participant's health condition. In some instances, 
participants have experienced negative outcomes because they have not 
received access to a specialist. Therefore, we propose to redesignate 
paragraph (c)(3) as (c)(5) and add a new paragraph (c)(3), which 
expressly states each participant has the right to reasonable and 
timely access to specialists as indicated by the participant's health 
condition and consistent with current clinical practice guidelines.
    Lastly, we are proposing to add a new paragraph at Sec.  
460.112(c)(4) to address a participant's right to receive care across 
all care settings. A PACE organization is expected to provide for the 
care that is necessary for each participant and determine the 
appropriate setting in which to provide that care, up to and including 
placement in a long term care facility when a participant's condition 
requires it (see Sec.  460.98(a) and (b)). However, CMS' monitoring and 
audit activity show that some PACE organizations are not providing 
long-term care services, even when their IDTs determine a participant 
can no longer live safely in their home and requires a higher level of 
care. We have learned that in some cases, affected participants 
disenroll from PACE in order to receive the long-term care that is 
needed. One of the purposes of the PACE program is to enable frail, 
older adults to live in the community as long as medically and socially 
feasible (see Sec.  460.4(b)(3)). PACE organizations are also 
responsible for furnishing comprehensive medical, health, and social 
services that integrate acute and long-term care, and providing 
services that are accessible and adequate to meet the needs of its 
participants. (See Sec.  460.98(b) and (d)(2) respectively). Lastly, 
enrollment in the PACE program continues until the participant's death, 
regardless of changes in health status, unless the participant 
voluntarily disenrolls, or is involuntarily disenrolled. (See Sec.  
460.160(a)). A PACE organization cannot deny placement in a long-term 
care facility if the IDT determines the participant requires 24 hour 
care but the PACE organization does not have a method for providing 
that care in the home through either its employees or contractors. See 
the relevant discussion under section VII.E. of this proposed rule 
regarding providing participants access to services 24 hours a day, 
every day of the year, across all care settings. In order to provide 
more specific detail about what this fundamental program requirement 
entails, we are proposing to add Sec.  460.112(c)(4) which would state 
that a participant has the right to receive necessary care in all care 
settings up to and including placement in a long term care facility 
when the PACE organization can no longer provide the services necessary 
to maintain the participant safely in the community.

H. Enforcement Action Appeal Rights Under PACE (Sec.  460.56)

    Sections 1894(e)(7) and 1934(e)(7) of the Act specify that, under 
regulations, the provisions at section 1857(h) of the Act, governing 
the procedures for termination of a contract with an MA organization, 
apply to the termination and sanctions of a PACE program agreement and 
PACE organization in the same manner as they apply to an MA 
organization under Medicare Advantage. The current enforcement 
provisions at 42 CFR part 460, subpart D, do not specify a process for 
appeals related to civil money penalties or intermediate sanctions. 
However, at Sec.  460.54, the regulations include appeal rights for 
termination procedures. In the preamble to the 1999 PACE interim final 
rule, we discuss the requirement in the BBA of 1997 that we take into 
account some of the requirements established for MA as we develop 
regulations for PACE organizations in certain areas common to both 
programs, such as beneficiary protections, payment rates, and 
sanctions. 64 FR 66236. CMS has interpreted this legal framework as 
granting the agency the authority to utilize the appeals processes that 
apply to MA organizations under Sec.  422.756 when imposing a 
suspension of enrollment or payment, or imposing civil money penalties 
on PACE organizations. Although it has not been codified in regulation, 
CMS currently provides PACE organizations with these appeal rights when 
imposing enforcement actions under Sec. Sec.  460.42, 460.46, and 
460.48(b).
    Therefore, in an effort to enhance transparency and ensure that 
PACE organizations are aware of their right to appeal an enforcement 
action, we are proposing to add a new Sec.  460.56 in subpart D of the 
PACE regulations to affirmatively state that a PACE organization may 
request a hearing according to the procedures at Sec.  422.756 when CMS 
imposes a sanction or civil money penalty under Sec.  460.42, Sec.  
460.46, or Sec.  460.48(b) on PACE organizations.
    For suspensions of enrollment or payment listed under Sec. Sec.  
460.42 and 460.48(b), CMS will follow the hearing procedures for 
imposing intermediate sanctions at Sec.  422.756(b), which includes the 
right to a hearing before a CMS designated hearing officer under 
subpart N of part 422. Under the process specified at Sec.  422.756(b), 
CMS provides organizations with a notice of intent to impose sanctions 
and their right to a hearing before a CMS hearing officer. 
Organizations are given 15 days from the date of the notice to request 
a hearing.
    For civil money penalties listed under Sec.  460.46, CMS will 
follow the procedures for imposition of civil money penalties at Sec.  
422.756(e)(2)(v), which includes the right to a hearing before an 
Administrative Law Judge (ALJ) under subpart T of part 422. In 
addition, CMS must send a written notice of the agency's decision to 
impose a civil money penalty, the amount of the penalty, the date the 
penalty is due, information about the organization's right to a hearing 
and where to file the request for hearing.
    We believe this proposal will ensure PACE organizations understand 
the process CMS utilizes for imposing these enforcement actions, as 
well as the PACE organization's right to appeal those actions.
    We have not included Sec.  460.48(a) or (c) in the proposed 
regulation because those provisions refer to the termination of a PACE 
program agreement, for which procedures are already set forth at Sec.  
460.54. However, Sec.  460.48(b) authorizes CMS to withhold payment 
under the PACE program agreement, which is similar to the suspension of 
payment provided at Sec.  460.42(b)(1). Therefore, the procedures at 
Sec.  422.756 would apply, as we are proposing to specify at Sec.  
460.56(a).

[[Page 9142]]

I. PACE Definitions (Sec.  460.6)

    As discussed briefly at section VII.A. of this proposed rule, we 
are proposing to modify our existing definition of ``services.'' 
Currently, the term ``services'' is defined as including items and 
services. We are proposing a change to use the term ``service'' in 
Sec.  460.6 to be consistent with the use of the singular in the terms 
defined under Sec.  460.6. The definition of the singular ``service'' 
would also apply to the plural ``services.'' In addition, we are 
proposing to modify our definition of ``service'' to better reflect the 
full scope of the PACE benefit package by stating that the term 
``service'', as used in part 460, means all services that could be 
required under Sec.  460.92, including items and drugs. In the 1999 
PACE interim final rule, we stated that required services included all 
current Medicare services, all Medicaid-covered services as specified 
by the state's approved Medicaid plan, and specifically included 
``drugs and biologicals'' as a part of a list of minimum benefits PACE 
organizations were required to provide. (64 FR 66246 and 66301). In the 
2006 PACE final rule, we removed the specific listing of all required 
services because we determined that it was not possible to provide a 
complete list of all services that must be furnished to participants if 
ordered by the IDT. (71 FR 71281). Instead, we adopted the language 
that is currently used in Sec.  460.92 to identify the services 
required as a part of the PACE benefit package. Since that time, 
through CMS' monitoring and oversight, we have found that some PACE 
organizations do not realize that they are responsible for providing 
the full Medicare benefit, including the provision of Part D drugs. 
Therefore, we are proposing to make changes by adding ``drugs'' to the 
definition of services for PACE purposes which is consistent with how 
we have historically defined the types of services that are required in 
PACE. We believe this change is necessary to remove potential ambiguity 
about the meaning of the terms ``service'' or ``services'' when used in 
the PACE regulations.

VIII. Technical Changes

A. Exclusion of Services Furnished Under a Private Contract (Sec.  
422.220)

    CMS proposes to update regulations that pertain to private 
contracts in order to provide greater clarity as to how such provisions 
should apply. Currently, section 1802(b)(6)(B) of the Act defines 
``physician,'' in respect to private contracts, as a term that is 
defined by paragraphs (1), (2), (3), and (4) of section 1861(r) of the 
Act; however, Sec.  422.220 currently defines ``physician,'' in respect 
to private contracts, using only paragraph (1) of section 1861(r) of 
the Act--narrowing the regulatory definition to exclude physicians who 
are not doctors of medicine or osteopathy. To avoid confusion about 
what kinds of providers the opt-out and private contracting rules apply 
to, we propose to extend the regulatory definition of ``physician'' to 
match the statutory definition when the term is used in regard to 
private contracts. CMS proposes to achieve this by adding references to 
paragraphs (2), (3) and (4) of section 1861(r) of the Act to the 
definition of ``physician'' at Sec.  422.220 to make the regulatory 
provision consistent with the statute.
    In addition, CMS proposes to clarify the prohibition at Sec.  
422.220 in regard to the types of items and services an opt-out 
provider may and may not receive payment for from an MA organization. 
Section 4507 of the BBA of 1997 amended section 1802 of the Act to 
allow private contracts for Part B services when, among other things, a 
physician or practitioner (as those terms are defined in section 
1802(b)(6)) of the Act signs an affidavit that states the physician or 
practitioner will not submit any claim for a Medicare-covered item or 
service except in specified cases of emergency or urgent care, and a 
copy of the affidavit is filed with the Secretary. When a physician or 
practitioner chooses to file a signed affidavit as described in section 
1802(b) of the Act and enters into a private contract with a Medicare 
beneficiary for services covered under Part B, the physician or 
practitioner is considered by CMS to be ``opted out.'' Section 1802 of 
the Act permits private contracts for Part B services under specific 
conditions when a physician or practitioner agrees to forego Medicare 
payment for benefits under Title XVIII, among other requirements (for 
example, related to information provided to the beneficiary) that are 
not specifically relevant here. As relevant to the MA program, section 
1802(b)(1)(B)(ii) states that an opt-out physician or practitioner must 
receive ``no amount for such item or service from an organization which 
receives reimbursement for such item or service under this title 
directly or on a capitated basis.'' The Medicare statute, specifically 
sections 1853 and 1854 of the Act, provide for capitation payments to 
MA organizations for items and services that are covered under Parts A 
and B (excluding hospice; beginning January 1, 2021, kidney acquisition 
costs for kidney transplants; and when there is a national coverage 
determination or legislative change in Medicare benefits). We believe 
that payments for supplemental benefits are outside the scope of the 
statutory restriction on payments to opt-out providers. This is also 
consistent with how Sec.  405.455 limits the consequences of the opt-
out to ``Medicare covered services,'' which means items, services and 
drugs covered by Part A, Part B or Part D. Section 40.19, Chapter 15 of 
the Medicare Benefit Policy Manual reiterates that the rules for 
private contracts do not pertain to items and services ``categorically 
not covered'' under Medicare. Further, in the final rule published June 
29, 2000 (65 FR 40170) that adopted Sec.  422.220, we explained that a 
Medigap policy may cover--and pay--for items and services furnished by 
an opted-out provider when the benefits are not covered by Medicare 
regardless of the opt-out. (65 FR 40262). By amending Sec.  422.220 to 
exclude supplemental benefits--which may only be benefits that are not 
otherwise covered by Medicare--from the prohibition on payment to 
opted-out providers, we would be bringing the MA regulation into 
alignment with the policy in the FFS program.
    Thus, CMS proposes amending Sec.  422.220 to clarify that the 
restrictions on payments to opt-out providers apply only to payments 
for basic benefits (that is, items and services covered under Parts A 
and B). As the term ``basic benefits'' is defined in Sec.  422.100(c) 
and used throughout Part 422 regulations governing the MA program to 
refer to these Medicare benefits, we use that term here and in our 
proposed amendments to Sec.  422.220. We also propose to specify in 
these amendments that MA organizations may make payments to opt-out 
providers for supplemental benefits.
    To ensure that the regulation is clear, we are also proposing some 
restructuring of the regulation so that paragraph (a) states the 
prohibition on payment while paragraphs (b) and (c) direct when an MA 
organization must or may nonetheless pay an opt-out provider. As 
proposed, paragraph (a) largely parrots the existing regulation text 
but limits the prohibition on payment to basic benefits and has new 
text to explain how paragraphs (b) and (c) are the exceptions to the 
prohibition. We propose to designate the last sentence of the current 
regulation, which requires an MA organization to pay for emergency or 
urgently needed services furnished by an opted-out physician or 
practitioner who has not signed a private contract with the 
beneficiary, as paragraph (b); our

[[Page 9143]]

proposal includes some minor technical revisions to the sentence. We 
also propose a new paragraph (c) to state that an MA organization may 
make payment to an opted-out physician or practitioner that are not 
basic benefits, but are provided to a beneficiary as a supplemental 
benefit. We use the terms ``basic benefits'' and ``supplemental 
benefits'' in our proposal consistent with how those terms are used in 
Sec. Sec.  422.100(c) and 422.102 and with our proposals in sections 
II.A. and VI.F. of this proposed rule.

B. Disclosure Requirements (Sec.  422.111)

    On April 15, 2011, CMS amended Sec.  422.111(b)(12) to state that 
CMS may require an MA organization to furnish directly to enrollees, in 
a manner specified by CMS and in a form easily understandable to such 
enrollees, a written explanation of benefits, when benefits are 
provided under Part 422. While the text of paragraph (b)(12) accurately 
reflects the intent of the proposal, its placement is inconsistent with 
the type of information paragraph (b) requires for disclosure; 
paragraph (b) pertains to generalized information about a plan, and 
generally specifies what information must be included in a plan 
description that is provided on an annual basis. The claims information 
that must be disclosed under paragraph (b)(12) is specific and unique 
to an individual enrollee and does not describe the plan's design and 
benefits. Therefore, we do not believe it is appropriate to list this 
notice as part of Sec.  422.111(b) and are proposing to redesignate 
this requirement to paragraph (k) with changes to codify existing 
guidance on the scope and content of the EOB. Under our proposal, the 
substance of current paragraph (b)(12) is moved to paragraph (k), with 
a minor change to delete the phrase ``CMS may require'' and to add the 
word ``must'' after ``MA organization'' to clarify that the notices are 
required.
    Currently, MA organizations are required to disclose claims data 
such as the amount a provider billed a plan and the corresponding 
billing code(s) used, the total cost approved by the plan, the plan's 
share of the total cost, and the enrollee's share of total cost. MA 
organizations are required to disclose specific claims data to their 
enrollees on a monthly or quarterly cycle, in an EOB. The MA 
organization must include all Part C claims processed during the 
reporting period, including all claims for Part A and Part B covered 
items and services, mandatory supplemental benefits, and optional 
supplemental benefits. CMS proposes to codify these existing 
requirements at Sec.  422.111(k)(1), including that the disclosed data 
include the following for each claim: Descriptor, billing code and 
amount billed; total cost approved for reimbursement; share of the 
total cost paid by the plan; and the share of the total cost for which 
the enrollee is liable.
    In addition, the current guidance provides that the claims data 
elements must include year-to-date information. For each reporting 
period, EOBs must contain cumulative, year-to-date totals for the 
amount providers have billed the plan, the total costs that have been 
approved by the plan, the plan's share of the total costs, and the 
enrollee's share of the total costs. We are proposing to codify this 
guidance in paragraph (k)(2) by requiring the EOB to include specific 
year-to-date totals as follows: (i) The cumulative amount billed by all 
providers; (ii) The cumulative total costs approved by the plan; (iii) 
The cumulative share of total cost paid for by the plan; (iv) The 
cumulative share of total cost for which the enrollee is liable; (v) 
The amount an enrollee has incurred toward the MOOP limit, as 
applicable; and (vi) The amount an enrollee has incurred toward the 
deductible, as applicable.
    In addition to EOB claims data elements, we are also proposing to 
codify existing requirements concerning additional information at Sec.  
422.111(k)(3). Currently, an MA organization must also include in the 
EOB (i) clear contact information for enrollee customer service; (ii) 
instructions on how to report fraud; and (iii) for any EOB that 
includes 1 or more denied claims, the EOB must include, in the same 
correspondence, a clear identification of the claim(s) denied as well 
as information about the denial and the enrollee's appeal rights. We 
note that the requirement to inform an enrollee of a claims denial at 
the time the EOB is issued is not a substitute for the denial notices 
required under the appeal regulations in subpart M.
    CMS also proposes to codify the existing issuance cycles for which 
an MA organization must send EOBs. Currently, MA organizations choose 
to either send EOBs on a monthly basis or quarterly basis with per-
claim notification. MA organizations that send EOBs monthly must send 
them before the end of each month that follows the month a claim was 
filed. For example, an MA organization must send a monthly EOB for a 
claim filed on June 1, 2019 no later than July 31, 2019. A per-claim 
notice must be sent on the same cycle as a monthly EOB, which is before 
the end of each month that follows the month a claim was filed; MA 
organizations that choose to send per-claim notices must also send 
quarterly summary EOBs. MA organizations that choose to send EOBs on a 
quarterly basis must send an EOB no later than the end of each month 
following the quarter a claim was filed. A per-claim notice is not a 
substitute for the quarterly EOB. CMS proposes to codify these existing 
requirements at paragraph (k)(4).

C. Special Requirements During a Disaster or Emergency (Sec.  422.100)

    Section 422.100(m)(5)(iii) currently states, ``Provide the 
information described in paragraphs (m)(1), (2), (3), and (4)(i) of 
this section on its website.'' However, Sec.  422.100(m) does not have 
a paragraph (m)(4)(i). In the Medicare Program; Contract Year 2015 
Policy and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs proposed rule (79 FR 1918) and the 
Medicare Program; Contract Year 2016 Policy and Technical Changes to 
the Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs final rule (80 FR 7912), we explained that this requirement 
was to post the disaster and emergency policies in order to facilitate 
enrollee access to needed services while normal care delivery is 
unavailable, which would enable enrollees and providers to know the 
payment policies for out-of-network services provided during disasters. 
Paragraph (m)(5)(i) describes the terms and conditions of payment 
during the public health emergency or disaster for non-contracted 
providers furnishing benefits to plan enrollees residing in the state-
of-disaster area, and is clearly the information we intended to be 
posted by the MA organization. Therefore, we are proposing to amend 
Sec.  422.100(m)(5)(iii) to correct the cross-reference from paragraph 
(m)(4)(i) to paragraph (m)(5)(i). In addition, the regulation text uses 
the term ``website'' but the non-hyphenated non-capitalized term 
``website'' is now commonly used and more consistent with other 
regulations in part 422. We are proposing to update the regulation text 
to use ``website'' as well.

D. Effective Date for Exclusion of Coverage for Kidney Acquisitions 
From Basic Benefits (Sec.  422.100)

    Section 1852(a)(1)(B)(i) of the Act defines the term ``benefits 
under the original Medicare Fee-for-Service program option'' for 
purposes of the requirement in subparagraph (a)(1)(A) that each MA 
organization provide enrollees such benefits. Section 17006(c)(1) of 
the Cures Act amended

[[Page 9144]]

section 1852(a)(1)(B)(i) of the Act by inserting ``or coverage for 
organ acquisitions for kidney transplants, including as covered under 
section 1881(d)'' after ``hospice care.'' Per section 17006(c)(3) of 
the Cures Act, this amendment applies with respect to plan years 
beginning on or after January 1, 2021. Thus, effective January 1, 2021, 
MA plans will no longer cover organ acquisitions for kidney 
transplants.
    In the April 2019 final rule, we amended the definition of ``basic 
benefits'' at Sec.  422.100(c)(1) to include ``additional telehealth 
benefits,'' and in doing so, we also amended Sec.  422.100(c)(1) to 
note the new exclusion of coverage for organ acquisitions for kidney 
transplants (in addition to the existing exclusion for hospice care). 
However, we inadvertently omitted the identification of the 2021 
effective date for this change set forth in the Cures Act.
    We are proposing a technical correction that would add the 2021 
effective date to Sec.  422.100(c)(1) for the exclusion of original 
Medicare coverage for organ acquisitions for kidney transplants. 
Specifically, we propose to correct the phrase ``(other than hospice 
care or coverage for organ acquisitions for kidney transplants)'' to 
read: ``(other than hospice care or, beginning in 2021, coverage for 
organ acquisitions for kidney transplants).'' This provision is 
technical and is therefore not expected to have economic impact beyond 
current operating expenses.

E. Add Back Cost Plan Related Sections From Previous Final Regulation 
(Sec.  422.503)

    In the Medicare Program; Contract Year 2015 Policy and Technical 
Changes to the Medicare Advantage and Medicare Prescription Drug 
Benefit Programs; Final Rule (hereinafter referred to as the May 2014 
final rule), we finalized regulations affecting the cost plan non-
renewal-related requirements (79 FR 29959). The final regulation 
inadvertently identified the non-renewal section as Sec.  
422.503(b)(4)(vi)(G)(5)(i) and (ii) when instead the revisions should 
have been specified as revising Sec.  422.503(b)(5)(i) and (ii). 
Although the regulatory text for the provision was published in the May 
2014 final rule, it was not correctly codified in the CFR. In this 
rule, we propose to designate the provision in the correct paragraph of 
Sec.  422.503. For additional discussion of this provision, including 
public comments on the proposal, see the May 2014 final rule.
    This section provides that an entity seeking to offer an MA 
organization may not accept new enrollees under a section 1876 
reasonable cost contract in any area in which it seeks to offer an MA 
plan. We are proposing to codify a policy adopted in the May 2014 final 
rule (79 FR 29850 through 29851 and 29959). In new Sec.  
422.503(b)(5)(i), we specify that an entity seeking to contract as an 
MA organization must not accept, or share a corporate parent 
organization owning a controlling interest in an entity that accepts, 
new enrollees under a section 1876 reasonable cost contract in any area 
in which it seeks to offer an MA plan. In new Sec.  422.503(b)(5)(ii), 
we specify that an entity seeking to offer an MA organization must not 
accept, or be either the parent organization owning a controlling 
interest of or subsidiary of, an entity that accepts, new enrollees 
under a section 1876 reasonable cost contract in any area in which it 
seeks to offer an MA plan. We are also proposing minor technical 
corrections to the regulation text described in the May 2014 final rule 
to improve the flow of the regulation text.

F. Definition of ``Institutionalized'' for Institutional Special Needs 
Plans (I-SNPs) (Sec.  422.2)

    Section 1859(b)(6)(B)(i) of the Act permits the Secretary to define 
the term ``institutionalized'' for the purposes of establishing 
eligibility criteria for Medicare Advantage (MA) special needs plans 
for individuals who are institutionalized (I-SNPs). In addition, 
section 1851(e)(2)(D) of the Act permits the Secretary to define the 
term for purposes of eligibility for a continuous open enrollment 
person to enroll or change enrollment in an MA plan, except for MA MSA 
plans. As currently defined in Sec.  [thinsp]422.2, 
``institutionalized'' means an MA eligible individual who continuously 
resides or is expected to continuously reside for 90 days or longer in 
a long-term care (LTC) facility which is a skilled nursing facility 
(SNF) nursing facility (NF); SNF/NF; an intermediate care facility for 
individuals with intellectual disabilities (ICF/IID); or an inpatient 
psychiatric facility. CMS codified this definition of institutionalized 
at Sec.  [thinsp]422.2 in the January 2005 final rule) (70 FR 4588). In 
combination with the definition of ``special needs individual'' (also 
in Sec.  422.2) and the eligibility requirements in Sec.  422.52, this 
definition restricts enrollment by MA eligible individuals into I-SNPs, 
which are one of three specific coordinated care plans (CCPs) for 
special needs individuals authorized by section 1859 of the Act. CMS 
also uses this definition to establish a special election period (SEP) 
for institutionalized individuals. Under Sec.  422.62(a)(4), an 
individual who is eligible to elect an MA plan and who is 
institutionalized, as defined in Sec.  [thinsp]422.2, is not limited, 
except as provided in Sec.  422.62(d) for MA MSA plans, in the number 
of enrollment elections or changes the individual may make.
    As currently defined under Sec.  422.2, the definition of 
institutionalized is limited in scope, given the array of institution 
types that exist today. We are proposing to revise the current 
regulatory definition of the term for purposes of defining a special 
needs individual and eligibility for the continuous open enrollment 
period to take into account current guidance and to provide additional 
flexibility to account for changes in the types of institutions that 
could potentially be used for I-SNPs that are not covered by the 
current definition of institutionalized. The current sub-regulatory 
definition for an institutionalized individual is broader than the 
regulatory definition and includes three additional institution types, 
which has led to some confusion among MA organizations seeking to offer 
I-SNPs. We are proposing to expand the definition of 
``institutionalized'' in Sec.  422.2 to reflect the evolution of 
institutions over time and the current landscape of institutional 
health care today. We are proposing to amend the definition of 
institutionalized, as defined in Sec.  [thinsp]422.2, to incorporate 
additional types of long-stay institutions. Our proposed change would 
align the regulatory text with existing operational practice and 
current guidance, clarify our policy for MA organizations, and promote 
the expansion of I-SNP offerings under the MA program.
    The current definition of institutionalized in Sec.  [thinsp]422.2 
is based on a list of five institutional settings. While chapter 16b of 
the Medicare Managed Care Manual (MMCM) also lists the same five types 
of institutions, it also refers to the MA Enrollment and Disenrollment 
Guidance, which lists seven institutional categories. The list in the 
MA Enrollment and Disenrollment Guidance is based on institutions that 
are identified in some way in Titles XVIII or XIX of the Act in 
connection with the Medicare and Medicaid programs. As defined in the 
MA Enrollment and Disenrollment Guidance, an institutionalized 
individual is an individual who resides in an institution of the 
following settings:
     SNF as defined in section 1819(a) of the Act;
     NF as defined in section 1919(a) of the Act;

[[Page 9145]]

     Intermediate care facility for the mentally retarded (ICF/
MR) as defined in section 1905(d) of the Act (now generally referred to 
as an intermediate care facility for the intellectually and 
developmentally disabled);
     Psychiatric hospital as defined in section 1861(f) of the 
Act;
     Rehabilitation hospital or unit as defined in section 
1886(d)(1)(B) of the Act;
     LTC hospital as defined in section 1886(d)(1)(B) of the 
Act; or
     Hospital which has an agreement under section 1883 of the 
Act (a swing-bed hospital). We propose to codify this list of seven 
institutions in the definition of institutionalized such that an 
individual who continuously resides in or is expected to continuously 
reside in one of these institutions for 90 days or longer meets the 
definition.
    We are also proposing to create criteria that would accommodate 
changes in forms of institutional care within American healthcare 
without sacrificing regulatory and statutory provisions surrounding I-
SNPs. Specifically, we are proposing that the definition of 
institutionalized include, subject to CMS approval, an additional 
facility that is not listed previously but (i) furnishes similar long-
term, healthcare services that are covered under Medicare Part A or 
Part B or Medicaid and (ii) whose residents have similar needs and 
healthcare status as residents of one or more facilities previously 
listed. Therefore, under this proposal, CMS could permit an MA 
organization to offer an I-SNP to serve beneficiaries that continuously 
reside in facilities that meet this new standard but are not listed in 
the definition, provided the plan meets the remaining criteria for I-
SNPs.
    We are proposing to amend the definition of institutionalized at 
Sec.  [thinsp]422.2 to incorporate the list of institutions from the MA 
Enrollment and Disenrollment Guidance and to adopt a standard for the 
identification of additional institutions. We believe these proposed 
changes will provide greater clarity in terms of institutional status 
and beneficiary eligibility to enroll in an I-SNP. The current 
regulatory definition of institutionalized lacks critical statutory 
criteria establishing I-SNP enrollment qualifications and institutional 
status. In addition, our proposal broadens the definition of 
institutionalized to include rehabilitation hospitals, LTC hospitals, 
and swing-bed hospitals. The extension of the definition to these other 
institution types will increase enrollee choice regarding MA plan 
options that deliver specialized services to residents of qualifying 
institutions. Further, making the special enrollment period described 
in Sec.  422.62(a)(4) available to residents of these facilities 
reduces confusion among stakeholders and eligible beneficiaries by 
aligning the SEP and I-SNP eligibility policies.
    We seek comment on our proposed amendment to the definition of 
institutionalized at Sec.  [thinsp]422.2 and specifically on the 
expansion of the definition to include rehabilitation hospitals, LTC 
hospitals, swing-bed hospitals, and for other institutions meeting the 
proposed standard. We also solicit comment on whether our proposed 
standard should use additional criteria. We acknowledge that this 
proposed definition does not align with Sec.  423.772, which defines 
``institutionalized individual'' as a full-benefit dual eligible 
individual who is an inpatient in a medical institution or nursing 
facility for which payment is made under Medicaid throughout a month, 
as defined under section 1902(q)(1)(B) of the Act. When we published 
the January 2005 final rule, we noted that provision was an income and 
resource-based definition for the purpose of determining Part D 
premiums and cost sharing subsidies for low-income individuals. The 
term ``institutionalized'' as defined in Sec.  422.4 is used for 
purposes of identifying a vulnerable population of individuals who 
reside in certain institutions and might benefit from enrollment into 
an I-SNP. In proposing a redefinition of ``institutionalized'' at Sec.  
[thinsp]422.2, we continue our position that Sec.  [thinsp]423.772 
serves a different purpose, unrelated to defining an institutionalized 
special needs individual who is eligible for I-SNP enrollment or for 
the special enrollment period for such individuals. We believe that the 
most immediate impact of this definitional change will be on I-SNP 
options, and that this change will help provide further clarity for 
stakeholders regarding the applicability of the definition as part of 
the criteria for establishing I-SNP beneficiary eligibility as it 
pertains to the authority under section 1859(b)(6)(B)(i) of the Act.
    In addition to institution-based enrollment, I-SNPs may also enroll 
MA eligible individuals living in the community, but requiring an 
institutional level of care. These types of I-SNPs are known as 
Institutional Equivalent SNPs. When an I-SNP opts to enroll individuals 
prior to having at least 90 days of institutional level care, a CMS-
approved needs assessment must be conducted. Results of the assessment 
must demonstrate that the individual's condition makes it likely that 
either the length of stay or the need for an institutional level of 
care will be at least 90 days. We are not proposing to amend the 
definition of ``institutionalized-equivalent'' in Sec.  [thinsp]422.2 
because it is not impacted the by our proposed amendment to the 
definition of ``institutionalized'' under Sec.  [thinsp]422.2.
    We are not scoring this provision in the Regulatory Impact Analysis 
section because it codifies and reconciles existing guidance and 
practice for the uses of the term ``institutionalized'' in part 422. We 
believe that there is no impact on stakeholders following the current 
guidance. We are also not scoring this provision in the Collection of 
Information section since we believe all information impacts of this 
provision have already been accounted for under OMB control number 
0938-1296 (CMS-10565), but seek comment on this assumption.
    We seek comment on the proposed amendment to the definition of 
institutionalized under Sec.  [thinsp]422.2 and the potential impact 
the proposal would have on MA organizations offering I-SNPs, enrollees, 
and providers.

G. Medicare Electronic Complaint Form (Sec. Sec.  422.504 and 423.505)

    On April 15, 2011, CMS amended Sec. Sec.  422.504 and 423.505 to 
add a new Sec. Sec.  422.504(a)(15) and 423.505(b)(22) requiring MA and 
Part D plans to address and resolve complaints received through CMS' 
complaint tracking system and to provide a direct link on their main 
web page to the Medicare.gov electronic complaint form. We are 
proposing to modify Sec. Sec.  422.504(a)(15) and 423.505(b)(22) by 
moving Sec. Sec.  422.504(a)(15)(ii) and 423.505(b)(22)(ii) to subpart 
V, Communication requirements. Sections 422.111(h)(2) and 423.128(d)(2) 
require MA and Part D plans to maintain a website. In section VI.H. of 
this proposed rule, we are proposing to add a new Sec. Sec.  422.2265 
and 423.2265, which provides requirements for MA and Part D plan 
websites. Specifically, in Sec. Sec.  422.2265(b) and 423.2265(b), we 
are proposing to identify the required content for websites, including 
a link to the Medicare.gov electronic complaint form. We believe the 
requirement for a direct link is more appropriate in CMS' website 
requirements rather than in Sec. Sec.  422.504(a)(15) and 
423.505(b)(22).
    We are not proposing any substantive changes to Sec. Sec.  
422.504(a)(15) and 423.505(b)(22) other than minor changes in the text 
to make it clear that plans must use the CMS complaint tracking system 
to address and resolve complaints received by CMS against the plan. In 
connection with removing

[[Page 9146]]

Sec. Sec.  422.504(a)(15)(ii) and 423.505(b)(22)(ii), we propose to 
redesignate the substance Sec. Sec.  422.504(a)(15)(i) and 
423.505(b)(22)(i) as Sec. Sec.  422.504(a)(15) and 423.505(b)(22).

H. Advance Notice and Announcement of Part D Risk Adjustment Factors 
(Sec.  423.329)

    The MMA, enacted on December 8, 2003, added a new ``Part D'' to the 
Medicare statute (sections 1860D-1 through 42 of the Act) establishing 
the Medicare Prescription Drug Benefit Program. The final provisions 
implementing the MMA for the MA and Part D programs appeared in the 
January 2005 final rule (70 FR 4588 through 4741 and 70 FR 4194 through 
4585, respectively). The MMA directed that important aspects of the 
Part D program be similar to, and coordinated with law for, the MA 
program.
    As is done in Part C, CMS uses risk adjustment factors to adjust a 
Part D plan's standardized bid amount. Risk adjustment accounts for the 
variation in plan liability for prescription drug costs that result 
from the demographics and health status of a plan's enrollees. In so 
doing, payments to plans reflect the beneficiaries they serve. The Part 
D statute, and the regulations implementing the statute, specify that 
CMS must publish the Part D risk adjustment factors at the time of 
publication of the Part C risk adjustment factors (section 1860D-
15(c)(1)(D) of the Act and Sec.  423.329(b)(4)). Part C risk adjustment 
factors are published through the Advance Notice and Rate Announcement 
process. By statute, the Part C factors are to be announced no later 
than the first Monday in April before the calendar year they will be in 
use (section 1853(b)(1)(B) of the Act and Sec.  422.312(a)(1)(ii)). In 
addition, the statute requires CMS to give MA organizations advanced 
notice of proposed changes in methodology no later than 60 days prior 
to publishing the Rate Announcement, with a 30-day comment period.
    In the vein of the MMA, which directed that important aspects of 
the Part D program be similar to, and coordinated with law for, the MA 
program, CMS interpreted section 1860D-15(c)(1)(D) of the Act to mean 
that Part D risk adjustment factors should be published as part of the 
Advance Notice and Rate Announcement process used for Part C. Since the 
inception of the Part D program in 2006, CMS has consistently proposed 
and finalized the Part D risk adjustment factors via the Advance Notice 
and Rate Announcement, respectively. The existing regulation codifying 
section 1860D-15(c)(1)(D) of the Act mirrors the statutory language of 
publishing Part D risk adjustment at the time of Part C risk adjustment 
factor publication but does not specify the means by which CMS will do 
so. The proposed amendment revises the regulation text to clarify our 
interpretation of the statute under which we will continue to publish 
Part D risk adjustment factors through the Advance Notice and Rate 
Announcement process. Specifically, we propose to amend the 
requirements at Sec.  423.329(b)(4) by revising the paragraph to 
stipulate our intention to publish Part D risk adjustment factors using 
the process through which CMS proposes, adopts, and announces the 
capitation rates and risk adjustment methodology for the MA program. 
This provision codifies the current interpretation of the statutory 
requirement and will not change how we propose and finalize the Part D 
risk adjustment model. Therefore, it is not expected to have economic 
impact beyond current operating expenses. We are not scoring this 
provision in the Regulatory Impact Analysis section since it codifies 
statutory provisions that are followed in practice by the agency.

I. Advance Notice and Announcement of Part C Annual Capitation Rate, 
Benchmarks, and Methodology Changes (Sec.  422.312)

    When enacted by the BBA of 1997, section 1853(b) of the Act 
mandated that the Secretary annually determine and announce capitation 
rates and the risk and other factors to be used in adjusting such rates 
for payment to Medicare Advantage (MA) organizations (then referred to 
as Medicare+Choice organizations). Section 1853(b) of the Act specifies 
the process through which CMS proposes, adopts, and announces changes 
in risk adjustment methodology and capitation rates for the MA program. 
Paragraph (b)(2) requires that CMS provide notice and an opportunity to 
submit comment on proposed changes to be made in the methodology from 
the methodology and assumptions used in the previous announcement. 
Paragraph (b)(1) provides for a final notice in which the rates and the 
risk and other factors used in adjusting payment will be published.
    When first written, section 1853(b)(2) of the Act called for a 45 
day advance notice period for the annual capitation rate and factors 
(for example, risk) used to adjust those rates and did not explicitly 
address a minimum comment period. However, beginning in 2017, 
amendments to section 1853(b) of the Act by the Securing Fairness in 
Regulatory Timing Act of 2015 (SFRTA) require a 60-day advance notice 
period and a 30-day comment period. The regulation implementing the 
advance notice and comment period, as currently written, mirrors the 
statute's original timeframe for issuance of the advance notice and 
requires only a 15-day comment period, which we adopted in the June 26, 
1998, Medicare Program; Establishment of the Medicare+Choice Program 
Interim Final Rule with comment period (63 FR 34968, 35093) to adopt 
the initial implementing regulations for the MA program. While we 
adjusted our operational practice to comply with current statutory 
requirements, we did not update the CFR provision. The proposed 
revision will align the timeframes identified in Sec.  422.312(b)(1) 
and (2) with the current statutory text. Specifically, we propose to 
revise the advance notice of changes in methodology requirements at 
Sec.  422.312(b)(1) and (2) by revising paragraph (b)(1) to say 60 days 
and paragraph (b)(2) to say 30 days. We are not scoring this provision 
in the Regulatory Impact Analysis section since it codifies statutory 
provisions that are followed in practice by the agency.

J. General Requirements for Applicable Integrated Plans and 
Continuation of Benefits (Sec. Sec.  422.629 and 422.632)

    We propose to make technical changes to Sec.  422.629(k)(4)(ii) to 
correct four technical errors from the April 2019 final rule. This 
paragraph references Medicare coverage criteria, however Medicaid 
coverage criteria are also applicable during the unified appeals 
process described in this section. Therefore, we are proposing to add 
the phrase ``and Medicaid'' following ``knowledge of Medicare'' in 
Sec.  422.629(k)(4)(ii).
    Also in paragraph (k)(4)(ii) of this section, there is an incorrect 
reference to the MA organization. We are proposing to replace ``MA 
organization'' with the correct term, ``applicable integrated plan''. 
We also propose adding the word ``integrated'' before ``organization 
determination decision'' to conform to the terminology used elsewhere 
in Sec.  422.629(k). Lastly, we are also proposing to remove the comma 
between the words ``expertise'' and ``in'' in the regulation text to 
clarify that the required expertise is in the topics identified in the 
text.
    In Sec.  422.632(b)(1), we propose to change the citation from 
Sec.  422.633(e) to (d). Section 422.632(b)(1) reflects the requirement 
that the enrollee file a

[[Page 9147]]

request for an integrated appeal in a timely manner, with a cross 
reference to the regulation that sets the timeframe for such appeals. 
Paragraph (d) of Sec.  422.633 sets that timeframe while paragraph (e) 
addresses the requirements for expedited integrated reconsiderations. 
We are therefore proposing to amend Sec.  422.632(b)(1) to use the 
correct cross-reference.

K. Representatives in Part D Appeals (Sec. Sec.  423.560, 423.566, 
423.578, 423.2014, and 423.2036)

    The regulations for Medicare fee-for-service (Part A and Part B) 
claims and entitlement appeals at part 405, subpart I, reference two 
types of representatives--authorized and appointed. Section 405.902 
defines an authorized representative as an individual authorized under 
state or other applicable law to act on behalf of a beneficiary or 
other party involved in an appeal, and separately defines an appointed 
representative as an individual appointed by a party to represent the 
party in a Medicare claim or claim appeal. The term ``representative'' 
is used throughout part 405, subpart I, to refer to either an 
authorized or appointed representative, except in some instances the 
regulations deal exclusively with appointed representatives. See, for 
example, Sec. Sec.  405.910 and 405.1112(c).
    Similarly, for appeals of Medicare Part C organization 
determinations, Sec.  422.561 defines ``representative'' as an 
individual appointed by an enrollee or other party, or authorized under 
state or other applicable law, to act on behalf of an enrollee or other 
party involved in the grievance or appeal. The term ``representative'' 
is then used throughout part 422, subpart M, to refer to either an 
authorized or appointed representative.
    For appeals of Medicare Part D coverage determinations, however, 
Sec.  423.560 defines ``appointed representative'' as meaning either an 
individual appointed by an enrollee or authorized under state or other 
applicable law to act on behalf of the enrollee. The term ``appointed 
representative'' is then used throughout part 423, subparts M and U, to 
refer to either an appointed representative or an authorized 
representative. We believe that including authorized representatives in 
the definition of appointed representatives for Part D appeals is 
confusing since the terms represent two distinct types of 
representation and are treated separately in part 405, subpart I, and 
part 422, subpart M.
    Accordingly, we are proposing to replace the definition of 
``appointed representative'' in Sec.  423.560 with a definition of 
``representative.'' Although the term being defined would change, we 
are proposing no other changes to the definition. To be consistent with 
this proposed change, we are also proposing to replace references to 
appointed representatives in Sec. Sec.  423.566(c)(2), 423.578(b)(4), 
423.2014(a)(1)(ii), and 423.2036(c) and (d) with references to 
representatives. These proposed changes establish consistency in use of 
the term ``representative'' across Medicare programs. These provisions 
codify existing guidance and therefore are not expected to have 
economic impact beyond current operating expenses. We welcome comments 
on these proposed changes.

L. Copayments and Coinsurance in Amount in Controversy Calculations 
(Sec. Sec.  422.600 and 423.2006)

    Section 1869(b)(1)(E) of the Act, as amended by section 521 of 
BIPA, established the amount in controversy (AIC) threshold amounts for 
Administrative Law Judge (ALJ) hearings and judicial review at $100 and 
$1,000, respectively, for Medicare Part A and Part B appeals. Section 
940 of the MMA amended section 1869(b)(1)(E) of the Act to require the 
AIC threshold amounts for ALJ hearings and judicial review to be 
adjusted annually. Section 940(b)(2) of the MMA provided conforming 
amendments to apply the AIC adjustment requirement to the amount in 
controversy thresholds applicable to appeals for Medicare Part C/
Medicare Advantage (MA) plans and health maintenance organization and 
competitive health plans offered pursuant to section 1876 of the Act. 
Under Sec.  405.840, health care prepayment plans offered pursuant to 
section 1833 of the Act are also subject to MA appeals rules, including 
the AIC adjustment requirement. Section 101 of the MMA provides for the 
application of the AIC adjustment requirement to Medicare Part D 
appeals.
    The regulations at part 405, subpart I, specifically Sec.  
405.1006(d), provide the methodology for calculating the AIC in 
Medicare fee-for-service (Part A and Part B) claims and entitlement 
appeals. In general, and subject to the exceptions listed in Sec. Sec.  
405.1006(d)(2) through (6), Sec.  405.1006(d)(1) provides that the AIC 
is computed as the amount that the provider or supplier bills (``the 
actual amount charged the individual'') for the items and services in 
the disputed claim, reduced by any Medicare payments already made or 
awarded for the items or services, and further reduced by ``any 
deductible and/or coinsurance amounts that may be collected for the 
items or services.''
    For Medicare Part C appeals under part 422, subpart M, Sec.  
422.600(b) provides that the AIC is computed in accordance with the 
part 405 rules (concerning appeals of initial determinations under 
original (fee-for-service) Medicare). However, while original Medicare 
uses deductibles and coinsurance (where the beneficiary pays a 
percentage of the cost for an item or service) as forms of cost 
sharing, MA plans may also use copayments (where the enrollee pays a 
flat fee for an item or service) as a form of cost sharing. Because 
Sec.  405.1006(d)(1) provides that the AIC excludes ``any deductibles 
and/or coinsurance amounts that may be collected for the items or 
services,'' questions have arisen regarding whether it is also 
appropriate to exclude any copayment amounts that may be collected for 
the items or services when applying the part 405 rules to appeals of 
Part C organization determinations made under part 422, subpart M. To 
resolve the ambiguity and help ensure that the AIC in Part C appeals is 
reflective of the actual amount at issue for the enrollee, we are 
proposing to revise Sec.  422.600(b) to clarify that the AIC, which can 
include any combination of Part A and Part B services, is computed in 
accordance with part 405, and that any references to coinsurance in the 
part 405 regulations for computing the AIC should be read to include 
both coinsurance and copayment amounts.
    We are also proposing a revision to the regulations for appeals of 
Part D plan sponsor coverage determination and at-risk determinations 
made under part 423, subpart M. The AIC for these appeals is addressed 
in Sec.  423.2006, which does not reference cost-sharing amounts. 
Instead, current sub-regulatory guidance states that applicable 
deductible or coinsurance amounts are excluded from the AIC calculation 
in Part C and D appeals. See Parts C & D Enrollee Grievances, 
Organization/Coverage Determinations, and Appeals Guidance (Parts C and 
D Appeals Guidance), section 70.2 (https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf). To clarify the AIC calculation for Part D appeals and 
help ensure that the AIC in Part D appeals is reflective of the actual 
amount at issue for the enrollee, we are proposing to revise Sec.  
423.2006 to reflect the AIC calculation provisions currently

[[Page 9148]]

set forth in the Parts C and D Appeals Guidance, further revised to 
exclude all cost-sharing amounts, including copayments. Specifically, 
we are proposing to redesignate paragraphs Sec.  423.2006(c)(1) and (2) 
to (2) and (3), and amend (c)(1) to provide general AIC calculation 
provisions for Part D appeals, modeled after those in Sec.  405.1006. 
This section will also provide that the AIC calculation is reduced by 
any cost-sharing amounts, including deductible, coinsurance, or 
copayment amounts, that may be collected from the enrollee for the Part 
D drug(s). This provision codifies existing guidance and is therefore 
not expected to have economic impact beyond current operating expenses.

M. Stipulated Decisions in Part C (Sec.  422.562)

    The regulations for Medicare fee-for-service (FFS) (Part A and Part 
B) claims and entitlement appeals at part 405, subpart I provide for 
stipulated decisions at Sec.  405.1038(c). This provision permits 
Office of Medicare Hearings and Appeals (OMHA) adjudicators to issue 
abbreviated, stipulated decisions if CMS or one of its contractors 
submits a written statement or makes an oral statement at a hearing 
indicating the item or service should be covered or payment may be 
made.\99\ In this situation, an ALJ or attorney adjudicator may issue a 
stipulated decision finding in favor of the appellant or other liable 
parties on the basis of the written or oral statement, and without 
making findings of fact, conclusions of law, or further explaining the 
reasons for the decision.
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    \99\ For appeals in which the amount of payment is an issue 
before the ALJ or attorney adjudicator, Sec.  405.1038(c) further 
provides that the written or oral statement must agree to the amount 
of payment the parties believe should be made.
---------------------------------------------------------------------------

    The MA appeal regulations at Sec.  422.562(d) provides-that the FFS 
appeals procedures in part 405, subpart I apply to appeals of Part C 
organization determinations to the extent they are appropriate and 
identifies specific part 405 regulations that are not appropriate to 
apply to MA appeals. Because MA organizations are not generally 
included within the definition of ``contractors'' in Sec.  405.902, we 
are concerned it is not clear that Sec.  405.1038(c) extends to 
stipulations made by MA organizations in Part C cases. The parallel 
Part D regulations for stipulated decisions at Sec.  423.2038(c) 
specifically apply to stipulations made by Part D plan sponsors.
    For consistency with the Part D regulations (which allow 
stipulations to be made by Part D plan sponsors under Sec.  
423.2038(c)), and to afford OMHA adjudicators the same flexibilities in 
Part C cases where the MA organization that issued the organization 
determination and plan reconsideration no longer disputes that an item 
or service should be covered or that payment should be made, we are 
proposing to revise Sec.  422.562 by adding new paragraph (d)(3) to 
clarify that, for the sole purpose of applying the regulations at Sec.  
405.1038(c) to Part C appeals under part 422, subpart M, an MA 
organization is included in the Sec.  405.902 definition of 
``contractors'' as that definition relates to stipulated decisions 
issued by ALJs and attorney adjudicators. We believe this proposed 
clarification would permit OMHA adjudicators to more efficiently issue 
decisions where there is no longer any material issue in dispute, which 
would ultimately benefit MA enrollees because these decisions could 
potentially be issued, and effectuated by the MA organization, sooner. 
We solicit comment whether our proposed revision to add Sec.  
422.562(d)(3) this way raises unintended consequences for how the part 
405 appeal rules apply to reviews at the ALJ of Part C appeals.

N. Beneficiaries With Sickle Cell Disease (SCD) (Sec.  423.100)

    Section 1860D-4(c)(5)(C)(ii) of the Act contains exemptions from 
DMPs for certain beneficiaries. These exemptions are for an individual 
who receives hospice care, or is a resident of a long-term care 
facility for which FADs are dispensed for residents through a contract 
with a single pharmacy. We codified these exemptions contained in the 
definition of ``exempted individual'' in Sec.  423.100. In addition, 
section 1860D-4(c)(5)(C)(ii)(III) of the Act provides the Secretary 
with the authority to elect to treat other beneficiaries as an exempted 
individual. Consistent with this authority and current clinical 
literature, CMS is proposing to add to the categories of exempted 
beneficiaries in Sec.  423.100 those beneficiaries with SCD.
    A recent analysis \100\ by the Centers for Medicare & Medicaid 
Services Office of Minority Health identified 11,790 Medicare FFS 
beneficiaries in 2016 with SCD. The prevalence rate of SCD in the 
United States among the Medicare FFS population is 0.20 per 1,000 
beneficiaries, of whom 72.6 percent were dually eligible for both 
Medicare and Medicaid. In April 2019, the CDC released guidance \101\ 
that advised against the misapplication of the Guideline for 
Prescribing Opioids for Chronic Pain. Cited examples of misapplication 
included applying the Guideline to patients in active cancer treatment, 
patients experiencing acute sickle cell crises, or patients 
experiencing post-surgical pain. Based on these clinical guidelines and 
information, CMS recognizes the unique clinical nature of SCD, and as 
such believes that beneficiaries with this diagnosis should be exempted 
from DMPs given the: (1) Clinical nature of the disease; (2) unique 
presentation of SCD crises; (3) limited evidence to guide opioid 
administration in SCD; (4) limited knowledge of SCD among providers; 
\102\ and (5) lack of other available therapies or modalities for 
treatment.
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    \100\ Wilson-Frederick SM, Hulihan M, Blaz J, et al. Prevalence 
of Sickle Cell Disease among Medicare Fee-for-Service Beneficiaries. 
CMS Office of Minority Health Data Highlight, No. 15. Baltimore, MD. 
2019. Available from: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Data-Highlight-15-Sickle-Cell-Disease.pdf.
    \101\ Dowell D, Haegerich T, Chou R. N Engl J Med. 2019 Jun 
13;380(24):2285-2287. doi: 10.1056/NEJMp1904190. Epub 2019 Apr 24. 
No abstract available. PMID:31018066. Available from: https://www.nejm.org/doi/full/10.1056/NEJMp1904190.
    \102\ https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Opioid-Prescription-in-Medicare-Beneficiaries-Report.pdf.
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O. Drug Management Programs (DMPs): Additional Requirements (Sec.  
423.153)

    In an attempt to improve the clarity of the DMP regulations, CMS 
proposes the following wording and reference changes:
    In the current DMP regulations, Sec.  423.153(f)(3) states the 
types of coverage limitations on FADs that a Part D sponsor may 
implement and Sec.  423.153(f)(3)(ii) specifically pertains to 
limitations to selected prescribers and pharmacies. Section 
423.153(f)(9) through (13) pertain to the prescriber and pharmacy 
selection process. However, Sec.  423.153(f)(3)(ii) references only 
paragraphs (f)(10) and (11). For completeness, we propose making a 
change to Sec.  423.153(f)(3)(ii) so that it additionally references 
paragraphs (f)(9), (12), and (13). This provision is technical and is 
therefore not expected to have economic impact beyond current operating 
expenses.
    In the current DMP regulations at Sec.  423.153(f)(4), the 
regulation contains two inaccurate cross references. At Sec.  
423.153(f)(4)(ii)(A), a prescriber limitation is listed as existing in 
paragraph (f)(2)(ii)(B) of this section. This paragraph does not exist. 
Therefore, we are proposing to correct this reference to the intended 
paragraph: (f)(3)(ii)(A). In the same Sec.  423.153(f)(4)(ii)(A), a 
reference to the section on eliciting information from

[[Page 9149]]

prescriber lists paragraph (f)(4)(i)(B). CMS proposes correcting this 
reference to the intended paragraph, (f)(2)(i)(B). This provision is 
technical and is therefore not expected to have economic impact beyond 
current operating expenses.
    Section 423.153(f)(8) addresses the timing and exceptions relevant 
to the beneficiary notice requirements. It provides that the second 
notice or alternate second notice must be provided on a date that is 
not less than 30 days, but does not clearly specify that this date is 
to be measured from the date of the initial notice. We propose to add 
this clarifying language to the paragraph. This provision is technical 
and is therefore not expected to have economic impact beyond current 
operating expenses.
    In addition, Sec.  423.153(f)(8) provides that the second notice or 
alternate second notice must be provided on a date that is not more 
than the earlier of two dates: (1) The date the sponsor makes the 
determination; or (2) 60 days after the date of the initial notice. No 
regulatory text is missing; however, we propose to structure the text 
to make it more readable and understandable.
    The current DMP regulations on data disclosure at Sec.  
423.153(f)(15) are the basis for Part D sponsors' reports to OMS and 
MARx. Section 423.153(f)(15)(ii)(C) requires Part D sponsors to provide 
information to CMS about any potential at-risk beneficiary that meets 
paragraph (2) of the definition in Sec.  423.100 that a sponsor 
identifies within 30 days from the date of the most recent CMS report 
identifying PARBs. A PARB meeting this definition refers to a 
beneficiary about whom a new plan sponsor receives notice upon the 
beneficiary's enrollment through the MARx system that the beneficiary 
was identified as potentially at-risk by the immediately prior plan 
sponsor under its DMP, but a coverage limitation on FADs had not yet 
been implemented by the prior plan before the beneficiary disenrolled.
    As we explained in the applicable proposed and final rules,\103\ in 
line with statutory requirements and previous opioid policy, we 
intended to also apply this requirement to at-risk beneficiaries (ARBs) 
who change plans. This intent is also reflected in our current policy 
and technical guidance,\104\ as well as in current practice. CMS needs 
this information to properly oversee Part D drug management programs. 
Therefore, we propose to insert ``or at-risk beneficiary'' to this 
section. This means that Part D sponsors would be required to provide 
information to CMS about any ARB that is reported to the sponsor 
through MARx 30 days from the date of the most recent OMS report, as 
sponsors currently do in practice. This provision is technical and is 
therefore not expected to have economic impact beyond current operating 
expenses.
---------------------------------------------------------------------------

    \103\ See pages 56359-60 of CMS-4182-P (November 28, 2017) and 
pages 16479-80 of the April 2018 final rule.
    \104\ See page 31 of the Part D Drug Management Program Policy 
Guidance (November 20, 2018). https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/2019-Part-D-Drug-Management-Program-Policy-Guidance-Memo-November-20-2018-.pdf.
---------------------------------------------------------------------------

    We would also like to take this opportunity to note mistakes in the 
Data Disclosure section of the Part D Drug Management Program Policy 
Guidance (November 20, 2018) on pages 30-31. In subsection I.2, we 
state that CMS has established the following procedures under which 
sponsors must share information about PARB 2s and ARB 2s. However, we 
clearly meant about PARBs and ARBs generally, as subsection I.2. 
details various data disclosures that Part D sponsors with DMPs must 
make about PARB 1s and ARB 1s also. In addition, in subsection I.2.b. 
on page 31, we state that a sponsor must provide coverage limitation 
information to CMS about PARB 2s and ARB 2s by entering information 
into MARx. Again, we meant PARBs and ARBs generally, as the subsection 
details information sponsors must enter into MARx about PARBs and ARBs 
and it is not limited to PARB 2s and ARB 2s. CMS needs this information 
in order to properly oversee Part D drug management programs, and this 
guidance is in line with existing Sec.  423.153(f)(15)(ii)(D) which 
states that sponsors must provide information about initial notices 
(all PARBs) and second notices (all ARBs). We have not had an issue 
with Part D sponsors providing this information--only a question 
whether there were mistakes.

IX. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), we are required to provide 60-day notice in the Federal Register 
and solicit public comment before a ``collection of information,'' as 
defined under 5 CFR 1320.3(c) of the PRA's implementing regulations, is 
submitted to the Office of Management and Budget (OMB) for review and 
approval. In order to fairly evaluate whether an information collection 
requirement (ICR) should be approved by OMB, section 3506(c)(2)(A) of 
the PRA requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    In this proposed rule we are soliciting public comment on each of 
these issues for the following sections that contain proposed 
collection of information requirements. The provisions that are not 
discussed under this section of the preamble do not propose any new or 
revised collection of information requirements and/or burden and, 
therefore, are not subject to the requirements of the PRA. Please see 
section IX.C. of this proposed rule for the total burden implications.

A. Wage Data

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' (BLS's) May 2018 National Occupational Employment and Wage 
Estimates for all salary estimates (https://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 9 presents the mean hourly wage, 
the cost of fringe benefits and overhead (calculated at 100 percent of 
salary), and the adjusted hourly wage.
BILLING CODE 4120-01-P

[[Page 9150]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.015

BILLING CODE 4120-01-C
    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. We believe that doubling the hourly wage to 
estimate total cost is a reasonably accurate estimation method.
    Wages for Individuals: For beneficiaries, we believe that the 
burden will be addressed under All Occupations (at $24.98/hr) since the 
group of individual respondents varies widely from working and 
nonworking

[[Page 9151]]

individuals and by respondent age, location, years of employment, and 
educational attainment, etc. Unlike our private sector adjustment to 
the respondent hourly wage, we did not adjust this figure for fringe 
benefits and overhead since the individuals' activities will occur 
outside the scope of their employment.

B. Proposed Information Collection Requirements (ICRs)

    The following ICRs are listed in the order of appearance within the 
preamble (see sections II through VIII) of this proposed rule.
1. ICRs Regarding Improvements to Care Management Requirements for 
Special Needs Plans (SNPs) (Sec.  422.101)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-1296 (CMS-10565). Subject to 
renewal, the control number is currently set to expire on June 30, 
2022. It was last approved on June 30, 2019 and remains active.
    This provision proposes to amend Sec.  422.101(f) to implement the 
new requirements legislated by the BBA of 2018 to section 1859(f) of 
the Act for C-SNPs and to extend them to all SNP types. Specifically, 
we propose to add the following new regulations to account for new 
requirements governing SNP enrollee care management and SNP MOC 
submissions. The proposed regulations impacting MA SNP MOCs are as 
follows:
     We propose an amendment to Sec.  422.101(f)(1)(i) 
following the end of the current text that would add the following 
language to the current regulation: ``and ensure that results from the 
initial and annual reassessment conducted for each individual enrolled 
in the plan are addressed in the individual's individualized care plan 
as required under paragraph (f)(1)(ii) of this section.'' In order to 
comply with this rule, MA SNPs would have to provide the necessary 
guidance to and develop related internal processes for employees of the 
SNP that are responsible for incorporating this requirement into their 
MOC.
     We propose a new regulation at Sec.  422.101(f)(3)(ii)(A)-
(C) to implement the requirement that: As part of the evaluation and 
approval of the SNP model of care, NCQA must evaluate whether goals 
were fulfilled from the previous model of care; plans must provide 
relevant information pertaining to the MOC's goals as well as 
appropriate data pertaining to the fulfillment the previous MOC's 
goals; plans submitting an initial model of care must provide relevant 
information pertaining to the MOC's goals for review and approval; and 
if the SNP model of care did not fulfill the previous MOC's goals, the 
plan must indicate in the MOC submission how it will achieve or revise 
the goals for the plan's next MOC. Under this proposed regulation, each 
plan's MOC must provide relevant information pertaining to the MOC's 
goals as well as appropriate data pertaining to the fulfillment the 
previous MOC's goals. Note, all SNPs are currently required to identify 
and clearly define measureable goals and health outcomes as part of 
their MOC under MOC 4, Element B: Measureable Goals and Health Outcomes 
for the MOC.
     Lastly, we propose a new regulation at Sec.  
422.101(f)(3)(iii) to implement the requirements that each SNP MOC 
submitted to CMS will be evaluated by NCQA based on a minimum benchmark 
(of 50 percent) for each of the existing four elements.
    At the time SNP applications are due, MA organizations wishing to 
offer a new SNP will submit a MOC with their SNP application in the 
Application module in HPMS for NCQA review and approval. MA 
organizations wishing to renew their current SNP will submit a MOC in 
the MOC module in HPMS for NCQA review and approval. Based on their MOC 
scores, I-SNPs and D-SNPs receive an approval for a period of 1, 2, or 
3 years. C-SNPs must renew their MOCs annually per section 
1859(b)(6)(B)(iii) of the Act. For calendar year 2020, CMS received 273 
SNP MOCs during the annual submission process and received 11 off-cycle 
submissions during the following time period. We believe these figures 
are representative of future SNP MOC submission totals going forward.
    The burden related to the new requirements for SNP MOCs reflects 
the time and effort needed to collect the information as previously 
described, as well as all other MOC data, and report this information 
to CMS. To derive average costs, we selected the position of registered 
nurse because the SNP nurse usually develops and submits the MOC to CMS 
and typically interacts with the health plan quality registered nurse 
in matters related to the MOC after it is submitted to CMS.
    The SNP will access HPMS and follow the appropriate instructions. 
The MA organization/SNP will click on the Application or MOC module in 
HPMS and download the SNP MOC Matrix document. The SNP will complete 
the document, and then upload its MOC matrix document with the MOC 
narrative. The SNP MOC Matrix upload document outlines the CMS SNP MOC 
standards and elements that must be addressed in the MOC narrative. The 
document also serves as a table of contents for the MOC narrative. 
Training to use the MOC module will be minimal at three hours annually, 
and training materials and non-mandatory webinar sessions are provided 
by CMS at no cost to the SNPs except for the time (and cost) to 
participate.
    Using HPMS contract year 2020 submission data, for off-cycle 
submissions we estimate that 273 SNPs will submit MOCs annually. Note, 
this calculation is based on estimates that include annual MOC 
submissions for C-SNPs and semi-annual submissions for I-SNPs and D-
SNPs. I-SNPs and D-SNPs submitting a MOC can receive MOC approval for 
one, two, or three year terms. For each SNP, we assume an additional 6 
hours at $72.60/hr for a registered nurse. In aggregate, we estimate an 
ongoing annual burden of 1,638 hours (273 SNPs * 6 hr) at a cost of 
$118,919 (1,638 hr * $72.60/hr).
    For plans seeking to revise their MOC based on qualifying events 
during the off-cycle season, we estimate that approximately 11 SNPs (D-
SNPs/I-SNPs) will submit off-cycle MOC changes. For each SNP submitting 
off-cycle MOC changes, we assume an additional 4 hours at $72.60/hr for 
a registered nurse. In aggregate, we estimate an ongoing annual burden 
of 44 hours (11 SNPs * 4 hr) at a cost of $3,194 (44 hr * $72.60/hr).
    Since the proposed Sec.  422.101(f)(3)(iii) sets a minimum 
benchmark for each MOC element, we anticipate that there will be some 
impact to the number of MOC submissions that will not pass NCQA's 
initial MOC review. Looking at data for contract year 2020, our 
proposed element benchmark of 50 percent would have impacted 20 of the 
273 MOCs submitted, or 7.3 percent. For contract year 2020, seven plans 
required submitting their MOCs for revision based on the current 
scoring system and an additional seven plans decided to withdraw their 
MOCs before the revision process for a total of 14 MOCs. The 14 SNPs 
must resubmit, taking 3 hours, or half the full 6 hour estimate. In 
aggregate, we estimate an added ongoing annual burden of 42 hours (14 
SNPs * 3 hr) at a cost of $3,049 (42 hr * $72.60/hr).
    For the aforementioned MOC requirements, we estimate an added 
annual burden of 1,724 hours (1,638 hr for MOC submissions + 44 hr for 
MOC revisions + 42 hr for MOC resubmissions) at a cost of $125,162 
($118,919 + $3,194 + $3,049, respectively).

[[Page 9152]]

    Separate from the proposed changes to the MOC process, we propose a 
new regulation at Sec.  422.101(f)(1)(iv) to implement a new 
requirement that plans provide face-to-face encounters with consenting 
individuals enrolled in the plan not less frequently than on an annual 
basis. The new regulation would require an annual face-to-face visit, 
that is, in-person or by remote technology such as telehealth, to occur 
starting within the first 12 months of enrollment within the plan. CMS 
would consider a visit to or by employed and/or contracted staff that 
perform clinical functions, such as direct enrollee care, as a 
qualifying encounter. Such activities may include, but are not limited 
to, annual wellness visits and/or physicals, HRA completion, meeting 
with the interdisciplinary team (IDT), care plan review, health-related 
education, and care coordination activities. It is also the expectation 
that any concerns related to physical, mental/behavioral health, and 
overall health status, including functional status, are addressed and 
any appropriate referrals, follow-up, and care coordination activities 
are provided or scheduled as necessary.
    We believe that most, if not all, SNP enrollees will have a 
qualifying face-to-face encounter as proposed under Sec.  
422.101(f)(1)(iv) through an initial or annual HRA, a qualifying 
encounter with an IDT member, or an annual wellness visit. We estimate 
that approximately 734 SNPs that have at least 11 members will need to 
track face-to-face encounters for their enrollees annually. For each 
SNP tracking face-to-face encounters, we assume 4 hours of work by SNP 
personnel, typically a registered nurse. In aggregate, we estimate 
2,936 hours (734 SNPs * 4 hr) at a cost of $213,154 (2,936 hr * $72.60/
hr).
    In addition, we propose to require in new Sec.  422.101(f)(1)(iii) 
that MA organizations offering a SNP must provide each enrollee with an 
IDT in the management of care that includes a team of providers with 
demonstrated expertise, including training in an applicable specialty, 
in treating individuals similar to the targeted population of the plan. 
We propose that plans develop and implement this requirement into their 
MOC components to assure an effective management structure. We believe 
this requirement is consistent with currently approved information 
tracking practices for all existing SNPs, and thus, does not impose any 
new or revised ICRs and/or burden beyond what is currently approved by 
OMB under the aforementioned control number.
    For the remaining proposed regulations under Sec.  422.101(f)(2) 
and (3), SNP MOC submission requirements and burden are currently 
approved by OMB under said control number. The proposed changes would 
codify current guidance governing SNP MOC submission practices, which 
is captured under the active information collection request.
2. ICRs Regarding Contracting Standards for Dual Eligible Special Needs 
Plan (D-SNP) Look-Alikes (Sec.  422.514)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0753 (CMS-R-267). Subject to 
renewal, the control number is currently set to expire on December 31, 
2021. It was last approved on December 3, 2018 and remains active. The 
proposed requirements are associated with burden on MA plans identified 
as D-SNP look-alikes under Sec.  422.514(d) (see section IX.B.2.a. of 
this proposed rule) and burden on the enrollees in these MA plans (see 
section IX.B.2.b. of this proposed rule).
    As described in section II.E. of this proposed rule, we propose new 
contract requirements that we believe are necessary to fully implement 
D-SNP requirements, especially those related to Medicare-Medicaid 
integration codified at Sec. Sec.  422.2, 422.107, and 422.629 through 
422.634 pursuant to the BBA of 2018. We are proposing a prohibition on 
CMS entering into or renewing a contract for any non-SNP MA plan that 
an MA organization offers, or proposes to offer that:
     Projects in its bid submitted under Sec.  422.254 that 80 
percent or more of the plan's total enrollment are enrollees entitled 
to medical assistance under a state plan under Title XIX of the Act, or
     Has actual enrollment, as determined by CMS in January of 
the current year, consisting of 80 percent or more of enrollees who are 
entitled to medical assistance under a state plan under Title XIX of 
the Act, unless the MA plan has been active for less than 1 year and 
has enrollment of 200 or fewer individuals at the time of such 
determination.
    Our proposed dually eligible enrollment threshold at Sec.  
422.514(d) would apply to any plan that is not a SNP as defined in 
Sec.  422.2. We propose applying this requirement only to non-SNP plans 
to allow for the disproportionate dually eligible enrollment that 
characterizes D-SNPs, I-SNPs, and some C-SNPs by virtue of the 
populations that the statute expressly permits each type of SNP to 
exclusively enroll. The proposed requirement would also be limited to 
states where there is a D-SNP or any other plan authorized by CMS to 
exclusively enroll dually eligible individuals, such as MMPs. We 
propose this limitation because it is only in such states that the 
implementation of D-SNP requirements necessitates our proposed new 
contracting requirements. That is, in a state with no D-SNP or 
comparable managed care plan, the D-SNP requirements have not had any 
relevance historically, and therefore the operation of a D-SNP look-
alike would not have any material impact on the full implementation of 
federal D-SNP requirements.
    The proposed contract requirement based on the projected enrollment 
in the plan bid at Sec.  422.514(d)(1) would prevent MA organizations 
from designing new D-SNP look-alikes. Under our proposal at Sec.  
422.514(d)(2), we would make the determination whether an MA 
organization has a non-SNP MA plan with actual enrollment exceeding the 
established threshold using the enrollment in January of the current 
year. Using data from the contract year 2020 bid submission process, we 
estimate that there are 67 MA plans that have enrollment of dually 
eligible individuals that is 80 percent or more of total enrollment. Of 
these 67 MA plans, 62 plans are in states where there are D-SNPs or 
comparable managed care plans and would be subject to Sec.  422.514(d). 
These 62 plans project a total enrollment of 180,758 for contract year 
2020.
    MA organizations would likely terminate at the end of the plan year 
those plans that exceed our proposed criteria in Sec.  422.514(d)(1) 
and (2). The MA organization would have the opportunity to make an 
informed business decision to transition enrollees into another MA plan 
by: (1) Identifying, or applying and contracting for, a qualified 
existing MA plan, including a D-SNP, in the same service area; or (2) 
creating a new D-SNP through the annual bid submission process. 
Alternatively, the terminating plan may choose to not transition 
enrollees.
    The changes required of MA organizations based on this proposed 
rule would trigger collection of information by D-SNP look-alikes (see 
section IX.B.2.a. of this proposed rule) and their enrollees (see 
section IX.B.2.b. of this proposed rule). While we cannot predict the 
action of each affected MA organization, we base our proposed burden 
estimates on the current landscape of D-SNP look-alikes, the 
availability of D-SNPs or MA plans under the same parent organization 
in

[[Page 9153]]

the same service area, and the size and resources of the MA 
organization.
a. Burden on MA Plans
    At Sec.  422.514(e), we propose a process for transitioning 
individuals who are enrolled in a D-SNP look-alike to another MA-PD 
plan offered by the MA organization, or by another MA organization with 
the same parent organization as the MA organization, to minimize 
disruption as a result of the prohibition on contract renewal for 
existing D-SNP look-alikes. Under our proposal, an MA organization with 
a non-SNP MA plan determined to meet the enrollment threshold in 
proposed paragraph (d) could transition enrollees into another MA plan 
offered by the same MA organization (or by another MA organization with 
the same parent organization as the MA organization), as long as that 
MA plan meets certain proposed criteria. This process would allow an MA 
enrollee to be transitioned from one MA plan offered by an MA 
organization to another MA plan without having to complete an election 
form. Under this process, as described in Sec.  422.514(e)(2), the MA 
organization would be required to describe changes to MA-PD benefits 
and provide information about the MA-PD plan into which the individual 
is enrolled in the Annual Notice of Change that the MA organization 
must send, consistent with Sec.  422.111(a), (d), and (e) and proposed 
Sec.  422.2267(e)(3).
    Under Sec.  422.514(e)(1), we propose to allow a terminating D-SNP 
look-alike to transition enrollment to another MA plan (or plans) only 
if the resulting total enrollment in each of the non-SNP MA plans 
receiving enrollment consists of less than 80 percent dually eligible 
individuals. This criterion would ensure that the enrollment 
transitions under this regulation do not result in another non-SNP MA 
plan being treated as a D-SNP look-alike under proposed Sec.  
422.514(d). Proposed Sec.  422.514(e)(1)(ii) would require that any 
plan receiving transitioned enrollment be an MA-PD plan as defined in 
Sec.  422.2. Proposed paragraph (e)(1)(iii) would require that any MA 
plan receiving transitioned enrollment from a D-SNP look-alike have a 
combined Part C and D premium of $0 after application of the premium 
subsidy for full subsidy eligible individuals described at Sec.  
423.780(a).
    The proposed process at Sec.  422.514(e) would allow, but not 
require, the MA organization to transition dually eligible enrollees 
from D-SNP look-alikes into D-SNPs and allow such enrollees to retain 
coverage under the MA organization and benefit from the care 
coordination and Medicaid benefit integration offered by a D-SNP. 
Proposed paragraph (e)(1) specifies that the MA organization could only 
transition individuals in a D-SNP look-alike into another MA plan 
(including a D-SNP) if they are eligible to enroll in the receiving 
plan. This proposed transition process is conceptually similar with 
``crosswalk exception'' procedures proposed in section VI.C. of this 
proposed rule and in Sec.  422.530(a) and (b); however, our proposal 
would allow the transition process to apply across contracts or legal 
entities and plan types (for example, non-SNP to SNP).
    While the proposed prohibition on D-SNP look-alikes would only 
apply to plans starting in the 2022 plan year, we intend for the 
transition process to take effect in time for D-SNP look-alikes 
operating in 2020 to utilize the transition process for enrollments to 
be effective January 1, 2021. Based on the current landscape for D-SNP 
look-alikes, we believe the vast majority of these plans would be able 
to move current enrollees into another MA plan using the proposed 
transition process. By 2022, we expect that all 62 D-SNP look-alikes 
would choose to transition current enrollees to another MA plan for the 
forthcoming contract year. We estimate the burden for transitioning 
current enrollees to another MA plan at an average of 2 hours at 
$74.00/hr for a business operations specialist to submit enrollment 
changes to CMS. D-SNP look-alikes that transition enrollees into 
another MA plan would take less time than D-SNP look-alikes that 
transition eligible beneficiaries into a D-SNP. The 2-hour time 
estimate accounts for any additional work to confirm an enrollee's 
Medicaid eligibility for D-SNP look-alikes transitioning eligible 
enrollees to a D-SNP. For the estimated 62 D-SNP look-alikes, the one-
time burden for transitioning enrollees to another MA plan by the 2022 
plan year would be 124 hours (62 D-SNP look-alikes * 2 hr/response) at 
a cost of $9,176 (124 hr * $74.00/hr).
    The vast majority of MA organizations with existing D-SNP look-
alikes also have an MA plan with a premium of $0 or a D-SNP in the same 
service area as the D-SNP look-alike. Therefore, we do not believe MA 
organizations would choose to create a new D-SNP as a result of this 
proposed rule. The prevalence of existing MA plans and D-SNPs also make 
it unlikely that an MA organization would need to expand a service area 
for an existing MA plan or D-SNP. Since we estimate fewer than 10 
respondents would apply as a new D-SNP or expand an existing MA plan 
service area, the information collection requirements are exempt under 
5 CFR 1320.3(c) from the requirements of the PRA.
    Additionally, we do not expect any plans would be required to send 
affected enrollees a written notice consistent with the non-renewal 
notice requirements at Sec.  422.506(a)(2) and described at proposed 
Sec.  422.514(e)(4), as we anticipate all MA organizations with D-SNP 
look-alikes would be able to transition their enrollees into another MA 
plan (or plans). However, we propose the requirement to ensure 
protection of enrollees if the situation did occur.
    In subsequent years, we estimate that at most five plans per year 
would be identified as D-SNP look-alikes under Sec.  422.514(d) due to 
meeting the enrollment threshold for dually eligible individuals or 
operating in a state that will begin contracting with D-SNPs or other 
integrated plans. We believe that these plans would terminate and 
transition their membership into another MA plan or a D-SNP. Therefore 
the annual burden after the 2022 plan year is estimated at 10 hours (5 
plans * 2 hr/plan) at a cost of $740 (10 hr * $74.00/hr) for a business 
operations specialist to transition enrollees into a new MA plan. The 
impacts are summarized in Table 10.
b. Burden on MA Plan Enrollees
    Proposed Sec.  422.514(e)(2) would allow any individual 
transitioned from a D-SNP look-alike to another MA plan to stay in the 
MA plan receiving the enrollment or make a different election. The 
enrollees may choose new forms of coverage for the following plan year, 
including a new MA plan or services through the original Medicare fee-
for-service program option and a Prescription Drug Plan (PDP). Because 
the proposed enrollment transition process would be effective on 
January 1 and notices would be provided during the annual election 
period, affected individuals would have opportunities to make different 
plan selections through the annual coordinated election period (prior 
to January 1) or the open enrollment period (after January 1). 
Additionally, dually eligible individuals qualify for a special 
election period at Sec.  423.38(c).
    We estimate that one percent of the 180,758 transitioning D-SNP 
look-alike enrollees would select a new plan or the original Medicare 
fee-for-service program and PDP option accepting the transition into a 
different MA plan or D-SNP under the same MA organization as the D-SNP 
look-alike they are currently enrolled in. Based on our experience

[[Page 9154]]

with passive enrollment of dually eligible beneficiaries into a new 
plan under the same parent organization for MMPs in the Financial 
Alignment Initiative, we estimate that 1,808 enrollees (180,758 
transitioning D-SNP look-alike enrollees * 0.01), would opt out of 
their new plan for contract year 2021. Consistent with our currently 
approved burden estimates under the aforementioned control number, the 
enrollment process would require 0.5 hours. For this proposed rule, the 
total added burden for enrollees would be 904 hours (1,808 enrollees * 
0.5 hr/response) at a cost of $22,582 (904 hr * $24.98/hr).
    As stated previously, we believe that in subsequent years, at most 
five plans would be identified as D-SNP look-alikes and therefore this 
proposed regulation would have a much smaller impact on MA enrollees. 
Since the current 62 D-SNP look-alike plans have 182,758 enrollees in 
62 plans, we estimate 14,577 enrollees (180,758 * 5/62) in five plans. 
Therefore, the maximum number of enrollees affected per year is 
estimated as 146 enrollees (14,577 total enrollees estimated in five 
plans * 0.01 who would select another plan). This would amount to a 
maximum annual burden of 73 hours (146 enrollees * 0.5 hr) at a cost of 
$1,824 (73 hr * $24.98/hr).
c. Summary
    The burden for the proposed provisions are summarized in Table 10.
    [GRAPHIC] [TIFF OMITTED] TP18FE20.016
    
3. ICRs Regarding Mandatory Drug Management Programs (DMPs) (Sec.  
423.153)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0964 (CMS-10141). Subject to 
renewal, the control number is currently set to expire on November 30, 
2021.
    As discussed in section III.A. of this proposed rule, we propose to 
codify the statutory requirement that Part D plan sponsors establish 
DMPs by 2022. We also propose that, beginning in 2021, DMPs evaluate 
enrollees with a history of opioid-related overdose as potential at-
risk beneficiaries (PARBs) that CMS reports to sponsors through the 
Overutilization Monitoring System (OMS).
    As brief background on DMPs for context for this section, in 
general, the DMP requirements are codified at Sec.  423.153(f). These 
provisions require Part D sponsors to conduct case management of PARBs 
identified by OMS through contact with their prescribers to determine 
if a beneficiary is at-risk for abuse or misuse of opioids and 
benzodiazepines.\105\ After case management is completed, if a plan 
sponsor intends to limit a beneficiary's access to coverage of opioids 
and benzodiazepines, the sponsor must provide an initial written notice 
to the beneficiary and their prescribers. After the beneficiary has a 
30-day time period to respond, the plan sponsor sends a second notice 
to the beneficiary, if the sponsor determines the beneficiary is an at-
risk beneficiary (ARB), that the sponsor is implementing a coverage 
limitation on opioids and/or benzodiazepines, or an alternative second 
notice if the plan sponsor determines that the beneficiary is not an

[[Page 9155]]

ARB. Thus, every beneficiary who receives an initial notice receives a 
second or alternate second notice.
---------------------------------------------------------------------------

    \105\ CMS currently designates both opioids and benzodiazepines 
as ``Frequently Abused Drugs'' for purposes of DMPs. See ``Part D 
Drug Management Program Policy Guidance'', November 20, 2018, p. 6; 
https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/2019-Part-D-Drug-Management-Program-Policy-Guidance-Memo-November-20-2018-.pdf.
---------------------------------------------------------------------------

    In 2019, a CMS analysis found that a majority of Part D contracts 
(669 of 779), or 85.9 percent) voluntarily included a DMP. Our proposal 
to codify the requirement that sponsors adopt DMPs would only affect 
the remaining minority of sponsors currently not offering such 
programs. There are 111 contracts (plan sponsors) run by 79 parent 
organizations that would be involved. Furthermore, we estimate that 
only 158 additional PARBs will be identified by these 111 contracts due 
to meeting the minimum OMS criteria. We estimate burden at the parent 
organization level because we believe that is a closer reflection of 
the number of systems that will need to be updated versus the contract 
level.
    The estimated reporting burden to these sponsors has four aspects. 
Under Sec.  423.153(f), sponsors must: (1) Design a DMP; (2) conduct 
case management, which includes sending written information about PARBs 
to prescribers; (3) program and issue written notices to PARBs and 
ARBs; and (4) disclose data to CMS about the outcome of case management 
via OMS and about any coverage limitation information into MARx.
    For one-time initial development, we estimate it will take each 
parent organization without a DMP 80 hours for a team of clinical and 
non-clinical staff to design its DMP. Thus, we estimate 6,320 hours (79 
parent organizations * 80 hr) program-wide for all remaining parent 
organizations to develop DMPs consistent with the requirements of Sec.  
423.153(f). We solicit comment as to the accuracy of these estimates.
    We estimate that development will likely require two pharmacists 
(working at $118.90/hr) and two general operation managers (working at 
$119.12/hr) per organization. Thus, the hourly wage for the 
organization's development team is $476.04 [2 pharmacists * $118.90/hr] 
+ [2 managers * $119.12/hr]. The labor rates for the development team 
is summarized in Table 11.

                                 Table 11--Labor Rates for the Development Team
----------------------------------------------------------------------------------------------------------------
                                                                     Adjusted
                           Occupation                               hourly wage      Number of      Total wages
                                                                      ($/hr)           staff          ($/hr)
----------------------------------------------------------------------------------------------------------------
General operations manager......................................          119.12               2          238.24
Pharmacist......................................................          118.90               2          237.80
                                                                 -----------------------------------------------
    Total.......................................................          238.02               4          476.04
----------------------------------------------------------------------------------------------------------------

    Therefore, each of the 79 parent organizations affected by this 
proposal will spend 80 hours at a cost of $38,083 (80 hr * $476.04/hr) 
for the team of four professionals to develop the DMP. The aggregate 
burden will therefore be 6,320 hours (79 parent organizations * 80 hr) 
at a cost of $3,008,573 (6,320 hr * $476.04/hr).
    Once a DMP is developed and in place, the primary operations for 
impacted sponsors will involve case management by the sponsor to assess 
those enrollees reported as PARBs by CMS's OMS. The 111 contracts run 
by 79 parent organizations that did not voluntarily establish a DMP are 
generally smaller plans that in some cases offered alternative means of 
managing comprehensive beneficiary care, such as through PACE. They 
enroll only 410,000 Part D beneficiaries (less than 1 percent of total 
Part D enrollment in 2019). Accordingly, based on analysis of the first 
3 quarters (January, April, and July 2019) of the OMS report data, we 
found that only 127 beneficiaries (about 0.7 percent) who met the 
minimum OMS criteria were not reported thus far in 2019 by CMS to the 
sponsors, because the sponsors did not have a DMP. Using this estimate, 
we can project that annually that about 158 beneficiaries would not be 
reported to their plan sponsors due to not having a DMP until DMPs 
become mandatory no later than January 1, 2022.
    Once required DMP policies are developed and operational, sponsors 
would have to case-manage their PARBs (as outlined in Sec.  
423.153(f)(2)). The case management requirement includes a requirement 
that sponsors send written information to prescribers about PARBs. We 
estimated it would take an average of 5 hours for a sponsor to case-
manage a PARB. We assume certain components of case management can be 
completed by staff of differing specialization and credentialing. We 
assume that 2 of the 5 hours on average would be conducted by a 
pharmacist (such as initial review of medication profiles, utilization, 
etc.) at $118.90/hr, 2 hours would be conducted by a health technician 
(``Technician, All other'') at $50.90/hr, and 1 hour would be conducted 
by a physician at $202.86/hr to work directly with providers on 
discussing available options and determining the best course of action. 
In aggregate, we estimate an annual burden for an estimated 158 
enrollees annually newly subject to case management under this proposal 
to cost $85,708.68 per year (158 enrollees * ([2 hr * $118.90/hr for 
Pharmacists] + [2 hr * $50.90/hr for Technicians, All other] + [1 hr * 
$202.86/hr for Physician]).
    The 79 Part D parent organizations affected by this proposal also 
would have to upload beneficiary notices into their internal claims 
systems before they could issue them. We estimate that it will take 
each, on average, 5 hours at $86.14/hr 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). In 
aggregate, we estimate a one-time burden of 395 hours (5 hr * 79 
sponsors) at a cost of $34,025 (395 hr * $86.14/hr).
    Since currently 5 percent of PARBs receive an initial and second 
notice (or alternate second notice), we estimate that 8 beneficiaries 
(158 beneficiaries * 0.05) would receive an initial notice and 8 would 
receive a second notice (or alternate second notice). Since fewer than 
10 beneficiaries are affected by this, the burden of sending these 
notices is exempt from PRA.
    As to disclosure of DMP case management outcomes data to CMS 
pursuant to Sec.  423.153(f)(15), as stated earlier, the plan sponsors 
newly impacted by a mandatory DMP policy would be required to report to 
CMS the outcome of case management via OMS and any associated coverage 
limitation information into MARx. We estimate that it would take 
sponsors on average 1 minute (0.0167 hr) to report this information to 
OMS and MARx. In aggregate, we estimate an annual burden of 2.6386 
hours (158 newly identified PARBs annually * 0.0167 hr) at a cost of 
$134 (2.6386 hr * $50.90/hr).

[[Page 9156]]

4. ICRs Regarding Beneficiaries With History of Opioid-Related Overdose 
Included in Drug Management Programs (DMPs) (Sec.  423.100)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0964 (CMS-10141). Subject to 
renewal, the control number is currently set to expire on November 30, 
2021.
    Our proposal under Sec.  423.100 to identify and report 
beneficiaries with a history of opioid-related overdose through OMS to 
Part D plan sponsors would mean that additional beneficiaries would be 
reported by OMS as PARBs. Based on July 2017 through June 2018 opioid-
related overdose data, CMS's internal analysis estimates that about 
18,268 enrollees meet the proposed criteria of an opioid-related 
overdose and would be PARBs. We project using this one-year estimate 
that in 2021 about 18,268 additional PARBs with an opioid-related 
overdose would be identified and reported by OMS. The estimated 
reporting burden associated with these new PARBs has three of the four 
aspects of the burden we estimated for mandatory DMPs, as previously 
described. Under Sec.  423.153(f), sponsors must: (1) Conduct case 
management, which includes sending written information about PARBs to 
prescribers; (2) issue written notices to PARBs and ARBs; and (3) 
disclose data to CMS about the outcome of case management via OMS and 
about any coverage limitation information into MARx.
    The assumptions surrounding case management by plan sponsors in the 
previous section were applied to the estimated population of 18,268 
PARBs projected to be identified annually under this proposal. In 
aggregate, we estimate an annual burden for a projected 18,268 
enrollees annually newly subject to case management, including sending 
the required written information to the prescribers of PARBs, under 
this proposal to cost $9,909,659.28 per year (18,268 enrollees * ([2 hr 
* $118.90/hr for Pharmacists] + [2 hr * $50.90/hr for Technicians, All 
other] + [1 hr * $202.86/hr for Physician]).
    In order to estimate the impact of providing beneficiary notices, 
we compare two populations: (1) Part D beneficiaries projected to be 
potentially at-risk, by meeting the OMS criteria (which CMS estimates 
as 22,516 PARBs, based on internal data); and (2) beneficiaries with a 
history of opioid-related overdose (which CMS estimates as 18,268 
PARBs, based on internal data).
    We believe the population of beneficiaries with a history of 
opioid-related overdose would have a much higher rate of coverage 
limitations imposed by sponsors, due to the history of overdose being 
the risk factor most predictive for another overdose or suicide-related 
event.\106\ We estimate that about 47.5 percent or 8,677 beneficiaries 
(18,268 beneficiaries * 0.475) of this population will receive an 
initial notice from the plan sponsor, informing the beneficiary of the 
sponsor's intention to limit their access to coverage of opioids and/or 
benzodiazepines. Thus, the beneficiary will also receive a second or 
alternate second notice informing them whether the limitation was in 
fact implemented.
---------------------------------------------------------------------------

    \106\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the US Veterans Health Administration. Addiction. 2017 
Jul; 11/2(7):1193-1201. doi: 10.1111/add.13774.
---------------------------------------------------------------------------

    This is in contrast to the PARBs meeting minimum and supplemental 
OMS criteria, where Part D program experience demonstrates a 
significantly lower incidence of coverage limitations (that is, only 
about 1,126 or 5 percent of the 22,516 beneficiaries receive 
notices).\107\
---------------------------------------------------------------------------

    \107\ CMS' internal analysis estimates that about 22,516 PARBs 
would meet the current OMS criteria based on 2018 data. An 
additional 18,268 PARBs are projected annually to meet the proposed 
criteria of opioid-related overdose.
---------------------------------------------------------------------------

    Following these assumptions, of the 40,784 (22,516 PARBs + 18,268 
PARBs) Part D beneficiaries projected to be potentially at-risk, either 
by meeting the OMS criteria (22,516 PARBs) or the history of opioid-
related overdose as defined (18,268 PARBs), those receiving a first 
notice from their plan sponsor informing them of the sponsor's 
intention to apply a coverage limitation are projected to total 9,803 
enrollees (8,677 with history of opioid-related overdose + 1,126 
meeting OMS minimum and supplemental criteria), or 24 percent of PARBs 
(40,784 * 0.24).
    We estimate it would take 10 minutes (0.1667 hr) at $50.90/hr for a 
health technician to send two notices (each notice would require 5 
minutes). In aggregate, we estimate an annual burden of 1,446 hours 
(8,677 enrollees * 0.1667 hr) at a cost of $73,601 (1,446 hr * $50.90/
hr).
    Evaluation of the use of POS claim edits under OMS since 2013 does 
not demonstrate a steady increase or decrease in edits. The OMS and POS 
edit reporting systems commenced in 2013 and 2014, and then between 
2015 and 2018 the number of beneficiaries with opioid POS claim edits 
only ranged from 1,152 to 1,351 annually. As such, given that the vast 
majority of Part D enrollees are in a plan already offering a DMP, 
including the majority of Part D enrollees with a history of opioid-
related overdose, we do not anticipate major shifts in the baseline 
average number of annual POS edits (and related initial notices). This 
stability in the annual number of ARBs and related notices to date 
appears largely unaffected by the baseline population of identified 
PARBs. However, we recognize that this proposed change is projected to 
approximately double the number of beneficiaries CMS identifies to 
sponsors as PARBs and accordingly solicit comment as to whether 
including beneficiaries with a history of opioid-related overdose and 
the projected doubling in identified PARBs is expected to require 
significant modifications by sponsors to respond to this increase in 
case management volume.
    Model beneficiary notices \108\ provided by CMS, as well as the 
required written information sent by sponsors to prescribers of PARBs 
as part of the case management process, would need to be revised to 
incorporate language specific to a PARB having a history of opioid-
related overdose. For the model beneficiary notices, this includes 
updates to the sections defining DMPs and possible justifications for 
applying a coverage limitation. Proposed changes to the model 
beneficiary notices will be submitted to OMB for approval under control 
number 0938-0964 (CMS-10141). Additionally, sponsors may need to update 
their DMP prescriber written communications to include history of 
opioid-related overdose as a possible reason for a beneficiary meeting 
the OMS criteria. The changes needed to align the model beneficiary 
notices and the written communication are expected to be minimal.
---------------------------------------------------------------------------

    \108\ Notice documents available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Drug-Management-Program-Notices-.zip.
---------------------------------------------------------------------------

    We estimate it would take no more than 1 hour at $50.90/hr for a 
health technician to draft and implement such changes. In aggregate, we 
estimate a one-time burden of 288 hours (288 parent organizations * 1 
hr/response) at a cost of $14,659 (288 hr * $50.90/hr). With respect to 
the burden of disclosure of DMP data to CMS associated with the 
increase in PARBs, we estimate that it will take sponsors on average 1 
minute (0.0167 hr) at $50.90/hr for a health technician to document OMS 
and/or MARx the outcome of case management and any applicable coverage 
limitations.

[[Page 9157]]

In aggregate, we estimate an annual burden of 305 hours (18,268 PARBs * 
0.0167 hr) at a cost of $15,525 (305 hr * $50.90/hr).
    Table 12 summarizes the DMP provisions for which impact is 
discussed in sections IX.B.3. and IX.B.4. of this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP18FE20.017

5. ICRs Regarding Eligibility for Medication Therapy Management 
Programs (MTMPs) (Sec.  423.153) and Information on the Safe Disposal 
of Prescription Drugs
    The following proposed changes to the MTM Standardized Format will 
be submitted to OMB for approval under control number 0938-1154 (CMS-
10396). Subject to renewal, the control number is currently set to 
expire on August 31, 2020. The complete information collection request, 
which includes the proposed changes along with the unchanged 
provisions, will be posted for public review and comment (see section 
IX.D. of this proposed rule for further information).
    Since the inception of the Medicare Part D benefit, the Act has 
required that all Part D plans offer a MTM program to eligible 
beneficiaries. The Act also established criteria for targeting 
beneficiaries for MTM program enrollment and a minimum set of services 
that must be included in MTM.
    Under the current regulation at Sec.  423.153(c), all MTM enrollees 
must be offered a Comprehensive Medication Review (CMR) at least 
annually and Targeted Medication Reviews (TMRs) no less than quarterly. 
A CMR is an interactive, person-to-person, or telehealth consultation 
performed by a pharmacist or other qualified provider that includes a 
review of the individual's medications and may result in the creation 
of a recommended medication action plan. An individualized, written 
summary in CMS's Standardized Format must be provided following each 
CMR. The SUPPORT Act expanded the population of beneficiaries that must 
be targeted for Part D MTM starting in 2021 and also added an 
additional requirement that information on the safe disposal of 
prescription drugs that are controlled substances be furnished to all 
MTM program enrollees; we are now proposing to modify our Part D 
regulations to conform with the changes to the MTM requirements enacted 
in the SUPPORT Act. These provisions of the

[[Page 9158]]

SUPPORT Act will affect the number of beneficiaries enrolled in MTM 
programs and potentially some of the content for the Standardized 
Format for the CMR and, therefore, the burden estimates for this 
document. We are estimating:
    (A) The burden of the expanded population of beneficiaries that 
must be targeted for enrollment in MTM programs,
    (B) the burden of mailing safe disposal information as part of the 
CMR summary, and
    (C) the burden of mailing safe disposal information once a year as 
part of a TMR or another follow up service.
    (A) The burden of the expanded population of beneficiaries that 
must be targeted for enrollment in MTM programs:
[GRAPHIC] [TIFF OMITTED] TP18FE20.018

    We estimate that in 2021 there will be 48,338,879 beneficiaries 
enrolled in Part D plans with MTM programs (line 1). Out of these, 
1,550,300 (or 3.2071% = 1,550,300/48,338,879) are estimated to be 
enrolled in an Enhanced MTM program under the Enhanced MTM Model, which 
is a model tested by the Center for Medicare and Medicaid Innovation 
(the Innovation Center) under section 1115A(b) of the Act and is not 
subject to the current or proposed MTM requirements, and therefore 
these beneficiaries are excluded from the total number of Part D 
enrollees (line 2). This leaves 46,788,579 Part D enrollees (96.7929% = 
46,788,579/48,338,879) who may be eligible for MTM if they meet the 
targeting criteria (line 3).
    According to internal data, we estimate that the SUPPORT Act 
requires targeting 10,000 ARBs for MTM in 2021 (line 4), of which 9,679 
(10,000 * 96.7929 percent of enrollees who are not in an enhanced MTM 
program) will be

[[Page 9159]]

targeted for a CMR (line 6) since those ARBs in the Enhanced MTM model 
plans (line 5) may not be targeted. Based on our previous experience 
with the MTM program, we estimate that 87 percent of beneficiaries 
targeted for MTM under the current requirements will accept the offer 
of a CMR (line 7). We assume this percentage will also apply to 
beneficiaries who will be enrolled in MTM programs under the new 
criteria; therefore, 8,421 ARBs (line 8) (9,679 targeted ARBs not in an 
enhanced MTM program * 87 percent who are expected to accept a CMR) are 
expected to accept a CMR based on the proposed provision.
    To estimate the burden on Part D plans of furnishing CMRs to the 
8,421 ARBs who would be expected to accept the offer of a CMR under the 
proposed policy, we separately calculate the non-labor cost of mailing 
and the labor cost of preparing the CMR and packaging it.
    To estimate the cost of mailing, we note that paper costs $2.50 per 
ream (500 sheets) of paper (at $0.005 per sheet) and toner costs $50.00 
and lasts for 10,000 sheets. Since CMR summaries contain private health 
information, they must be mailed first class for which postage costs 
$0.70 per mailing. Based on industry standards, we assume envelopes 
cost $0.08, and folding and stuffing costs about $0.08 per document. We 
therefore estimate the non-labor cost to print and mail a CMR summary 
in CMS's Standardized Format will be $0.92 per mailing (line 13). This 
results in a cost of $7,747 (line 14) ($0.92 cost per mailing * 8,421 
ARBs).
    To estimate the labor cost of preparing the CMS, we note that the 
CMR is a clinical consultation service and therefore must be 
administered by a pharmacist, physician, nurse practitioner, or other 
clinician. Currently, 100% percent of MTMPs employ pharmacists to 
conduct CMRs, which is the basis of the hourly rate estimate. Industry 
standards indicate that an average CMR requires 40 minutes or 0.6667 
hours (line 9) at $118.90/hr (line 11) for a pharmacist to complete and 
would result in a CMR summary that averages 6 pages in length based on 
proposed revisions which would streamline the Standardized Format. This 
is a decrease in length from the currently approved Standardized Format 
which averages 10 pages. This results in an annual labor burden of 
5,614 hours (line 10) (8,421 ARBs * 0.6667 hours) at a cost of $667,505 
(line 12) (5,614 hours * $118.90/hr).
    Therefore, the estimated total annual cost of providing CMRs to 
8,421 ARBs would be $675,252 (line 15) ($667,505 labor costs + $7,747 
non-labor mailing costs). These calculations are summarized in Table 
13.
    (B) The burden of mailing safe disposal information as part of the 
CMR summary:
[GRAPHIC] [TIFF OMITTED] TP18FE20.019

    Under our proposed regulatory change to Sec.  423.153(d)(1), Part D 
plans would be required to provide all MTM enrollees with information 
about safe disposal of prescription medications that are controlled 
substances. The proposed provision would allow plans to mail the newly 
required safe disposal information either as part of the CMR summary or 
as part of a TMR or other follow-up service. We estimate the safe 
disposal information will take one page, has no personal information, 
and can for example be mailed out as a standalone flier if not included 
in the annual CMR.

[[Page 9160]]

    However, for those enrollees receiving a CMR, we believe it most 
economical to include the 1 page with the already existing CMR summary. 
We solicit industry input on the accuracy of this assumption. 
Therefore, the cost of mailing one extra page per enrollee is $0.01 
(line 25) (1 page * $2.50/ream of 500 sheets + 1 page * $50 toner/
10,000 sheets). We note that the envelope to mail the CMR is already 
being paid for under current regulations (although folding and stuffing 
of 7 pages versus 6 pages might require some extra effort, we do not 
believe this will raise the $0.08 current cost but solicit stakeholder 
comment on this assumption); the $0.70 first class postage for 2 ounces 
is sufficient for 7 pages (there would be no increase in postage).
    To estimate total mailing cost, we must add the estimates of i) 
total number of Part D enrollees not in an Enhanced MTM program under 
the Enhanced MTM model and who are not ARBs who will receive a CMR 
under the current criteria and ii) total number of ARBs who will 
receive a CMR under the proposed criteria.
    (i) As shown in Table 13, lines (3) and (6), we estimate that in 
2021, there will be 46,788,579 Part D enrollees not in an Enhanced MTM 
program under the Enhanced MTM program (line 16) and as previously 
determined, 9,679 of those will meet the new MTM targeting criteria as 
ARBs (line 17). This leaves 46,778,900 Part D enrollees (46,788,579 not 
in an Enhanced MTM program minus 9,679 enrollees meeting the ARB 
criteria) that must be targeted for MTM if they meet the current 
criteria (line 18). Our internal data shows that 5.34 percent (line 19) 
of the Part D enrollees will be targeted for MTM programs under the 
current criteria. Hence, this leaves 2,497,993 Part D enrollees (5.34 
percent * 46,778,900) who will be targeted for MTM under the current 
criteria (line 20). Of these 2,497,993 targeted enrollees, as stated 
previously, based on internal CMS data, we estimate 87 percent will 
accept the annual CMR offer (line 21). Therefore 2,173,254 
beneficiaries (2,497,993 * 0.87) will receive a CMR under the current 
criteria (line 22).
    (ii) As shown in Table 13, line (8), 8,421 ARBs are estimated to 
receive a CMR under the proposed criteria.
    Hence, in 2021 a total of 2,181,675 enrollees will receive a CMR 
under the current and proposed criteria (8,421 ARBs under the proposed 
criteria + 2,497,993 under the current criteria) (line 24), at a total 
non-labor mailing cost of $21,817 (2,181,675 enrollees * $0.01 mailing 
cost per enrollee) to add an additional page containing safe disposal 
information to all CMRs (line 25).
    These calculations are summarized in Table 15.
    (C) The burden of mailing safe disposal information once a year as 
part of a TMR or other follow-up service:
[GRAPHIC] [TIFF OMITTED] TP18FE20.020

    All targeted beneficiaries who have not opted out of the MTM 
program must receive TMRs at least quarterly, and we are allowing Part 
D sponsors the flexibility of choosing whether to include safe disposal 
information in the CMR, through a TMR, or another follow-up service at 
least once annually. Since we assume that 87 percent of targeted 
enrollees accept an offer of a CMR (Table 13, line (7)), it follows 
that 13 percent (100 percent - 87 percent) (line 30) of Part enrollees 
who are targeted for enrollment in an MTM program refuse the CMR offer 
but do not opt out of the MTM program completely. As discussed 
previously, 9,679 ARBs (Table 13, line (6)) under the proposed criteria 
and 2,497,993 enrollees (Table 14, line 20) under the current criteria, 
or a total of 2,507,672 enrollees (2,497,003 + 9,679) (line (29)) will 
be targeted to receive a CMR. Therefore 325,997 enrollees (2,507,672 
total enrollees * 13 percent who refuse a CMR) would need to be mailed 
the safe disposal information as part of a TMR or other follow-up 
service (line 31). The cost to mail 1 page of safe disposal information 
is $0.01095 per enrollee if the letter does not contain private health 
information and thus bulk mailing is used (line 32) (1 page * $2.50 per 
ream of paper/500 sheets + 1 page * $50 per toner/10,000 pages + $0.19/
200 items). Therefore, the estimated cost of mailing safe disposal 
information to those MTM enrollees who do not receive a CMR is $3,570 
(line 33) (325,997 enrollees * $0.01095 mailing cost per page).
    The total cost of mailing safe disposal information to all Part D 
beneficiaries enrolled in MTM programs is then estimated to be $25,387 
(line 35) ($3,570 for those enrollees who refuse a CMR + $21,817 for 
those enrollees who accept a CMR). These calculations are summarized in 
Table 15.
    The total additional annual cost for 288 parent organizations to 
provide CMRs to ARBs and to send safe disposal information of 
prescription medications that are controlled substances to all MTM 
program enrollees is $700,369.

[[Page 9161]]

Table 16 provides a compact summary of the bottom lines of impact by 
activity.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP18FE20.021

BILLING CODE 4120-01-C
6. ICRs Regarding Beneficiaries' Education on Opioid Risks and 
Alternative Treatments (Sec.  423.128)
    In this rule, we are proposing under Sec.  423.128 to require Part 
D sponsors to disclose, beginning 2021, information about the risks of 
prolonged opioid use to enrollees. In addition to this information, 
Part D sponsors of MA-PDs must disclose coverage of non-pharmacological 
therapies, devices, and non-opioid medications under their plans and 
under Medicare Part C. Part D sponsors of PDPs must disclose coverage 
of non-pharmacological therapies, devices, and non-opioid medications 
under their plans and under Medicare Parts A and B.
    Before Part D sponsors can send this information, they would have 
to create and upload materials into their internal systems. Based on 
2019 CMS data, there are 608 Part D legal entities (sponsors) with 
which CMS contracts, associated with 288 parent organizations that 
these contracts identified in their initial applications, which is 
confirmed annually. Based on our knowledge of the way parent 
organizations and their Part D legal entities are structured, we 
believe it is appropriate to estimate burden at the parent organization 
level, as it is a closer reflection of the number of systems that will 
need to be updated versus at the contract level.
    We estimate that 288 Part D sponsors would be subject to this 
proposal, based on 2019 data. We estimate that it will take on average 
2 hours at $86.14/hr for a computer programmer to upload the

[[Page 9162]]

information into the systems. This would result in a one-time burden of 
576 hours (2 hr * 288 parent organizations) at a cost of $49,617 (576 
hours * $86.14/hr). Once the information is uploaded into the parent 
organization's database, we anticipate no further cost associated with 
this task, as the process will be automated after the initial upload 
with the same information on subsequent materials that are sent. The 
automation would include the sending of information to those enrollees 
who wish to receive an electronic copy. The automation would also cover 
updates in future years as the plan enrollment changes.
    We also estimate a one-time burden of 2 hours at $118.90/hr for a 
pharmacist to develop the materials(s) to be sent to the beneficiaries. 
In aggregate, we estimate a one-time burden of 576 hours (288 parent 
organizations * 2 hr) at a cost of $ 68,486 (576 hr * $118.90/hr). 
Although there might be the need for updates in future years (if opioid 
risk and/or coverage information changes), we believe the burden to 
making such updates to existing materials will be negligible as the 
changes will be minor and may only occur in some future years. Hence, 
the more accurate approach adopted here is to estimate this as a one-
time update.
    We propose that Part D sponsors may disclose the opioid and 
coverage information in electronic form. Some enrollees prefer 
electronic notification and some prefer paper mailing. We have no way 
of estimating the proportions for each preference, but our experience 
suggests that most enrollees expect a paper mailing. Therefore, we 
assume 75 percent (the average of 50 percent and 100 percent) would 
prefer a paper mailing, while the remaining 25 percent would prefer 
electronic notification.
    There are several Part D enrollee groups presented in section 
III.D. of this proposed rule that we suggest could be sent the required 
information and thus, several approaches to estimate the burden. These 
enrollee group estimates range from sending the information to 
46,759,911 enrollees to 2,698,064 enrollees, Therefore, for plans 
convenience and planning, Table 17 presents an alternative cost 
analysis of the wide range of alternatives discussed in section III.D. 
of this proposed rule.
    We also include calculations under assumption that only 50 percent 
want paper and calculations under assumption that 75 percent want 
paper. As can be seen, the range of costs are $0.1 to $0.5 million (for 
sending notices by paper to all Part D enrollees. Thus, cost need not 
be a factor in plan choice.
    Since the range of costs are $0.1 million to $0.5 million, for 
purposes of the Summary Table, we are listing the $0.1 million or 
$118,103 first year cost ($68,486 for creation of materials + $49,617 
for system updates) but leaving out mailing costs until we receive 
feedback from our stakeholders. We however, solicit stakeholder 
feedback on which alternatives they believe are most likely and 
unlikely, as well as stakeholder feedback on our estimation of printing 
and delivery costs.
    In making estimates on the burden of sending out notices, we assume 
that the IT systems of the plan would generate and mail the documents 
once a template is produced. Thus, the only costs per enrollee are 
paper, toner, and postage. We also assume one page per notice. We 
therefore estimate:
     Cost of paper: Typical wholesale costs of paper are 
approximately $2.50 for a ream of 500 sheets. Thus cost for one page is 
2.50/500 = $0.005.
     Cost of toner: Toner costs can range from $50 to $200 and 
each toner can last 4,000 to 10,000 sheets. CMS assumes a cost of 
$50.00 for 10,000 pages. Thus cost per page is $50/10,000 = $0.005.
     Cost of postage: For 2019, the bulk postage rates are 
$0.19 per 200 pages. Thus the cost per page is 0.19/200 = 0.000950.
    Thus, the aggregate cost per page is 0.01095 (0.005 + 0.005 + 
0.000950). This per page amount is multiplied by the number of 
enrollees receiving the notification. Note that mailing costs are 
annual while the programming updates and the development of materials 
are first-year costs with minimal or no costs in future years. The 
product of the cost per page times the number of enrollees plus the 
first year costs are the costs listed for each possibility in Table 17.
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BILLING CODE 4120-01-C
    The burden associated with developing and uploading these materials 
into sponsors' internal systems will be submitted to OMB under PRA 
package number CMS-10141 (OMB 0938-0964). Subject to renewal, it is 
currently set to expire on November 30th, 2021. It was last approved on 
November 28, 2018, and remains active.

[[Page 9164]]

7. ICRs Regarding Suspension of Pharmacy Payments Pending 
Investigations of Credible Allegations of Fraud and Program Integrity 
Transparency Measures (Sec. Sec.  405.370, 422.500, 422.503, 423.4, 
423.504, and 455.2)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-TBD (CMS-10724) for Medicare 
Advantage Plans and 0938-1262 (CMS-10517) for Part D Plans.
    Proposed Sec. Sec.  422.503(b)(4)(vi)(G)(4) and 
423.504(b)(4)(vi)(G)(4) would require the MA organization or Part D 
plan sponsor, respectively, to have procedures to identify and report 
to CMS or designee: (1) Any payment suspension implemented by a plan, 
pending investigation of credible allegations of fraud by a pharmacy; 
which must be implemented in the same manner as the Secretary does 
under 1862(o)(1) of the Act; and (2) any information related to the 
inappropriate prescribing of opioids and concerning investigations, 
credible evidence of suspicious activities of a provider of services 
(including a prescriber) or supplier, and other actions taken by the 
plan.
    CMS initiated a reporting pilot program in December 2016 with six 
plan sponsors to test the effectiveness of mandatory reporting of 
fraud, waste and abuse. The pilot collected all external or internal 
Medicare complaints and referrals submitted to the plan's Special 
Investigations Unit (SIU). The data collected as part of the pilot 
program was time limited, but broader than the scope of reporting 
required by sections 2008 and 6063 of the SUPPORT Act. The scope of 
that pilot tested the reporting of all types of health care fraud, 
waste, and abuse that the plan sponsors could encounter in their 
operations and, therefore, could be utilized as a reasonable estimate 
of burden involved with the quarterly plan reporting to CMS that CMS 
will use to implement sections 2008 and 6063 of the SUPPORT Act. The 
pilot program analyzed information that was reported from five of six 
plan participants on time spent collecting three quarterly data 
submissions. Based on the results of the pilot study, if every plan 
reported, we estimate it would take 605 MA plans and 63 Part D plans 
164,996 hours (668 plans * 247 hr/plan) at a cost of $14,975,037 
(164,996 hr * $90.76/hr) to fulfill the proposed reporting and 
procedure preparation in the first year. The first-year costs consist 
of the time and effort needed to prepare the procedures and report the 
inappropriate prescribing information. Subsequent effort consists 
solely of the ongoing time and cost to report the inappropriate 
prescribing information to CMS. We cannot anticipate how many plans 
will need to report any payment suspension to pharmacies in the plans' 
network or information on inappropriate opioid prescribing to CMS.
    In subsequent years, we estimate an annual burden of 104,208 hours 
(668 plans *156 hr/plan) at a cost of $9,457,918 (104,208 hr * $90.76/
hr).
    The following Tables 18 and 19 show--
     MA Organization and Part D Plan Sponsor Time Estimate 
(HOURS) (Table 18); and
     MA Organization and Part D Plan Sponsor Cost Estimate ($) 
(Table 19).
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[[Page 9165]]


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BILLING CODE 4120-01-C
8. ICRs Regarding Medicare Advantage (MA) Plan Options for End-Stage 
Renal Disease (ESRD) Beneficiaries (Sec. Sec.  422.50, 422.52, and 
422.110)
    As discussed in section IV.A. of this proposed rule, we propose to 
revise Sec. Sec.  422.50(a)(2), 422.52(c), and 422.110(b) to allow ESRD 
beneficiaries, without exception, to enroll in an MA plan. In 
estimating the impact of this provision, we separately estimate impact 
on beneficiaries and plans. Enrollment processing and notification 
requirements are codified at Sec.  422.60 and are not being revised as 
part of this rulemaking, and no new or additional ICRs are being 
imposed. The additional paperwork burden for this provision to account 
for ESRD beneficiaries to enroll in a MA plan, as outlined in the next 
section, will be submitted to OMB for approval under control number 
0938-0753 (CMS-R-267). Subject to renewal, the control number is 
currently set to expire on December 31, 2021.
a. Beneficiary Burden
    The burden associated with this requirement would be related to the 
effort it takes for a beneficiary to complete an enrollment request. 
Because there will be an increase in the number of beneficiaries 
eligible to elect an MA plan starting in plan year 2021, the universal 
burden for beneficiaries would increase (that is, the number of 
beneficiaries who are expected to initiate an enrollment action would 
increase). However, the currently approved response time estimate (0.5 
hr) would not change.
    To elect an MA plan, an individual must complete and sign an 
election form, complete another CMS-approved election method offered by 
the MA plan, or call the 1-800-MEDICARE Call Center, and provide 
information required for enrollment. The burden associated with this 
requirement is the time it takes a new enrollee to complete an 
enrollment form or other CMS-approved election method offered by the MA 
plan. The enrollment form and other election methods vary for each 
organization, but similar identifying information is collected.
    As detailed in section X.C.4. of this proposed rule, OACT expects 
an average increase of 59,000 ESRD beneficiaries to enroll in MA plans 
per year in 2021 through 2023. Therefore, we expect a burden of 29,500 
hours (59,000 new ESRD enrollees * 0.5 hr) to complete an enrollment 
form at a cost of $736,910 (29,500 hr * $24.98/hr).
    CMS is proposing changes to the current, standard (``long'') model 
form used for MA and PDP enrollment in order to reduce data collection 
and simplify the enrollment process. CMS is not revising the current, 
``long'' model form under CMS-R-267. The ``shortened'' enrollment form, 
three pages in length, (compared to the current model form which is 
seven pages), would limit data collection to what is lawfully required 
to process the enrollment, and, other limited information that the 
sponsor is, required or chooses to, provide to the beneficiary. A new 
``stand-alone'' PRA notice (CMS-10718, OMB 0938-TBD) that is specific 
to the shortened enrollment form published in the Federal Register on 
November 18 (84 FR 63655) with a 60-day comment period and November 21, 
2019 (84 FR 64319) with a burden correction. The shortened form has 
been made available for public review/comment outside of the rulemaking 
process since it is not tied to any of the provisions proposed in this 
rule, and it would not be subject to the effective date of the 
subsequent, final rule.

[[Page 9166]]

b. Plan Burden
    Although not effective until January 1, 2021, section 17006 of the 
Cures Act amends the Act by allowing ESRD beneficiaries, without 
exception, to enroll in an MA plan. Consequently, OACT has incorporated 
an increase in ESRD enrollment in the Medicare Trust Fund baseline due 
to the legislation. The increases cover the plans' required revenue or 
submitted bid amounts, both medical (benefit) and administrative (non-
benefit). The non-benefit expense portion of the bids include direct 
administrative expenses, indirect administrative expenses, gain and 
loss margins, marketing, and other items such as the net cost of 
private re-insurance as well as insurer fees. These non-benefit 
expenses generally make up a sizeable portion of the bid (about 16 
percent for the 2020 bids).
    Consequently, the expected increase to the plan for administering 
additional enrollments, due to additional ESRD beneficiaries enrolling 
in MA plans, has already been included in the currently approved burden 
estimates; therefore, this provision, which simply codifies the 
existing requirement, is not expected to have further impact beyond 
what is currently approved by OMB.
9. ICRs Regarding Beneficiary Real Time Benefit Tool (RTBT) (Sec.  
423.128)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0763 (CMS-R-262). Subject to 
renewal, the control number is currently set to expire on April 30, 
2022.
    As described in section V.G. of this proposed rule, the proposed 
new paragraphs at Sec.  423.128(d)(4) and (5) would require each Part D 
plan to implement a beneficiary RTBT no later than January 1, 2022. 
This tool would allow enrollees to view a plan-defined subset of the 
information included in the prescriber RTBT system which includes 
complete, accurate, timely, and clinically appropriate patient-specific 
real-time formulary and benefit information (including cost, formulary 
alternatives, and utilization management requirements). Plans would be 
able to use existing secure patient portals to fulfill this 
requirement, to develop a new portal, or to use a computer application.
    As discussed in section V.G. of this proposed rule, we understand 
that most Part D plans have already created beneficiary portals that 
satisfy existing privacy and security requirements. Based on our 
conversations with the industry, we believe that the few plans that 
have yet to create a portal or web application will have one in place 
by January 1, 2022.
    We estimate it would take 104 hours at $86.14/hr for a computer 
programmer to program this information into the beneficiary portal and 
an additional 52 hours to put this information into a user interface 
that is easily understood by enrollees. The time estimates are based on 
consultation with the healthcare industry and their IT staff to 
determine the time that it takes for minor changes in programming. Thus 
the cost of implementing RTBT is 44,928 hours (288 organizations * 56 
hr) at a cost of 3,870,098 (44,928 hr * $86.14/hr).
    We next estimate the cost of implementing the rewards and 
incentives program for use of RTBT. We will estimate three items: (A) 
Development of policies for the new program, (B) updating of systems, 
and (C) maintaining the program. We solicit stakeholder feedback on all 
our assumptions. We informally asked stakeholders who thought that only 
10 percent of parent part D sponsors would create such a program. Since 
there are 288 Part D sponsors we expect 29 (288 * 0.10 or 10 percent) 
organizations to develop and use a reward and incentive program.
    (A) Development of policy: We estimate that for each parent 
organization an operations manager and compliance officer working 
together at a combined hourly wage of $188.84/hr ($119.12/hr + $69.72/
hr) would take a week of work, 40 hours, Therefore the aggregate impact 
is 1,160 hours (40 hr * 29 parent organizations) at a cost of $219,054 
(1,160 hr * $188.84/hr).
    (B) Since systems already exist to collect enrollee data, they will 
only have to be updated to collect data on use of RTBT and most of this 
work will be done when creating the RTBT. We therefore estimate, per 
parent organization, an extra week of work, 40 hours. Therefore, the 
aggregate impact is 1,160 hours (40 hr * 29 organizations) at a cost of 
$99,922 (1,160 hr * $86.14/hr).
    (C) Since computer systems are doing most of the work we estimate 
that 2 administrative support workers each working at $36.04/hr will 
take 15 hours every month to maintain the program. Thus each parent 
organization will spend 360 hours per year (15 hr/month * 12 months * 2 
workers). The aggregate impact is 10,440 hours (360 hr/organization * 
29 organizations) at a cost of $376,258 (10,400 hr * $36.04/hr).

The aggregate impact for implementing the rewards and incentives for 
RTBT among those Part D sponsors who wish to do so is s 13,920 hours 
(1,160 hr + 1,160 hr + 10,440) at a cost of $695,234 ($219,054 + 
$99,922 + $376,258).
    Since plans are in the best position to estimate their 
implementation costs, we seek comment on the accuracy of this burden 
estimate and on any measures that CMS can take to decrease the impact 
of this provision, while maintaining its utility for enrollees. In 
addition, because plans are in the best position to estimate any 
information collection implications, since they will be the 
stakeholders implementing this provision, we solicit comment on any 
other potential information collection implications.
    While we are proposing to allow plans to offer rewards and 
incentives to enrollees who use the tool, we are not estimating burden 
for including rewards and incentives, since we are not requiring that 
plans provide rewards and incentives, and CMS does not have a means of 
calculating the costs and benefits of rewards and incentives at this 
time.
10. ICRs Regarding Establishing Pharmacy Performance Measure Reporting 
Requirements (Sec.  423.514)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0992 (CMS-10185). Subject to 
renewal, the control number is currently set to expire on December 31, 
2021. It was last approved on December 7, 2018, and remains active.
    We propose to amend Sec.  423.514(a) by requiring that Part D 
sponsors report to CMS the pharmacy performance measures they use to 
evaluate pharmacy performance, as established in their network pharmacy 
agreement. Given the growing practice of Part D sponsors measuring the 
performance of pharmacies that service Part D beneficiaries to 
determine the final cost of a drug under Part D, this reporting 
requirement will enable CMS to monitor the impact of these recoupment 
practices. This new Part D reporting requirements section would require 
plans to report their pharmacy performance measures' data. We estimate 
a collection of less than 15 data elements. As noted in the preamble, 
the Part D reporting requirements data elements, consistent with our 
proposed standard, would be specified through the standard non-rule PRA 
process after publication of the final rule, if this proposal is 
finalized. The standard non-rule process includes the publication of 
60- and 30-day Federal Register notices.
    Although the data elements will be made available for public review 
through the standard PRA process, we are providing the interested 
parties with

[[Page 9167]]

an initial projection of the potential burden estimates. In this regard 
there are currently 627 contracts that would be required to report 
their pharmacy performance measures' data. Part D sponsors currently 
report 6 sections of data to CMS in accordance with the Part D 
reporting requirements. Therefore, CMS does not expect compliance to 
these reporting requirements would result in additional start-up costs. 
Anticipated staff time spent performing these data collection would be 
30 minutes for data analysts and/or IT analysts at a rate of $90.02/hr. 
We would require this information to be reported at the plan level once 
annually. Reporting at the plan level would generate 5,234 responses 
since there are currently 5,234 plans. In aggregate, we estimate an 
annual plan sponsor burden of 2,617 hours (5,234 plans * 1 report/year 
* 0.5 hr/report) at a cost of $235,582 (2,617 hr * $90.02/hr). We are 
soliciting input from stakeholders on the accuracy of these estimates 
and on any measures that CMS can take to decrease the burden of this 
provision.
11. ICRs Regarding Medical Loss Ratio (MLR) (Sec. Sec.  422.2420, 
422.2440, and 423.2430)
MSA Enrollment
    The proposed changes affecting MSA enrollment will be submitted to 
OMB for approval under control number 0938-0753 (CMS-R-267). Subject to 
renewal, the control number is currently set to expire on December 31, 
2021.
    As discussed in section V.I.4. of this proposed rule, CMS is 
proposing to amend Sec.  422.2440 to provide for the application of a 
deductible factor to the MLR calculation for MA MSA contracts that 
receive a credibility adjustment. The proposed deductible factor would 
serve as a multiplier on the credibility factor. The application of the 
proposed deductible factor would increase the MLRs of MSA contracts 
that receive this adjustment.
    We believe that the proposed change to the MLR calculation for MSAs 
could potentially cause the number of enrollees in MSA plans to 
increase relative to enrollment projections under the current 
regulations. For this impact estimate, we make the following 
assumptions. If the proposed changes take effect, we assume:
     Enrollment in MSAs will double over the first 3 years that 
the proposed change is in effect. We believe 3 years is a reasonable 
time frame for the enrollment changes resulting from this policy to be 
phased in. We project that enrollment will double in order to avoid 
potentially understating the cost for the proposal. Our estimate is 
based on the largest potential change in enrollment that we could 
reasonably anticipate. We acknowledge that the proposed change could 
have no impact on enrollment.
     Relative to projections in the baseline, MSA enrollment 
will be 33.33 percent higher in contract year (CY) 2021 (increasing 
from 7,435 to 9,913), 66.67 percent higher in 2022 (increasing from 
7,812 to 13,020), and 100 percent higher in CY 2023 (increasing from 
8,179 to 16,358) to CY 2030 (increasing from 10,354 to 20,708).
     Half of the new enrollees in MA MSA plans would otherwise 
have been enrolled in other types of MA plans, and half would otherwise 
have been enrolled in FFS Medicare. We did not have a basis for 
assuming that migration to MSAs would predominantly be from FFS 
Medicare or from non-MSA MA plans.
    The process for enrolling in an MA plan is the same regardless of 
whether that plan is an MSA or a non-MSA. Therefore, we assume that the 
burden to enroll in an MSA plan and a non-MSA plan is the same. 
Therefore, the increased burden related to changes in MSA enrollment is 
attributable only to the portion of potential new MSA enrollees who 
would be expected to enroll in FFS Medicare if the proposal is not 
finalized. The cost burden of this proposal is summarized in Table 20.
a. Beneficiary Burden
    For beneficiaries, the burden associated with the expected increase 
in MSA enrollment as a consequence of our proposal would be related to 
the effort it takes for a beneficiary to complete an enrollment 
request. It takes 0.5 hours at $24.98/hr for a beneficiary to complete 
an enrollment form. We assume no burden increase for the estimated 
fifty percent of additional MSA enrollees who would otherwise be 
enrolled in a non-MSA MA plan. For 2021, the burden for all 
beneficiaries is estimated at approximately 620 hours (2,478/2 
beneficiaries * 0.5 hr) at a cost of $15,488 (620 hr * $24.98/hr). For 
2022, the burden for all beneficiaries is estimated at approximately 
1,302 hours (5,208/2 beneficiaries * 0.5 hr) at a cost of $32,524 
(1,302 hr * $24.98/hr). For 2023, the burden for all beneficiaries is 
estimated at approximately 2,045 hours (8,179/2 beneficiaries * 0.5 hr) 
at a cost of $51,084 (2,045 hr * $24.98/hr).
    The average burden per year is 1,322 hours ([620 + 1,302 + 2,045]/
3) at an average cost of $33,032 ([$15,488 + $32,254 + $51,084]/3).
b. MA Organization Estimate
    There are currently four MA organizations offering MSA plans in 
2020. We project that this number will double in 2021 as a result of 
the proposed change. We therefore estimate that the proposed change 
would result in approximately 2,478 total additional enrollments in 
MSAs in 2021, or 310 additional enrollments per organization (2,478 
individuals/8 organizations); in 2022, 5,308 total additional 
enrollments in MSAs, or 664 additional enrollments per organization 
(5,308 individuals/8 organizations); and in 2023, and 8,531 total 
additional enrollments, or 1,066 additional enrollments per 
organization (8,531 individuals/8 organizations).
    The MA organization must give the beneficiary prompt written notice 
of acceptance or denial of the enrollment request in a format specified 
by CMS that meets the requirements set forth in this section. The 
burden associated with each organization providing the beneficiary 
prompt written notice, performed by an automated system, is estimated 
at 1 minute per application processed. We estimate that it will take 1 
minute at $74.00/hr for a business operations specialist to 
electronically generate and submit a notice to convey the enrollment or 
disenrollment decision for each beneficiary. As noted previously, we 
anticipate that half of the new enrollees in MSAs will already be 
enrolled in other MA plans, meaning the current burden estimate for 
their enrollment is already accounted for in the currently approved 
collection. For 2021, the burden to complete the notices for the other 
half of new MSA enrollees (that is, the new enrollees who would 
otherwise enroll in FFS Medicare) is approximately 21 hours (2,478/2 
notices * 1 min/60) at a cost of $1,554 (21 hr * $74.00/hr) or $1.25 
per notice ($1,554/1,239 notices) or $194.25 per organization ($1,554/8 
MA organizations). For 2022, the burden to complete the notices for the 
half of new MSA enrollees who would otherwise enroll in FFS Medicare is 
approximately 43 hours (5,208/2 notices * 1 min/60) at a cost of $3,182 
(43 hr * $74.00/hr) or $1.22 per notice ($3,182/2,604 notices) or 
$397.75 per organization ($3,182/8 MA organizations). For 2023, the 
burden is approximately 68 hours (8,179/2 notices * 1 min/60) at a cost 
of $5,032 (68 hr * $74.00/hr) or $1.23 per notice ($5,032/4,090 
notices) or $629.00 per organization ($5,032/8 MA organizations).
    The average burden per year is 44 hours ([21 hr + 43 hr + 68 hr]/3) 
at an average cost of $3,256 ([$1,554 + $3,182 + $5,032]/3).

[[Page 9168]]

    The burden associated with electronic submission of enrollment 
information to CMS is estimated at 1 minute at $74.00/hr for a business 
operations specialist to submit the enrollment information to CMS 
during the open enrollment period. The total burden for 2021 is 
approximately 21 hours (2,478/2 submissions x 1 min/60) at a cost of 
$1,554 (21 hr * $74.00/hr) or $1.25 per submission ($1,554/1,239 
submissions) or $194.25 per organization ($1,554/8 MA organizations). 
For 2022, the total burden is approximately 43 hours (5,208/2 
submissions x 1 min/60) at a cost of $3,182 (43 hr * $74.00/hr) or 
$1.22 per submission ($3,182/2,604 submission) or $397.75 per 
organization ($3,182/8 MA organizations). For 2023, the total burden is 
approximately 68 hours (8,179/2 submissions * 1 min/60) at a cost of 
$5,032 (68 hr * $74.00/hr) or $1.23 per submission ($5,032/4,090 
submissions) or $629.00 per organization ($5,032/8 MA organizations).
    The average burden per year is 44 hours ([21 hr + 43 hr + 68 hr]/3) 
at an average cost of $3,256 ([$1,554 + $3,182 + $5,032]/3).
    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 $36.04/hr for an office and 
administrative support worker to perform record retention for the 
additional MA MSA enrollees. In aggregate, we estimate an annual burden 
for 2021 of 103 hours (2,478/2 beneficiaries * 5 min/60) at a cost of 
approximately $3,712 (103 hr * $36.04/hr) or $473 per organization 
($3,784/8 MA organizations). For 2022, we estimate an aggregated annual 
burden of 217 hours (5,208/2 beneficiaries * 5 min/60) at a cost of 
approximately $7,821 (217 hr * $36.04/hr) or $978 per organization 
($7,821/8 MA organizations). For 2023, we estimate an aggregated annual 
burden of 341 hours (8,179/2 beneficiaries * 5 min/60) at a cost of 
approximately $12,290 (341 hr * $36.04/hr) or $1,536.25 per 
organization ($12,290/8 MA organizations).
    The average burden per year is 220 hours ([103 hr + 217 hr + 341 
hr]/3) at an average cost of $7,941 ([$3,712 + $7,821 + $12,290]/3).
MLR Calculation
    The proposed changes affecting the MLR calculation will be 
submitted to OMB for approval under control number 0938-1232 (CMS-
10476). Subject to renewal, the control number is currently set to 
expire on December 31, 2021.
    MA organizations will need to spend additional time calculating the 
MLRs for MSA contracts in order to apply the proposed deductible 
factor. We estimate that for each of the 8 MA organizations that we 
anticipate will offer MSA contracts in 2021 and in each year through 
2030, it will take an actuary approximately 5 minutes at a wage of 
$111.78/hr to calculate the deductible factor for the contract. In 
aggregate, we estimate an annual burden of 0.6667 hours (5 min/60 * 8 
MA organizations) at a cost of approximately $75 (0.6667 hr x $111.78/
hr) or approximately $9 per organization ($111.78/hr * 0.0833 hr).
    The average (in fact, actual) burden per year is 0.6667 hr at a 
cost of $75. For 2021, we estimate a total burden for all MA 
organizations resulting from this proposed provision to be 145.6667 
hours (21 hr + 21 hr + 103 hr + 0.6667 hr) at a cost of $6,895 ($1,554 
+ $1,554 + $3,712 + $75). Per organization, we estimate an annual 
burden of approximately 18.2 hours (145.6667 hr/8 MA organizations) at 
a cost of $861.88 ($6,895/8 organizations). For beneficiaries we 
estimate a total annual burden of 620 hours at a cost of $15,488 and a 
per beneficiary burden of 30 minutes at $12.50.
    For 2022, we estimate a total burden for all MA organizations 
resulting from this proposed provision to be 303.6667 hours (43 hr + 43 
hr + 217 hr + 0.6667 hr) at a cost of $14,260 ($3,182 + $3,182 + $7,821 
+ $75). Per organization, we estimate an annual burden of approximately 
38 hours (303.6667 hr/8 MA organizations) at a cost of $1,782.50 
($14,260/8 organizations). For beneficiaries we estimate a total annual 
burden of 620 hours at a cost of $15,488 and a per beneficiary burden 
of 30 minutes at $12.50.
    For 2023, we estimate a total burden for all MA organizations 
resulting from this proposed provision to be 477.6667 hours (68 hr + 68 
hr + 341 hr + 0.6667 hr) at a cost of $22,429 ($5,032 + $5,032 + 
$12,290 + $75). Per organization, we estimate an annual burden of 
approximately 60 hours (477 hr/8 MA organizations) at a cost of 
$2,803.63 ($22,429/8 organizations). For beneficiaries we estimate a 
total annual burden of 620 hours at a cost of $15,488 and a per 
beneficiary burden of 30 minutes at $12.50.
Summary
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12. ICRs Regarding Special Election Periods (SEPs) for Exceptional 
Conditions (Sec. Sec.  422.62 and 423.38)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0753 (CMS-R-267) for Part C and 
0938-0964 (CMS-10141) for Part D.
    We are proposing to codify certain Part C (at Sec.  422.62(b)(4) 
through (25)) and Part D (at Sec.  423.38(c)(11) through (32)) SEPs for 
exceptional circumstances currently set out in sub-regulatory guidance 
that MA organizations and Part D plan sponsors have implemented and are 
currently following. We are also proposing to establish two new 
additional SEPs for exceptional circumstances: The SEP for Individuals 
Enrolled in a Plan Placed in Receivership and the SEP for Individuals 
Enrolled in a Plan that has been identified by CMS as a Consistent Poor 
Performer.
    We do not believe the proposed changes will adversely impact 
individuals requesting enrollment in Medicare health or drug plans, the 
plans themselves, or their current enrollees. Similarly, we do not 
believe the proposed changes would have any impact on the Medicare 
Trust Fund.
    Our proposal represents the codification of existing policy on SEPs 
for exceptional circumstances that has been specified in sub-regulatory 
guidance for quite some time, as well as the addition of the two 
aforementioned new SEPs for exceptional circumstances. MA organizations 
and Part D plan sponsors are currently assessing applicants' 
eligibility for election periods as part of existing enrollment 
processes; therefore, no additional burden is anticipated from this 
proposal. However, because a burden estimate for determining an 
applicant's eligibility for an election period has not previously been 
submitted to OMB, due to inadvertent oversight, we are seeking their 
approval under the aforementioned OMB control numbers.
    We estimate it would take approximately 5 minutes (0.0833 hr) at 
$74.00/hr for a business operations specialist to determine an 
applicant's eligibility for an election period.
    The burden for all MA organizations is estimated at 142,497 hours 
(1,710,650 beneficiary SEP elections * 0.0833 hr) at a cost of 
$10,544,778 (142,497.1450 hr * $74.00/hr) or 58,258 per parent 
organization ($10,544,778/181 MA parent organizations).
    The burden for all Part D parent organizations is estimated at 
155,564 hours (1,867,519 beneficiary SEP elections * 0.0833 hr) at a 
cost of $11,511,736 (155,564 hr * $74.00/hr) or $217,203 per Part D 
parent organization ($11,511,736/53 Part D parent organization).
13. ICRs Regarding Service Delivery Request Processes Under PACE 
(Sec. Sec.  460.104 and 460.121)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0790 (CMS-R-244). Subject to 
renewal, the control number is currently set to expire on June 30, 
2020.
    Under new Sec.  460.121(i)(2) discussed in section VII.A. of this 
proposed rule, we are proposing to require that PACE organizations 
provide written notification to participants whenever they extend the 
processing timeframe for service delivery requests. Based on our 
experience with PACE audits during 2017 and 2018, during which time we 
reviewed all PACE organizations in operation in that period, we found a 
total of 34,146 service delivery requests. The average PACE total 
enrollment during that period was 40,040. Thus the average number of 
service delivery requests per 1,000 enrollees was 852.8 (34,146/
40.040). Based on the same audit experience and data collected, we 
further estimate that:
     Approximately 12 percent of all service delivery requests 
currently received are extended,
     Of those 852.8 service delivery requests currently 
received, 80 percent are approved, while 20 percent are denied.
    Based on our proposed amendments to this section, we believe that 
half of the requests that are approved (that is, 50 percent of the 80 
percent of requests not denied) could be approved in full by an IDT 
member at the time the request is made. Because those approval 
decisions could be made immediately (and therefore would not need to be 
fully processed as service delivery requests), the extension 
notification would not apply to those service delivery requests.
    The proposed requirement of written notification for requests that 
are extended would apply to:
     The 2.4 percent of service delivery requests which are 
extended and subsequently denied (20 percent of service delivery 
requests are denied * 12 percent of service delivery requests are 
extended), and
     The 4.8 percent of service delivery requests that are 
approved and not routine (that is, a member of the IDT cannot approve 
the service delivery request in full at the time the request is made) 
and are extended (80 percent not denied * 50 percent not routine * 12 
percent extended).
    Thus the proposal would apply to 7.2 percent (2.4 percent denied 
and extended and 4.8 percent approved, not routine, and extended) of 
all service delivery requests. Based on OACT estimates, the average 
projected PACE enrollment for 2021-2023 is 47,680.
    We also estimate, based on our audit experience, that to prepare 
and issue notification of the extension to a participant or the 
designated representative would take the IDT approximately 1 hour.
    Consequently, the total annual burden of this request is 2,928 
hours (852.8 requests per 1,000 * 47,680 projected enrollment for 2021-
2023 * 7.2 percent of requests that require extensions * 1 hour to 
process each service delivery request extension) at a cost of $164,612 
(2,928 hr * $56.22/hr for a Master's-level Social Worker (MSW) to 
process them).
    Section 460.104(d)(2) currently states the requirements for 
processing service delivery requests (that is, requests from 
participants or their designated representatives to initiate, 
eliminate, or continue a service). We are proposing to move these 
requirements to new Sec.  460.121 and modify the requirements to reduce 
burden on PACE organizations while ensuring appropriate participant 
protections are in place. We are proposing to require PACE 
organizations to notify participants or their designated 
representatives when they take an extension when processing a service 
delivery request. We expect most PACE organizations would develop a 
template letter to notify the appropriate parties in these situations. 
We are also clarifying requirements regarding the content of denial 
notifications following the determination of a service delivery 
request, which would require PACE organizations to update their denial 
notification letter templates.
    For the development and revision of the extension notification and 
denial notification, we estimate a burden of 2 hours at $69.72/hr for a 
compliance officer to create and revise the materials. We estimate a 
one-time burden of 262 hours (131 PACE organizations * 2 hr) at a cost 
of $18,267 (262 hr * $69.72/hr).
14. ICRs Regarding Appeals Requirements Under PACE (Sec. Sec.  460.122 
and 460.124)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0790 (CMS-R-244). Subject to 
renewal, the control number is currently set to expire on June 30, 
2020.

[[Page 9170]]

    Section 460.122 currently states the requirements for implementing 
an appeals process in PACE. We are proposing to modify the appeals 
section to increase clarity for organizations and ensure appropriate 
participant protections are in place. We are proposing to require PACE 
organizations to develop and distribute written materials that would 
explain the PACE requirements to the third party reviewers that are 
responsible for making appeal determinations. Additionally, we are 
proposing to increase requirements around what appeal decision 
notifications must include, which we expect would require PACE 
organizations to revise their current appeal notification materials.
    For the development and distribution of materials to the third 
party reviewer, we estimate it would take 4 hours at $69.72/hr for a 
quality officer at each PACE organization to create and distribute 
these materials (3 hr to create and 1 hr to distribute). For the 
revision of the written appeal notices, we estimate it would take 1 
hour at $69.72/hr for a quality officer at each PACE organization to 
revise the current notices.
    In aggregate, we estimate a one-time burden of 655 hours [131 PACE 
organizations * (4 hr + 1 hr)] at a cost of $45,667 (655 hr * $69.72/
hr).
15. ICRs Regarding Documenting and Tracking the Provision of Services 
Under PACE (Sec.  460.98)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0790 (CMS-R-244). Subject to 
renewal, the control number is currently set to expire on June 30, 
2020.
    As discussed in section VII.E. of this proposed rule, we are 
proposing to amend Sec.  460.98 in part to require PACE organizations 
to document, track and monitor the provision of services across all 
care settings, regardless of whether services are formally incorporated 
into a participant's plan of care. The burden associated with this 
requirement would consist of the time and effort required for PACE 
organizations to develop and implement procedures and to perform the 
required documentation, tracking and monitoring.
    We estimate a one-time burden of 50 hours at $50.90/hr for 
technical staff at each PACE organization to develop the necessary 
procedures and written materials. We estimate a one-time burden of 
6,550 hours (131 PACE organizations * 50 hr) at a cost of $333,395 
(6,550 hr * $50.90/hr) for the first year. Since PACE organizations are 
already required to document all services furnished in the medical 
record in accordance with Sec.  460.210(b)(2), we believe that by 
adding the requirement to track and monitor the provision of those 
services, the one-time burden of 50 hours would be a reasonable 
estimate on how long it would take to ensure procedures were developed.
    We also estimate this provision would result in increased ongoing 
costs to PACE organizations. To estimate the increased burden, we use 
the following assumptions about the documentation, tracking, and 
monitoring of services, based on our experience monitoring and auditing 
PACE organizations.
    As organizations are already required to document services 
furnished in the participant's medical record, PACE organizations would 
need to devote time to tracking and monitoring the provision of 
services in order to ensure services are being provided. We therefore 
estimate a burden of 50 hours at $50.90/hr for technical staff to 
complete these activities, including, when warranted, revision of the 
aforementioned program procedures and monitoring measures. We estimate 
a total aggregate annual cost at $333,395 (131 PACE organizations * 50 
hr * $50.90/hr). This annual cost combined with the one-time cost of 
$333,395 for developing written procedures and materials would total 
$666,790 for the first year of implementation.
16. ICRs Regarding Documentation in Medical Records Under PACE (Sec.  
460.210)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0790 (CMS-R-244). Subject to 
renewal, the control number is currently set to expire on June 30, 
2020.
    Section 460.210 currently includes the requirements relating to 
medical records for PACE participants. This includes the minimum 
content of participant medical records. As discussed in section VII.F. 
of this proposed rule, we are proposing to require PACE organizations 
to maintain additional documentation in the medical record, including 
documentation of all recommendations for services made by employees or 
contractors of the PACE organization, the reasons for not approving or 
providing any service recommended by an employee or contractor of the 
PACE organization, and original documentation of any written 
communication the PACE organization receives relating to the care, 
health or safety of a participant. While PACE organizations would not 
have to develop new systems for maintaining this documentation, we 
expect that they would have to revise their policies and procedures and 
re-train staff on the new requirements. We believe that a compliance 
officer or quality officer would be responsible for ensuring the 
necessary materials are updated and that staff are trained. For 
revising materials and training staff, we estimate a one-time burden of 
10 hours at $69.72/hr for technical staff to revise materials and lead 
training. Therefore, the one-time burden to implement this provision is 
1,310 hours (131 PACE organizations * 10 hr) at a cost of $91,333 
(1,310 hr * $69.72/hr).
    We also estimate this provision would result in increased ongoing 
costs to PACE organizations. To estimate the increased burden, we use 
the following assumptions about medical record documentation. These 
assumptions are based on our experience monitoring and auditing PACE 
organizations' compliance with clinical processing requirements and 
medical record documentation.
    As discussed previously, we proposed requiring three additional 
types of documentation to be included within a participant's medical 
record. Specifically, the documentation of recommendations made by 
employees and/or contractors, the reasons for not approving or 
providing a recommended service, and the original documentation of any 
written communication the PACE organization receives relating to the 
care, health or safety of a participant. Of these new requirements, we 
estimate that the requirement to maintain original documentation of any 
written communication the PACE organization receives relating to the 
care, health or safety of a participant, in any format, would not 
create a large burden, as organizations would only be required to save 
the already created documentation within a medical record. Therefore, 
we estimate that the total burden for part of the provision would be 5 
hours per PACE organization or 655 total hours (5 hr/organization * 131 
organizations).
    We also proposed to require a PACE organization to document 
recommendations for services from employees or contractors of the PACE 
organization, including specialists. Furthermore, we are proposing to 
require PACE organizations to document the reasons a service 
recommended by an employee or contractor of the PACE organization is 
not approved or provided. We considered several factors when 
determining the estimated burden associated with these provisions. 
First, PACE organizations are already required under Sec.  
460.104(b)(1) to document the

[[Page 9171]]

rationale for not providing services following initial comprehensive 
assessments in the development of the care plan; therefore this 
provision would only apply to services recommended following the 
initial care plan development. Second, PACE organizations would only 
have to document the rationale under proposed Sec.  460.210(b)(5) when 
the PACE organization does not approve or provide a recommended 
service, so there would be no additional burden in situations where the 
PACE organization approves or provides a recommended service. 
Considering these two factors, we determined that each PACE 
organization would have to spend approximately 51 hours (approximately 
1 hr per week) to implement this part of the regulation. Therefore, we 
estimate a total of 56 hours per organization (51 hr + 5 hr), or a 
total of 7,336 hours (56 hr * 131 organizations).
    Additionally, any IDT occupation may be involved in the 
documentation of this rationale depending on the type of service being 
recommended. Therefore, to determine the cost associated with this 
provision, we took the cost of one hour of wages for the full IDT 
($838.36) and divided it by the 11 occupations included in the IDT (see 
Table 21) to determine an average wage of $76.21 ($838.36/11). We 
believe this is the most accurate estimate as it would be unlikely all 
occupations were working at the same time, and we are unable to 
estimate how much any one occupation would work over a different 
occupation.

                 Table 21--Wages for IDT Staff Members *
------------------------------------------------------------------------
                                                            Mean hourly
                                                             wage with
                                            Occupation        fringe
            Occupation title                   code        benefits and
                                                           overhead ($/
                                                                hr)
------------------------------------------------------------------------
Primary Care Provider...................         29-1069          196.04
Registered Nurse........................         29-1141           72.60
Home Care Coordinator (often a RN)......         29-1141           72.60
Physical Therapist......................         29-1123           85.46
Occupational Therapist..................         29-1122           82.08
Masters of Social Work..................         21-1022           56.22
Recreational Therapist..................         29-1125           48.68
Dietician...............................         29-1031           58.86
Driver..................................         53-3022           32.10
Personal Care Attendant.................         31-1011           24.36
PACE Center Manager.....................         11-9111          109.36
                                         -------------------------------
    Total...............................  ..............          838.36
                                         -------------------------------
        Average IDT Cost Per Hour.......  ..............           76.21
------------------------------------------------------------------------
*See section IX.A. of this proposed rule.

    We estimate the total cost of this provision to be $559,077 (7,336 
hr * $76.21/hr).
17. ICRs Regarding PACE Participant Rights: Contact Information and 
Access Requirements (Sec.  460.112)
    The following proposed changes will be submitted to OMB for 
approval under control number 0938-0790 (CMS-R-244). Subject to 
renewal, the control number is currently set to expire on June 30, 
2020.
    Section 460.112 currently includes the specific rights to which 
PACE participants are entitled. As discussed in section VII.G. of this 
proposed rule, we are proposing to modify the participant rights to 
include three new distinct rights, specifically, the participant's 
right to have reasonable and timely access to specialists as indicated 
by the participant's health condition and consistent with current 
clinical practice guidelines, the right to call 1-800-MEDICARE with 
questions or concerns regarding the program, and the right to receive 
necessary care in all care settings, up to and including placement in a 
long-term care facility when the PACE organization can no longer 
maintain the participant safely in the community. The PACE organization 
is currently required to provide a copy of this set of participant 
rights to participants at the time of enrollment, and they are required 
to post a copy of the rights in the center. Under these proposals, the 
PACE organization would be required to revise the current participant 
rights to account for the three new requirements.
    We estimate it would take 2 hours at $69.72/hr for technical staff 
to update the participant rights information included in the enrollment 
information and post the new participant rights in the center. In 
aggregate, we estimate a one-time burden of 262 hr (131 PACE 
organizations * 2 hr) at a cost of $18,267 (262 hr * $69.72/hr).
18. ICRs Regarding Stipulated Decisions in Part C (Sec.  422.562)
    In order to permit OMHA adjudicators to more efficiently issue 
decisions where there is no longer any material issue in dispute, we 
are proposing to include MA organizations in the definition of 
``contractors'' as that definition relates to stipulated decisions 
issued by ALJs and attorney adjudicators under Sec.  405.1038. We are 
scoring this impact as negligible for several reasons. The total number 
of favorable decisions in MA for contract year 2018, the most recent 
year for which we have complete appeals data, was 578. The number of 
these overturned denials that were stipulated decisions is not 
currently quantifiable as it is not data that existing appeals systems 
are equipped to track, and ALJs do not track this data on their own.
    We consulted with OMHA for its opinion on stipulated decisions, and 
OMHA estimated that the number of contractors submitting oral or 
written statements in an ALJ hearing or attorney adjudicator review was 
in the single digits because plans prefer an alternate, informal 
approach that removes the claim from the appeals process altogether: 
Requesting that the beneficiary withdraw their appeal and resubmit 
their claim for payment. The

[[Page 9172]]

reason for this preference is currently speculative at best.
    CMS estimates that while this proposal would positively impact 
beneficiaries both in receipt of their items or services, and afford 
beneficiaries due process protections in a formalized stipulated 
decisions process, the number of beneficiaries that would be affected 
is minimal. Despite this estimation of negligible impact, CMS is 
proposing inclusion of this provision to promote regulatory uniformity 
in their approach to stipulate decisions as far as Medicare contractors 
are concerned. The submission of a written or oral statement seeking a 
stipulated decision is an ICR that is associated with an administrative 
action pertaining to specific individuals or entities (5 CFR 
1320.4(a)(2) and (c)). Consequently, the burden for preparing and 
filing the oral or written statement for use in the appeal is exempt 
from the requirements and collection burden estimates of the PRA.

C. Summary of Proposed Information Collection Requirements and 
Associated Estimates

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D. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection and recordkeeping 
requirements. These requirements are not effective until they have been 
approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections previously discussed, please visit CMS's 
website at: https://www.cms.gov/RegulationsandGuidance/Legislation/PaperworkReductionActof1995/PRAListing.html, or call the Reports 
Clearance Office at (410) 786-1326.
    We invite public comments on these proposed 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-4190-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.

X. Regulatory Impact Analysis

A. Statement of Need

    This rule proposes several mandatory regulatory changes stemming 
from federal laws related to the Part C and D programs--including the 
BBA of 2018, the SUPPORT Act, and the Cures Act. The statutory need for 
these policies is clear. However, this rule contains various other 
proposals that are discretionary policies, including enhancements to 
the Programs of All-Inclusive Care for the Elderly (PACE) requirements, 
hence we provide economic justification for some of these noteworthy 
provisions in the following paragraphs.
    We estimate that the proposed Star Ratings provisions would result 
in an overall net savings for the Medicare Trust Fund. There are two 
proposed changes that may impact a contract's Star Rating: (1) We 
propose to increase measure weights for patient experience/complaints 
and access measures from two to four to further emphasize the patient 
voice, and (2) we propose the use of Tukey outlier deletion, which is a 
standard statistical methodology for removing outliers, to increase the 
stability and predictability of the non-CAHPS measure cut points. The 
proposed increased weight reflects CMS's commitment to put patients 
first and to empower patients to work with their doctors to make health 
care decisions that are best for them. Since more outliers tend to be 
at the low end of the distribution (worse performers), directly 
removing outliers causes some shifting downward in overall Star 
Ratings. The increased measure weights for patient experience/
complaints and access revision is assumed to be a cost to the Medicare 
Trust Fund given the ratings for these measures tend to be higher 
relative to other measures, and the Tukey outlier deletion is assumed 
to be a saver to the Medicare Trust Fund since directly removing 
outliers results in a shift downward in ratings. The aggregate savings 
to the Medicare Trust Fund over 2024-2030 is $4.9 billion.
    Based on industry feedback over the course of several years, and 
our experiences auditing PACE organizations, we are proposing to modify 
certain PACE requirements to enhance stakeholders' understanding of our 
requirements and reduce administrative burden. Stakeholders have 
suggested that the existing processes for addressing service delivery 
requests is burdensome for PACE organizations, and can delay 
participants' access to services. We are proposing several changes to 
the PACE regulations to streamline these processes while ensuring that 
important participant protections remain intact. We believe these 
changes will save PACE organizations approximately $20 million a year.

B. Overall Impact

    We examined the impact of this proposed rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), Executive Order 13272 on Proper 
Consideration of Small Entities in Agency Rulemaking (August 13, 2002), 
section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform 
Act of 1995 (UMRA) (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 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.
    This proposed rule affects MA and PACE organizations and Part D 
sponsors (North American Industry Classification System (NAICS) 
category 524114) with a minimum threshold for small business size of 
$41.5 million (https://www.sba.gov/content/small-business-size-standards). This proposed rule additionally affects hospitals (NAICS 
subsector 622), a variety of provider categories, including physicians 
and specialists (NAICS subsector 621), pharmacy related businesses 
(NAICS code 3254), and information technology (IT) services (54141).
    To clarify the flow of payments between these entities and the 
federal government, note that MA organizations and Part D sponsors 
submit bids (that is, proposed plan designs and projections of the 
revenue needed to provide those benefits, divided into three 
categories--basic benefits, supplemental benefits, and Part D drug 
benefits) in June 2020 for operation in contract year 2021. These bids 
project utilization of services from and payments to hospitals, 
providers, and staff as well as the cost of plan administration and 
profits. These bids in turn determine the payments from the Medicare 
Trust Fund to the MA organizations and Part D Sponsors that pay 
providers and other stakeholders for their provision of covered 
benefits to enrollees. Consequently, our analysis will focus on those 
plan types that submit bids (primarily MA organizations and Part D 
Sponsors) for which we have complete data. We will supplement this data 
with internal CMS financial data, which we have for all plan types.
    There are various types of Medicare health plans, including MA 
organizations and their plans, Part D sponsors and Part D plans (PDPs), 
demonstration plans, section 1876 cost plans, PDPs, and PACE 
organizations. We use the term ``Medicare health plan'' as a general 
term referring to any of these plan types just listed. By examining 
records from the most recent year for which we have complete data, 
2019, we determined, that to the nearest 10 percent, approximately 40 
percent of all Medicare health plan organizations are not-for-profit. 
Note that the 40 percent applies to all Medicare health plans. Some 
important subcategories have different proportions. For example, 
coordinated care plans are 30 percent not-for-profit, PACE plans are 90 
percent not-for-profit, and PDPs are about 50 percent not-for-profit. 
The attribute ``small business'' only applies to for-profit entities 
and, for insurers such as MA plans and Part D sponsors, refers to for-
profit entities whose receipts are under $41.5 million. While we have 
financial information on MA plans and Part D sponsors, we do not

[[Page 9178]]

have total receipts. We have used proposed bids and payments as a proxy 
for receipts.
    Executive Order 13272 requires that HHS thoroughly review rules to 
assess and take appropriate account of their potential impact on small 
business, small governmental jurisdictions, and small organizations (as 
mandated by the RFA).
    If a proposed rule may have a significant economic impact on a 
substantial number of small entities, then the proposed rule must 
discuss steps taken, including alternatives, to minimize burden on 
small entities. The RFA does not define the terms ``significant 
economic impact'' or ``substantial number.'' The Small Business 
Administration (SBA) \109\ advises that this absence of statutory 
specificity allows what is ``significant'' or ``substantial'' to vary, 
depending on the problem that is to be addressed in the rulemaking, the 
rule's requirements, and the preliminary assessment of the rule's 
impact. To ensure that a broad range of impacts are fully considered in 
the analysis, we consider ``substantial number'' to mean 3-5 percent or 
more of the affected small entities within an identified industry.
---------------------------------------------------------------------------

    \109\ The Regulatory Flexibility Act An Implementation Guide for 
Federal Agencies, pages 17-19. Issued by SBA's Office of Advocacy, 
and accessible at www.sba.gov/advo.
---------------------------------------------------------------------------

    The 1984 HHS Handbook, On Developing Low Burden and Low Cost 
Regulatory Proposals, set forth the following definitional narrative 
for the term ``significant economic impact'' and is still applicable: A 
rule has a significant economic impact on the small entities it 
affects, if it significantly affects their total costs or revenues. If 
the economic impact is expected to be similar for all affected small 
entities and those entities have similar costs and revenues, then an 
average impact can be calculated. If the average annual impact on small 
entities is 3 to 5 percent or more, then we consider the rule has a 
significant economic impact on small entities.
    While a significant number (more than 30 percent) of the 
organizations affected by this proposed rule are not-for-profit 
organizations, the impact is not significant. As shown in Table 41, the 
net impact of this rule is an annualized savings of $5.8 million a year 
resulting from a $28.8 million savings versus a $23 million cost. This 
annualized cost is significantly below 3-5 percent of the net receipts 
of all plans.
    While this rule has significant impact on the Medicare Trust Fund 
and United States Treasury as detailed in this Regulatory Impact 
Analysis, neither of these entities are ``small businesses.'' 
Consequently, this impact is not discussed in this section.
    We next discuss the impact on hospitals, physician and other 
provider practices, pharmacy related businesses, and IT services.
    As discussed in sections IX and X of this proposed rule, many of 
the provisions require system updates necessitating programming and 
other IT services. More specifically, the following provisions have PRA 
impacts involving IT services: Beneficiary RTBT, Fraud and Abuse, PACE, 
ESRD, SEP Part C/D, DMP, and Education on Addiction. Based on estimates 
in section IX, the combined cost of IT services is approximately $50 
million, which is significantly below the 3-5 percent threshold that 
would trigger further discussion. Furthermore, this $50 million 
represents payments for services rendered not a burden per se.
    The provisions of this rule primarily affect the responsibility of 
MA organizations and Part D sponsors to furnish services. This means 
that services that were formerly paid for out-of-pocket or by other 
insurances are now paid for by the Part C and D programs. Therefore, 
the provisions of this proposed rule do not impose specific burdens on 
hospitals or providers.
    For example, the various provisions affecting enrollment (ESRD, SEP 
Part C/D, MSA) require that the Medicare Trust Fund pay for services 
provided to those who enroll. In some cases, this change is limited to 
who pays. In other cases, surgeries and other procedures that would not 
have been purchased are not being furnished to enrollees. However, 
these services are being paid for; they are not independent burdens.
    Unlike the previous mentioned stakeholders (where there was no 
impact), we do expect pharmacy-related businesses to be impacted by 
this rule. For example, the DMP provisions will likely reduce 
prescription utilization for the targeted population. As a result, the 
Medicare Trust Fund will have lower expenditures. Similarly, pharmacies 
and drug manufacturers will have lower sales volumes. The provisions 
for mandatory DMPs and the provisions to include beneficiaries with a 
history of opioid overdose as PARBs will involve prescribers in case 
management. We believe network providers are typically contractually 
obligated to participate in utilization review activities by plan 
sponsors, and non-network providers are not. If any pharmacy 
limitations are implemented as a result, this will involve network 
pharmacies, which we believe are also contractually obligated to 
participate in drug utilization review activities. Additionally, we 
estimate approximately 40,000 beneficiaries will be identified as 
PARBs, which constitutes approximately 0.08 percent of Part D 
enrollees.
    As detailed in this Regulatory Impact Analysis, the DMP provisions 
will reduce spending by about $7.7 million a year and, as just 
indicated, likely reduce revenue to pharmacies and manufacturers. The 
MTMP provisions will bring in an extra $0.7 million per year due to 
increased requirements. The preferred specialty tier for Part D could 
have the effect that brand manufacturers may have to lower their prices 
and/or offer better rebates for placement on the preferred specialty 
tier relative to other brands or the potential for more generic drug or 
biosimilar/interchangeable biological product alternatives. Similarly, 
this provision may encourage generic manufacturers to develop more 
generic drug or biosimilar/interchangeable biological product 
alternatives at competitive prices (that is, relative to pricing 
changes by brand manufacturers). The Office of the Actuary (OACT) could 
not estimate this effect of the preferred specialty tier for Part D. 
The combined total impacts to pharmacies is estimated at under $25 
million a year (the big drivers being the reduced drug utilization due 
to DMP, the DMP case management, and the MTMP requirements). This is 
significantly less than the 3-5 percent of total revenue of pharmacies 
required to trigger further discussion.
    Consequently, the Secretary has determined that this proposed rule 
will not have a significant economic impact on a substantial number of 
small entities, and we have met the requirements of Executive Order 
13271 and the RFA. In addition, section 1102(b) of the Act requires us 
to prepare a regulatory analysis for any rule under title XVIII, title 
XIX, or part B of title XI 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 proposed rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of UMRA also requires that agencies assess anticipated 
costs and benefits before issuing any rule whose mandates require 
spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation. In 2019, that threshold is approximately $154 
million. This proposed rule is not

[[Page 9179]]

anticipated to have an unfunded effect on state, local, or tribal 
governments, in the aggregate, or on the private sector of $154 million 
or more.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule that imposes 
substantial direct requirement costs on state and local governments, 
preempts state law, or otherwise has federalism implications. Since 
this proposed rule does not impose any substantial costs on state or 
local governments, preempt state law or have federalism implications, 
the requirements of Executive Order 13132 are not applicable.
    If regulations impose administrative costs on reviewers, such as 
the time needed to read and interpret this proposed rule, then we 
should estimate the cost associated with regulatory review. There are 
currently 795 contracts (which includes MA, MA-PD, and PDP contracts), 
55 state Medicaid Agencies, and 300 Medicaid MCOs. We also expect a 
variety of other organizations to review (for example, consumer 
advocacy groups, major Pharmacy Benefit Managers). Each organization 
will designate one person to review the rule. A reasonable maximal 
number is 2,000 total reviewers. We note that other assumptions are 
possible.
    Using the BLS wage information for medical and health service 
managers (code 11-9111), we estimate that the cost of reviewing this 
proposed rule is $109.36 per hour, including fringe benefits and 
overhead costs (https://www.bls.gov/oes/current/oes_nat.htm). Assuming 
an average reading speed, we estimate that it will take approximately 
100 hours for each person to review this proposed rule. For each entity 
that reviews the rule, the estimated cost is therefore $10,936 (100 
hours * $109.36). Therefore, we estimate that the maximum total cost of 
reviewing this proposed rule is $21 million ($10,936 * 2,000 
reviewers). We expect that many reviewers will not review the entire 
rule but just the sections that are relevant to them. If each person on 
average reviews 10 percent of the rule, then the cost would be $2 
million.
    Note that this analysis assumed one reader per contract. Some 
alternatives include assuming one reader per parent organization. Using 
parent organizations instead of contracts will reduce the number of 
reviewers. However, we believe it is likely that review will be 
performed by contract. The argument for this is that a parent 
organization might have local reviewers assessing potential region-
specific effects from this proposed rule.
    In accordance with the provisions of Executive Order 12866, this 
rule was reviewed by OMB.

C. Anticipated Effects

    Many of the provisions of this proposed rule have no impact either 
because they are technical provisions or are provisions that codify 
existing guidance. Other provisions have an impact although it cannot 
be quantified or whose estimated impact is zero. Throughout the 
preamble, we have noted when provisions have no impact. Additionally, 
this Regulatory Impact Analysis discusses several provisions with 
either zero impact or impact that cannot be quantified. The remaining 
provisions are estimated in section IX of this proposed rule and in 
this Regulatory Impact Analysis. Where appropriate, when a group of 
provisions have both paperwork and non-paperwork impact, this 
Regulatory Impact Analysis cross-references impacts from section IX of 
this proposed rule in order to arrive at total impact. Additionally, 
this Regulatory Impact Analysis provides pre-statutory impact of 
several provisions whose additional current impact is zero because 
their impact has already been included in the appropriate baselines. 
For further discussion of what is estimated in this Regulatory Impact 
Analysis, see Table 10 and the discussion afterwards.
1. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.100)
    This provision would require that CMS identify beneficiaries 
enrolled in Medicare Part D with a history of opioid-related overdose 
(as defined by the Secretary) and include such individuals as PARBs for 
prescription drug abuse under the Part D sponsor's drug management 
program. We projected a list of approximately 18,000 beneficiaries that 
met the criteria for this provision between July 2017 and June 2018, 
but did not meet other criteria for classification as a potential at-
risk beneficiary. Under this proposal, this population is projected to 
(1) increase the population of enrollees requiring case management by 
plan sponsors (see section IX.B.3. of this proposed rule), and (2) 
reduce Part D drug cost.
    We evaluated their Prescription Drug Event (PDE) data for the same 
July 2017 and June 2018 period to determine the effects of this 
provision. After examining the PDE data, we found that these 
beneficiaries had an average gross drug cost per beneficiary per year 
of $9,675. Because this amount is high relative to the typical Part D 
spending and because they do not meet other at-risk criteria, it is 
likely that many of these beneficiaries have conditions that require 
expensive specialty medications. These drugs have complex clinical 
criteria that are difficult to alter through utilization management. 
Accordingly, we have assumed that 5 percent of their Part D drug cost 
would be reduced through additional plan management. Our estimated 
fiscal year federal savings rounded to the nearest million are shown in 
Table 23. Since these drugs would not be purchased as a result of 
efficient case management, they represent reduction in goods consumed 
and are true savings to the Medicare Trust Fund.

                                          Table 23--Estimated Benefits to the Medicare Trust Fund of the Inclusion of Additional At-Risk Beneficiaries
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Fiscal year ($ in millions)                                               Total 2021-2030
                                                        ------------------------------------------------------------------------------------------------------------------------   Impact ($ in
                      Fiscal Year                                                                                                                                                   millions)
                                                            2021        2022        2023        2024        2025        2026        2027        2028        2029        2030    ----------------
                                                                                                                                                                                    2021-2030
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Impact.......................................         $6          $8          $8          $8          $8          $8          $8          $8          $8          $8              $75
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 24 summarizes the aggregate impact of the changes to DMPs. It 
reflects all the estimates related to DMPs in section IX of this 
proposed rule (which incur costs) and the savings due to reduction in 
drug costs discussed in this Regulatory Impact Analysis.

[[Page 9180]]



                                  Table 24--Summary of DMP Impacts by Provision
                                                  [Millions $]
----------------------------------------------------------------------------------------------------------------
                                                                 Annual       Annual
                                       1st yr      1st year     savings     cost  2nd-   Total  10-   Total  10-
                                      savings        cost       2nd-10th    10th  year      year      year  cost
                                                                  year                    savings
----------------------------------------------------------------------------------------------------------------
Mandatory DMP Case Management       ...........  ...........  ...........          0.1  ...........          0.8
 (COI)............................
DMP Paperwork (COI)...............  ...........          3.1  ...........          0.1  ...........          3.9
DMP Overdose Case Management (COI)  ...........          9.9  ...........         10.0  ...........         99.9
DMP Drug savings..................          5.8  ...........          7.7  ...........         75.4  ...........
                                   -----------------------------------------------------------------------------
    Total.........................  ...........  ...........  ...........  ...........         75.4        104.6
                                   -----------------------------------------------------------------------------
        Net Impact (Cost) over 10   ...........  ...........  ...........  ...........  ...........         29.2
         years....................
----------------------------------------------------------------------------------------------------------------

2. Automatic Escalation to External Review Under a Medicare Part D Drug 
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec.  423.153, 
423.590, and 423.600)
    As stated in the preamble, starting in 2022, the SUPPORT Act 
requires automatic escalation of drug management program appeals to the 
independent outside entity contracted with the Secretary for review and 
resolution. We are proposing rules to codify that provision.
    To estimate the impact of this proposal, we first determined how 
many Part D sponsors had implemented drug management plans. As of July 
9, 2019, we found that 60 Part D sponsors had implemented drug 
management plans. Next, we estimated of the number of CARA-appeals per 
1,000 enrollees and the percentage of plan denials related to CARA. To 
do this, we contacted nine Part D sponsors and asked how many CARA 
related appeals they had received from January 1, 2019 through July 31, 
2019.
    Of those nine, eight plans responded they had have not received any 
CARA appeals. One Part D sponsor responded to say they had received 
CARA related appeals. That plan reported a rate of 0.014 CARA related 
appeals per 1000 enrollees. This accounted for 0.08 percent of plan 
denials. Since there are about 28,600 appeals per year, therefore there 
are only about 23 cases (0.08 percent * 28,600) affected by this 
provision. Since most IRE cases are judged by a physician at a wage of 
$202.46 and typically an IRE will take at most 1 hour to review most 
cases, the total burden is about $4,656.58 (23 cases * $202.46 * 1 
hour) or $0.0 million.
3. Suspension of Pharmacy Payments Pending Investigations of Credible 
Allegations of Fraud and Program Integrity Transparency Measures 
(Sec. Sec.  405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)
    We are unable to determine the overall impact of implementing 
sections 2008 and 6063 of the SUPPORT Act because we do not have 
adequate data to support an estimate of the potential costs and 
savings. While we do have access to estimates of overall Medicare Part 
D opioid spending, sections 2008 and 6063 of the SUPPORT ACT are not 
expected to impact all Part D opioid prescriptions, nor do we expect 
that they would impact all pharmacies that dispense those medications. 
For example, section 2008 of the SUPPORT Act requires Part D plan 
sponsors to report to CMS any payment suspension pending investigation 
of credible allegations of fraud by a pharmacy, which must be 
implemented in the same manner as the Secretary does under section 
1862(o) of the Act. In addition, section 6063 of the SUPPORT Act 
requires MA organizations and Part D plan sponsors to report 
information on the investigations, credible evidence of suspicious 
activities of a provider of services (including a prescriber) or 
supplier related to fraud, and other actions taken by the plan related 
to inappropriate prescribing of opioids. In both cases, these 
provisions would directly impact a percentage of all opioid 
prescriptions written by doctors and dispensed by pharmacies. While we 
believe there may be savings generated through actions taken by Part D 
plan sponsors that will conduct their own due diligence from the 
reporting and sharing of administrative actions between CMS, MA 
organizations and Medicare Part D plan sponsors (including MA 
organizations offering MA-PD plans), as well as additional law 
enforcement actions, we cannot estimate the impact at this time. We 
welcome comment and suggestions for data that could be relied upon for 
this purpose.
4. Medicare Advantage (MA) Plan Options for End-Stage Renal Disease 
(ESRD) Beneficiaries (Sec. Sec.  422.50, 422.52, and 422.110)
    CMS is proposing to codify requirements under section 17006 of the 
Cures Act that, effective for the plan year beginning January 1, 2021, 
would remove the prohibition for beneficiaries with ESRD from enrolling 
in an MA plan. Since CMS is proposing to codify existing statute, there 
would be no impact to program expenditures. In order to estimate the 
impact of requirements under section 17006 of the Cures Act, a pre-
statute baseline was used to estimate the impacts.
    There are two primary assumptions that contribute to the regulatory 
impact analysis for this provision: (1) The increased number of 
beneficiaries with ESRD who choose to enroll in an MA health plan; and 
(2) The cost differential between MA and FFS for those enrollees with 
ESRD.
    We are expecting that there will be an influx of beneficiaries 
switching from FFS to MA beginning on January 1, 2021 due to the 
provision. In 2019, there were 532,000 enrollees in ESRD status with 
Medicare Part A benefits as shown in the Medicare Enrollment 
Projections tables of the 2020 Medicare Advantage Rate Announcement. Of 
these, 401,000 enrollees were in the FFS program, which results in 
131,000 in Private Health Plans. This equates to a private health 
penetration rate of about 25 percent. Absent the ESRD enrollment 
provision of the Cures Act, we project that ESRD enrollment in Private 
Health plans will grow to 144,000 in 2021, representing about 26 
percent of the projected 2021 total ESRD population of 559,000. Based 
on an analysis by OACT, ESRD enrollment in MA plans is expected to 
increase by 83,000 due to the Cures Act provision. This increase is 
assumed to be phased in over 6 years,

[[Page 9181]]

with half of the beneficiaries (41,500) enrolling during 2021.
    Next, we determine the cost differential of the projected ESRD 
enrollees that are new to MA in 2021 due to the Cures Act. The cost 
differential between MA and FFS ESRD enrollees is attributed to the 
adjustment to MA risk scores for differences in diagnosis coding 
between MA and FFS beneficiaries. The Coding Intensity (Annual) was 
derived by examining historical risk score data and computing the 
differences between MA and FFS risk scores. Demographic differences 
(age, gender factors) for enrollees have been separated and removed 
from risk score comparisons so that the final differences are 
considered health status differences.
    Table 25 shows the cost for codifying section 17006 of the Cures 
Act, removing the prohibition for ESRD beneficiaries to enroll in MA 
plans. The United States Per Capita Cost (USPCC) amounts for Part A and 
Part B can be found in the 2020 Medicare Advantage Rate Announcement. 
The Gross Costs (before backing out the Part B premium portion) is 
calculated by multiplying the Additional MA ESRD Enrollment by the 
ESRD-USPCC rates, which are on a per member per month basis, multiplied 
by 12 (the number of months in a year) multiplied by the Composite 
Coding Intensity. The Net Cost is calculated by multiplying the Gross 
Costs by the Net of Part B Premium amount which averages between 85.6% 
and 84.9% from 2021-2030. The Net Costs range from $23 million in 
Calendar Year 2021 to $440 million in CY 2030.
[GRAPHIC] [TIFF OMITTED] TP18FE20.030

    Because these increases are already included in the baseline, they 
are not included in Table 41, nor do they contribute to the monetized 
table calculations (Table 40). However, notes to Table 41 and 
observations in the conclusion do mention this impact.
5. Medicare Fee-for-Service (FFS) Coverage of Costs for Kidney 
Acquisitions for Medicare Advantage (MA) Beneficiaries (Sec.  422.322) 
and Exclusion of Kidney Acquisition Costs From Medicare Advantage (MA) 
Benchmarks (Sec. Sec.  422.258 and 422.306)
    Section 17006(b) of the Cures Act amended section 1853(k) and (n) 
of the Act to exclude standardized costs for kidney acquisitions from 
MA benchmarks starting in 2021. As such, CMS is proposing to codify 
these requirements so that, effective for the contract year beginning 
January 1, 2021, MA organizations will no longer be responsible for 
costs for organ acquisitions for kidney transplants for

[[Page 9182]]

their beneficiaries. Removing these costs from the MA benchmarks will 
decrease the amounts paid to the plans from the Medicare trust funds. 
Instead, as required by statute, CMS proposes to require that Medicare 
FFS cover the kidney acquisition costs for MA beneficiaries, effective 
2021.
    Since the budget baseline has reflected this change from the 
publication of the Cures Act, there is no additional impact of the 
proposed codification of this change to the computation of rates. To 
estimate the impact of the statute when published we used a pre-statute 
baseline. This impact of the statute will therefore not be included in 
Table 41 or Table 40, which deal with impacts of current provision.
    Our analysis in the next section shows that: (1) FFS coverage of 
kidney acquisition costs for MA beneficiaries results in net costs to 
the Medicare Trust Funds ranging from $212 million in 2021 to $981 
million in 2030; (2) Excluding kidney acquisition costs from MA 
benchmarks results in net savings estimated to range from $594 million 
in 2021 to $1,346 million in 2030. In addition, we anticipate no change 
in plan, provider, or beneficiary burden for these provisions. Plan 
burden would not be impacted by the change in their payment rate. 
Provider burden will not be impacted because they continue to bill for 
kidney acquisition regardless of whether they receive payment from FFS 
Medicare or MA organizations. Finally, beneficiaries would not be 
impacted by the change in the source of payment for the acquisition of 
the organ.
    Next, we describe the steps used to calculate the savings 
associated with excluding kidney acquisition costs from MA benchmarks 
as well as the costs associated with requiring FFS coverage of kidney 
acquisition costs for MA beneficiaries.
    First, we examined the FFS cost of kidney acquisition coverage. We 
calculate the expected costs to the FFS program for covering kidney 
acquisitions from the MA population starting in 2021. The costs for 
these services are expected to be lower than the amount that is 
expected to be excluded from the MA benchmarks for two reasons.
    1. The MA penetration rate for ESRD enrollees is lower than for the 
non-ESRD enrollees. This means that a higher percentage of 
beneficiaries with ESRD are in FFS than in MA, so there will likely be 
fewer kidney transplants in MA versus FFS. However, this enrollment 
difference will likely lessen as ESRD enrollees are permitted to enroll 
in MA plans beginning in 2021.
    2. The kidney transplant incidence rate for MA ESRD enrollees has 
historically been much lower than the kidney transplant incidence rate 
for FFS ESRD enrollees. We suspect that this is due to MA ESRD 
enrollees being in dialysis status for a shorter duration than FFS 
enrollees. Again, we believe that this difference (between MA and FFS) 
in the kidney transplant incidence rate will decrease over time as more 
ESRD beneficiaries enroll in MA plans.
    The kidney transplant incidence rate is computed by dividing the 
number of kidney transplants by the ESRD enrollment separately for the 
MA and FFS programs. As shown in table 26, the FFS kidney transplant 
incidence rate has historically often been more than three times the MA 
rate.
[GRAPHIC] [TIFF OMITTED] TP18FE20.031

    As mentioned, we expect that as a greater portion of enrollees with 
ESRD will join MA plans, starting in 2021, the difference in the kidney 
transplant incidence rate between MA and FFS will begin to lessen, as 
shown in table 27. The total number of MA and FFS kidney transplants 
are expected to grow by 3 percent per year which is based on the 2013-
2017 historical growth rate. That rate is higher than the average 
increase in MA and FFS ESRD enrollment of 2 percent for 2013-2017. 
Since the kidney transplant growth is projected to be higher than the 
ESRD enrollment growth, we expect the kidney transplant incidence rate 
to increase over time.

[[Page 9183]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.032

    We then calculate the average kidney acquisition costs using FFS 
claims data from CMS data systems. The average kidney acquisition costs 
ranged from $69,000 in 2013 to $83,000 in 2017, which equates to an 
annual growth rate of 4.7 percent. This percentage was used to estimate 
average kidney acquisition costs during the projection period of 2018 
to 2030.
    The gross costs to the FFS program for covering MA kidney 
acquisition costs are computed by multiplying the MA transplant 
incidence rate by the number of MA ESRD enrollees multiplied by the 
average kidney acquisition cost. This computation was completed for the 
years 2021-2030. The gross costs, as found in the Table 28, range from 
$298 million in 2021 to $1,384 million in 2030. Again, we apply the 
government share of the gross savings factors as well as the Part B 
premium factors to compute the net costs to the Medicare Trust Funds. 
These factors are the same as those used to calculate the savings for 
excluding kidney acquisition costs from the MA benchmarks. The net 
costs to the Medicare Trust Funds after applying these factors are 
expected range from $212 million in 2021 to $981 million in 2030.
[GRAPHIC] [TIFF OMITTED] TP18FE20.033


[[Page 9184]]


    Next, we examined the MA cost of kidney acquisition coverage. We 
used data based on the kidney acquisition costs for the FFS 
beneficiaries to compute the portion of the MA benchmark that has been 
attributed to kidney acquisition costs. In order to compute the amount 
that the MA health plans have been reimbursed for these costs in the 
past, we tabulated Medicare's share of kidney acquisition costs and the 
number of Medicare discharges from the Medicare Cost Reports (Form CMS-
2552-10) for certified kidney transplant centers. The kidney 
acquisition costs were computed for the years 2013-2017 (the latest 
data that was available at the time of this study) using information 
from the Medicare Cost Reports for FFS beneficiaries at the county-
level. The county level per member per month (PMPM) costs are derived 
by summing the kidney acquisition costs for each county and dividing 
these amounts by the county specific Medicare FFS enrollment. These 
annual costs per member are then divided by 12 in order to compute the 
PMPM's.
    Next, we examine the historical kidney acquisition cost PMPM trend 
for the years 2013-2017 to project these costs for the years 2018-2030. 
In aggregate, the kidney acquisition PMPM costs grew at an average rate 
of 6.4 percent during 2013-2017. This trend is used to estimate these 
costs for the 2018-2030 period.
    To calculate the gross savings to the Medicare Trust Funds, we 
multiply the projected MA enrollment by the annual per member kidney 
acquisition costs. We then apply two additional factors to the gross 
savings in order to compute the net savings to the Medicare Trust 
Funds:
    1. Average government share of gross savings. Government 
expenditures are the sum of bids and rebates. Rebates are the portion 
of the difference between the MA benchmarks and MA bids that the health 
plans use to pay for additional supplemental benefits or reductions in 
enrollee cost sharing. The government retains the remaining difference 
between MA benchmarks and MA bids. We estimate that bids will be 
reduced by 50 percent of the total reduction in benchmarks.
    2. Net of Part B premium. Medicare enrollees, not the Trust Funds, 
are responsible for approximately 25 percent of their Part B costs.
    The government share of gross savings factors are expected to be 
between 83.0 percent and 83.4 percent during the period 2021-2030. The 
net of Part B premium factors are expected to be 85.6 percent and 84.9 
percent during that same period. The results can be found in table 29. 
The net savings due to excluding kidney acquisition costs from MA 
benchmarks is estimated to range from $594 million in 2021 to $1,346 
million in 2030.
[GRAPHIC] [TIFF OMITTED] TP18FE20.034

6. Reinsurance Exceptions (Sec.  422.3)
    It is difficult to determine whether there would be a cost or 
savings impact to this proposal. The use of reinsurance or other 
arrangements permitted by the proposal is a choice for MA 
organizations, which they can exercise if they believe it is in their 
business interests to purchase. While purchasing reinsurance coverage 
has a cost associated with it, the use of reinsurance provides 
financial protection that may generate offsetting savings to the MA 
organization, or reduce their risk. We therefore are unable to 
quantitatively estimate the impacts of this provision. We solicit 
stakeholder comment on (i) how this provision may be used, (ii) likely 
costs and savings, and (iii) other related impacts.
7. Medicare Advantage (MA) and Part D Prescription Drug Program Quality 
Rating System (Sec. Sec.  422.162, 422.164, 422.166, 422.252, 423.182, 
423.184, and 423.186)
    We are proposing some measure updates and technical clarifications 
as well as the methodology changes (concerning outliers and the weight 
of patient experience/complaints and access measures). These measure 
updates and technical clarifications are routine and do not have an 
impact on the highest ratings of contracts (that is,

[[Page 9185]]

overall rating for MA-PDs, Part C summary rating for MA-only contracts, 
and Part D summary rating for PDPs). These type of routine changes have 
historically had very little or no impact on the highest ratings. 
Hence, there will be no, or negligible, impact on the Medicare Trust 
Fund from the routine changes.
    We are also proposing to clarify some of the current rules around 
assigning Quality Bonus Payment (QBP) ratings and to codify the rules 
around assigning QBP ratings for new contracts under existing parent 
organizations. We are not proposing any changes to our current QBP 
policies, so there will be no impact on the Medicare Trust Fund from 
these proposals.
    The cost impacts due to the Star Ratings updates are calculated by 
quantifying the difference in the MA organization's final Star Rating 
with the proposed rule and without the proposed rule. There are two 
ways that our proposed rule could cause a contract's Star Rating to 
change: (1) We propose in this rule to increase measure weights for 
patient experience/complaints and access measures from two to four, and 
(2) we propose the use of Tukey outlier deletion, which is a standard 
statistical methodology for removing outliers. There are assumed to be 
Medicare Trust Fund impacts due to the Star Ratings changes associated 
with these two revisions to the methodology. The increased measure 
weights for patient experience/complaints and access revision is 
assumed to be a cost to the Medicare Trust Fund, as there are more 
contracts that would see their Star Ratings increase than decrease. The 
Tukey outlier deletion is assumed to be a saver to the Medicare Trust 
Fund, as more contracts would see their Star Ratings decrease rather 
than increase.
    All impacts are considered transfers since no goods or services are 
increased or decreased.
    The impact analysis for the Star Ratings updates takes into 
consideration the final quality ratings for those contracts that would 
have Star Ratings changes under this proposed rule. There are two ways 
that Star Ratings changes will impact the Medicare Trust Fund:
    1. A Star Rating of 4.0 or higher will result in a QBP for the MA 
organization, which, in turn, leads to a higher benchmark. MA 
organizations that achieve an overall Star Rating of at least 4.0 
qualify for a QBP that is capped at 5 percent (or 10 percent for 
certain counties).
    2. The rebate share of the savings will be higher for those MA 
organizations that achieve a higher Star Rating. The rebate share of 
savings amounts to 50 percent for plans with a rating of 3.0 or fewer 
stars, 65 percent for plans with a rating of 3.5 or 4.0 stars, and 70 
percent for plans with a rating of 4.5 or 5.0 stars.
    In order to estimate the impact of the Star Ratings updates, the MA 
baseline assumptions are updated with the assumed Star Ratings changes 
described in this proposed rule. The MA baseline is completed using a 
complicated, internal CMS model. The main inputs into the MA baseline 
model include enrollment and expenditure projections. Enrollment 
projections are based on three cohorts of beneficiaries: (i) Dual-
eligible beneficiaries, (ii) beneficiaries with employer-sponsored 
coverage, and (iii) all others, including individual-market enrollees. 
MA enrollment for all markets is projected by trending the growth in 
the penetration rates for the 2011 through 2018 base data. The key 
inputs for the expenditure projections include:
     United States Per Capita Cost (USPCC) growth rates.
     Adjustment to MA risk scores for differences in diagnosis 
coding between MA and fee-for-service beneficiaries.
     Quality bonus (county-specific).
     Phase-out of Indirect Medical Education (county-specific).
    Projections are performed separately for payments from the Part A 
and Part B trust funds. Aggregate projected payments are calculated as 
the projected per capita cost times the projected enrollment. The 
Medicare Trust Fund impacts are calculated by taking the difference of 
the MA baseline with the Star Ratings changes and the original MA 
baseline.
    The results are presented in Table 30. The last column of Table 29 
presents net savings to the Medicare Trust Fund; in 2024 the savings is 
$368.1 million; this will grow over time reaching $999.4 million by 
2030. The aggregate savings over 2024-2030 is $4.9 billion. Ordinary 
inflation is carved out of these estimates. The source for ordinary 
inflation is Table II.D1 of the 2019 Medicare Trustees report. It 
should be noted that there are inflationary factors that are used in 
the projected Star Ratings and are used in these estimates. The Star 
Ratings are assumed to inflate at a higher rate for the lower rated 
contracts than for the higher rated contracts. MA organizations with 
low Star Ratings have a better chance of improving their quality 
ratings than MA organizations that have already achieved a high Star 
Rating. For instance, a contract with a Star Rating of 4.5 has less 
room to increase its Star Rating than a contract with a Star Rating of 
3.0.
    There is a large projected reduction in the costs associated with 
the proposed increase in the weight of measures classified as patient 
experience/complaints and access measures in 2029. This is due to 
several contracts that are projected to achieve the required 4.0 Star 
Rating in 2029 and are eligible for the QBP at that time, even after 
this proposed rule is applied. This narrows the difference in costs 
between the proposed rule and the original baseline.

[[Page 9186]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.035

8. Permitting a Second, ``Preferred'', Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)
    The proposed option for Part D sponsors to offer a second, 
``preferred'' specialty tier has the potential to impact Part D drug 
costs in two ways. First, a Part D sponsor may have additional 
negotiating power with brand drug manufacturers by offering a 
preferential tier position relative to the current single specialty 
tier. Second, Part D sponsors may promote lower-cost biosimilar 
biological products on a preferred specialty tier. We consider each of 
these possibilities in the following discussion.
    For a Part D sponsor to be able to negotiate better formulary 
position and lower beneficiary cost sharing for a particular specialty 
drug, there must be a substantial difference between the cost sharing 
on the preferred specialty tier and the higher cost sharing specialty 
tier. As the proposed regulation limits the maximum allowable cost 
sharing to the range of 25 to 33 percent, Part D sponsors must achieve 
this difference by lowering the cost sharing on the preferred specialty 
tier. Because of the high cost for specialty drugs and the structure of 
the Part D benefit, Part D enrollees and prescribers might not 
significantly alter their behavior in response to a five percent change 
in coinsurance, for example. A substantial reduction in the cost 
sharing for this tier would necessitate a substantial increase in cost 
sharing for other tiers to maintain an actuarially equivalent benefit, 
which may unfavorably change the competitive position of the Part D 
sponsor's plan offering. In particular, a plan that offers lower cost 
sharing on high-cost specialty drugs and higher cost sharing on 
conventional drugs would risk adverse selection from Part D enrollees.
    In addition, allowing tiering exceptions between the preferred 
specialty tier and the higher cost sharing specialty tier creates a 
risk for the Part D sponsor that may exceed the benefit of being better 
able to negotiate with respect to brand drugs. A portion of the higher 
cost-sharing specialty drugs may be granted exceptions as the clinical 
criteria for such Part D drugs is complex and can lead to different 
prescriptions for beneficiaries with similar conditions. These Part D 
drugs are often more complicated chemically and apply to complex 
conditions, such as Rheumatoid Arthritis or Multiple Sclerosis. This 
added complexity requires greater specialized knowledge than a 
traditional small molecule drug would for denying an exception. This 
will be known to manufacturers, who will be less inclined to provide 
additional incentives for the preferred placement given that a 
significant amount of non-preferred use will limit any market share 
gains from their enhanced formulary position. Part D sponsors would 
also face additional liability from the difference in cost sharing 
between the preferred and the higher cost sharing specialty tier on 
prescriptions that are granted exceptions. This dynamic is what 
prevents Part D sponsors from placing specialty drugs on a non-
preferred drug tier under current regulation.
    Regarding savings from biosimilar biological products that could be 
promoted through a preferred specialty tier, some of the same 
previously discussed issues still apply. For example, Part D sponsors 
may expect a portion of a non-preferred reference biological product to 
be given an exception to the preferred tier for a biosimilar biological 
product if such biosimilar biological product is not licensed for all 
of the same indications as the reference biological product. 
Furthermore, the selection of these drugs is often largely determined 
by the behavior of the prescriber rather than the formulary status of 
the Part D sponsor. If the prescriber prefers the reference biological 
product, they are more likely to prescribe it rather than the 
biosimilar biological product, regardless of the formulary position. 
This is particularly true for specialty drugs, where the differences in 
total drug cost and in the cost-sharing provisions of the plan are not 
as extreme as the differences between conventional brand and generic 
drugs. Finally, it is worth noting that several large Part D sponsors 
do not currently promote biosimilar biological products. For example, 
Zarxio[supreg], the biosimilar biological product to Neupogen[supreg], 
is not included on the formulary for several large Part D plans.
    Our conclusion is that the provisions of the proposed rule to allow 
Part D sponsors to structure their benefits with

[[Page 9187]]

a second, ``preferred'' specialty tier are unlikely to have a material 
impact on Part D costs. While it is possible that a small savings to 
the Part D program could result from the enhanced flexibility, 
particularly for MA-PD plans with greater prescriber integration, broad 
adoption of a second specialty tier is unlikely. Nevertheless, we 
believe there are reasons to propose a second specialty tier. As 
discussed in more detail in section V.F. of this proposed rule, 
stakeholders requesting this change have posited that it might lead to 
better rebates on certain Part D drugs and reduced costs for Part D 
enrollees and CMS. Most importantly, we are currently not aware of any 
major adverse effects that could result to Part D enrollees by allowing 
Part D sponsors to structure their benefits with a second, 
``preferred'' specialty tier as proposed. For example, concern for 
undue financial burden on some Part D enrollees has prompted us to 
propose to retain the current maximum allowable cost sharing (that is, 
25/33 percent, as discussed in more detail in section V.F. of this 
proposed rule). Additionally, we solicit comment regarding whether 
negative consequences to Part D enrollees could result from this 
proposal. If there were no foreseeable notable harms to Part D 
enrollees, it would seem reasonable to provide the requested 
flexibility to Part D sponsors and see if additional benefits do 
result, while monitoring implementation for adverse effects and 
responding as necessary.
    As discussed in section V.F. of this proposed rule, improving Part 
D enrollee access to needed drugs, including lowering drug costs, are 
central goals for CMS. While this regulatory impact analysis assesses 
the potential impact this proposal will have on Part D drug costs, we 
also believe this proposal has the potential to impact patient access 
and lower drug costs more broadly by providing further incentives for 
manufacturers to develop generic drugs and biosimilar and 
interchangeable biological products. Even if notable savings for the 
Part D program were not to materialize, individual Part D enrollees 
might save a great deal on rebated Part D drugs. Or, the policy might 
result in the benefit of (1) more formulary choices, or (2) more 
choices at a lower cost than might have otherwise been the case. These, 
in turn, might lead to positive health outcomes with associated 
indirect savings to Part D enrollees or the government. We solicit 
comment on any other unforeseen benefits that might result. And, again, 
if we were to finalize this proposal, we would closely monitor for any 
adverse effects and take any necessary action including proposing 
warranted changes for future rulemaking.
9. Medical Loss Ratio (MLR) (Sec. Sec.  422.2420, 422.2440, and 
423.2440)
Regulatory Changes to Incurred Claims (Sec.  [thinsp]422.2420)
    CMS is proposing to amend the regulation at Sec.  422.2420(b)(2)(i) 
so that the incurred claims portion of the MLR numerator for an MA 
contract would include all amounts that an MA organization pays 
(including under capitation contracts) for covered services for all 
enrollees under the contract. Currently, Sec.  422.2420(b)(2)(i) 
specifies that incurred claims include direct claims that an MA 
organization pays to providers (including under capitation contracts 
with physicians) for covered services provided to all enrollees under 
the contract.
    CMS is proposing this amendment so that incurred claims in the MLR 
numerator will include expenditures for certain supplemental benefits 
that MA organizations are newly authorized to include in their PBPs as 
a result of recent policy and legislative changes. As explained in 
greater detail in sections II.A. and VI.F. of this proposed rule, 
recent subregulatory guidance and statutory changes have expanded the 
types of supplemental benefits that MA organizations may include in 
their PBPs. Beginning in 2020, pursuant to section 1852(a)(3)(D) of the 
Act, as amended by the BBA of 2018, MA organizations may provide SSBCI. 
SSBCI can include benefits that are not primarily health related, as 
long as the item or service has the reasonable expectation to improve 
or maintain the chronically ill enrollee's health or overall function. 
In addition, effective January 1, 2019, CMS's interpretation of 
``primarily health related benefits,'' which is used as a criteria for 
supplemental benefits, has been changed to include services or items 
used to diagnose, compensate for physical impairments, ameliorate the 
functional/psychological impact of injuries or health conditions, or 
reduce avoidable emergency and healthcare utilization. To be considered 
``primarily health related,'' a supplemental benefit must focus 
directly on an enrollee's health care needs and should be recommended 
by a licensed medical professional as part of a health care plan, but 
it need not be directly provided by one.
    This impact analysis assumes that the proposed amendments to the 
MLR regulations would not impact MA enrollee benefits. In other words, 
the analysis assumes the proposed amendments would change the types of 
expenditures that could be included in the MLR numerator as incurred 
claims, but there would be no impact on the level or number of 
permissible enrollee benefits that MA plans elect to offer. We request 
comment on this assumption.
    The requirements pertaining to the calculation and reporting of MA 
contracts' MLRs are presented in subpart X of 42 CFR part 422. MA 
organizations' contracts that do not meet the 85 percent minimum MLR 
requirement for a contract year are required to remit funds to CMS 
(Sec.  422.2410(b)). CMS collects remittances by deducting the amounts 
owed from MA organizations' monthly payments (Sec.  422.2470(c)). In 
the absence of statutory language directing CMS to return remitted 
funds to the Medicare Trust Fund, CMS transfers remittances to the 
Treasury. For purposes of this impact analysis, we assume contracts 
that have an MLR of less than 85 percent for one contract year do not 
continue to fail to meet the MLR requirement for an additional two 
consecutive contract years, which would result in imposition of 
enrollment sanctions, or for an additional four consecutive contract 
years, which would result in contract termination. This is consistent 
with our experience; although the MLR requirement has only been in 
effect for five contract years, to date, very few contracts have been 
subject to MLR-related enrollment sanctions, and only one contract has 
failed to meet the MLR requirement for more than three consecutive 
contract years. No contract has been terminated for failure to satisfy 
the MLR requirement for five consecutive contract years.
    Total remittances for individual contract years can be substantial. 
Based on internal CMS data, the simple average of total remittances 
across all contracts for contract years 2014-2017 is $131 million. If 
we adjusted these payments to a 2017 level by trending for enrollment 
and per capita growth but carving out ordinary inflation, the average 
would be $139 million.
    We anticipate that, if finalized, the proposed amendments to Sec.  
422.2420(b)(2)(i) would increase the numerator of the MLR because the 
incurred claims category would include certain expenditures that would 
not qualify for inclusion in the numerator under the current 
regulations. Specifically, under the proposed amendments to Sec.  
422.2420(b)(2)(i), incurred claims would include amounts

[[Page 9188]]

that an MA organization pays (including under capitation contracts) for 
covered services, regardless of whether payment is made to an 
individual or entity that is a provider as defined at Sec.  422.2. We 
expect that this will cause some MA contracts which formerly did not 
satisfy the minimum MLR requirement of 85 percent to now meet or exceed 
it. For contracts that still fail to meet the 85 percent threshold, we 
anticipate that the amount of remittances would decrease. In other 
words, the proposed regulation would, if finalized, effectively result 
in a transfer of funds from the Treasury to the MA organizations 
through the Medicare Trust Fund. Amounts that MA organizations would 
remit and which the Treasury would receive under the current 
regulations would instead remain with the MA organizations, implying 
that MA organizations enjoy cost savings while the Treasury has a cost 
impact. The net impact on the Medicare Trust Fund would be zero, since 
there are no additional transfers from or to the Medicare Trust Fund; 
the only issue being whether the MA organizations retain additional 
funds or the Treasury receives fewer funds.
    To estimate the amount of payments made for services that would be 
included in incurred claims under the proposed amendments to Sec.  
422.2420(b)(2)(i), we used data in the 2019 submitted bids to estimate 
the increase in the supplemental benefits category for the primarily 
health related benefits that MA organizations could include in their 
PBPs starting in 2019. This estimate is complicated by the fact that, 
in the absence of the proposed amendments to Sec.  422.2420(b)(2)(i), 
some types of supplemental benefits that MA organizations could offer 
starting in 2019 could potentially meet the requirements at Sec.  
422.2430 to be quality improvement activities (QIAs) for MLR purposes, 
meaning expenditures for those benefits could be included in the MLR 
numerator. Based on the 2019 submitted bid information, a consideration 
of the types of benefits that MA organizations could offer under CMS's 
reinterpretation of the ``primarily health related'' definition, and 
the likelihood that some of these benefits would meet the requirements 
at Sec.  422.2430(a) to be QIAs, we estimated a 52 percent increase in 
projected expenditures for the categories of ``primarily health 
related'' supplemental benefits that would not qualify for inclusion in 
the MLR numerator as ``incurred claims'' under current Sec.  
422.2420(b)(i) or as QIA under Sec.  422.2430(a). The first year that 
the expanded interpretation of ``primarily health related benefits'' 
was implemented was 2019, and so the increase seen in these categories 
for 2019 is attributed to this reinterpretation. To date, MA 
organizations have only been able to include non-primarily health 
related SSBCI in their plan offerings for one year (that is, 2020). 
While early indications show that utilization for these benefits have 
been low, we expect the use of these benefits to grow over time as MA 
organizations become more familiar with them and have time to include 
them in future plan offerings. Due to the absence of credible data for 
SSBCI, the impact on future MLR remittances is currently 
unquantifiable. We will continue to track SSBCI information and adjust 
the forecasts as more information becomes available.
    We then reevaluated the MLRs for those contracts that failed to 
meet the 85 percent MLR requirement for contract years 2014-2017 by 
revising the numerator calculation to incorporate the 52 percent 
increase in the previously listed benefits. The change in the numerator 
calculation resulted in several of the contracts passing the MLR 
requirement instead of failing. For contracts that would not have met 
the MLR requirement even with the revised numerator calculation, the 
amount of remittances decreased. The average decrease in remittance 
payments over the four year period (that is, 2014-2017) is estimated to 
be $25.8 million (in 2017 dollars).
    In order to project the decrease in remittances for the years 2021-
2030, the $25.8 million was increased using estimated enrollment and 
per capita increases based on Tables IV.C1 and IV.C3 of the 2019 
Medicare Trustees Report, with ordinary inflation (Table II.D1 of the 
2019 Medicare Trustees Report) carved out of the estimates.
    The results are presented in Table 31, which shows that in the 
first year of the proposed provision, 2021, there would effectively be 
a transfer from the Treasury through the Medicare Trust Fund of $35.3 
million to MA organizations. For computational transparency, the 
amounts in 2017-2020 are also shown representing amounts paid to the 
Treasury in those years. This transfer would take the form of a 
reduction in the remittance amounts withheld from MA capitated 
payments. This amount (that is, the amount of remittances not withheld 
from MA capitated payments if the proposal were finalized) is projected 
to grow over 10 years, resulting in a $56.4 million transfer from the 
Treasury through the Medicare Trust Fund to MA organizations in 2030. 
The total transfer from the Treasury to MA organizations over 10 years 
is $455 million. There is $0 impact on the Medicare Trust Fund.

[[Page 9189]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.036

Deductible Factor for MA Medical Savings Account (MSA) Contracts (Sec.  
422.2440)
    CMS is proposing to amend the regulation at Sec.  422.2440 to 
provide for the application of a deductible factor to the MLR 
calculation for MA MSA contracts that receive a credibility adjustment. 
The proposed deductible factor would serve as a multiplier on the 
credibility factor. CMS is proposing to adopt and codify in new 
paragraph (g) of Sec.  422.2440 the same deductible factors that appear 
in the commercial MLR regulations at 45 CFR 158.232(c)(2). For 
partially credible MA MSA contracts, the deductible factor would range 
from 1.0 for MA MSA contracts that have a weighted average deductible 
of less than $2,500 to 1.736 for MA MSA contracts have a weighted 
average deductible of $10,000 or more.
    As discussed in section V.I.4. of this proposed rule, CMS is 
proposing to add a deductible factor to the MLR calculation for MSAs so 
that organizations currently offering MSA plans, or those that are 
considering entering the market, are not deterred from offering MSAs 
due to concern that they will be unable to meet the MLR requirement as 
a result of random variations in claims experience. Although we believe 
that the proposed deductible factors would, if finalized, adequately 
address any such concerns by making it less likely that an MSA contract 
will fail to meet the MLR requirement due to random variations in 
claims experience, we are unable to predict with confidence whether or 
how the proposed change to the MLR calculation for MA MSA contracts 
will impact the availability of MA MSAs or the number of beneficiaries 
enrolled in MA MSAs. Due to this uncertainty, we estimate that the cost 
impact of the proposed change to the MLR calculation for MA MSAs will 
be as low as $0 or as high as $43.2 million over 10 years (2021-2030).
    We do not anticipate that applying a deductible factor to the MLR 
calculation for MA MSA contracts, as proposed, would have an impact on 
remittances to the federal government. For CYs 2014-2017 (the most 
recent contract year for which MA MSAs have submitted MLR data), no MA 
MSA contract has failed to meet the 85 percent minimum MLR requirement. 
If the proposed deductible factors had applied to the MLR calculation 
for MA MSAs for CYs 2014-2017, although the MLRs for partially credible 
MA MSAs would have been higher, total remittances by MA MSAs would have 
remained at $0. We do not anticipate that MSA contracts that currently 
meet the MLR requirement will have more difficulty doing so if the 
proposed changes are finalized. We anticipate that new MA MSA contracts 
that MA organizations may choose to offer as a result of the proposed 
change will also succeed in meeting the MLR requirement, in light of 
the experience of current MSAs and in consideration of the more 
generous credibility adjustment that potential new MSAs would be 
expected to receive as a result of the application of the proposed 
deductible factor.
    We believe that the cost impact of this proposed change, if any, 
will be attributable to an increase in MA MSA enrollment as these plans 
become more widely available as a result of MA organizations choosing 
to offer MA MSAs in response to the proposed change to the MLR 
calculation. To develop the upper limit of the cost estimate for this 
proposal ($43.2 million over 10 years), we assumed that the proposed 
change to the MLR calculation for MSAs would cause MA MSA enrollment to 
double over the first 3 years that the proposed change is in effect. We 
estimated that, relative to enrollment projections under the current 
regulations, if the proposed changes took effect, MSA enrollment will 
be 33.33 percent higher in 2021, 66.67 percent higher in 2022, and 100 
percent higher in 2023 to 2030. We assumed that half of the new 
enrollees in MA MSA plans would otherwise have been enrolled in other 
types of MA plans, and half would otherwise have been enrolled in FFS 
Medicare.
    We then determined the difference between the amount that CMS pays 
for each MA MSA plan enrollee and the amount CMS pays for each enrollee 
in a non-MSA MA plan or FFS Medicare. CMS generally incurs greater 
costs for MA MSA enrollees relative to enrollees in other MA plans 
because 100 percent of the difference between the MA MSA's projection 
of the cost of A/B services (referred to as the MSA premium) and the 
benchmark is deposited in the enrollee's account. By contrast, for MA 
plans that bid under the benchmark,

[[Page 9190]]

CMS retains between 30 percent and 50 percent of the difference between 
the bid and the benchmark. FFS spending per enrollee is approximately 
100 percent of the amount CMS pays to MA plans for each enrollee. 
Therefore, the cost to the Medicare program for each additional MA MSA 
enrollee is approximately the same regardless of whether the enrollee 
would otherwise have been enrolled in a non-MSA MA plan or in FFS 
Medicare.
    The estimated annual cost to the Medicare Trust fund by contract 
year is presented in Table 32. This estimate takes into account the 
projected growth in MSA enrollment in the Part C baseline projection 
supporting the Mid-Session Review of the FY 2020 President's Budget. 
The estimated annual cost reflects the additional cost to the Medicare 
program for each beneficiary who enrolls in an MA MSA plan in lieu of a 
non-MSA MA plan or FFS Medicare, multiplied by the projected increase 
in the number of enrollees in MA MSA plans.

                                    Table 32--Estimated Cost per Year to the Medicare Trust Fund for Proposed Changes to MLR Calculation for MA MSA Contracts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                   Contract year
                           Contract year                               2021       2022       2023       2024       2025       2026       2027       2028       2029       2030       2021-2030
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Annual cost (millions)............................................       $1.0       $2.2       $3.6       $4.0       $4.4       $4.8       $5.2       $5.6       $6.0       $6.4           $43.2
Proposed Annual Increase in MA MSA Enrollment.....................      2,478      5,208      8,179      8,531      8,876      9,213      9,531      9,833     10,118     10,354  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10. Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B 
Services (Sec. Sec.  422.100 and 422.101) and Service Category Cost 
Sharing Limits for Medicare Parts A and B Services and Per Member Per 
Month Actuarial Equivalence Cost Sharing (Sec. Sec.  422.100 and 
422.113)
    MOOP and cost sharing limits are an important beneficiary 
protection and integral to ensuring that MA enrollees who need 
extensive or expensive health care because of their health status are 
not targeted or discriminated against. Requiring MOOP and cost sharing 
limits in MA plan design is necessary 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 in violation of section 1852(b)(1) of the Act). CMS 
expects adopting transparent rules to govern MOOP and cost sharing 
limits for local and regional plans, including rules for incorporating 
out-of-pocket costs incurred by beneficiaries with diagnoses of ESRD, 
will provide stability for MA organizations and plan enrollees. We 
expect that our proposed approach to including ESRD costs would 
increase all in-network and combined MOOP limits for local and regional 
MA plan types; however, based on our program experience, we believe 
this is an important and necessary step to ensure that plan designs are 
not discriminatory and beneficiaries are protected from high and 
unreasonable financial costs regardless of which MA plan they enroll 
in. We have coordinated the MOOP and cost sharing proposals in sections 
VI.A. and VI.B. of this proposed rule in an effort to prevent 
substantial increases in MOOP limits, cost sharing limits, and premiums 
to protect beneficiaries, while also proposing reasonable updates and 
flexibilities for MA organizations to offer sustainable MA plans with 
stable benefit designs.
    CMS expects the proposals in sections VI.A. and VI.B. of this 
proposed rule, related to transitioning ESRD costs into the data used 
to set MOOP and cost sharing limits, may result in a combination of 
savings and costs for MA organizations. Depending upon an individual's 
health status and health care coverage selections some enrollees may 
experience increased costs while others may experience decreased costs. 
CMS is not able to quantify these potential impacts accurately. CMS has 
not historically estimated potential cost impacts due to changes in 
cost sharing standards, MOOP limits, and other benefits such as 
additional telehealth benefits becoming a basic benefit.\110\ 
Accordingly, we provide background and a qualitative discussion to 
share our rationale. The cost to the MA organization of having a MOOP 
limit and cost sharing are captured as a supplemental benefit in the 
bid pricing tool. With a higher MOOP limit or cost sharing, the cost of 
the MOOP limit and benefits are lower to the MA organization which 
allows additional rebate dollars to be spent elsewhere (for example, 
for cost sharing reductions or additional benefits). From an actuarial 
perspective, on average, the MA enrollee is receiving the same level of 
benefits in total (of course, individual impacts will vary). As a 
result, we believe the MOOP and Cost Sharing provisions will have 
minimal impact.
---------------------------------------------------------------------------

    \110\ April 2019 Final Rule; Past draft and final Call Letters 
may be accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html.
---------------------------------------------------------------------------

    Before the amendments made by the Cures Act are effective, 
individuals medically determined to have ESRD cannot enroll in a MA 
plan, subject to limited exceptions. Generally, those exceptions 
include the following circumstances: An individual that develops ESRD 
while enrolled in a MA plan can remain in that plan, or, can enroll in 
a MA plan in the same organization; if enrolled in a health plan within 
an organization, an ESRD individual can enroll in a MA plan within that 
same organization; an ESRD individual enrolled in a plan which is 
terminated or discontinued has a one-time opportunity to join another 
plan; or, an individual may enroll in a special needs plan that has 
obtained a waiver to be open for enrollment to individuals with ESRD. 
Further information on enrollment exceptions for ESRD individuals is 
located in Chapter 2 of the Medicare Managed Care Manual. CMS 
establishes separate rates of payment to address the higher costs MA 
plans may experience when managing care for these enrollees with ESRD, 
and will continue to do so after Medicare beneficiaries with diagnoses 
of ESRD are allowed to enroll in MA plans in greater numbers than they 
can under the current limitations. For additional information on 
enrollment impacts from the Cures Act, CMS directs readers to sections 
IV.A., IX.B.8., and X.C.4. of this proposed rule.
    MA organizations have been aware of the program change to allow 
Medicare beneficiaries with diagnoses of ESRD to enroll in MA since the 
Cures Act was enacted in December 2016. Following the Cures Act, the 
OACT has included projections of the number of individuals with 
diagnoses of ESRD that may enroll in MA within the President's 
Budget.\111\ The OACT will update these projections for the FY 2021 
President's Budget. As such, CMS expects MA organizations

[[Page 9191]]

have planned and prepared for this upcoming program change as they have 
conducted business activities, such as defining plan benefits, provider 
contracting with network providers, developing case management 
programs, and making reinsurance arrangements.
---------------------------------------------------------------------------

    \111\ The Fiscal Year President's Budgets may be accessed at 
https://www.govinfo.gov/app/collection/BUDGET/.
---------------------------------------------------------------------------

    CMS recognizes MA organizations are in a competitive market and 
design their plan bids to manage risk, encourage enrollment, and 
satisfy Medicare coverage requirements. CMS does not require MA 
organizations to report these unique approaches and as such cannot 
quantitatively report an accurate projection of what savings or costs 
MA organizations may incur from the changes in MOOP and cost sharing 
limits that will result from implementation of this proposal. CMS's 
goal in this proposed rule is to provide predictable and transparent 
MOOP limits and cost sharing standards and to set limits at a level 
that should not result in significant new costs for MA organizations or 
enrollees. By taking the program changes from the Cures Act into 
account within our existing process to set and update MOOP limits and 
cost sharing standards, we are looking to protect MA enrollees against 
high out of pocket costs and sudden changes in those costs.
    CMS recognizes the MOOP limit in the MA program provides a unique 
protection to MA enrollees from high out-of-pocket costs. CMS notes 
beneficiaries with diagnoses of ESRD previously enrolled in Medicare 
FFS with or without Medigap coverage may experience different cost 
sharing and out-of-pocket costs if they switch to a MA plan. For 
example, a Medicare beneficiary with a diagnosis of ESRD enrolled in 
Medicare FFS (without Medigap or employer coverage) may experience 
higher out-of-pocket costs annually if their annual health care 
treatment out-of-pocket costs go above a MOOP limit available in MA. In 
addition, current and new MA enrollees without diagnoses of ESRD may 
also experience, or have already experienced, plan changes as MA 
organizations prepare for increased MA enrollment by beneficiaries with 
diagnoses of ESRD beyond those already enrolled in the program.
    CMS cannot accurately project the cost impacts of these MOOP limit 
and cost sharing proposals for beneficiaries and MA organizations 
because potential savings and costs are largely influenced by: (1) The 
rate of transition for Medicare beneficiaries with diagnoses of ESRD 
into the MA program, (2) the mechanisms MA organizations choose to 
address this programmatic change (such as provider contracting, case 
management, plan benefits designs, and benefit flexibilities including 
Special Supplemental Benefits for the Chronically Ill, MA uniformity 
flexibility, as well as MOOP limits and cost sharing flexibilities 
proposed in this rule). In addition, there are multiple factors that 
CMS cannot currently disaggregate in order to attribute MOOP limit or 
cost sharing changes or a portion of cost sharing or MOOP limit changes 
to the changes in ESRD enrollment policy. These factors include:
     CMS does not collect enrollee level cost sharing 
information from MA organizations about the individuals reaching the 
MOOP limit each year;
     The MA enrollee population constantly changes based on 
individuals who are aging-in to the Medicare program on a monthly 
basis, existing enrollees dying, and enrollees switching plans;
     MA enrollees who may reach the MOOP limit one year may not 
meet the MOOP limit the following year; and
     MA organizations prepare plan bids that address many 
business factors at once, such as capitated payments, quality bonus 
payments and rebates, provider contracting, reinsurance arrangements, 
health insurance providers' fee, margins, along with policy changes 
such as beneficiaries with ESRD diagnoses being able to enroll in the 
MA program.
    By implementing more than two levels of MOOP limits and by 
providing increased flexibility in setting cost sharing amounts for MA 
organizations with lower MOOP limits, we expect to encourage plan 
offerings with more favorable benefit designs for Medicare 
beneficiaries to choose from. We note that beneficiaries consider the 
MOOP limit and cost sharing structure when choosing an MA plan, however 
we do not expect them to face more complex plan options due to these 
proposals. From a beneficiary perspective, they will see and review the 
same volume of information about MOOP limits and cost sharing 
structures as they do currently. We also do not expect these proposals 
to drive MA plans to offer more plan options than they currently do as 
they can already create different MOOP limit and cost sharing 
structures. CMS will continue evaluations and enforcement of the 
current authority prohibiting plans from misleading beneficiaries in 
their communication materials and continue efforts to improve plan 
offerings and plan comparison tools and resources (for example, 
Medicare & You and 1-800-MEDICARE). In addition, we will disapprove a 
plan bid if its proposed benefit design substantially discourages 
enrollment in that plan by certain Medicare-eligible individuals.
11. Medicare Advantage (MA) and Cost Plan Network Adequacy (Sec. Sec.  
417.416 and 422.116)
    Our proposal codifies the standards and methodology, with some 
modifications, used currently to evaluate network adequacy for MA plans 
and section 1876 cost plans; the proposal includes the list of provider 
and facility specialty types subject to network adequacy reviews, 
county type designations and ratios, maximum time and distance 
standards and minimum number requirements. The proposal also formalizes 
the CMS exceptions process and requires the annual publishing of the 
Health Services Delivery (HSD) reference file, which will provide 
updated numbers and maximums for these standards in subsequent years, 
and the Provider Supply File, which lists available providers and 
facilities, including their corresponding office locations and 
specialty types. CMS will continue to use the current PRA-approved 
collection of information in conjunction with the HPMS Network 
Management Module as a means for MA organizations to submit network 
information when required. As this has been the process for conducting 
network adequacy reviews since 2016, we do not expect any additional 
burden on MA plans as it relates to the network adequacy review 
process.
    Our proposal is solely related to the sufficiency of contracted 
networks that MA organizations must maintain and has no impact on the 
provision of Medicare benefits that must be provided in either in-
network and out-of-network settings. As a result, we do not expect any 
impact on the Medicare Trust Fund.
    However, we propose three modifications to current network adequacy 
policy that may have qualitative impacts on MA organizations. We 
propose to reduce the required percentage of beneficiaries residing 
within maximum time and distance standards in Micro, Rural, and CEAC 
from 90 percent to 85 percent. We propose to allow for a 10 percentage 
point credit towards this percentage when MA organizations contract 
with one or more telehealth providers in the specialties of 
dermatology, psychiatry, neurology, otolaryngology and cardiology. 
Similarly, we propose that MA organizations may receive a 10-percentage 
point credit towards the percentage of beneficiaries residing within 
published time and distance standards for affected provider and 
facility types in states that have CON

[[Page 9192]]

laws, or other state imposed anti-competitive restrictions, that limit 
the number of providers or facilities in a county or state.
    With respect to the reduction in percentage of beneficiaries 
residing within maximum time and distance standards in rural counties, 
we expect that MA organizations will have a greater likelihood of 
complying with our reduced percentage in the initial network submission 
and will not need to request an exception for CMS's consideration. It 
is not possible to fully quantify the level of effort or hours required 
for an MA organization to submit an exception request, as they are 
submitted for multiple reasons. However, generally, we expect that this 
change will decrease the administrative burden on MA organizations when 
going through the network review process. Conceivably, the 
administrative costs included in an MA organization's bid could 
decrease. However, the decrease in administrative burden could be 
offset by the increase in administrative burden of contracting with 
telehealth providers. Additionally, more MA organizations may consider 
providing contracted services in areas that have traditionally been 
difficult to establish a sufficient network. The ability to meet 
compliance standards in new markets is a reasonable factor that may 
drive MA organization behavior, but we cannot quantify the likelihood 
of this, as many other factors are considered when entering new 
markets. In theory, the reduction in the rural percentage could 
conceivably increase MA enrollment, however our enrollment projections 
currently do not consider health plans' network adequacy information, 
and any changes to enrollment projections would be very minor.
    By crediting MA organizations 10-percentage points towards the 
percentage of beneficiaries residing within time and distance standards 
for contracting with telehealth providers for certain specialties, we 
anticipate that this will be one of many factors that will help 
encourage MA organizations to contract with providers that offer 
telehealth services. However, we do not expect this policy change to 
significantly alter MA organization contracting patterns related to 
telehealth providers.
    For the 10-percentage point credit for affected providers and 
facilities in states with CON laws, we expect that MA organizations 
will have a greater likelihood of complying with network adequacy 
standards in the initial network submission and will not need to 
request an exception for CMS's consideration. As we discussed earlier, 
it is not possible to fully quantify the level of effort or hours 
required for an MA organization to submit an exception request, but it 
is possible the administrative costs included in an MA organization's 
bid could decrease. However, we believe time associated with completing 
exception requests is nominal will not have a significant impact on the 
overall administrative costs submitted in a plan's bid.
    In summary, we believe this proposal will have a non-quantifiable, 
negligible economic impact.
12. Service Delivery Request Processes Under PACE (Sec. Sec.  460.104 
and 460.121)
    We estimate that our proposed amendments to these provisions, as 
discussed in section VII.A. of this proposed rule, would result in 
savings to PACE organizations. To estimate the savings from our 
proposed revisions to the service delivery request provisions we rely 
upon the assumptions described in the next section. These assumptions 
are based on our experience monitoring PACE organizations' compliance 
with current service delivery request requirements, and on data 
collected during those monitoring efforts.
    We estimate that under the current regulation, the aggregate total 
annual cost to all PACE organizations for processing service delivery 
requests is approximately $37.1 million.
    We estimated that cost by using the following assumptions. First, 
we estimate the wages for each of the 11 Interdisciplinary team (IDT) 
members in order to better estimate a total cost. The eleven 
disciplines shown are those disciplines required for the IDT 
composition under Sec.  460.102(b). The Job codes and wages to be used 
come from the BLS's website allowing 100 for overhead and fringe 
benefits. Table 33 allows us to estimate the mean hourly wage of the 
IDT as a whole.

                  Table 33--Wages for IDT Staff Members
------------------------------------------------------------------------
                                                            Mean hourly
                                                             wage with
                                            Occupation        fringe
            Occupation title                   code        benefits and
                                                           overhead  ($/
                                                                hr)
------------------------------------------------------------------------
Primary Care Provider...................         29-1069          196.04
Registered Nurse........................         29-1141           72.60
Home Care Coordinator (often a RN)......         29-1141           72.60
Physical Therapist......................         29-1123           85.46
Occupational Therapist..................         29-1122           82.08
Masters of Social Work..................         21-1022           56.22
Recreational Therapist..................         29-1125           48.68
Dietician...............................         29-1031           58.86
Driver..................................         53-3022           32.10
Personal Care Attendant.................         31-1011           24.36
PACE Center Manager.....................         11-9111          109.36
                                         -------------------------------
    TOTAL...............................  ..............          838.36
------------------------------------------------------------------------

    Currently, when processing a service delivery request, the IDT must 
determine the appropriate discipline(s) to conduct a reassessment under 
Sec.  460.104(d)(2) and is responsible for notifying the participant or 
designated representative of its decision to approve or deny a request 
under Sec.  460.104(d)(2)(iii). Based on our experiences monitoring 
PACE organizations, we estimate that the IDT takes approximately 1 hour 
to handle these responsibilities for each service delivery request (1 * 
$838.36 = $838.36).
    Reassessments performed in response to service delivery requests 
are varied and may be done by multiple disciplines. For purposes of 
this

[[Page 9193]]

estimate, we assume a registered nurse (RN) and Master's-level Social 
Worker (MSW) conducts reassessments, and that the total hours for 
reassessments equals 1.5 hours per discipline. Therefore, we estimate 
that reassessments would cost (1.5 * $72.60 = $108.90) and (1.5 * 
$56.22 = $84.33). This is summarized in Table 34.

                 Table 34--Cost Per Service Delivery Request for a PACE Organization Assessment
----------------------------------------------------------------------------------------------------------------
                                                   Occupational     Hourly wage                     Total cost
                  Professional                         code           ($/hr)        Time  (hr)          ($)
----------------------------------------------------------------------------------------------------------------
Registered Nurse................................         29-1141           72.60             1.5          108.90
Masters-level of Social Work....................         21-1022           56.22             1.5           84.33
                                                 ---------------------------------------------------------------
    Total Cost..................................  ..............  ..............  ..............          193.23
----------------------------------------------------------------------------------------------------------------

    Additionally, once a decision has been rendered, one discipline 
(usually the MSW) notifies the participant and/or designated 
representative which we believe takes about 1 hour (1 * $56.22 = 
$56.22). This is summarized in Table 35.

                Table 35--Cost Per Service Delivery Request for a Pace Organization Notification
----------------------------------------------------------------------------------------------------------------
                                                Occupational   Hourly wage  ($/
                Professional                        code             hr)           Time  (hr)    Total Cost  ($)
----------------------------------------------------------------------------------------------------------------
Masters-level of Social Work................         21-1022            56.22                1            56.22
----------------------------------------------------------------------------------------------------------------

    Therefore, the processing of a service delivery request under 
current regulations is approximately $1,087.81 (838.36 + 108.90 + 84.33 
+ 56.22) per request.
    Additionally, based on combined audit data collected from all PACE 
organizations in 2017 and 2018, we estimate there are 852.8 service 
delivery requests per 1000 enrollees (34,146 total service delivery 
requests for 2017 and 2018 divided by 40,040 the average enrollment for 
that time period). Consequently, the total cost of processing service 
delivery requests for 2017-2018 under the current regulations was 
approximately $37.1 million (852.8 service delivery requests/1000 
enrollees * 40,040 thousand enrollees * $1,087.81 per hour of work by 
the IDT) per year.
    We anticipate our proposed regulation would reduce burden on PACE 
organizations in the following ways. First, the proposal would 
establish a streamlined approval process for service delivery requests 
that an IDT member can approve in full at the time the request is made 
under new Sec.  460.121(e)(2). These approved requests would not need 
to be brought to the full IDT for review and would not require the IDT 
to conduct a separate assessment. We also do not anticipate 
notification of the approval adding an additional burden because the 
IDT member would approve the request immediately and therefore satisfy 
the notification requirement at the time the request is made. As 
discussed in section IX.B.13. of this proposed rule, we estimate:
    (i) 20 percent of all service delivery requests are denied, while 
80 percent are approved
    (ii) Of the 80 percent of service delivery requests that are 
approved, 50 percent of those are routine (that is, can be approved in 
full by an IDT member), while 50 percent are not routine.
    Consequently,
    (a) 341 service delivery requests/1000 enrollees are routine and 
approved (50 percent routine * 80 percent approved * 852.8 service 
delivery requests/1000 total)
    (b) 171 service delivery requests/1000 enrollees are denied (20 
percent * 852.8 service delivery requests/1000 enrollees)
    (c) 341 service delivery requests/1000 enrollees are approved but 
not routine (80 percent approved * 50 percent not routine * 852.8 
service delivery requests/1000)
    These estimates are summarized in Table 36.

[[Page 9194]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.037

    We are proposing that:
    (i) Service delivery requests that can be approved in full at the 
time the request is made would not require full IDT review, assessment, 
or a separate notification; Although work is involved in this approval, 
we are estimating the cost as $0 since (i) no separate assessment is 
needed, (ii) no separate notification is needed, (iii) the full IDT is 
not needed and (iv) the estimated time for an IDT member to approve in 
full an easily approved service delivery request is small and hence the 
total cost is negligible and can be done as a part of the PACE 
organization's routine day to day activities.
    (ii) Denied service delivery requests require (as is the case under 
current provisions) IDT review, an in-person assessment and 
notification.
    (iii) Service delivery requests that are approved, but cannot be 
approved in full at the time the request is made would require IDT 
review and notification but no assessment.
    In section IX.B. of this proposed rule, we indicated five proposals 
anticipated to create increased burden for PACE organizations: The 
proposals, their projected first year costs, and their projected annual 
costs after the first year are summarized in Table 37.

[[Page 9195]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.038

    To estimate the total savings over 10 years we proceed as follows:
     We estimate the total savings without additional paperwork 
for 2017-2018 by subtracting the projected cost under the proposed 
provisions from the actual cost under the current provisions. Table 37 
presents these calculations, showing a $17.5 million savings, without 
considering paperwork, for 2017-2018.
     For any year between 2021 and 2030, we divide the 
projected enrollment for that year by the actual enrollment for 2017/
2018. Since costs are per 1000 enrollees, this quotient when multiplied 
by 17.5 million will give the savings for that year without considering 
paperwork requests.
     Finally, since, paperwork requests are an additional 
burden, we subtract paperwork costs from the savings to ascertain the 
projected savings for that year. In subtracting paperwork costs, we 
must subtract an annual cost in all years and a special one-time first 
year cost in 2021. Table 38 presents this 10 year projection.
    We illustrate these calculations by deriving the $17.5 million 
savings estimated based upon the data for 2018, and presented in Table 
40. That is, if the proposed provisions of this rule had been adopted 
in 2018, there would have been a savings of $17.5 million. This can be 
shown as follows:

 Actual Cost (without paperwork) for 2018: 37.1 million
 Cost (without paperwork) if these provisions were adopted: 
19.6 million
 Total savings (Difference of the last two rows) 17.5 million

    As we explained previously, in order to arrive at the 37.1 million 
and the 19.6 million for 2018, we considered the following:

 $37.1 = 40,040 (enrollees) * 852.8 service delivery requests/
1000 enrollees * $1087.81 (IDT + assessment + notification)
 $19.6 = $12.2 + $7.4 + $0
    [cir] $12.2 = 40,040 enrollees * 341 service delivery requests/1000 
enrollee * ($1087.81-193.23)
    [cir] $7.4 = 40,040 enrollees * 171 service delivery requests/1000 
enrollee * ($1087.81)
    [cir] $0 = $40,040 enrollees * 341 service delivery requests/1000 
enrollee * $0

    As can be seen, the savings comes from the fact that whereas 
current regulations require that all 852.8 service delivery requests/
1000 enrollees be processed by the IDT (at a cost of $1087.81), the 
proposed regulations only require that 512 service delivery requests 
(171 service delivery requests/1000 enrollees that are denied and 341 
service delivery requests/1000 enrollees that are approved but not 
routine) would go to the full IDT for processing, but another 341 
service delivery requests would be approved and routine and therefore 
would not impose any cost on the PACE organization. Additionally, the 
341 approved but not routine requests that would go to the IDT would be 
a reduced cost of $1087.81-$193.23 since assessments would not be done 
for those approvals. We believe our proposal will reduce administrative 
burden on the PACE organization, and allow IDT members to focus more 
time on providing participant care.

[[Page 9196]]

[GRAPHIC] [TIFF OMITTED] TP18FE20.039

[GRAPHIC] [TIFF OMITTED] TP18FE20.040


[[Page 9197]]


    To clarify Table 39, consider the following:
     As noted previously, the actual non-paper savings for the 
base year, had this provision been implemented in 2018, would have been 
$17.5 million for the 40,040 enrollees.
     The OACT projects 46,311 PACE enrollees for 2021.
     Since enrollment is projected to increase by a factor of 
1.1566 (46,311/40,040), and we are estimating service delivery requests 
per 1000 enrollees, we project the non-paper savings for 2021 to be 
1.1566 * $17.5 = $20.2 million. In other words the 2018 costs under the 
current regulation and proposed regulation would involve a product of 
2018 enrollment (about 40,040) times the number of service requests per 
1000. The 2021 costs use the same formula, however the 40,040 is 
replaced by 46,311. It follows that multiplying 2018 numbers by 46,311/
40,040 gives us the correct 2021 number. Since the difference between 
current and proposed is savings, it follows that multiplying this 
difference by the ratio of 46,311/40,040 gives the updated savings.)
     However, these are savings without paperwork costs. Table 
38 shows that total annual paperwork costs is $1.1 million and 
additionally there is a special $0.5 million cost for the first year.
     Therefore, the total savings for 2021 would be 
approximately $20.2 - (1.1 + 0.5) = $18.7 million.
     The other rows are calculated similarly.
    Accordingly, our proposals to streamline the processes for 
addressing service delivery requests in PACE are projected to save PACE 
organizations $18.7 million in 2021 with a gradual increase in savings 
to $23.9 million by 2030. These savings are to industry (PACE 
organizations) because administrative burden is being reduced. 
Additionally, each blank cell in Table 37 corresponds to a proposal to 
eliminate an unnecessary burden.
13. Beneficiaries With Sickle Cell Disease (Sec.  423.100)
    Based on analysis of 2018 data, we found that about 683 
beneficiaries (1.3 percent) who met the minimum OMS criteria or who had 
a history of an opioid-related overdose had sickle cell disease and 
would be affected by the proposed exemption. Since we estimate that 
less than 10 percent of these 683 beneficiaries would have been 
targeted for case management, the resulting savings is $0.0 million (10 
percent * 683 enrollees * $542.46 for each case management).

D. Alternatives Considered

1. Beneficiaries With History of Opioid-Related Overdose Included in 
Drug Management Programs (DMPs) (Sec.  423.100)
    As the Medicare Part D program is a prescription drug benefit and 
opioid-related overdoses can be due to both prescription opioids, which 
may be covered under Part D, and illicit opioids, this raises a 
question of how CMS should define history of opioid-related overdose. 
CMS considered two options for defining history of an opioid-related 
overdose plus two alternatives.
    Opioid overdose codes (ICD-10) \112\ were identified using Medicare 
FFS Claims data and Part C Encounter data. When considering overdose, 
we noted that prescription opioids can also be obtained through illegal 
or illicit means. The available overdose diagnosis codes describe the 
type of drug involved in the poisoning but do not specify how the drugs 
were obtained. There is also an unspecified opioid overdose code. 
Therefore, assumptions were made to classify an overdose code as 
prescription or illicit. For example, code 40.4 (other synthetic 
opioids) was classified as illicit opioid overdose but in some cases 
fentanyl may have been obtained by prescription. Conversely, code 40.2 
(other opioids) may include poisoning due to oxycodone which was 
classified as prescription opioid overdose but may have been obtained 
illegally.
---------------------------------------------------------------------------

    \112\ World Health Organization. (2015). International 
statistical classification of diseases and related health problems, 
10th revision, Fifth edition, 2016. World Health Organization.
---------------------------------------------------------------------------

    Option #1. Include beneficiaries with either prescription or 
illicit opioid-related overdoses. This option would allow CMS to 
proactively identify the most potential at-risk beneficiaries with a 
history of opioid-related overdoses, regardless whether the opioid is 
prescription or illicit, so that they can be reported to the Part D 
sponsor and reviewed through a DMP. This option represents the largest 
program size of all of the options. Based on data between July 2017 and 
June 2018, CMS estimates that there were about 28,891 beneficiaries 
with prescription or illicit opioid-related overdoses who would have 
been identified and reported as potential at-risk beneficiaries through 
the OMS.
    Option #1 (Alternative): The program size for this option decreases 
by 37 percent to 18,268 if we were to identify only those beneficiaries 
reported to have at least one opioid prescription drug claim during the 
6-month OMS measurement period (approximately 63 percent had opioid 
Part D claim(s)), which means that they have at least one relatively 
current opioid prescriber.
    Option #2: Identify beneficiaries with only prescription opioid-
related overdoses. This approach would utilize a 12-month lookback 
period to identify beneficiaries with a history of prescription opioid 
overdoses. Based on data between July 2017 and June 2018, CMS estimates 
that there were about 21,037 beneficiaries with prescription opioid-
related overdoses who would be identified and reported by OMS.
    Option #2 (Alternative): Since about 72 percent of beneficiaries 
had at least one Part D opioid claim in the 6-month OMS measurement 
period, this option decreases the program size to 15,217 beneficiaries 
if we were to require beneficiaries reported to have at least one 
opioid prescription drug claim, which means that they have at least one 
relatively current opioid prescriber.
    As noted, the primary impact will result from needing to case 
manage the additional beneficiaries identified as meeting the proposed 
definition. At the proposed hour and skill levels defined, this 
introduces a projected cost of $542.46 per additional beneficiary 
undergoing case management. The various economic impacts for the 
alternatives considered are summarized in Table 40.

          Table 40--Economic Impact of Alternatives Considered
------------------------------------------------------------------------
                                               Number of
           Alternative  (criteria)             enrollees    Total cost
                                               affected         ($)
------------------------------------------------------------------------
Option 1....................................      28,891   15,672,211.86
Option 1 (alternative)......................      18,268    9,909,659.28
Option 2....................................      21,037   11,411,731.02
Option 2 (alternative)......................      15,217    8,254,613.82
------------------------------------------------------------------------

    As noted in the preamble, CMS proposed to define history of opioid-
related overdose as defined in Option 1 (Alternative). This option 
incorporates the risk factor most predictive for another overdose or 
suicide-related event \113\ and is commensurate with the 
Administration's commitment to vigorously address the opioid epidemic. 
However, this approach keeps a clear tie between opioid-related 
overdoses and the Part D program by requiring a recent prescription 
opioid prescriber, which simultaneously increases the likelihood for 
successful provider outreach through

[[Page 9198]]

case management by the sponsor. We note that should an option be 
finalized that does not include a requirement for a recent PDE, related 
changes to other provisions of the DMP regulations may need to be 
considered. For example, the current regulation language on case 
management could be revised to include outreach to relevant providers 
generally, not just prescribers of FADs as there may not be an active 
current prescriber for purposes of sponsor-led case management.
---------------------------------------------------------------------------

    \113\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the US Veterans Health Administration. Addiction. 2017 
Jul;112(7):1193-1201. doi: 10.1111/add.13774.
    Epub 2017 Mar 16. PubMed PMID: 28301070.
---------------------------------------------------------------------------

2. Eligibility for Medication Therapy Management (MTMPs) (Sec.  
423.153)
    We initially contemplated requiring that each plan as part of the 
MTM service develop educational materials regarding the safe disposal 
of prescription drugs that are controlled substances for its 
beneficiaries. Though each plan would have had a greater cost to 
develop such materials, the information might have included more local 
resources specific to individual plans. However, for the sake of 
consistency and to reduce burden on MTM programs we are proposing that 
Part D plans would be required to furnish materials in their MTM 
programs that meet criteria specified in Sec.  422.111(j) as part of a 
CMR, TMR, or other follow-up. We also considered whether we should 
extend MTM eligibility to potential at-risk beneficiaries (PARBs) 
instead of to just those determined to be at risk. We believe that 
providing MTM to PARBs might have been beneficial for this population. 
However, the SUPPORT Act is clear that the extended MTM should apply 
only to at risk beneficiaries.
3. Beneficiaries' Education on Opioid Risks and Alternative Treatments 
(Sec.  423.128)
    The provision regarding educating MA and Part D beneficiaries on 
opioid risks and alternative treatments has been fully discussed in 
section III.D. of this proposed rule, including various suggested 
enrollee groups to receive the information. The impact of this 
provision was estimated in section IX.B.6. of this proposed rule, which 
includes discussion of paper versus electronic delivery options.
    We emphasize that the SUPPORT Act does not require CMS to set a 
standard as to which enrollees receive the required information. As 
indicated in section III.D. of this proposed rule, the SUPPORT Act 
gives plans flexibility to choose which enrollees to send the 
information. To facilitate plan choice, we have provided a wide range 
of alternatives in Table 17 in section IX.B.6. of this proposed rule, 
including an alternative of sending notices to all Part D enrollees. As 
can be seen, costs vary between $0.1 and $0.5 million. We refer the 
reader to the narrative in that section.
4. Permitting a Second, ``Preferred'', Specialty Tier in Part D 
(Sec. Sec.  423.104, 423.560, and 423.578)
    In proposing to allow Part D sponsors to have two specialty tiers, 
under the existing policy at Sec.  423.578(c)(3)(ii), Part D sponsors 
would be required to permit tiering exceptions between the two 
specialty tiers. CMS is also considering permitting Part D sponsors to 
exempt tiering exceptions between the two specialty tiers, but CMS is 
concerned that removing the Part D enrollee protection requiring 
exceptions between the two specialty tiers could negate benefits that 
might otherwise have accrued to Part D enrollees under a two specialty 
tier policy when there is a therapeutic alternative on the preferred 
specialty tier that a Part D enrollee is unable to take.
    Additionally, although CMS is proposing to codify at Sec.  
423.104(d)(2)(iv)(E) the maximum allowable cost sharing under current 
policy, because CMS notes that the deductible applies to all tiers and 
it is unclear that we should continue to differentiate the specialty 
tier from other tiers on the basis of the deductible, CMS is also 
considering decreasing the maximum permissible cost sharing to the 25 
percent Defined Standard coinsurance for Part D plans with decreased or 
no deductibles. As a result, we would anticipate that Part D sponsors 
would need to raise cost sharing on non-specialty drugs to maintain 
actuarial equivalence. If this applies to all plans, then there should 
be no budget impact, as they must still return to a basic benefit 
design that is actuarially equivalent to the Defined Standard benefit, 
and there will be no adverse selection. Additionally, we do not expect 
impacts from this proposal to the private sector, as additional 
specialty tiers already exist in that market. Plans with a high 
proportion of dual-eligible enrollees are less likely to offer a second 
specialty tier, because the lower cost sharing would be less impactful 
for those beneficiaries. As a result, we don't expect material impacts 
to Medicaid costs.
    Finally, although CMS is proposing at Sec.  423.104(d)(2)(iv)(B) to 
increase the specialty-tier cost threshold for all plan years in which 
CMS determines that no less than a ten percent increase in the 
specialty-tier cost threshold, before rounding ``to'' the nearest $10 
increment, in order to reestablish the one percent outlier threshold, 
CMS is also considering a change in this methodology such that CMS 
would always round ``up'' to the nearest $10 increment. This rounding 
up methodology would: (a) Ensure that the new specialty-tier cost 
threshold actually meets the one percent outlier threshold, and (b) 
provide more stability to the specialty-tier cost threshold. Although 
the $780 30-day equivalent ingredient cost we determined to be the 
specialty-tier cost threshold for this proposed rule did not require 
rounding, had we arrived at a 30-day equivalent ingredient cost of, for 
example, $772, rounding up to $780 30-day equivalent ingredient cost 
would have an insignificant impact on the number of drugs meeting the 
specialty-tier cost threshold.
5. Beneficiary Real Time Benefit Tool (RTBT) (Sec.  423.128)
    We propose to require that each Part D plan adopt a beneficiary 
RTBT by January 1, 2022. We had considered requiring that this 
regulatory action occur by January 1, 2021 to coincide with the 
requirement of a prescriber RTBT and the other regulatory actions in 
this rule. However, we wanted to ensure that plans had adequate time to 
focus on implementing the prescriber RTBT by the currently mandated 
January 1, 2021 deadline.
    We also considered requiring that plans display this information 
via a third party website or web application. However, since we 
discovered that plans already have patient portals that provide some of 
the mandated information, we believe it would be less confusing for 
beneficiaries to keep this information on the plan portal. In addition, 
it would be less of a burden on plans for them put the information on 
the portals, rather than supply the information to a third party.

E. Accounting Statement and Table

    The following table summarizes savings, costs, and transfers by 
provision. As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Table 41, we 
have prepared an accounting statement showing the savings, costs, and 
transfers associated with the provisions of this proposed rule for 
calendar years 2021 through 2030. Table 41 is based on Tables 42A, 42B, 
and 42C which lists savings, costs, and transfers by provision. Table 
41 is expressed in millions of dollars with both costs and savings 
listed as positive numbers. The sign of the transfers follow the 
convention of Table 41 with positive

[[Page 9199]]

numbers reflecting costs (as transfers) to government entities (the 
Medicare Trust Fund and the Treasury) and negative numbers reflecting 
savings to government entities. As can be seen, the net annualized 
savings of this rule is about $6 million per year. The raw savings over 
10 years is $292 million. Due to transfers, there is net annualized 
reduced spending by government agencies (the Medicare Trust Fund and 
Treasury) of $370-$405 million. A breakdown of these savings from 
various perspectives may be found in Table 41.

                                           Table 41--Accounting Table
                                                 [Millions $] *
----------------------------------------------------------------------------------------------------------------
                                   Annualized  at  Annualized  at
               Item                      7%              3%               Period             Who is impacted
----------------------------------------------------------------------------------------------------------------
Net Annualized Monetized Savings.             5.8             6.3  Contract Years 2021- Federal government, MA
                                                                    2030.                organizations and Part
                                                                                         D Sponsors.
Annualized Monetized Savings.....            28.8            29.0  Contract Years 2021- Federal government, MA
                                                                    2030.                organizations and Part
                                                                                         D Sponsors.
Annualized Monetized Cost........            23.0            22.7  Contract Years 2021- Federal government, MA
                                                                    2030.                organizations and Part
                                                                                         D Sponsors.
Transfers........................         (369.0)         (406.5)  Contract Years 2021- Transfers between the
                                                                    2030.                Dept of Treasury and
                                                                                         CMS (Medicare Trust
                                                                                         Fund, Plans, and
                                                                                         Sponsors).
----------------------------------------------------------------------------------------------------------------
* The ESRD enrollment and Kidney acquisition cost provisions which affected the pre-statutory baseline but did
  not further impact the codifications of this rule would have added $128.3 and $113.1 million respectively in
  annualized transfer savings, resulting in total annualized transfer savings of $497.3 and $519.7 savings at 7
  percent and 3 percent respectively.

    The following Table 42 summarizes savings, costs, and transfers by 
provision and forms a basis for the accounting table. For reasons of 
space, Table 42 is broken into Table 42A (2021 through 2024), Table 42B 
(2025 through 2028), and Table 42C (2029-2030), as well as raw totals. 
In these tables, all numbers are positive; positive numbers in the 
savings columns indicate actual dollars saved while positive numbers in 
the costs columns indicate actual dollars spent; the aggregate row 
indicates savings less costs and does not include transfers. All 
numbers are in millions. Tables 42A, B, and C form the basis for Table 
41 and for the calculation to the infinite horizon discounted to 2016 
and mentioned in the conclusion.
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BILLING CODE 4120-01-C
    The following information supplements Table 42 and also identifies 
how impacts calculated in section IX of this proposed rule affect the 
calculations of this section and the tables.
     For two provisions, DMP and PACE, this Regulatory Impact 
Analysis provides tables summarizing a variety of impacts with line 
items for the paperwork burdens of section IX of this proposed rule. 
Thus the section IX impacts are reflected both in Table 42 (summary 
table) and 40 (monetized table) as well as in special tables in this 
section.
     For five provisions, MTMP, RTBT, SNP MOCs, pharmacy, and 
Fraud and Abuse, the only impacts are calculated in section IX of this 
proposed rule. These five provisions have those section IX impacts 
listed in Table 42.
     For outreach to at risk beneficiaries, which was estimated 
in section IX of this proposed rule, only the system updates and 
preparation of outreach are listed in Table 42. Although Table 19 of 
section IX of this proposed rule does list additional impacts, the 
mailing of material to beneficiaries, since CMS was not given the 
authority to decide on the

[[Page 9206]]

cohort of beneficiaries to whom to send this information, we have 
omitted mailing costs from Table 42 and instead solicited stakeholder 
feedback.
     For two provisions, Parts C and D SEPs, and ESRD 
enrollment, calculations of impact, either paperwork or on the Medicare 
Trust Fund have been provided in the narrative along with tables 
providing 10-year summaries. However, since these impacts are already 
reflected in current spending, in other words, since the provisions do 
not change current spending, these impacts have not been included in 
Table 42.
     There is a cost of $0.7 million arising from burden to 
beneficiaries for filling out enrollment forms as a result of allowing 
ESRD beneficiaries to join plans and expected increased in MSA 
enrollment. These costs have been duly noted in section IX of this 
proposed rule but were not included in Table 42 since it deals mainly 
with impacts on the Medicare Trust Fund and industry.
     For two provisions, D-SNP look alike and MSA MLR, the 
impact calculated in section IX of this proposed rule is $0.0 million 
and hence these amounts are not included in Table 42. They are however 
included in Table 10 of section IX of this proposed rule.

F. Conclusion

    As indicated in Table 41, we estimate that this proposed rule 
generates annualized cost savings of approximately $5.8 to 6.3 million 
per year over 2021 through 2030. As indicated in Table 42, the primary 
driver of savings are (i) proposed revisions to the PACE program 
resulting in greater efficiencies and (ii) increased vigilance for at-
risk beneficiaries with a consequent reduction in drug costs. These 
savings are offset by costs from Fraud and Abuse efforts and a variety 
of outreach efforts to at-risk beneficiaries.
    As indicated in Table 42, the government agencies have a net 
reduction in spending of $4.4 billion over 10 years. The primary driver 
of reduction is the use of the Tukey outlier deletion for Star Ratings. 
This reduction in Medicare Trust Fund spending is offset by several 
items increasing spending such as the MLR provisions which reduce civil 
penalties to the Treasury, and the MSA provisions which may result in 
increased enrollment in MSA plans and consequent increased spending by 
the Trust Fund,

G. Reducing Regulation and Controlling Regulatory Costs

    This proposed rule, if finalized, is tentatively expected to be a 
deregulatory action under Executive Order 13771. The Department 
preliminarily estimates that this rule generates $4.4 million in 
annualized savings at a 7 percent discount rate, discounted relative to 
2016, over a perpetual time horizon.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Diseases, Health facilities, 
Health professions, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, and X-rays.

42 CFR Part 417

    Administrative practice and procedure, Grant programs--health, 
Health care, Health insurance, Health maintenance organizations (HMO), 
Loan programs--health, Medicare, and Reporting and recordkeeping 
requirements.

42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
maintenance organizations (HMO), Medicare, Penalties, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, 
Health facilities, Health maintenance organizations (HMO), Medicare, 
Penalties, Privacy, Reporting and recordkeeping requirements.

42 CFR Part 455

    Fraud, Grant programs--health, Health facilities, Health 
professions, Investigations, Medicaid, Reporting and recordkeeping 
requirements.

42 CFR Part 460

    Aged, Health care, Health records, Medicaid, Medicare, 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

0
1. The authority citation for part 405 continues to reads as follows:

    Authority:  42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x, 
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).

0
2. Section 405.370(a) is amended by--
0
a. Revising paragraph (1) of the definition of ``Credible allegation of 
fraud''; and
0
b. Adding the definition for ``Fraud hotline tip'' in alphabetical 
order.
    The revision and addition read as follows:


Sec.  405.370  Definitions.

    (a) * * *
    Credible allegation of fraud. * * *
    (1) Fraud hotline tips verified by further evidence.
* * * * *
    Fraud hotline tip. A complaint or other communications that are 
submitted through a fraud reporting phone number or a website intended 
for the same purpose, such as the Federal Government's HHS OIG Hotline 
or a health plan's fraud hotline.
* * * * *

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

0
3. The authority citation for part 417 is revised to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh, 42 U.S.C. 300e, 300e-5, 
and 300e-9, and 31 U.S.C. 9701.

0
4. Section 417.416 is amended by adding paragraph (e)(3) to read as 
follows:


Sec.  417.416  Qualifying condition: Furnishing of services.

* * * * *
    (e) * * *
    (3) The HMO or CMP must meet network adequacy standards specified 
in Sec.  422.116 of this chapter.
0
5. Section 417.496 is added to read as follows:


Sec.  417.496  Cost plan crosswalk.

    (a) General rules--(1) Definition. Crosswalk means the movement of 
enrollees from one plan (or plan benefit package (PBP)) to another plan 
(or PBP) under a cost plan contract between the CMP or HMO and CMS. To 
crosswalk enrollees from one PBP to another is to change the enrollment 
from the first PBP to the second.
    (2) Prohibition. (i) Crosswalks are prohibited between different 
contracts.
    (ii) Crosswalks are prohibited between different plan IDs unless 
the crosswalk to a different plan ID meets the requirements in 
paragraph (c)(1)(i) of this section.
    (3) Compliance with renewal/nonrenewal rules. The cost plan must 
comply with renewal and nonrenewal rules in Sec. Sec.  417.490 and 
417.492 in order to complete plan crosswalks.
    (b) Allowable crosswalk types. All cost plans may perform a 
crosswalk in the following circumstances:

[[Page 9207]]

    (1) Renewal. A plan in the following contract year that links to a 
current contract year plan and retains the entire service area from the 
current contract year. The following contract year plan must retain the 
same plan ID as the current contract year plan.
    (2) Consolidated renewal. A plan in the following contract year 
that combines 2 or more PBPs. The plan ID for the following contract 
year must retain one of the current contract year plan IDs.
    (3) Renewal with a service area expansion (SAE). A plan in the 
following contract year plan that links to a current contract year plan 
and retains all of its plan service area from the current contract 
year, but also adds one or more new counties. The following year 
contract plan must retain the same plan ID as the current contract year 
plan.
    (4) Renewal with a service area reduction (SAR). A plan in the 
following contract year that links to a current contract year plan and 
only retains a portion of its plan service area. The following contract 
year plan must retain the same plan ID as the current contract year 
plan. The crosswalk is limited to the enrollees in the remaining 
service area.
    (c) Exception. (1) In order to perform a crosswalk that is not 
specified in paragraph (b) of this section, a cost organization must 
request an exception. CMS reviews requests and permits a crosswalk 
exception in the following circumstance:
    (i) Except as specified in paragraph (c)(1)(ii) of this section, 
terminating cost plans offering optional benefits may transfer 
enrollees from one of the PBPs under its contract to another PBP under 
its contract, including new PBPs that have no optional benefits or 
optional benefits different than those in the terminating PBP.
    (ii) A terminating cost plan cannot move an enrollee from a PBP 
that does not include Part D to a PBP that does include Part D.
    (iii) If the terminated supplemental benefit includes Part D and 
the new PBP does not, enrollees must receive written notification about 
the following:
    (A) That they are losing Part D coverage;
    (B) The options for obtaining Part D; and
    (C) The implications of not getting Part D through some other 
means.
    (2) [Reserved]

PART 422--MEDICARE ADVANTAGE PROGRAM

0
6. The authority citation for part 422 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh.

0
7. Section 422.2 is amended by revising the definition of 
``Institutionalized'' and adding the definition of ``Parent 
organization'' in alphabetical order to read as follows:


Sec.  422.2  Definitions.

* * * * *
    Institutionalized means, for the purposes of defining a special 
needs individual and for the open enrollment period for 
institutionalized individuals at Sec.  422.62(a)(4), an MA eligible 
individual who continuously resides or is expected to continuously 
reside for 90 days or longer in one of the following long-term care 
facility settings:
    (1) Skilled nursing facility (SNF) as defined in section 1819 of 
the Act (Medicare).
    (2) Nursing facility (NF) as defined in section 1919 of the Act 
(Medicaid).
    (3) Intermediate care facility for individuals with intellectual 
and developmental disabilities as defined in section 1905(d) of the 
Act.
    (4) Psychiatric hospital or unit as defined in section 1861(f) of 
the Act.
    (5) Rehabilitation hospital or unit as defined in section 
1886(d)(1)(B) of the Act.
    (6) Long-term care hospital as defined in section 1886(d)(1)(B) of 
the Act.
    (7) Hospital which has an agreement under section 1883 of the Act 
(a swing-bed hospital).
    (8) Subject to CMS approval, a facility that is not listed in 
paragraphs (1) through (7) of this definition but meets both of the 
following:
    (i) Furnishes similar long-term, healthcare services that are 
covered under Medicare Part A, Medicare Part B, or Medicaid; and
    (ii) Whose residents have similar needs and healthcare status as 
residents of one or more facilities listed in paragraphs (1) through 
(7) of this definition.
* * * * *
    Parent organization means the legal entity that exercises a 
controlling interest, through the ownership of shares, the power to 
appoint voting board members, or other means, in a Part D sponsor or MA 
organization, directly or through a subsidiary or subsidiaries, and 
which is not itself a subsidiary of any other legal entity.
* * * * *
0
8. Section 422.3 is added to read as follows:


Sec.  422.3  MA organizations' use of reinsurance.

    (a) An MA organization may obtain insurance or make other 
arrangements for the cost of providing basic benefits to an individual 
enrollee that either:
    (1) The aggregate value of which exceeds an aggregate level that is 
greater than or equal to $10,000 during a contract year; or
    (2) If the MA organization uses insurance or makes arrangements for 
sharing such costs proportionately on a first dollar basis, the value 
of the insured risk does not exceed a value which is actuarially 
equivalent to the costs described in paragraph (a)(1) of this section.
    (b) [Reserved]


Sec.  422.50  [Amended]

0
9. Section 422.50 is amended in paragraph (a)(2) introductory text by 
removing the phrase ``Has not been'' and adding in its place the phrase 
``For coverage before January 1, 2021, has not been''.


Sec.  422.52  [Amended]

0
10. Section 422.52 is amended in paragraph (c) by removing the phrase 
``CMS may waive Sec.  422.50(a)(2)'' and adding in its place the phrase 
``For plan years beginning before January 1, 2021, CMS may waive Sec.  
422.50(a)(2)''.
0
11. Section 422.62 is amended by--
0
a. Revising paragraphs (b) introductory text and (b)(3) introductory 
text;
0
b. Redesignating paragraph (b)(4) as paragraph (b)(26); and
0
c. Adding a new paragraph (b)(4) and paragraphs (b)(5) through (25).
    The revisions and additions read as follows:


Sec.  422.62  Election of coverage under an MA plan.

* * * * *
    (b) Special election periods (SEPs). An individual may at any time 
(that is, not limited to the annual coordinated election period) 
discontinue the election of an MA plan offered by an MA organization 
and change his or her election from an MA plan to original Medicare or 
to a different MA plan under any of the following circumstances:
* * * * *
    (3) The individual demonstrates to CMS that--
* * * * *
    (4) The individual is making an MA enrollment request into or out 
of an employer sponsored MA plan, is disenrolling from an MA plan to 
take employer sponsored coverage of any kind, or is disenrolling from 
employer sponsored coverage (including COBRA coverage) to elect an MA 
plan. This SEP is available to individuals who have (or are enrolling 
in) an employer or union

[[Page 9208]]

sponsored MA plan and ends 2 months after the month the employer or 
union coverage of any type ends. The individual may choose an effective 
date that is not earlier than the first of the month following the 
month in which the election is made and no later than up to 3 months 
after the month in which the election is made.
    (5) The individual is enrolled in an MA plan offered by an MA 
organization that has been sanctioned by CMS and elects to disenroll 
from that plan in connection with the matter(s) that gave rise to that 
sanction.
    (i) Consistent with disclosure requirements at Sec.  422.111(g), 
CMS may require the MA organization to notify current enrollees that if 
the enrollees believe they are affected by the matter(s) that gave rise 
to the sanction, the enrollees are eligible for a SEP to elect another 
MA plan or disenroll to original Medicare and enroll in a PDP.
    (ii) The SEP starts with the imposition of the sanction and ends 
when the sanction ends or when the individual makes an election, 
whichever occurs first.
    (6)(i) The individual is enrolled in a section 1876 cost contract 
that is not renewing its contract for the area in which the enrollee 
resides.
    (ii) This SEP begins December 8 of the then-current contract year 
and ends on the last day of February of the following year.
    (7) The individual is disenrolling from an MA plan to enroll in a 
Program of All-inclusive Care for the Elderly (PACE) organization or is 
enrolling in an MA plan after disenrolling from a PACE organization.
    (i) An individual who disenrolls from PACE has a SEP for 2 months 
after the effective date of PACE disenrollment to elect an MA plan.
    (ii) An individual who disenrolls from an MA plan has a SEP for 2 
months after the effective date of MA disenrollment to elect a PACE 
plan.
    (8) The individual terminated a Medigap policy upon enrolling for 
the first time in an MA plan and is still in a ``trial period'' and 
eligible for ``guaranteed issue'' of a Medigap policy, as outlined in 
section 1882(s)(3)(B)(v) of the Act.
    (i) This SEP allows an eligible individual to make a one-time 
election to disenroll from his or her first MA plan to join original 
Medicare at any time of the year.
    (ii) This SEP begins upon enrollment in the MA plan and ends after 
12 months of enrollment or when the individual disenrolls from the MA 
plan, whichever is earlier.
    (9) Until December 31, 2020, the individual became entitled to 
Medicare based on ESRD for a retroactive effective date (whether due to 
an administrative delay or otherwise) and was not provided the 
opportunity to elect an MA plan during his or her Initial Coverage 
Election Period (ICEP).
    (i) The individual may prospectively elect an MA plan offered by an 
MA organization, provided--
    (A) The individual was enrolled in a health plan offered by the 
same MA organization the month before their entitlement to Parts A and 
B;
    (B) The individual developed ESRD while a member of that health 
plan; and
    (C) The individual is still enrolled in that health plan.
    (ii) This SEP begins the month the individual receives the notice 
of the Medicare entitlement determination and continues for 2 
additional calendar months after the month the notice is received.
    (10) The individual became entitled to Medicare for a retroactive 
effective date (whether due to an administrative delay or otherwise) 
and was not provided the opportunity to elect an MA plan during their 
initial coverage election period (ICEP). This SEP begins the month the 
individual receives the notice of the retroactive Medicare entitlement 
determination and continues for 2 additional calendar months after the 
month the notice is received. The effective date would be the first of 
the month following the month in which the election is made but would 
not be earlier than the first day of the month in which the notice of 
the Medicare entitlement determination is received by the individual.
    (11)(i) The individual enrolled in an MA special needs plan (SNP) 
and is no longer eligible for the SNP because he or she no longer meets 
the applicable special needs status.
    (ii) This SEP begins the month the individual's special needs 
status changes and ends when the individual makes an enrollment request 
or 3 calendar months after the effective date of involuntary 
disenrollment from the SNP, whichever is earlier.
    (12) The individual belongs to a qualified State Pharmaceutical 
Assistance Program (SPAP) and is requesting enrollment in an MA-PD 
plan.
    (i) The individual may make one MA election per year.
    (ii) This SEP is available while the individual is enrolled in the 
SPAP and, upon loss of eligibility for SPAP benefits, for an additional 
2 calendar months after either the month of the loss of eligibility or 
notification of the loss, whichever is later.
    (13)(i) The individual has severe or disabling chronic conditions 
and is eligible to enroll into a Chronic Care SNP designed to serve 
individuals with those conditions. The SEP is for an enrollment 
election that is consistent with the individual's eligibility for a 
Chronic Care SNP. Individuals enrolled in a Chronic Care SNP who have a 
severe or disabling chronic condition which is not a focus of their 
current SNP are eligible for this SEP to request enrollment in a 
Chronic Care SNP that focuses on this other condition. Individuals who 
are found after enrollment not to have the qualifying condition 
necessary to be eligible for the Chronic Care SNP are eligible for a 
SEP to enroll in a different MA plan.
    (ii) This SEP is available while the individual has the qualifying 
condition and ends upon enrollment in the Chronic Care SNP. This SEP 
begins when the MA organization notifies the individual of the lack of 
eligibility and extends through the end of that month and the following 
2 calendar months. The SEP ends when the individual makes an enrollment 
election or on the last day of the second of the 2 calendar months 
following notification of the lack of eligibility, whichever occurs 
first.
    (14) The individual is enrolled in an MA-PD plan and requests to 
disenroll from that plan to enroll in or maintain other creditable 
prescription drug coverage.
    (i) This SEP is available while the individual is enrolled in an 
MA-PD plan. The effective date of disenrollment from the MA plan is the 
first day of the month following the month a disenrollment request is 
received by the MA organization.
    (ii) Permissible enrollment changes during this SEP are to 
disenroll from an MA-PD plan and elect original Medicare or to elect an 
MA-only plan, resulting in disenrollment from the MA-PD plan.
    (15) The individual is requesting enrollment in an MA plan offered 
by an MA organization with a Star Rating of 5 Stars. An individual may 
use this SEP only once for the contract year in which the MA plan was 
assigned a 5-star overall performance rating, beginning the December 
8th before that contract year through November 30th of that contract 
year.
    (16) The individual is a non-U.S. citizen who becomes lawfully 
present in the United States.
    (i) This SEP begins the month the individual attains lawful 
presence status and ends the earlier of when the

[[Page 9209]]

individual makes an enrollment election or 2 calendar months after the 
month the individual attains lawful presence status.
    (ii) [Reserved]
    (17) The individual was adversely affected by having requested, but 
not received, required notices or information in an accessible format, 
as outlined in section 504 of the Rehabilitation Act of 1973 within the 
same timeframe that the MA organization or CMS provided the same 
information to individuals who did not request an accessible format.
    (i) The SEP begins at the end of the election period during which 
the individual was seeking to make an enrollment election and the 
length is at least as long as the time it takes for the information to 
be provided to the individual in an accessible format.
    (ii) MA organizations may determine eligibility for this SEP when 
the criterion is met, ensuring adequate documentation of the situation, 
including records indicating the date of the individual's request, the 
amount of time taken to provide accessible versions of the requested 
materials and the amount of time it takes for the same information to 
be provided to an individual who does not request an accessible format.
    (18) Individuals affected by a Federal Emergency Management Agency 
(FEMA)-declared weather-related emergency or major disaster are 
eligible for a SEP to make an MA enrollment or disenrollment election. 
The SEP is available from the start of the incident period and for 4 
calendar months after the start of the incident period. And individual 
is eligible for this SEP provided the individual--
    (i)(A) Resides, or resided at the start of the incident period, in 
an area for which FEMA has declared an emergency or a major disaster 
and has designated affected counties as being eligible to apply for 
individual or public level assistance; or
    (B) Does not reside in the affected areas but relies on help making 
healthcare decisions from one or more individuals who reside in the 
affected areas; and
    (ii) Was eligible for an election period at the time of incident 
period; and
    (iii) Did not make an election during that election period due to 
the weather-related emergency or major disaster.
    (19) The individual experiences an involuntary loss of creditable 
prescription drug coverage, including a reduction in the level of 
coverage so that it is no longer creditable and excluding any loss or 
reduction of creditable coverage that is due to a failure to pay 
premiums.
    (i) The individual is eligible to request enrollment in an MA-PD 
plan.
    (ii) The SEP begins when the individual is notified of the loss of 
creditable coverage and ends 2 calendar months after the later of the 
loss (or reduction) or the individual's receipt of the notice.
    (iii) The effective date of this SEP is the first of the month 
after the enrollment election is made or, at the individual's request, 
may be up to 3 months prospective.
    (20) The individual was not adequately informed of a loss of 
creditable prescription drug coverage, or that they never had 
creditable coverage. CMS determines eligibility for this SEP on a case-
by-case basis, based on its determination that an entity offering 
prescription drug coverage failed to provide accurate and timely 
disclosure of the loss of creditable prescription drug coverage or 
whether the prescription drug coverage offered is creditable.
    (i) The individual is eligible for one enrollment in, or 
disenrollment from, an MA-PD plan.
    (ii) This SEP begins the month of CMS' determination and continues 
for 2 additional calendar months following the determination.
    (21) The individual's enrollment or non-enrollment in an MA-PD plan 
is erroneous due to an action, inaction, or error by a Federal 
employee.
    (i) The individual is permitted enrollment in, or disenrollment 
from, the MA-PD plan, as determined by CMS.
    (ii) This SEP begins the month of CMS approval of this SEP on the 
basis that the individual's enrollment was erroneous due to an action, 
inaction, or error by a Federal employee and continues for 2 additional 
calendar months following this approval.
    (22) The individual is eligible for an additional Part D Initial 
Election Period, such as an individual currently entitled to Medicare 
due to a disability and who is attaining age 65.
    (i) The individual is eligible to make an MA election to coordinate 
with the additional Part D Initial Election Period.
    (ii) The SEP may be used to disenroll from an MA plan, with or 
without Part D benefits, to enroll in original Medicare, or to enroll 
in an MA plan that does not include Part D benefits, regardless of 
whether the individual uses the Part D Initial Election Period to 
enroll in a PDP.
    (iii) The SEP begins and ends concurrently with the additional Part 
D Initial Election Period.
    (23) Individuals affected by a significant change in plan provider 
network are eligible for a SEP that permits disenrollment from the MA 
plan that has changed its network to another MA plan or to original 
Medicare. This SEP can be used only once per significant change in the 
provider network.
    (i) The SEP begins the month the individual is notified of 
eligibility for the SEP and extends an additional 2 calendar months 
thereafter.
    (ii) An enrollee is affected by a significant network change when 
the enrollee is assigned to, currently receiving care from, or has 
received care within the past 3 months from a provider or facility 
being terminated from the provider network.
    (iii) When instructed by CMS, the MA plan that has significantly 
changed its network must issue a notice, in the form and manner 
directed by CMS, that notifies enrollees who are eligible for this SEP 
of their eligibility for the SEP and how to use the SEP.
    (24) The individual is enrolled in a plan offered by an MA 
organization that has been placed into receivership by a state or 
territorial regulatory authority. The SEP begins the month the 
receivership is effective and continues until it is no longer in effect 
or until the enrollee makes an election, whichever occurs first. When 
instructed by CMS, the MA plan that has been placed under receivership 
must notify its enrollees, in the form and manner directed by CMS, of 
the enrollees' eligibility for this SEP and how to use the SEP.
    (25) The individual is enrolled in a plan that has been identified 
with the low performing icon in accordance with Sec.  
422.166(h)(1)(ii). This SEP exists while the individual is enrolled in 
the low performing MA plan.
* * * * *
0
12. Section 422.68 is amended by revising paragraph (d) to read as 
follows:


Sec.  422.68  Effective dates of coverage and change of coverage.

* * * * *
    (d) Special election periods. For an election or change of election 
made during a special election period as described in Sec.  422.62(b), 
the coverage or change in coverage is effective the first day of the 
calendar month following the month in which the election is made, 
unless otherwise noted.
* * * * *
0
13. Section 422.100 is amended by--
0
a. Revising paragraphs (c)(1) and (2);
0
b. Redesignating paragraph (d)(2) as paragraph (d)(2)(i);
0
c. Adding paragraph (d)(2)(ii); and

[[Page 9210]]

0
d. Revising paragraphs (f)(4) through (6), (j), and (m)(5)(iii).
    The revisions and addition read as follows:


Sec.  422.100  General requirements.

* * * * *
    (c) * * *
    (1) Basic benefits are all items and services (other than hospice 
care or, beginning in 2021, coverage for organ acquisitions for kidney 
transplants) for which benefits are available under Parts A and B of 
Medicare, including additional telehealth benefits offered consistent 
with the requirements at Sec.  422.135.
    (2) Supplemental benefits are benefits offered under Sec.  422.102.
    (i) Supplemental benefits consist of--
    (A) Mandatory supplemental benefits are services not covered by 
Medicare that an MA enrollee must purchase as part of an MA plan that 
are paid for in full, directly by (or on behalf of) Medicare enrollees, 
in the form of premiums or cost sharing.
    (B) Optional supplemental benefits are health services not covered 
by Medicare that are purchased at the option of the MA enrollee and 
paid for in full, directly by (or on behalf of) the Medicare enrollee, 
in the form of premiums or cost sharing. These services may be grouped 
or offered individually.
    (ii) Supplemental benefits must meet the following requirements:
    (A) Except in the case of special supplemental benefit for the 
chronically ill (SSBCI) offered in accordance with Sec.  422.102(f) 
that are not primarily health related, the benefits diagnose, 
compensate for physical impairments or act to ameliorate the functional 
or psychological impact of injuries or health conditions, or reduce 
avoidable emergency and health care utilization;
    (B) The MA organization incurs a non-zero direct medical cost, 
except that in the case of a SSBCI that is not primarily health related 
that is offered in accordance with Sec.  422.102, the MA organization 
may instead incur a non-zero direct non-administrative cost; and
    (C) The benefits are not covered by Medicare.
    (d) * * *
    (2) * * *
    (ii) MA plans may provide supplemental benefits (such as specific 
reductions in cost sharing or additional services or items) that are 
tied to disease state or health status in a manner that ensures that 
similarly situated individuals are treated uniformly; there must be 
some nexus between the health status or disease state and the specific 
benefit package designed for enrollees meeting that health status or 
disease state.
* * * * *
    (f) * * *
    (4) Except as provided in paragraph (f)(5) of this section, for 
each year beginning on or after January 1, 2022, MA local plans (as 
defined in Sec.  422.2) must establish a maximum out-of-pocket (MOOP) 
limit for basic benefits that is consistent with this paragraph (f)(4). 
MA organizations are responsible for tracking out-of-pocket spending 
incurred by the enrollee, and must alert enrollees and contracted 
providers when the MOOP limit is reached.
    (i) CMS sets up to three MOOP limits using projections of 
beneficiary spending that are based on the most recent, complete 
Medicare Fee-for-Service (FFS) data subject to paragraph (f)(4)(vii) of 
this section.
    (ii) An MA organization that establishes a plan's MOOP limit at a 
dollar amount within the range specified in paragraphs (f)(4)(ii)(A) 
through (C) of this section is considered to have the corresponding 
mandatory, intermediate, or lower MOOP limit for purposes of paragraphs 
(f)(6) and (j) of this section:
    (A) Mandatory MOOP limit: Above the intermediate MOOP limit and up 
to and including the mandatory MOOP limit.
    (B) Intermediate MOOP limit: Above the lower MOOP limit and up to 
and including the intermediate MOOP limit.
    (C) Lower MOOP limit: Between $0.00 and up to and including the 
lower MOOP limit.
    (iii) Each MOOP limit CMS sets is rounded to the nearest $50 
increment and in cases where the MOOP limit is projected to be exactly 
in between two $50 increments, CMS rounds to the lower $50 increment.
    (iv) For 2022, CMS sets the MOOP limits as follows, subject to the 
rounding rules in paragraph (f)(4)(iii) of this section and ESRD cost 
transition schedule in paragraph (f)(4)(vii) of this section:
    (A) The mandatory MOOP limit is set at the 95th percentile of 
projected Medicare FFS beneficiary out-of-pocket spending.
    (B) The intermediate MOOP is set at the numeric midpoint of the 
mandatory and lower MOOP limits.
    (C) The lower MOOP limit is set at the 85th percentile of projected 
Medicare FFS beneficiary out-of-pocket spending.
    (v) For 2023 and 2024 or, if later, until the end of the ESRD cost 
transition, CMS sets the MOOP limits as follows, subject to the 
rounding rules in paragraph (f)(4)(iii) of this section and ESRD cost 
transition schedule in paragraph (f)(4)(vii) of this section:
    (A) The mandatory MOOP limit does not continue the ESRD cost 
transition if the prior year's projected 95th percentile (including 
costs incurred by all Medicare FFS beneficiaries with and without 
diagnoses of ESRD) is more than two percentiles above or below the 
projected 95th percentile for the upcoming contract year. Instead, the 
mandatory MOOP limit increases or decreases by up to 10 percent of the 
prior year's MOOP limit and the ESRD cost transition schedule resumes 
at the rate that was scheduled to occur once the prior year's projected 
95th percentile remains within the range of two percentiles above or 
below the projected 95th percentile for the upcoming contract year.
    (B) The intermediate MOOP is either maintained at the prior year's 
limit or updated to the new numeric midpoint if the mandatory or lower 
MOOP limit changes for the year.
    (C) The lower MOOP limit does not continue the ESRD cost transition 
if the prior year's projected 85th percentile (including costs incurred 
by all Medicare FFS beneficiaries with and without diagnoses of ESRD) 
is more than two percentiles above or below the projected 85th 
percentile for the upcoming contract year. Instead, the lower MOOP 
limit increases or decreases by up to 10 percent of the prior year's 
MOOP limit and the ESRD cost transition schedule resumes at the rate 
that was scheduled to occur once the prior year's projected 85th 
percentile remains within the range of two percentiles above or below 
the projected 85th percentile for the upcoming contract year.
    (vi) For 2025 or following the ESRD transition schedule in 
paragraph (f)(4)(vii) of this section and for subsequent years, CMS 
sets the MOOP limits as follows, subject to the rounding rules in 
paragraph (f)(4)(iii) of this section:
    (A) The prior year's mandatory MOOP limit is maintained for the 
upcoming contract year if:
    (1) The prior year's MOOP limit amount is within the range of two 
percentiles above or below the projected 95th percentile of Medicare 
FFS beneficiary out-of-pocket spending for the upcoming year incurred 
by beneficiaries with and without diagnoses of ESRD; and
    (2) The projected 95th percentile did not increase or decrease for 
three consecutive years in a row. If the prior year's mandatory MOOP 
limit is not maintained, CMS increases or decreases the MOOP limit by 
up to 10 percent of

[[Page 9211]]

the prior year's MOOP amount annually until the MOOP limit reaches the 
projected 95th percentile for the applicable year.
    (B) The prior year's intermediate MOOP limit is maintained or 
updates to the new numeric midpoint if the mandatory or lower MOOP 
limit changes as outlined in this section.
    (C) The prior year's lower MOOP limit is maintained for the 
upcoming contract year if:
    (1) The prior year's MOOP limit amount is within the range of two 
percentiles above or below the projected 85th percentile of Medicare 
FFS beneficiary out-of-pocket spending for the upcoming year incurred 
by beneficiaries with and without diagnoses of ESRD; and
    (2) The projected 85th percentile did not increase or decrease for 
three consecutive years in a row. If the prior year's lower MOOP limit 
is not maintained, CMS increases or decreases the MOOP limit by up to 
10 percent of the prior year's MOOP amount annually until the MOOP 
limit reaches the projected 85th percentile for the applicable year.
    (vii) For purposes of this section, the ESRD cost differential is 
the difference between, first, for the mandatory MOOP limit, $7,175 and 
for the lower MOOP limit, $3,360 and second, the projected out-of-
pocket costs for beneficiaries using Medicare FFS data (including the 
costs incurred by beneficiaries with ESRD diagnoses) for each year 
between 2022 and 2024 or the final year of transition. Subject to the 
MOOP calculation methodology in paragraphs (f)(4)(iv) through (vi) of 
this section, CMS transitions to using the most recent, complete 
Medicare FFS data of beneficiary out-of-pocket spending incurred by 
beneficiaries with and without diagnoses of ESRD by factoring in a 
percentage of the ESRD cost differential on the following schedule:
    (A) For 2022, CMS factors in 60 percent of the ESRD cost 
differential.
    (B) For 2023 or the next year of ESRD cost transition, CMS factors 
in 80 percent of the ESRD cost differential.
    (C) For 2024 or the final year of the ESRD cost transition and 
beyond, CMS uses the most recent, complete Medicare FFS data that 
includes the out-of-pocket costs incurred by beneficiaries with and 
without diagnoses of ESRD.
    (5) With respect to a local PPO plan, the MOOP limits specified 
under paragraph (f)(4) of this section apply only to use of network 
providers.
    (i) Such local PPO plans must establish a total combined limit on 
beneficiary out-of-pocket expenditures for basic benefits that are 
provided in-network and out-of-network that is no greater than the 
total combined limit applicable to regional plans under Sec.  
422.101(d)(3)(ii).
    (ii) The type of in-network MOOP limit dictates the type of 
combined MOOP limit the MA plan may use; MA PPO plans must have the 
same MOOP type (lower, intermediate, or mandatory) for the in-network 
MOOP limit and combined limit on in-network and out-of-network out-of-
pocket expenditures.
    (iii) MA organizations are responsible for tracking out-of-pocket 
spending incurred by the enrollee, and must alert enrollees and 
contracted providers when the MOOP limit is reached.
    (6) For each year beginning on or after January 1, 2022, a MA 
organization must establish cost sharing for basic benefits (which may 
be coinsurance or copayments) that comply with the cost sharing limits 
in this paragraph (f)(6), which are in addition to any other limits and 
rules applicable to MA cost sharing, including that MA cost sharing for 
basic benefits be actuarially equivalent to Medicare FFS cost sharing.
    (i)(A) For in-network basic benefits that are not specifically 
addressed in this paragraph (f)(6)(i) and for out-of-network basic 
benefits, MA plans may not pay less than 50 percent of the total MA 
plan financial liability, regardless of the MOOP limit established.
    (B) If the MA plan establishes a coinsurance method of cost 
sharing, then the coinsurance cannot exceed 50 percent.
    (C) If the MA plan establishes a copay method of cost sharing, then 
the copay for out-of-network benefits cannot exceed 50 percent of the 
average Medicare FFS allowable cost for that service area and the copay 
for in-network benefits cannot exceed 50 percent of the MA 
organization's average contracted rate of that benefit (item or 
service).
    (ii)(A) In setting copayment limits, CMS rounds to the nearest 
whole $5 increment for professional services and nearest whole $1 for 
inpatient acute and psychiatric and skilled nursing facility cost 
sharing limits.
    (B) For all cases in which the copayment limit is projected to be 
exactly between two increments, CMS rounds to the lower dollar amount.
    (iii)(A) For in-network basic benefits that are professional 
services, including primary care services, physician specialist 
services, partial hospitalization, and rehabilitation services, an MA 
plan may not establish cost sharing that exceeds the limits established 
by CMS pursuant to this paragraph (f)(6)(ii) for the MOOP limit 
established by the MA plan.
    (B) CMS uses projections of out-of-pocket costs representing 
beneficiaries with and without diagnoses of ESRD based on the most 
recent, complete Medicare FFS data for basic benefits that are 
professional services to set the cost sharing limits.
    (C) The professional service cost sharing limits, subject to the 
rounding rules at paragraph (f)(6)(ii)(A) of this section are as 
follows:
    (1) Mandatory MOOP limit: 30 percent coinsurance or actuarially 
equivalent copayment values. The MA plan must not pay less than 70 
percent of the total MA plan financial liability.
    (2) Intermediate MOOP limit: 40 percent coinsurance or actuarially 
equivalent copayment values. The MA plan must not pay less than 60 
percent of the total MA plan financial liability.
    (3) Lower MOOP limit: 50 percent coinsurance or actuarially 
equivalent copayment values. The MA plan must not pay less than 50 
percent of the total MA plan financial liability.
    (iv)(A) For in-network basic benefits that are inpatient acute and 
psychiatric services, an MA plan may not establish cost sharing that 
exceeds the limits established by CMS pursuant to this paragraph 
(f)(6)(iv) for the MOOP limit established by the MA plan.
    (B) The cost sharing limits are set for the following seven 
inpatient stay scenarios in an inpatient facility for a period for 
which cost sharing would apply under original Medicare: inpatient 
hospital acute stay scenarios of 3 days, 6 days, 10 days, and 60 days 
and psychiatric inpatient hospital stay scenarios of 8 days, 15 days, 
and 60 days.
    (C) CMS sets the inpatient acute and psychiatric cost sharing 
limits annually using projections of out-of-pocket costs and 
utilization based on the most recent, complete Medicare FFS data that 
factors in out-of-pocket costs representing all beneficiaries with 
diagnoses of ESRD on the transition schedule described in paragraphs 
(f)(4)(vii)(A) through (D) of this section (without application of the 
exceptions for MOOP limit calculations in paragraphs (f)(4)(v)(A) and 
(C) of this section), and may also use patient utilization information 
from MA encounter data.
    (D) The cost sharing limits applicable to inpatient acute and 
psychiatric services are as follows:
    (1) Mandatory MOOP limit: cost sharing must not exceed 100 percent 
of estimated Medicare Fee-for-Service cost sharing, including the Part 
A deductible and related Part B costs, for each length of stay 
scenario.

[[Page 9212]]

    (2) Intermediate MOOP limit: cost sharing must not exceed the 
numeric mid-point between the cost sharing limits established in 
paragraphs (f)(6)(iv)(D)(1) and (3) of this section.
    (3) Lower MOOP limit: cost sharing must not exceed 125 percent of 
estimated Medicare Fee-for-Service cost sharing, including the Part A 
deductible and related Part B costs, for each the length of stay 
scenario. For inpatient acute 60 day length of stays, MA plans that 
establish a lower MOOP limit have the flexibility to set cost sharing 
above 125 percent of estimated Medicare Fee-for-Service cost sharing as 
long as the total cost sharing for the inpatient benefit does not 
exceed the MOOP limit or cost sharing for inpatient benefits in 
original Medicare on an per member per month actuarially equivalent 
basis.
* * * * *
    (j) Cost sharing and actuarial equivalence standards for basic 
benefits--(1) Specific benefits for which cost sharing may not exceed 
cost sharing under original Medicare. For each year beginning on or 
after January 1, 2022, for the following basic benefits, in-network 
cost sharing established by an MA plan may not exceed the cost sharing 
required under original Medicare:
    (i) Chemotherapy administration services to include chemotherapy/
radiation drugs integral to the treatment regimen.
    (ii) Renal dialysis services as defined at section 1881(b)(14)(B) 
of the Act.
    (iii) Skilled nursing care, defined as services provided during a 
covered stay in a skilled nursing facility during the period for which 
cost sharing would apply under original Medicare, when the MA plan 
establishes the mandatory MOOP limit; when the MA plan establishes the 
lower or intermediate MOOP limit, the MA plan may establish cost 
sharing for the first 20 days of a SNF stay.
    (A) Regardless of the MOOP limit established by the MA plan, the 
per-day cost sharing for days 21 through 100 must not be greater than 
the projected original Medicare SNF amount.
    (B) Total cost sharing for the overall SNF benefit must be no 
higher than the actuarially equivalent cost sharing for the SNF benefit 
in original Medicare.
    (iv) Home health services (as defined in section 1861(m) of the 
Act), when the MA plan establishes a mandatory or intermediate MOOP 
limit; when the MA plan establishes the lower MOOP limit, the MA plan 
may have cost sharing up to 20 percent of the total MA plan financial 
liability.
    (v) Durable medical equipment (DME), when the MA plan establishes 
the mandatory MOOP limit; when the MA plan establishes the lower or 
intermediate MOOP limit, the MA plan may establish cost sharing on 
specific categories or items of DME as long as the total cost sharing 
for the overall DME benefit is no higher than the per member per month 
actuarially equivalent cost sharing for the DME benefit in original 
Medicare.
    (2) Actuarially equivalent cost sharing for categories of basic 
benefits in the aggregate. For each year beginning on or after January 
1, 2022, total MA cost sharing for all basic benefits, excluding out of 
network benefits covered by a regional MA plan, must not exceed cost 
sharing for those benefits in original Medicare on a per member per 
month actuarially equivalent basis.
    (i) MA cost sharing for the following specific benefit categories 
must not exceed the cost sharing for those benefit categories in 
original Medicare on a per member per month actuarially equivalent 
basis:
    (A) Inpatient hospital acute and psychiatric services, defined as 
services provided during a covered stay in an inpatient facility during 
the period for which cost sharing would apply under original Medicare.
    (B) Durable medical equipment (DME).
    (C) Drugs and biologics covered under Part B of original Medicare 
(including both chemotherapy/radiation drugs integral to the treatment 
regimen and other drugs covered under Part B).
    (D) Skilled nursing care, defined as services provided during a 
covered stay in a skilled nursing facility during the period for which 
cost sharing would apply under original Medicare.
    (ii) CMS may extend flexibility for MA plans when evaluating 
actuarial equivalent cost sharing limits for those service categories 
to the extent that the per member per month cost sharing limit is 
actuarially justifiable based on generally accepted actuarial 
principles and supporting documentation included in the bid, provided 
that the cost sharing for specific services otherwise satisfies 
published cost sharing standards.
* * * * *
    (m) * * *
    (5) * * *
    (iii) Provide the information described in paragraphs (m)(1), (2), 
and (3) and (m)(5)(i) of this section on its website.
0
14. Section 422.101 by--
0
a. Revising paragraphs (d)(2) and (3), (f)(1) introductory text, and 
(f)(1)(i) and (iii); and
0
b. Adding paragraph (f)(1)(iv);
0
c. Revising paragraph (f)(2) introductory text; and
0
d. Adding paragraph (f)(3).
    The revisions and additions read as follows:


Sec.  422.101  Requirements relating to basic benefits.

* * * * *
    (d) * * *
    (2) Catastrophic limit. For each year beginning on or after January 
1, 2022, MA regional plans must establish a catastrophic limit on 
beneficiary out-of-pocket expenditures for basic benefits that are 
furnished by in-network providers that is consistent with Sec.  
422.100(f)(4) subject to the rounding rules in paragraph (f)(4)(iii) of 
this section.
    (i) The type of catastrophic (in-network) limit dictates the total 
catastrophic MOOP range for MA regional plans under paragraph (d)(3) of 
this section, MA regional plans must have the same MOOP type (lower, 
intermediate, or mandatory) for the in-network MOOP limit and combined 
catastrophic limit on in-network and out-of-network out-of-pocket 
expenditures.
    (ii) MA organizations are responsible for tracking out-of-pocket 
spending incurred by the enrollee, and must alert enrollees and 
contracted providers when the MOOP limit is reached.
    (3) Total catastrophic limit. For each year beginning on or after 
January 1, 2022, MA regional plans must establish a total catastrophic 
limit on beneficiary out-of-pocket expenditures for basic benefits that 
are provided in-network and out-of-network that is consistent with this 
paragraph (d)(3).
    (i) The total catastrophic limit for both in-network and out-of-
network benefits may not be used to increase the limit described in 
paragraph (d)(2) of this section.
    (ii) CMS sets the total catastrophic limit by multiplying the 
respective in-network MOOP limits by 1.5 for the relevant year, subject 
to the rounding rules in paragraph (f)(4)(iii) of this section.
    (iii) MA organizations are responsible for tracking out-of-pocket 
spending incurred by the enrollee, and must alert enrollees and 
contracted providers when the MOOP limit is reached.
* * * * *
    (f) * * *
    (1) MA organizations offering special needs plans (SNP) must 
implement an evidence-based model of care with appropriate networks of 
providers and specialists designed to meet the specialized needs of the 
plan's targeted enrollees. The MA organization must, with respect to 
each individual enrolled, do all of the following:

[[Page 9213]]

    (i) Conduct a comprehensive initial health risk assessment of the 
individual's physical, psychosocial, and functional needs as well as 
annual health risk reassessment, using a comprehensive risk assessment 
tool that CMS may review during oversight activities, and ensure that 
results from the initial assessment and annual reassessment conducted 
for each individual enrolled in the plan are addressed in the 
individual's individualized care plan as required under paragraph 
(f)(1)(ii) of this section.
* * * * *
    (iii) In the management of care, use an interdisciplinary team that 
includes a team of providers with demonstrated expertise and training, 
and, as applicable, training in a defined role appropriate to their 
licensure in treating individuals similar to the targeted population of 
the plan.
    (iv) Provide for face-to-face encounters between each enrollee and 
a member of the enrollee's interdisciplinary team or the plan's case 
management and coordination staff on at least an annual basis, 
beginning within the first 12 month of enrollment, as feasible and with 
the individual's consent. A face-for-face encounter must be either in 
person or through a visual, real-time, interactive telehealth 
encounter.
    (2) MA organizations offering SNPs must also develop and implement 
the following model of care components to assure an effective care 
management structure:
* * * * *
    (3)(i) All MA organizations wishing to offer or continue to offer a 
SNP will be required to be approved by the National Committee for 
Quality Assurance (NCQA) effective January 1, 2012 and subsequent 
years. All SNPs must submit their model of care (MOC) to CMS for NCQA 
evaluation and approval in accordance with CMS guidance.
    (ii) As part of the evaluation and approval of the SNP model of 
care, NCQA must evaluate whether goals were fulfilled from the previous 
model of care.
    (A) Plans must provide relevant information pertaining to the MOC's 
goals as well as appropriate data pertaining to the fulfillment the 
previous MOC's goals.
    (B) Plans submitting an initial model of care must provide relevant 
information pertaining to the MOC's goals for review and approval.
    (C) If the SNP model of care did not fulfill the previous MOC's 
goals, the plan must indicate in the MOC submission how it will achieve 
or revise the goals for the plan's next MOC.
    (iii) Each element of the model of care of a plan must meet a 
minimum benchmark score of 50 percent, and a plan's model of care will 
only be approved if each element of the model of care meets the minimum 
benchmark.
0
15. Section 422.102 is amended--
0
a. In paragraph (a)(4) by removing the phrase ``only as a mandatory'' 
and adding in its place the phrase ``for Part A and B benefits only as 
a mandatory''; and
0
b. Adding paragraphs (a)(5) and (6) and (f).
    The revisions and additions read as follows:


Sec.  422.102  Supplemental benefits.

    (a) * * *
    (5) An MA plan may reduce the cost sharing for items and services 
that are not basic benefits only as a mandatory supplemental benefit.
    (6) An MA plan may offer mandatory supplemental benefits in the 
following forms:
    (i) Reductions in cost sharing through the use of reimbursement, 
through a debit card or other means, for cost sharing paid for covered 
benefits. Reimbursements must be limited to the specific plan year.
    (ii) Use of a uniform dollar amount as a maximum plan allowance for 
a package of supplemental benefits, including reductions in cost 
sharing or coverage of specific items and services, available to 
enrollees on a uniform basis for enrollee use for any supplemental 
benefit in the package. Allowance must be limited to the specific plan 
year.
* * * * *
    (f) Special supplemental benefits for the chronically ill (SSBCI)--
(1) Requirements--(i) Chronically-ill enrollee. (A) A chronically ill 
enrollee is an individual enrolled in the MA plan who has one or more 
comorbid and medically complex chronic conditions that meet all of the 
following:
    (1) Is life threatening or significantly limits the overall health 
or function of the enrollee;
    (2) Has a high risk of hospitalization of other adverse health 
outcomes; and
    (3) Requires intensive care coordination.
    (B) CMS may publish a non-exhaustive list of conditions that are 
medically complex chronic conditions that are life threatening or 
significantly limit the overall health or function of an individual.
    (ii) SSBCI definition. A special supplemental benefit for the 
chronically ill (SSBCI) is a supplemental benefit that has, with 
respect to a chronically ill enrollee, a reasonable expectation of 
improving or maintaining the health or overall function of the 
enrollee; an SSBCI that meets this standard may also include a benefit 
that is not primarily health related, as defined in Sec.  
422.100(c)(2)(ii).
    (2) Offering SSBCI. (i) An MA plan may offer SSBCI to a chronically 
ill enrollee only as a mandatory supplemental benefit.
    (ii) Upon approval by CMS, an MA plan may offer SSBCI that are not 
uniform for all chronically ill enrollees in the plan.
    (iii) An MA plan may consider social determinants of health as a 
factor to help identify chronically ill enrollees whose health or 
overall function or could be improved or maintained with SSBCI. An MA 
plan may not use social determinants of health as the sole basis for 
determining eligibility for SSBCI.
    (3) Plan responsibilities. An MA plan offering SSBCI must do all of 
the following:
    (i) Must have written policies for determining enrollee eligibility 
and must document its determination that an enrollee is a chronically 
ill enrollee based on the definition in paragraph (f)(1)(i) of this 
section.
    (ii) Make information and documentation related to determining 
enrollee eligibility available to CMS upon request.
    (iii) Must have written policies based on objective criteria for 
determining a chronically ill enrollee's eligibility to receive a 
particular SSBCI and must document this criteria.
    (iv) Document each determination that an enrollee is eligible to 
receive an SSBCI and make this information available to CMS upon 
request.


Sec.  422.110  [Amended]

0
16. Section 422.110 is amended in paragraph (b) by removing the phrase 
``An MA organization'' and adding in its place the phrase ``For 
coverage before January 1, 2021, an MA organization''.
0
17. Section 422.111 is amended by--
0
a. Removing paragraph (b)(12);
0
b. Revising paragraphs (h)(1)(i), (ii) and (iii); and
0
c. Adding paragraphs (h)(1)(iv) and (v), (j), and (k).
    The revisions and additions read as follows:


Sec.  422.111  Disclosure requirements.

* * * * *
    (h) * * *
    (1) * * *
    (i) Is open at least from 8:00 a.m. to 8:00 p.m. in all service 
areas served by the Part C plan.
    (ii) At a minimum, provides customer telephone service access, in 
accordance with the following business practices:

[[Page 9214]]

    (A) Limits average hold time to no longer than 2 minutes. The hold 
time is defined as the time spent on hold by callers following the 
interactive voice response (IVR) system, touch-tone response system, or 
recorded greeting, before reaching a live person.
    (B) Answers 80 percent of incoming calls within 30 seconds after 
the Interactive Voice Response (IVR), touch-tone response system, or 
recorded greeting interaction.
    (C) Limits the disconnect rate of all incoming calls to no higher 
than 5 percent. The disconnect rate is defined as the number of calls 
unexpectedly dropped divided by the total number of calls made to the 
customer call center.
    (iii)(A) Provides interpreters for non-English speaking and limited 
English proficient (LEP) individuals.
    (B) Interpreters must be available within 8 minutes of reaching the 
customer service representative and be made available at no cost to the 
caller.
    (iv) Responds to TTY-to-TTY calls as defined in 47 CFR part 64, 
subpart F, in accordance with the mandatory minimum standards 
delineated in 47 CFR 64.604.
    (v) Provides effective real-time communication with individuals 
using auxiliary aids and services, including TTYs and all forms of 
Federal Communication Commission-approved telecommunications relay 
systems, when using automated-attendant systems. See 28 CFR 35.161 and 
36.303(d).
* * * * *
    (j) Safe disposal of certain prescription drugs. Information 
regarding the safe disposal of prescription drugs that are controlled 
substances and drug takeback programs must be provided in the case of 
an individual enrolled under an MA plan who is furnished an in-home 
health risk assessment on or after January 1, 2021.
    (1) As part of the in-home health risk assessment, the enrollees 
must be furnished written supporting materials describing how to safely 
dispose of medications that are controlled substances as well as a 
verbal summary when possible. The written information furnished to 
enrollees about the safe disposal of medications and takeback programs 
must include the following information for enrollees:
    (i) Unused medications should be disposed of as soon as possible.
    (ii) The US Drug Enforcement Administration (DEA) allows unused 
prescription medications to be mailed back to pharmacies and other 
authorized sites using packages made available at such pharmacies or 
such other locations.
    (iii) Community take back sites are the preferred method of 
disposing of unused controlled substances.
    (iv) Location of take back sites available in the MA plan service 
area where the enrollee resides or that are nearest to the enrollee's 
residence.
    (v) Instructions on how to safely dispose of medications in 
household trash or of cases when a medication can be safely flushed. 
Include instructions on removing personal identification information 
when disposing of prescription containers.
    (vi) Include a web link to the information available on the United 
States Department of Health and Human Services website identifying 
methods for the safe disposal of drugs available at the following web 
address: www.hhs.gov/opioids/prevention/safely-dispose-drugs/
    (k) Claims information. MA organizations must furnish directly to 
enrollees, in the manner specified by CMS and in a form easily 
understandable to such enrollees, a written explanation of benefits, 
when benefits are provided under this part.
    (1) Information requirements for the reporting period. Claims data 
elements presented on the explanation of benefits must include all of 
the following for the reporting period:
    (i) The descriptor and billing code for the item or service billed 
by the provider, and the corresponding amount billed.
    (ii) The total cost approved by the plan for reimbursement.
    (iii) The share of total cost paid for by the plan.
    (iv) The share of total cost for which the enrollee is liable.
    (2) Information requirements for year-to-date totals. Claims data 
elements presented on the explanation of benefits must include specific 
year-to-date totals as follows:
    (i) The cumulative amount billed by all providers.
    (ii) The cumulative total costs approved by the plan.
    (iii) The cumulative share of total cost paid for by the plan.
    (iv) The cumulative share of total cost for which the enrollee is 
liable.
    (v) The amount an enrollee has incurred toward the MOOP limit, as 
applicable.
    (vi) The amount an enrollee has incurred toward the deductible, as 
applicable.
    (3) Additional information requirements. (i) Each explanation of 
benefits must include clear contact information for enrollee customer 
service.
    (ii) Each explanation of benefits must include instructions on how 
to report fraud.
    (iii) Each EOB that includes a denied claim must clearly identify 
the denied claim and provide information about enrollee appeal rights, 
but the EOB does not replace the notice required by Sec. Sec.  422.568 
and 422.570.
    (4) Reporting cycles for explanation of benefits. MA organizations 
must send an explanation of benefits on either a monthly cycle or a 
quarterly cycle with per-claim notifications.
    (i) A monthly explanation of benefits must include all claims 
processed in the prior month and, for each claim, the information in 
paragraphs (k)(1) and (2) of this section as of the last day of the 
prior month.
    (A) The monthly explanation of benefits must be sent before the end 
of each month that follows the month a claim was filed.
    (B) [Reserved]
    (ii) A quarterly explanation of benefits must include all claims 
processed in the quarter and, for each claim, the information in 
paragraphs (k)(1) and (2) of this section as of the last day of the 
quarter; a per-claim notification must include all claims processed in 
the prior month and, for each claim, the information specified in 
paragraph (k)(1) of this section as of the last day of the prior month.
    (A) MA organizations that send the explanation of benefits on a 
quarterly cycle with per-claim notifications must send the quarterly 
explanation of benefits before the end of each month that follows the 
quarter in which a claim was filed.
    (B) MA organizations that send the explanation of benefits on a 
quarterly cycle with per-claim notifications must send the per-claim 
notification before the end of each month that follows the month in 
which a claim was filed.
0
18. Section 422.113 is amended by--
0
a. Revising paragraph (b)(2)(v); and
0
b. Adding paragraph (b)(2)(vi).
    The revision and addition read as follows:


Sec.  422.113  Special rules for ambulance services, emergency and 
urgently needed services, and maintenance and post-stabilization care 
services.

* * * * *
    (b) * * *
    (2) * * *
    (v) For each year beginning on or after January 1, 2022, with a 
dollar limit on emergency services including post-stabilization 
services costs for enrollees that is the lower of--
    (A) The cost sharing established by the MA plan if the emergency 
services

[[Page 9215]]

were provided through the MA organization; or
    (B) A maximum cost sharing limit permitted per visit that 
corresponds to the MA plan MOOP limit as follows:
    (1) $115 for MA plans with a mandatory MOOP limit.
    (2) $130 for MA plans with an intermediate MOOP limit.
    (3) $150 for MA plans with a lower MOOP limit.
    (vi) For each year beginning on or after January 1, 2022, with a 
cost sharing limit on urgently needed services that does not exceed the 
limits specified for professional services in Sec.  422.100(f)(6)(iii).
* * * * *
0
19. Section 422.116 is added to read as follows:


Sec.  422.116  Network adequacy.

    (a) General rules--(1) Access. A network-based MA plan, as 
described in Sec.  422.114(a)(3)(ii) but not including MSA plans, must 
demonstrate that it has an adequate contracted provider network that is 
sufficient to provide access to covered services in accordance with 
access standards described in section 1852(d)(1) of the Act and in 
Sec. Sec.  422.112(a) and 422.114(a)(1) and by meeting the standard in 
paragraph (a)(2) of this section. When required by CMS, an MA 
organization must attest that it has an adequate network for access and 
availability of a specific provider or facility type that CMS does not 
independently evaluate in a given year.
    (2) Standards. An MA plan must meet maximum time and distance 
standards and contract with a specified minimum number of each provider 
and facility-specialty type.
    (i) Each contract provider type must be within maximum time and 
distance of at least one beneficiary in order to count toward the 
minimum number.
    (ii) The minimum number criteria and the time and distance criteria 
vary by the county type.
    (3) Applicability of MA network adequacy criteria. (i) The 
following providers and facility types do not count toward meeting 
network adequacy criteria:
    (A) Specialized, long-term care, and pediatric/children's 
hospitals.
    (B) Providers that are only available in a residential facility.
    (C) Providers and facilities contracted with the organization only 
for its commercial, Medicaid, or other products.
    (ii) For the facility type of outpatient dialysis, hospital-based 
dialysis may count in network adequacy criteria.
    (4) Annual updates by CMS. CMS annually updates and makes the 
following available:
    (i) A Health Service Delivery (HSD) Reference file that identifies 
the following:
    (A) All minimum provider and facility number requirements.
    (B) All provider and facility time and distance standards.
    (C) Ratios established in paragraph (e) of this section in advance 
of network reviews for the applicable year.
    (ii) A Provider Supply file that lists available providers and 
facilities and their corresponding office locations and specialty 
types.
    (A) The Provider Supply file is updated annually based on 
information in the Integrated Data Repository (IDR), which has 
comprehensive claims data, and information from public sources.
    (B) CMS may also update the Provider Supply file based on findings 
from validation of provider information submitted on Exception Requests 
to reflect changes in the supply of health care providers and 
facilities.
    (b) Provider and facility-specialty types. The provider and 
facility-specialty types to which the network adequacy evaluation under 
this section applies are specified in this paragraph (b).
    (1) Provider-specialty types. The provider-specialty types are as 
follows:
    (i) Primary Care.
    (ii) Allergy and Immunology.
    (iii) Cardiology.
    (iv) Chiropractor.
    (v) Dermatology.
    (vi) Endocrinology.
    (vii) ENT/Otolaryngology.
    (viii) Gastroenterology.
    (ix) General Surgery.
    (x) Gynecology, OB/GYN.
    (xi) Infectious Diseases.
    (xii) Nephrology.
    (xiii) Neurology.
    (xiv) Neurosurgery.
    (xv) Oncology--Medical, Surgical.
    (xvi) Oncology--Radiation/Radiation Oncology.
    (xvii) Ophthalmology.
    (xviii) Orthopedic Surgery.
    (xix) Physiatry, Rehabilitative Medicine.
    (xx) Plastic Surgery.
    (xxi) Podiatry.
    (xxii) Psychiatry.
    (xxiii) Pulmonology.
    (xxiv) Rheumatology.
    (xxv) Urology.
    (xxvi) Vascular Surgery.
    (xxvii) Cardiothoracic Surgery.
    (2) Facility-specialty types. The facility specialty types are as 
follows:
    (i) Acute Inpatient Hospitals.
    (ii) Cardiac Surgery Program.
    (iii) Cardiac Catheterization Services.
    (iv) Critical Care Services--Intensive Care Units (ICU).
    (v) Outpatient Dialysis (including hospital-based outpatient 
dialysis).
    (vi) Surgical Services (Outpatient or ASC).
    (vii) Skilled Nursing Facilities.
    (viii) Diagnostic Radiology.
    (ix) Mammography.
    (x) Physical Therapy.
    (xi) Occupational Therapy.
    (xii) Speech Therapy.
    (xiii) Inpatient Psychiatric Facility Services.
    (xiv) Outpatient Infusion/Chemotherapy.
    (3) Removal of a provider or facility-specialty type. CMS may 
remove a specialty or facility type from the network adequacy 
evaluation for a particular year by not including the type in the 
annual publication of the HSD reference file.
    (c) County type designations. Counties are designated as a specific 
type using the following population size and density parameters:
    (1) Large metro. A large metro designation is assigned to any of 
the following combinations of population sizes and density parameters:
    (i) A population size greater than or equal to 1,000,000 persons 
with a population density greater than or equal to 1,000 persons per 
square mile.
    (ii) A population size greater than or equal to 500,000 and less 
than or equal to 999,999 persons with a population density greater than 
or equal to 1,500 persons per square mile.
    (iii) Any population size with a population density of greater than 
or equal to 5,000 persons per square mile.
    (2) Metro. A metro designation is assigned to any of the following 
combinations of population sizes and density parameters:
    (i) A population size greater than or equal to 1,000,000 persons 
with a population density greater than or equal to 10 persons per 
square mile and less than or equal to 999.9 persons per square mile.
    (ii) A population size greater than or equal to 500,000 persons and 
less than or equal to 999,999 persons with a population density greater 
than or equal to 10 persons per square mile and less than or equal to 
1,499.9 persons per square mile.
    (iii) A population size greater than or equal to 200,000 persons 
and less than or equal to 499,999 persons with a population density 
greater than or equal to 10 persons per square mile and less than or 
equal to 4,999.9 persons per square mile.
    (iv) A population size greater than or equal to 50,000 persons and 
less than or equal to 199,999 persons with a population density greater 
than or equal

[[Page 9216]]

to 100 persons per square mile and less than or equal to 4999.9 persons 
per square mile.
    (v) A population size greater than or equal to 10,000 persons and 
less than or equal to 49,999 persons with a population density greater 
than or equal to 1,000 persons per square mile and less than or equal 
to 4999.9 persons per square mile.
    (3) Micro. A micro designation is assigned to any of the following 
combinations of population sizes and density parameters:
    (i) A population size greater than or equal to 50,000 persons and 
less than or equal to 199,999 persons with a population density greater 
than or equal to 10 persons per square mile and less than or equal to 
99.9 persons per square mile.
    (ii) A population size greater than or equal to 10,000 persons and 
less than or equal to 49,999 persons with a population density greater 
than or equal to 50 persons per square mile and less than 999.9 persons 
per square mile.
    (4) Rural. A rural designation is assigned to any of the following 
combinations of population sizes and density parameters:
    (i) A population size greater than or equal to 10,000 persons and 
less than or equal to 49,999 persons with a population density of 
greater than or equal to 10 persons per square mile and less than or 
equal to 49.9 persons per square mile.
    (ii) A population size less than 10,000 persons with a population 
density greater than or equal 50 persons per square mile and less than 
or equal to 999.9 persons per square mile.
    (5) Counties with extreme access considerations (CEAC). For any 
population size with a population density of less than 10 persons per 
square mile.
    (d) Maximum time and distance standards--(1) General rule. CMS 
determines and annually publishes maximum time and distance standards 
for each combination of provider or facility specialty type and each 
county type in accordance with paragraphs (d)(2) and (3) of this 
section.
    (i) Time and distance metrics measure the relationship between the 
approximate locations of beneficiaries and the locations of the network 
providers and facilities.
    (ii) [Reserved]
    (2) By county designation. The following base maximum time (in 
minutes) and distance (in miles) standards apply for each county type 
designation, unless modified through customization as described in 
paragraph (d)(3) of this section.

                                                                                   Table 1 to Paragraph (d)(2)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Large Metro                  Metro                     Micro                     Rural                     CEAC
                                                               ---------------------------------------------------------------------------------------------------------------------------------
                    Provider/Facility Type                                       Max                       Max                       Max                       Max                       Max
                                                                  Max time     distance     Max time     distance     Max time     distance     Max time     distance     Max time     distance
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Care..................................................           10            5           15           10           30           20           40           30           70           60
Allergy and Immunology........................................           30           15           45           30           80           60           90           75          125          110
Cardiology....................................................           20           10           30           20           50           35           75           60           95           85
Chiropractor..................................................           30           15           45           30           80           60           90           75          125          110
Dermatology...................................................           20           10           45           30           60           45           75           60          110          100
Endocrinology.................................................           30           15           60           40          100           75          110           90          145          130
ENT/Otolaryngology............................................           30           15           45           30           80           60           90           75          125          110
Gastroenterology..............................................           20           10           45           30           60           45           75           60          110          100
General Surgery...............................................           20           10           30           20           50           35           75           60           95           85
Gynecology, OB/GYN............................................           30           15           45           30           80           60           90           75          125          110
Infectious Diseases...........................................           30           15           60           40          100           75          110           90          145          130
Nephrology....................................................           30           15           45           30           80           60           90           75          125          110
Neurology.....................................................           20           10           45           30           60           45           75           60          110          100
Neurosurgery..................................................           30           15           60           40          100           75          110           90          145          130
Oncology--Medical, Surgical...................................           20           10           45           30           60           45           75           60          110          100
Oncology--Radiation/Radiation Oncology........................           30           15           60           40          100           75          110           90          145          130
Ophthalmology.................................................           20           10           30           20           50           35           75           60           95           85
Orthopedic Surgery............................................           20           10           30           20           50           35           75           60           95           85
Physiatry, Rehabilitative Medicine............................           30           15           45           30           80           60           90           75          125          110
Plastic Surgery...............................................           30           15           60           40          100           75          110           90          145          130
Podiatry......................................................           20           10           45           30           60           45           75           60          110          100
Psychiatry....................................................           20           10           45           30           60           45           75           60          110          100
Pulmonology...................................................           20           10           45           30           60           45           75           60          110          100
Rheumatology..................................................           30           15           60           40          100           75          110           90          145          130
Urology.......................................................           20           10           45           30           60           45           75           60          110          100
Vascular Surgery..............................................           30           15           60           40          100           75          110           90          145          130
Cardiothoracic Surgery........................................           30           15           60           40          100           75          110           90          145          130
Acute Inpatient Hospitals.....................................           20           10           45           30           80           60           75           60          110          100
Cardiac Surgery Program.......................................           30           15           60           40          160          120          145          120          155          140
Cardiac Catheterization Services..............................           30           15           60           40          160          120          145          120          155          140
Critical Care Services--Intensive Care Units (ICU)............           20           10           45           30          160          120          145          120          155          140

[[Page 9217]]

 
Outpatient Dialysis...........................................           20           10           45           30           65           50           55           50          100           90
Surgical Services (Outpatient or ASC).........................           20           10           45           30           80           60           75           60          110          100
Skilled Nursing Facilities....................................           20           10           45           30           80           60           75           60           95           85
Diagnostic Radiology..........................................           20           10           45           30           80           60           75           60          110          100
Mammography...................................................           20           10           45           30           80           60           75           60          110          100
Physical Therapy..............................................           20           10           45           30           80           60           75           60          110          100
Occupational Therapy..........................................           20           10           45           30           80           60           75           60          110          100
Speech Therapy................................................           20           10           45           30           80           60           75           60          110          100
Inpatient Psychiatric Facility Services.......................           30           15           70           45          100           75           90           75          155          140
Outpatient Infusion/Chemotherapy..............................           20           10           45           30           80           60           75           60          110          100
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    (3) By customization. CMS may set maximum time and distance 
standards for provider or facility types for specific counties by 
customization in accordance with the following rules:
    (i) CMS maps provider location data from the Provider Supply file 
against its MA Medicare Sample Census (which provides MA enrollee 
population distribution data) or uses claims data to identify the 
distances beneficiaries travel according to the usual patterns of care 
for the county.
    (ii) CMS identifies the distance at which 90 percent of the 
population would have access to at least one provider or facility in 
the applicable specialty type.
    (iii) The resulting distance is then rounded up to the next 
multiple of 5, and a multiplier specific to the county designation is 
applied to determine the analogous maximum time.
    (iv) Customization may only be used to increase the base time and 
distance standards specified in paragraph (d)(2) of this section and 
may not be used to decrease the base time and distance standards.
    (4) Percentage of beneficiaries residing within maximum time and 
distance standards. MA plans must ensure both of the following:
    (i) At least 85 percent of the beneficiaries residing in micro, 
rural, or CEAC counties have access to at least one provider/facility 
of each specialty type within the published time and distance 
standards.
    (ii) At least 90 percent of the beneficiaries residing in large 
metro and metro counties have access to at least one provider/facility 
of each specialty type within the published time and distance 
standards.
    (5) MA telehealth providers. An MA plan receives a 10 percentage 
point credit towards the percentage of beneficiaries residing within 
published time and distance standards for the applicable provider 
specialty type and county when the plan includes one or more telehealth 
providers that provide additional telehealth benefits, as defined in 
Sec.  422.135, in its contracted networks for the following provider 
specialty types:
    (i) Dermatology.
    (ii) Psychiatry.
    (iii) Cardiology.
    (iv) Neurology.
    (v) Otolaryngology.
    (6) State Certificate of Need (CON) laws. In a state with CON laws, 
or other state imposed anti-competitive restrictions that limit the 
number of providers or facilities in the state or a county in the 
state, CMS may award the MA organization a 10-percentage point credit 
towards the percentage of beneficiaries residing within published time 
and distance standards for affected providers and facilities in 
paragraph (b) of this section or, where appropriate, specifically 
customize the base time and distance standards based on the effects of 
CON laws.
    (e) Minimum number standard. CMS annually determines the minimum 
number standard for each provider and facility-specialty type as 
follows:
    (1) General rule. The provider or facility must--
    (i) Be within the maximum time and distance of at least one 
beneficiary in order to count towards the minimum number standard 
(requirement); and
    (ii) Not be a telehealth-only provider.
    (2) Minimum number requirement for provider and facility-specialty 
types. The minimum number for provider and facility-specialty types are 
as follows:
    (i) For provider-specialty types described in paragraph (b)(1) of 
this section, CMS calculates the minimum number as specified in 
paragraph (e)(3) of this section.
    (ii) For facility-specialty types described in paragraph (b)(2)(i) 
of this section, CMS calculates the minimum number as specified in 
paragraph (e)(3) of this section.
    (iii) For facility-specialty types described in paragraphs 
(b)(2)(ii) through (xiv) of this section, the minimum requirement 
number is 1.
    (3) Determination of the minimum number of for certain provider and 
facility-specialty types. For specialty types in paragraphs (b)(1) and 
(b)(2)(i) of this section, CMS multiplies the minimum ratio by the 
number of beneficiaries required to cover, divides the resulting 
product by 1,000, and rounds it up to the next whole number.
    (i)(A) The minimum ratio for provider specialty types represents 
the minimum number of providers per 1,000 beneficiaries.
    (B) The minimum ratio for facility specialty type specified in 
paragraph (b)(2)(i) of this section (acute inpatient hospital) 
represents the minimum number of beds per 1,000 beneficiaries.
    (C) The minimum ratios are as follows:

[[Page 9218]]



                                        Table 2 to Paragraph (e)(3)(i)(C)
----------------------------------------------------------------------------------------------------------------
          Minimum ratio             Large metro        Metro           Micro           Rural           CEAC
----------------------------------------------------------------------------------------------------------------
Primary Care....................            1.67            1.67            1.42            1.42            1.42
Allergy and Immunology..........            0.05            0.05            0.04            0.04            0.04
Cardiology......................            0.27            0.27            0.23            0.23            0.23
Chiropractor....................            0.10            0.10            0.09            0.09            0.09
Dermatology.....................            0.16            0.16            0.14            0.14            0.14
Endocrinology...................            0.04            0.04            0.03            0.03            0.03
ENT/Otolaryngology..............            0.06            0.06            0.05            0.05            0.05
Gastroenterology................            0.12            0.12            0.10            0.10            0.10
General Surgery.................            0.28            0.28            0.24            0.24            0.24
Gynecology, OB/GYN..............            0.04            0.04            0.03            0.03            0.03
Infectious Diseases.............            0.03            0.03            0.03            0.03            0.03
Nephrology......................            0.09            0.09            0.08            0.08            0.08
Neurology.......................            0.12            0.12            0.10            0.10            0.10
Neurosurgery....................            0.01            0.01            0.01            0.01            0.01
Oncology--Medical, Surgical.....            0.19            0.19            0.16            0.16            0.16
Oncology--Radiation/Radiation               0.06            0.06            0.05            0.05            0.05
 Oncology.......................
Ophthalmology...................            0.24            0.24            0.20            0.20            0.20
Orthopedic Surgery..............            0.20            0.20            0.17            0.17            0.17
Physiatry, Rehabilitative                   0.04            0.04            0.03            0.03            0.03
 Medicine.......................
Plastic Surgery.................            0.01            0.01            0.01            0.01            0.01
Podiatry........................            0.19            0.19            0.16            0.16            0.16
Psychiatry......................            0.14            0.14            0.12            0.12            0.12
Pulmonology.....................            0.13            0.13            0.11            0.11            0.11
Rheumatology....................            0.07            0.07            0.06            0.06            0.06
Urology.........................            0.12            0.12            0.10            0.10            0.10
Vascular Surgery................            0.02            0.02            0.02            0.02            0.02
Cardiothoracic Surgery..........            0.01            0.01            0.01            0.01            0.01
Acute Inpatient Hospitals.......            12.2            12.2            12.2            12.2            12.2
----------------------------------------------------------------------------------------------------------------

    (ii)(A) Number of beneficiaries required to cover. (1) The number 
of beneficiaries required to cover is calculated by multiplying the 
95th percentile base population ratio by the total number of Medicare 
beneficiaries residing in a county.
    (2) CMS uses its MA State/County Penetration data to calculate the 
total beneficiaries residing in a county.
    (B) 95th percentile base population ratio. (1) The 95th percentile 
base population ratio is:
    (i) Calculated annually for each county type and varies over time 
as MA market penetration and plan enrollment change across markets; and
    (ii) Represents the proportion of Medicare beneficiaries enrolled 
in the 95th percentile MA plan (that is, 95 percent of plans have 
enrollment lower than this level).
    (2) CMS calculates the 95th percentile base population ratio as 
follows:
    (i) Uses its most recent List of PFFS Network Counties to exclude 
any PFFS plans in non-networked counties from the calculation at the 
county-type level.
    (ii) Uses its most recent MA State/County Penetration data to 
determine the number of eligible Medicare beneficiaries in each county.
    (iii) Uses its Monthly MA Enrollment By State/County/Contract data 
to determine enrollment at the contract ID and county level, including 
only enrollment in RPPO, LPPO, HMO, HMO/POS, healthcare prepayment 
plans under section 1833 of the Act, and network PFFS plan types.
    (iv) Calculates penetration at the contract ID and county level by 
dividing the number of enrollees for a given contract ID and county by 
the number of eligible beneficiaries in that county.
    (v) Groups counties by county designation to determine the 95th 
percentile of penetration among MA plans for each county type.
    (f) Exception requests. (1) An MA plan may request an exception to 
network adequacy criteria in paragraphs (b) through (e) of this section 
when both of the following occur:
    (i) Certain providers or facilities are not available for the MA 
plan to meet the network adequacy criteria as shown in the Provider 
Supply file for the year for a given county and specialty type.
    (ii) The MA plan has contracted with other providers and facilities 
that may be located beyond the limits in the time and distance 
criteria, but are currently available and accessible to most enrollees, 
consistent with the local pattern of care.
    (2) In evaluating exception requests, CMS considers whether--
    (i) The current access to providers and facilities is different 
from the HSD reference and Provider Supply files for the year;
    (ii) There are other factors present, in accordance with Sec.  
422.112(a)(10)(v), that demonstrate that network access is consistent 
with or better than the original Medicare pattern of care; and
    (iii) Approval of the exception is in the best interests of 
beneficiaries.
0
20. Section 422.134 is revised to read as follows:


Sec.  422.134  Reward and incentive programs.

    (a) Definitions. As used in this section, the following definitions 
are applicable:
    Incentive item means the same things as reward item.
    Incentive(s), R&I, and rewards and incentives mean the same things 
as reward(s).
    Incentive(s) program, Reward(s) program, and R&I program means the 
same thing as rewards and incentives program.
    Qualifying individual in the context of a plan-covered health 
benefit means any plan enrollee who would qualify for coverage of the 
benefit and satisfies the plan criteria to participate in the target 
activity. In the context of a non-plan-covered health benefit it means 
any plan enrollee who satisfies the plan criteria to participate in the 
target activity.
    Reward and incentive program is a program offered by an MA plan to 
qualifying individuals to voluntarily perform specified target 
activities in exchange for reward items.
    Reward item (or incentive item) means the item furnished to a 
qualifying individual who performs a target

[[Page 9219]]

activity as specified by the plan in the reward program.
    Target activity means the activity for which the reward is provided 
to the qualifying individual by the MA plan.
    (b) Offering an R&I program. An MA plan may offer R&I program(s) 
consistent with the requirements of this section.
    (c) Target activities. (1) A target activity in an R&I program must 
meet all of the following:
    (i) Directly involve the qualifying individual and performance by 
the qualifying individual.
    (ii) Be specified, in detail, as to the level of completion needed 
in order to qualify for the reward item.
    (iii) Be health-related by doing at least one of the following:
    (A) Promoting improved health.
    (B) Preventing injuries and illness,
    (C) Promoting the efficient use of health care resources.
    (2) The target activity in an R&I program must not do any of the 
following:
    (i) Be related to Part D benefits.
    (ii) Discriminate against enrollees. To assure that anti-
discrimination requirements are met, an MA organization, in providing a 
rewards and incentives program, must comply with paragraph (f)(1) of 
this section and all the following:
    (A) Uniformly offer any qualifying individual the opportunity to 
participate in the target activity.
    (B) Provide accommodations to otherwise qualifying individuals who 
are unable to perform the target activity in a manner that satisfies 
the intended goal of the target activity.
    (C) Not design a program based on the achievement of a health 
status measurement.
    (d) Reward items. (1) The reward item for a target activity must 
meet all of the following:
    (i) Be offered uniformly to any qualifying individual who performs 
the target activity.
    (ii) Be a direct tangible benefit to the qualifying individual who 
performs the target activity.
    (iii) Be provided, such as through transfer of ownership or 
delivery, to the enrollee in the contract year in which the activity is 
completed, regardless if the enrollee is likely to use the reward item 
after the contract year.
    (2) The reward item for a target activity must not:
    (i) Be offered in the form of cash, cash equivalents, or other 
monetary rebates (including reduced cost sharing or premiums). An item 
is classified as a cash equivalent if it either:
    (A) Is convertible to cash (such as a check); or
    (B) Can be used like cash (such as a general purpose debit card).
    (ii) Have a value that exceeds the value of the target activity 
itself.
    (iii) Involve elements of chance.
    (3) Permissible reward items for a target activity may be reward 
items that:
    (i) Consist of ``points'' or ``tokens'' that can be used to acquire 
tangible items.
    (ii) Are offered in the form of a gift card that can be redeemed 
only at specific retailers or retail chains or for a specific category 
of items or services.
    (e) Marketing and communication requirements. An MA organization 
that offers an R&I program must comply with all marketing and 
communications requirements in subpart V of this part.
    (f) R&I disclosure. MA organization must make information available 
to CMS upon request about the form and manner of any rewards and 
incentives programs it offers and any evaluations of the effectiveness 
of such programs.
    (g) Miscellaneous. (1) The MA organization's reward and incentive 
program must comply with all relevant fraud and abuse laws, including, 
when applicable, the anti-kickback statute and civil monetary penalty 
prohibiting inducements to beneficiaries. Additionally all MA program 
anti-discrimination prohibitions continue to apply. The R&I program may 
not discriminate against enrollees based on race, national origin, 
including limited English proficiency, gender, disability, chronic 
disease, whether a person resides or receives services in an 
institutional setting, frailty, health status, or other prohibited 
basis.
    (2) Failure to comply with R&I program requirements may result in a 
violation of one or more of the basis for sanction at Sec.  422.752(a).
    (3) The reward and incentive program is classified as a non-benefit 
expense in the plan bid.
    (i) If offering a reward and incentive program, the MA organization 
must include all costs associated with the reward and incentive program 
as an administrative cost and non-benefit expense in the bid for the 
year in which the reward and incentive program operates.
    (ii) Disputes on rewards and incentives must be treated as a 
grievance under Sec.  422.564.
    (4) A reward and incentive program may not be changed mid-year.
0
21. Section 422.162 is amended--
0
a. In paragraph (a) by adding a definition for ``Tukey outer fence 
outliers'' in alphabetical order;
0
b. By revising paragraphs (b)(3)(iv)(A) and (B); and
0
c. By adding paragraph (b)(4).
    The additions and revisions read as follows:


Sec.  422.162  Medicare Advantage Quality Rating System.

    (a) * * *
    Tukey outer fence outliers are measure scores that are below a 
certain point (first quartile - 3.0 x (third quartile - first 
quartile)) or above a certain point (third quartile + 3.0 x (third 
quartile - first quartile)).
    (b) * * *
    (3) * * *
    (iv) * * *
    (A)(1) For the first year after consolidation, CMS uses enrollment-
weighted measure scores using the July enrollment of the measurement 
period of the consumed and surviving contracts for all measures, except 
survey-based measures 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.
    (2) For contract consolidations approved on or after January 1, 
2021, if a measure score for a consumed or surviving contract is 
missing due to a data integrity issue as described in Sec.  
422.164(g)(1)(i) and (ii), CMS assigns a score of zero for the missing 
measure score in the calculation of the enrollment-weighted measure 
score.
    (B)(1) For the second year after consolidation, CMS uses the 
enrollment-weighted measure scores using the July enrollment of the 
measurement year of the consumed and surviving contracts for all 
measures except for HEDIS, CAHPS, and HOS. HEDIS and HOS measure data 
are scored as reported. CMS ensures that the CAHPS survey sample 
includes enrollees in the sample frame from both the surviving and 
consumed contracts.
    (2) For contract consolidations approved on or after January 1, 
2021, for all measures except HEDIS, CAHPS, and HOS if a measure score 
for a consumed or surviving contract is missing due to a data integrity 
issue as described in Sec.  422.164(g)(1)(i) and (ii), CMS assigns a 
score of zero for the missing measure score in the calculation of the 
enrollment-weighted measure score.
* * * * *
    (4) Quality bonus payment ratings. (i) For contracts that receive a 
numeric Star Rating, the final quality bonus payment (QBP) rating for 
the contract is released in April of each year for the following 
contract year. The QBP rating is the contract's highest rating from the 
Star Ratings published by CMS in October of the calendar year that is 2 
years before

[[Page 9220]]

the contract year to which the QBP rating applies.
    (ii) The contract QBP rating is applied to each plan benefit 
package offered under the contract.
* * * * *
0
22. Section 422.164 is amended by revising paragraph (g)(1)(iii)(A) to 
read as follows:


Sec.  422.164  Adding, updating, and removing measures.

* * * * *
    (g) * * *
    (1) * * *
    (iii) * * *
    (A)(1) The data submitted for the Timeliness Monitoring Project 
(TMP) or audit that aligns with the Star Ratings year measurement 
period is used to determine the scaled reduction.
    (2) For contract consolidations approved on or after January 1, 
2021, if there is a contract consolidation as described at Sec.  
422.162(b)(3), the TMP or audit data are combined for the consumed and 
surviving contracts before the methodology provided in paragraphs 
(g)(1)(iii)(B) through (O) of this section is applied.
* * * * *
0
23. Section 422.166 is amended--
0
a. By revising paragraph (a)(2)(i);
0
b. By adding paragraph (d)(2)(vi);
0
c. In paragraphs (e)(1)(iii) and (iv) by removing the phrase ``weight 
of 2'' and adding in its place ``weight of 4''; and
0
d. By adding a sentence to the end of paragraph (i)(8).
    The revision and additions read as follows:


Sec.  422.166  Calculation of Star Ratings.

    (a) * * *
    (2) * * *
    (i) The method maximizes differences across the star categories and 
minimizes the differences within star categories using mean resampling 
with the hierarchal clustering of the current year's data, and a 
guardrail so that the measure-threshold-specific cut points for non-
CAHPS measures do not increase or decrease more than the value of the 
cap from 1 year to the next. Prior to applying mean resampling with 
hierarchal clustering, Tukey outer fence outliers are removed. The cap 
is equal to 5 percentage points for measures having a 0 to 100 scale 
(absolute percentage cap) or 5 percent of the restricted range for 
measures not having a 0 to 100 scale (restricted range cap). New 
measures that have been in the Part C and D Star Rating program for 3 
years or less use the hierarchal clustering methodology with mean 
resampling with no guardrail for the first 3 years in the program.
* * * * *
    (d) * * *
    (2) * * *
    (vi) The QBP ratings for contracts that do not have sufficient data 
to calculate and assign ratings and do not meet the definition of low 
enrollment or new MA plans at Sec.  422.252 are assigned as follows:
    (A) For a new contract under an existing parent organization that 
has other MA contract(s) with numeric Star Ratings in November when the 
preliminary QBP ratings are calculated for the contract year that 
begins 14 months later, the QBP rating assigned is the enrollment-
weighted average highest rating of the parent organization's other MA 
contract(s) that are active as of the April when the final QBP ratings 
are released under Sec.  422.162(b)(4). The Star Ratings used in this 
calculation are the rounded stars (to the whole or half star) that are 
publicly displayed on www.medicare.gov.
    (B) For a new contract under a parent organization that does not 
have other MA contract(s) with numeric Star Ratings in November when 
the preliminary QBP ratings are calculated for the contract year that 
begins 14 months later, the MA Star Ratings for the previous 3 years 
are used and the QBP rating is the enrollment-weighted average of the 
MA contract(s)'s highest ratings from the most recent year rated for 
that parent organization.
    (1) The Star Ratings had to be publicly reported on 
www.medicare.gov.
    (2) The Star Ratings used in this calculation are rounded to the 
whole or half star.
    (C) The November enrollment is used in the enrollment-weighted 
calculations for the year the Star Ratings are released.
    (D) The QBP ratings are updated for any changes in a contract's 
parent organization that are reflected in CMS records prior to the 
release of the final QBP ratings in April of each year.
    (E) Once the QBP ratings are finalized in April of each year for 
the following contract year, no additional parent organization changes 
are used for purposes of assigning QBP ratings.
* * * * *
    (i) * * *
    (8) * * * Missing data includes data where there is a data 
integrity issue as defined at Sec.  422.164(g)(1).
* * * * *
0
24. Section 422.220 is revised to read as follows:


Sec.  422.220  Exclusion of payment for basic benefits furnished under 
a private contract.

    (a) Unless otherwise authorized in paragraph (b) or (c) of this 
section, an MA organization may not pay, directly or indirectly, on any 
basis, for basic benefits furnished to a Medicare enrollee by a 
physician (as defined in paragraphs (1), (2), (3), and (4) of section 
1861(r) of the Act) or other practitioner (as defined in section 
1842(b)(18)(C) of the Act) who has filed with the Medicare contractor 
an affidavit promising to furnish Medicare-covered services to Medicare 
beneficiaries only through private contracts under section 1802(b) of 
the Act with the beneficiaries.
    (b) An MA organization must pay for emergency or urgently needed 
services furnished by a physician or practitioner described in 
paragraph (a) of this section who has not signed a private contract 
with the beneficiary.
    (c) An MA organization may make payment to a physician or 
practitioner described in paragraph (a) of this section for services 
that are not basic benefits but are provided to a beneficiary as a 
supplemental benefit consistent with Sec.  422.102.
0
25. Section 422.252 is amended by revising the definition of ``New MA 
plan'' to read as follows:


Sec.  422.252  Terminology.

* * * * *
    New MA plan means a plan that meets the following:
    (1) Offered under a new MA contract.
    (2) Offered under an MA contract that is held by a parent 
organization defined at Sec.  422.2 that has not had an MA contract in 
the prior 3 years. For purposes of this definition, the parent 
organization is identified as of April of the calendar year before the 
payment year to which the final QBP rating applies, and contracts 
associated with that parent organization are also evaluated using 
contracts in existence as of April of the 3 calendar years before the 
payment year to which the final QBP rating applies. Under our current 
policy, we identify the parent organization for each MA contract in 
April of each year and then whether any MA contracts have been held by 
that parent organization in the immediately preceding 3 years to 
determine if the parent organization meets the 3-year standard.
* * * * *


Sec.  422.258  [Amended]

0
26. Section 422.258 is amended in paragraphs (d)(3), (d)(5) 
introductory text, (d)(5)(i) introductory text, (d)(5)(ii), and 
(d)(6)(i) by removing the reference

[[Page 9221]]

``Sec.  422.306(c)'' and adding in its place the reference '' Sec.  
422.306(c) and (d)''.
0
27. Section 422.306 is amended--
0
a. In the introductory text by:
0
i. Removing ``Sec. Sec.  422.308(b) and 422.308(g)'' and adding in its 
place ``Sec.  422.308(b) and (g)''; and
0
ii. Removing the phrase ``year under paragraph (c) of this section'' 
and adding in its place the phrase ``year under paragraph (c) of this 
section and costs for kidney acquisitions in the area for the year 
under paragraph (d) of this section''; and
0
b. By adding paragraph (d).
    The addition reads as follows:


Sec.  422.306  Annual MA capitation rates.

* * * * *
    (d) Exclusion of costs for kidney acquisitions from MA capitation 
rates. Beginning with 2021, after the annual capitation rate for each 
MA local area is determined under paragraph (a) or (b) of this section, 
the amount is adjusted in accordance with section 1853(k)(5) of the Act 
to exclude the Secretary's estimate of the standardized costs for 
payments for organ acquisitions for kidney transplants covered under 
this title (including expenses covered under section 1881(d) of the 
Act) in the area for the year.


Sec.  422.312  [Amended]

0
28. Section 422.312 is amended--
0
a. In paragraph (b)(1) by removing the phrase ``45 days'' and adding in 
its place the phrase ``60 days''; and
0
b. In paragraph (b)(2) by removing the phrase ``15 days'' and adding in 
its place the phrase ``30 days''.
0
29. Section 422.322 is amended by adding paragraph (d) to read as 
follows:


Sec.  422.322  Source of payment and effect of MA plan election on 
payment.

* * * * *
    (d) FFS payment for expenses for kidney acquisitions. Paragraphs 
(b) and (c) of this section do not apply with respect to expenses for 
organ acquisitions for kidney transplants described in section 
1852(a)(1)(B)(i) of the Act.
0
30. Section 422.500 is amended in paragraph (b) by adding the 
definitions of ``Fraud hotline tip'', ``Inappropriate prescribing'', 
and ``Substantiated or suspicious activities of fraud, waste, or 
abuse'' in alphabetical order to read as follows:


Sec.  422.500  Scope and definitions.

* * * * *
    (b) * * *
    Fraud hotline tip is a complaint or other communications that are 
submitted through a fraud reporting phone number or a website intended 
for the same purpose, such as the Federal Government's HHS OIG Hotline 
or a health plan's fraud hotline.
    Inappropriate prescribing means that, after consideration of all 
the facts and circumstances of a particular situation identified 
through investigation or other information or actions taken by MA 
organizations and Part D plan sponsors, there is an established pattern 
of potential fraud, waste, and abuse related to prescribing of opioids, 
as reported by the plan sponsors. Plan sponsors may consider any number 
of factors including, but not limited to the following:
    (i) Documentation of a patient's medical condition.
    (ii) Identified instances of patient harm or death.
    (iii) Medical records, including claims (if available).
    (iv) Concurrent prescribing of opioids with an opioid potentiator 
in a manner that increases risk of serious patient harm.
    (v) Levels of morphine milligram equivalent (MME) dosages 
prescribed.
    (vi) Absent clinical indication or documentation in the care 
management plan or in a manner that may indicate diversion.
    (vii) State-level prescription drug monitoring program (PDMP) data.
    (viii) Geography, time, and distance between a prescriber and the 
patient.
    (ix) Refill frequency and factors associated with increased risk of 
opioid overdose.
* * * * *
    Substantiated or suspicious activities of fraud, waste, or abuse 
means and includes, but is not limited to, allegations that a provider 
of services (including a prescriber) or supplier--
    (i) Engaged in a pattern of improper billing;
    (ii) Submitted improper claims with suspected knowledge of their 
falsity;
    (iii) Submitted improper claims with reckless disregard or 
deliberate ignorance of their truth or falsity; or
    (iv) Is the subject of a fraud hotline tip verified by further 
evidence.
0
31. Section 422.502 is amended by adding paragraphs (b)(1)(i) and (ii) 
to read as follows:


Sec.  422.502  Evaluation and determination procedures.

* * * * *
    (b) * * *
    (1) * * *
    (i) An applicant may be considered to have failed to comply with a 
contract for purposes of an application denial under paragraph (b)(1) 
if during the applicable review period the applicant does any of the 
following:
    (A) Was subject to the imposition of an intermediate sanction or 
civil money penalty under subpart O of this part, with the exception of 
a sanction imposed under Sec.  422.752(d).
    (B) Failed to maintain a Part C summary rating score of at least 
three stars consistent with Sec.  422.504(b)(17).
    (C) Failed to maintain a fiscally sound operation consistent with 
the requirements of Sec.  422.504(b)(14).
    (ii) CMS may deny an application submitted by an organization that 
does not hold a Part C contract at the time of the submission when the 
applicant's parent organization or another subsidiary of the parent 
organization meets the criteria for denial stated in paragraph 
(b)(1)(i) of this section.
* * * * *
0
32. Section 422.503 is amended by adding paragraphs (b)(4)(vi)(G)(4) 
through (7) and (b)(5)(i) and (ii) to read as follows:


Sec.  422.503  General provisions.

* * * * *
    (b) * * *
    (4) * * *
    (vi) * * *
    (G) * * *
    (4) The MA organization must have procedures to identify, and must 
report to CMS or its designee either of the following, in the manner 
described in paragraphs (b)(4)(vi)(G)(4) through (6) of this section:
    (i) Any payment suspension implemented by a plan, pending 
investigation of credible allegations of fraud by a pharmacy, which 
must be implemented in the same manner as the Secretary does under 
section 1862(o)(1) of the Act.
    (ii) Any information related to the inappropriate prescribing of 
opioids and concerning investigations, credible evidence of suspicious 
activities of a provider of services (including a prescriber) or 
supplier, and other actions taken by the plan.
    (5) The MA organization must submit the data elements specified in 
paragraphs (b)(4)(G)(vi)(5)(i) through (lxviii) of this section in the 
program integrity portal when reporting payment suspensions pending 
investigations of credible allegations of fraud by pharmacies; 
information related to the inappropriate prescribing of opioids and 
concerning investigations and credible evidence of suspicious 
activities of a provider of services (including a prescriber) or 
supplier, and other actions taken by the MA organization; or if the 
plan reports a referral, through the portal, of substantiated or 
suspicious activities of a provider of services (including a 
prescriber) or a supplier

[[Page 9222]]

related to fraud, waste, or abuse to initiate or assist with 
investigations conducted by CMS, or its designee, a Medicare program 
integrity contractor, or law enforcement partners. The data elements, 
as applicable, are as follows:
    (i) Date of Referral.
    (ii) Part C or Part D Issue.
    (iii) Complainant Name.
    (iv) Complainant Phone.
    (v) Complainant Fax.
    (vi) Complainant Email.
    (vii) Complainant Organization Name.
    (viii) Complainant Address.
    (ix) Complainant City.
    (x) Complainant State.
    (xi) Complainant Zip.
    (xii) Plan Name/Contract Number.
    (xiii) Plan Tracking Number.
    (xiv) Parent Organization.
    (xv) Pharmacy Benefit Manager.
    (xvi) Beneficiary Name.
    (xvii) Beneficiary Phone.
    (xviii) Beneficiary Health Insurance Claim Number (HICN).
    (xix) Beneficiary Medicare Beneficiary Identifier (MBI).
    (xx) Beneficiary Address.
    (xxi) Beneficiary City.
    (xxii) Beneficiary State.
    (xxiii) Beneficiary Zip.
    (xxiv) Beneficiary Date of Birth (DOB).
    (xxv) Beneficiary Primary language.
    (xxvi) Beneficiary requires Special Accommodations. If Yes, 
Describe.
    (xxvii) Beneficiary Medicare Plan Name.
    (xxviii) Beneficiary Member ID Number.
    (xxix) Whether the Beneficiary is a Subject.
    (xxx) Did the complainant contact the beneficiary. If Yes, is there 
a Report of the Contact?
    (xxxi) Subject Name.
    (xxxii) Subject Tax Identification Number (TIN).
    (xxxiii) Does the Subject have Multiple TIN's. If Yes, provide.
    (xxxiv) Subject NPI.
    (xxxv) Subject DEA Number.
    (xxxvi) Subject Medicare Provider Number.
    (xxxvii) Subject Business.
    (xxxviii) Subject Phone Number.
    (xxxix) Subject Address.
    (xl) Subject City.
    (xli) Subject State.
    (xlii) Subject Zip.
    (xliii) Subject Business or Specialty Description.
    (xliv) Secondary Subject Name.
    (xlv) Secondary Subject Tax Identification Number (TIN)
    (xlvi) Does the Secondary Subject have Multiple TIN's. If Yes, 
provide.
    (xlvii) Secondary Subject NPI.
    (xlviii) Secondary Subject DEA Number.
    (xlix) Secondary Subject Medicare Provider Number.
    (l) Secondary Subject Business.
    (li) Secondary Subject Phone Number.
    (lii) Secondary Subject Address.
    (liii) Secondary Subject City.
    (liv) Secondary Subject State.
    (lv) Secondary Subject Zip.
    (lvi) Secondary Subject Business or Specialty Description.
    (lvii) Complaint Prior MEDIC Case Number.
    (lviii) Period of Review.
    (lix) Complaint Potential Medicare Exposure.
    (lx) Whether Medical Records are Available.
    (lxi) Whether Medical Records were Reviewed.
    (lxii) Whether the submission has been Referred to Law Enforcement. 
Submission Accepted? If so, provide Date Accepted.
    (lxiii) What Law Enforcement Agency(ies) has it been Referred to.
    (lxiv) Whether HPMS Analytics and Investigations Collaboration 
Environment for Fraud, Waste, and Abuse (AICE-FWA) was Used.
    (lxv) Whether the submission has indicated Patient Harm or 
Potential Patient Harm.
    (lxvi) Whether the submission has been Referred. If so, provide 
Date Accepted.
    (lxvii) What Agency was it Referred to.
    (lxviii) Description of Allegations/Plan Sponsor Findings.
    (6)(i) The MA organization is required to notify the Secretary, or 
its designee, of a payment suspension described in paragraph 
(b)(4)(vi)(G)(4)(i) of this section 14 days prior to implementation of 
the payment suspension.
    (ii) The MA organization is required to submit the information 
described in paragraph (b)(4)(vi)(G)(4)(ii) of this section no later 
than January 15, April 15, July 15, and October 15 of each year for the 
preceding periods, respectively, of October 1 through December 31, 
January 1 through March 31, April 1 through June 30, and July 1 through 
September 30. For the first reporting period (January 15, 2021), the 
reporting will reflect the data gathered and analyzed for the previous 
quarter in the calendar year (October 1-December 31).
    (7)(i) CMS will provide MA organizations with data report(s) or 
links to the information described in paragraphs (b)(4)(vi)(G)(4)(i) 
and (ii) of this section no later than April 15, July 15, October 15, 
and January 15 of each year based on the information in the portal, 
respectively, as of the preceding October 1 through December 31, 
January 1 through March 31, April 1 through June 30, and July 1 through 
September 30.
    (ii) Include administrative actions, pertinent information related 
to opioid overprescribing, and other data determined appropriate by the 
Secretary in consultation with stakeholders.
    (iii) Are anonymized information submitted by plans without 
identifying the source of such information.
    (iv) For the first quarterly report (April 15, 2021), that the 
report reflect the data gathered and analyzed for the previous quarter 
submitted by the plan sponsors on January 15, 2021.
    (5) * * *
    (i) Not accept, or share, a corporate parent organization owning a 
controlling interest in an entity that accepts new enrollees under a 
section 1876 reasonable cost contract in any area in which it seeks to 
offer an MA plan.
    (ii) Not accept, or be either the parent organization owning a 
controlling interest of, or subsidiary of, an entity that accepts new 
enrollees under a section 1876 reasonable cost contract in any area in 
which it seeks to offer an MA plan.
* * * * *
0
33. Section 422.504 is amended by revising paragraph (a)(15) to read as 
follows:


Sec.  422.504  Contract provisions.

* * * * *
    (a) * * *
    (15) Through the CMS complaint tracking system, to address and 
resolve complaints received by CMS against the MA organization.
* * * * *
0
34. Section 422.514 is amended by--
0
a. Revising the section heading and the heading for paragraph (a).
0
b. Adding paragraphs (d) and (e).
    The revisions and additions read as follows:


Sec.  422.514  Enrollment requirements.

    (a) Minimum enrollment rules. * * *
    (d) Rule on dual eligible enrollment. In any state where there is a 
dual eligible special needs plan or any other plan authorized by CMS to 
exclusively enroll individuals entitled to medical assistance under a 
state plan under title XIX, CMS does not enter into or renew a contract 
under this subpart for plan year 2022 or subsequent years for an MA 
plan that is not a specialized MA plan for special needs individuals as 
defined in Sec.  422.2 which does either of the following:
    (1) Projects enrollment in its bid submitted under Sec.  422.254 
that 80 percent or more enrollees of the plan's total enrollment are 
enrollees entitled to

[[Page 9223]]

medical assistance under a state plan under title XIX.
    (2) Has actual enrollment, as determined by CMS using the January 
enrollment of the current year, consisting of 80 percent or more of 
enrollees who are entitled to medical assistance under a state plan 
under title XIX, unless the MA plan has been active for less than 1 
year and has enrollment of 200 or fewer individuals at the time of such 
determination.
    (e) Transition process and procedures. (1) For coverage effective 
January 1 of the next year, and subject to the disclosure requirements 
described in paragraph (e)(2) of this section, an MA organization may 
transition enrollees in a plan specified in paragraph (d)(2) of this 
section into another MA plan or plans (including into a dual eligible 
special needs plan for enrollees who are eligible for such a plan) 
offered by the MA organization, or another MA organization that shares 
the same parent organization as the MA organization, for which the 
individual is eligible in accordance with Sec. Sec.  422.50 through 
422.53 if the MA plan or plans receiving such enrollment--
    (i) Would not meet the criteria in paragraph (d)(2) of this 
section, as determined in the procedures described in paragraph (e)(3) 
of this section, with the addition of the newly enrolled individuals 
(unless such plan is a Specialized MA plan for Special Needs 
Individuals as defined in Sec.  422.2);
    (ii) Is an MA-PD plan described at Sec.  422.2; and
    (iii) Has a combined Part C and Part D premium of $0.00 for 
individuals eligible for the premium subsidy for full subsidy eligible 
individuals described in Sec.  423.780(a) of this chapter.
    (2) An MA organization may transition individuals under paragraph 
(e)(1) of this section without requiring the individual to file the 
election form under Sec.  422.66(a) if--
    (i) The enrolled individual is eligible to enroll in the MA plan; 
and
    (ii) The MA organization describes changes to MA-PD benefits and 
information about the MA-PD plan into which the individual is enrolled 
in the Annual Notice of Change, which must be sent consistent with 
Sec. Sec.  422.111(a), (d), and (e) and 422.2267(e)(3).
    (3) For the purpose of approving a MA organization to transition 
enrollment under this paragraph (e), CMS determines whether a non-SNP 
MA plan would meet the criteria in paragraph (d)(2) of this section by 
adding the cohort of individuals identified by the MA organization for 
enrollment in a non-SNP MA plan to the April enrollment of such plan 
and calculating the resulting percentage of dual eligible enrollment.
    (4) In cases where an MA organization does not transition current 
enrollees under paragraph (e)(1) of this section, the MA organization 
must send, consistent with Sec.  422.506(a)(2), a written notice to 
enrollees who are not transitioned.
0
35. Section 422.530 is added to subpart K to read as follows:


Sec.  422.530  Plan crosswalks.

    (a) General rules--(1) Definition of crosswalk. A crosswalk is the 
movement of enrollees from one plan benefit package (PBP) to another 
PBP under a contract between the MA organization and CMS. To crosswalk 
enrollees from one PBP to another is to change the enrollment from the 
first PBP to the second.
    (2) Prohibitions. Except as described in paragraph (c) of this 
section, crosswalks are prohibited between different contracts or 
different plan types (for example, HMO to PPO).
    (3) Compliance with renewal/nonrenewal rules. The MA organization 
must comply with renewal and nonrenewal rules in Sec. Sec.  422.505 and 
422.506 in order to complete plan crosswalks.
    (4) Eligibility. Enrollees must be eligible for enrollment under 
Sec. Sec.  422.50 through 422.54 in order to be moved from PBP to 
another PBP.
    (5) Types of MA plans. For purposes of crosswalk policy in this 
section, CMS considers the following plans as different plan types:
    (i) Health maintenance organizations coordinated care plans.
    (ii) Provider-sponsored organizations coordinated care plans.
    (iii) Regional or local preferred provider organizations 
coordinated care plans.
    (iv) Special needs plans.
    (v) Private Fee-for-service plans.
    (vi) MSA plans.
    (b) Allowable crosswalk types--(1) All MA plans. All MA plans may 
perform a crosswalk in the following circumstances:
    (i) Renewal. A plan in the following contract year that links to a 
current contract year plan and retains the entire service area from the 
current contract year. The following contract year plan must retain the 
same plan ID as the current contract year plan.
    (ii) Consolidated renewal. A plan in the following contract year 
that combines 2 or more complete current contract year plans of the 
same plan type but not including when a current PBP is split among more 
than one PBP for the following contract year. The plan ID for the 
following contract year must be the same as one of the current contract 
year plan IDs.
    (iii) Renewal with a service area expansion (SAE). A plan in the 
following contract year plan that links to a current contract year plan 
and retains all of its plan service area from the current contract 
year, but also adds one or more new counties. The following year 
contract plan must retain the same plan ID as the current contract year 
plan.
    (iv) Renewal with a service area reduction (SAR). (A) A plan in the 
following contract year that links to a current contract year plan and 
only retains a portion of its plan service area. The following contract 
year plan must retain the same plan ID as the current contract year 
plan. The crosswalk is limited to the enrollees in the remaining 
service area.
    (B) While the MA organization may not affirmatively crosswalk 
enrollees in the locations that will no longer be part of the service 
area, the MA organization may offer the affected enrollees in the 
reduced portion of the service area a continuation in accordance with 
Sec.  422.74(b)(3)(ii), provided that there are no other MA plan 
options in the reduced service area.
    (C) If the MA organization offers another PBP in the locations that 
will no longer be part of the service area, current enrollees in the 
locations that will no longer be part of the service area must be 
disenrolled and the MA organization must send a non-renewal notice that 
includes notification of a special enrollment period under Sec.  422.62 
and, for applicable enrollees, Medigap guaranteed issue rights.
    (D) The MA organization may offer current enrollees in the 
locations that will no longer be part of the service area the option of 
enrolling in the other plan(s) the MA organization offers in the 
location that is no longer part of the service area, however, no 
specific plan information for the following contract year may be shared 
with any beneficiaries prior to the plan marketing period for the next 
contract year.
    (2) Special needs plans (SNPs). In addition to those described in 
paragraph (b)(1) of this section, SNPs may also perform the following 
types of crosswalks:
    (i) Chronic SNPs (C-SNPs). (A) Renewing C-SNP with one chronic 
condition that transitions eligible enrollees into another C-SNP with a 
grouping that contains that same chronic condition.
    (B) Non-renewing C-SNP with one chronic condition that transitions 
eligible enrollees into another C-SNP

[[Page 9224]]

with a grouping that contains that same chronic condition.
    (C) Renewing C-SNP with a grouping that is transitioning eligible 
enrollees into another C-SNP with one of the chronic conditions from 
that grouping.
    (D) Non-renewing C-SNP in a grouping that is transitioning eligible 
enrollees into a different grouping C-SNP if the new grouping contains 
at least one condition that the prior plan contained.
    (ii) Institutional SNP. (A) Renewing Institutional SNP that 
transitions enrollees to an Institutional/Institutional Equivalent SNP.
    (B) Renewing Institutional Equivalent SNP that transitions 
enrollees to an Institutional/Institutional Equivalent SNP.
    (C) Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional SNP.
    (D) Renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to an Institutional Equivalent SNP.
    (E) Non-renewing Institutional/Institutional Equivalent SNP that 
transitions eligible enrollees to another Institutional/Institutional 
Equivalent SNP.
    (c) Exceptions. In order to perform a crosswalk that is not 
specified in paragraph (b) of this section, an MA organization must 
request an exception. Crosswalk exceptions are prohibited between 
different plan types. CMS reviews exception requests and permits a 
crosswalk exception in the following circumstances:
    (1) When a non-network or partial network Private Fee-For-Service 
(PFFS) changes to either a partial network or to a full network PFFS 
plan, enrollees may be moved to the new plan when CMS determines it is 
in the interest of beneficiaries.
    (2) When MA plans offered by two different MA organizations that 
share the same parent organization are consolidated such that the MA 
plans under separate contracts are consolidated under one surviving 
contract, the enrollees from the consolidating plans may be crosswalked 
to an MA plan under the surviving plan.
    (3) When a renewing D-SNP in a multi-state service area reduces its 
service area to accommodate state contracting efforts in the service 
area, enrollees who are no longer in the service area may be moved into 
one or more new or renewing D-SNPs in their service area as CMS 
determines is necessary to accommodate changes to D-SNP state 
contracts.
    (4) When a renewing D-SNP has another new or renewing D-SNP, and 
the two D-SNPs are offered to different populations, enrollees who are 
no longer eligible for their current D-SNP may be moved into the other 
new or renewing D-SNP if they meet the eligibility criteria for the new 
or renewing D-SNP and CMS determines it is in the best interests of the 
enrollees to move to the new or renewing D-SNP.
    (5) Renewing C-SNP with a grouping that is transitioning eligible 
enrollees into another C-SNP with one of the chronic conditions from 
that grouping.
    (d) Procedures. (1) An MA organization must submit all crosswalks 
in paragraph (b) of this section in writing through the bid submission 
process in HPMS by the bid submission deadline announced by CMS.
    (2) An organization must submit all crosswalk exception requests in 
paragraph (c)(1) of this section in writing through the crosswalk 
exceptions process in HPMS by the crosswalk exception request deadline 
announced by CMS annually. CMS verifies the requests and notifies 
requesting organizations of the approval or denial after the crosswalk 
exception request deadline.
0
36. Section 422.550 is amended by adding paragraph (f) to read as 
follows:


Sec.  422.550  General provisions.

* * * * *
    (f) Sale of beneficiaries not permitted. (1) CMS only recognizes 
the sale or transfer of an organization's entire MA line of business, 
consisting of all MA contracts held by the MA organization with the 
exception of the sale or transfer of a full contract between wholly 
owned subsidiaries of the same parent organization, which is permitted.
    (2) CMS does not recognize or allow a sale or transfer that 
consists solely of the sale or transfer of individual beneficiaries, 
groups of beneficiaries enrolled in a plan benefit package, or one 
contract if the organization holds more than one MA contract.
0
37. Section 422.562 is amended by adding paragraph (d)(3) to read as 
follows:


Sec.  422.562  General provisions.

* * * * *
    (d) * * *
    (3) For the sole purpose of applying the regulations at Sec.  
405.1038(c) of this chapter, an MA organization is included in the 
definition of ``contractors'' as it relates to stipulated decisions.
0
38. Section 422.568 is amended by adding paragraphs (g) through (k) to 
read as follows:


Sec.  422.568  Standard timeframes and notice requirements for 
organization determinations.

* * * * *
    (g) Dismissing a request. The MA organization may dismiss an 
organization determination request, either entirely or as to any stated 
issue, under any of the following circumstances:
    (1) The individual or entity making the request is not permitted to 
request an organization determination under Sec.  422.566(c).
    (2) The MA organization determines the party failed to make out a 
valid request for an organization determination that substantially 
complies with paragraph (a) of this section.
    (3) An enrollee or the enrollee's representative files a request 
for an organization determination, but the enrollee dies while the 
request is pending, and both of the following apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the organization determination.
    (4) A party filing the organization determination request submits a 
timely written request for withdrawal of their request for an 
organization determination with the MA organization.
    (h) Notice of dismissal. The MA organization must mail or otherwise 
transmit a written notice of the dismissal of the organization 
determination request to the parties. The notice must state the all of 
the following:
    (1) The reason for the dismissal.
    (2) The right to request that the MA organization vacate the 
dismissal action.
    (3) The right to request reconsideration of the dismissal.
    (i) Vacating a dismissal. If good cause is established, the MA 
organization may vacate its dismissal of a request for an organization 
determination within 6 months from the date of the notice of dismissal.
    (j) Effect of dismissal. The dismissal of a request for an 
organization determination is binding unless it is modified or reversed 
by the MA organization upon reconsideration or vacated under paragraph 
(i) of this section.
    (k) Withdrawing a request. A party that requests an organization 
determination may withdraw its request at any time before the decision 
is issued by filing a written request with the MA organization.

[[Page 9225]]

0
39. Section 422.570 is amended by adding paragraph (g) to read as 
follows:


Sec.  422.570  Expediting certain organization determinations.

* * * * *
    (g) Dismissing a request. The MA organization may dismiss an 
expedited organization request in accordance with Sec.  422.568.
0
40. Section 422.582 is amended by adding paragraphs (f) through (i) to 
read as follows:


Sec.  422.582  Request for a standard reconsideration.

* * * * *
    (f) Dismissing a request. The MA organization may dismiss a 
reconsideration request, either entirely or as to any stated issue, 
under any of the following circumstances:
    (1) The person or entity requesting a reconsideration is not a 
proper party under Sec.  422.578.
    (2) The MA organization determines the party failed to make a valid 
request for a reconsideration that substantially complies with 
paragraph (a) of this section.
    (3) The party fails to file the reconsideration request within the 
proper filing time frame in accordance with paragraph (b) of this 
section.
    (4) The enrollee or the enrollee's representative files a request 
for a reconsideration, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the reconsideration.
    (5) A party filing the reconsideration request submits a timely 
written request for withdrawal of the request for a reconsideration 
with the MA organization.
    (g) Notice of dismissal. The MA organization must mail or otherwise 
transmit a written notice of the dismissal of the reconsideration 
request to the parties. The notice must state the all of the following:
    (1) The reason for the dismissal.
    (2) The right to request that the MA organization vacate the 
dismissal action.
    (3) The right to request review of the dismissal by the independent 
entity.
    (h) Vacating a dismissal. If good cause is established, the MA 
organization may vacate its dismissal of a request for reconsideration 
within 6 months from the date of the notice of dismissal.
    (i) Effect of dismissal. The MA organization's dismissal is binding 
unless the enrollee or other party requests review by the independent 
entity in accordance with Sec.  422.590(h) or the decision is vacated 
under paragraph (h) of this section.
0
41. Section 422.584 is amended by adding paragraph (g) to read as 
follows:


Sec.  422.584  Expediting certain reconsiderations.

* * * * *
    (g) Dismissing a request. The MA organization may dismiss an 
expedited reconsideration request, either entirely or as to any stated 
issue, under any of the following circumstances:
    (1) When the person or entity requesting an expedited 
reconsideration is not a proper party under paragraph (a) of this 
section.
    (2) When the MA organization determines the party failed to make a 
valid request for an expedited reconsideration that substantially 
complies with paragraph (b) of this section.
    (3) When the party fails to file the expedited reconsideration 
request within the proper filing time frame in accordance with Sec.  
422.572(a).
    (4) When the enrollee or the enrollee's representative files a 
request for an expedited reconsideration, but the enrollee dies while 
the request is pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the expedited reconsideration.
    (5) When a party filing the expedited reconsideration request 
submits a timely written request for withdrawal of their request for an 
expedited reconsideration with the MA organization.
0
42. Section 422.590 is amended by adding paragraph (i) to read as 
follows:


Sec.  422.590  Timeframes and responsibility for reconsiderations.

* * * * *
    (i) Requests for review of a dismissal by the independent entity. 
If the MA organization dismisses a request for a reconsideration in 
accordance with Sec. Sec.  422.582(f) and 422.584(g), the enrollee or 
other party has the right to request review of the dismissal by the 
independent entity. A request for review of a dismissal must be filed 
in writing with the independent entity within 60 calendar days from the 
date of the MA organization's dismissal notice.
0
43. Section 422.592 is amended by revising paragraph (a) and adding 
paragraphs (d) through (i) to read as follows:


Sec.  422.592  Reconsideration by an independent entity.

    (a) When the MA organization affirms, in whole or in part, its 
adverse organization determination, the issues that remain in dispute 
must be reviewed and resolved by an independent, outside entity that 
contracts with CMS. In accordance with Sec.  422.590(h), the 
independent entity is responsible for reviewing MA organization 
dismissals of reconsideration requests.
* * * * *
    (d) The independent entity may dismiss a reconsideration request, 
either entirely or as to any stated issue, under any of the following 
circumstances:
    (1) The person or entity requesting a reconsideration is not a 
proper party under Sec.  422.578(c).
    (2) The independent entity determines the party failed to make out 
a valid request for a reconsideration that substantially complies with 
Sec.  422.582(a) or (b).
    (3) The enrollee or the enrollee's representative files a request 
for a reconsideration, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the reconsideration.
    (4) The party filing the reconsideration request submits with the 
independent review entity a timely written request for withdrawal of 
the request for reconsideration.
    (e) The independent entity mails or otherwise transmits a written 
notice of the dismissal of the reconsideration request to the parties. 
The notice must state the following:
    (1) The reason for the dismissal.
    (2) That there is a right to request that the independent entity 
vacate the dismissal action.
    (3) The right to a review of the dismissal under Sec. Sec.  422.600 
and 422.602.
    (f) If good cause is established, the independent entity may vacate 
its dismissal of a request for reconsideration within 6 months from the 
date of the notice of dismissal.
    (g) The independent entity's dismissal is binding and not subject 
to further review unless a party meets the requirements in Sec.  
422.600 and files a proper and timely request under Sec.  422.602 or 
the dismissal is vacated under paragraph (f) of this section.
    (h) The party or physician acting on behalf of an enrollee who 
files a request for reconsideration may withdraw the request by filing 
a written request for

[[Page 9226]]

withdrawal with the independent entity.
    (i) If the independent entity determines that the MA organization's 
dismissal was in error, the independent entity vacates the dismissal 
and remands the case to the plan for reconsideration. The independent 
entity's decision regarding an MA organization's dismissal, including a 
decision to deny a request for review of a dismissal, is binding and 
not subject to further review.
0
44. Section 422.600 is amended by revising paragraph (b) to read as 
follows:


Sec.  422.600  Right to a hearing.

* * * * *
    (b) The amount remaining in controversy, which can include any 
combination of Part A and Part B services, is computed in accordance 
with part 405 of this chapter. For purposes of calculating the amount 
remaining in controversy under this section, references to coinsurance 
in Sec.  405.1006(d) of this chapter should be read to include 
coinsurance and copayment amounts.
* * * * *
0
45. Section 422.629, as added on April 16, 2019 (84 FR 15835) effective 
January 1, 2021, is amended by revising paragraph (k)(4)(ii) to read as 
follows:


Sec.  422.629  General requirements for applicable integrated plans.

* * * * *
    (k) * * *
    (4) * * *
    (ii) If deciding an appeal of a denial that is based on lack of 
medical necessity (or any substantively equivalent term used to 
describe the concept of medical necessity), are a physician or other 
appropriate health care professional who have the appropriate clinical 
expertise in treating the enrollee's condition or disease, and 
knowledge of Medicare and Medicaid coverage criteria, before the 
applicable integrated plan issues the integrated organization 
determination decision.
* * * * *
0
46. Section 422.631, as added on April 16, 2019 (84 FR 15835) effective 
January 1, 2021, is amended by adding paragraphs (e) through (i) to 
read as follows:


Sec.  422.631  Integrated organization determinations.

* * * * *
    (e) Dismissing a request. The applicable integrated plan may 
dismiss a standard or expedited integrated organization determination 
request, either entirely or as to any stated issue, under any of the 
following circumstances:
    (1) The individual or entity making the request is not permitted to 
request an integrated organization determination under Sec.  
422.629(l).
    (2) The applicable integrated plan determines the party failed to 
make out a valid request for an integrated organization determination 
that substantially complies with paragraph (b) of this section.
    (3) An enrollee or the enrollee's representative files a request 
for an integrated organization determination, but the enrollee dies 
while the request is pending, and both of the following apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the integrated organization determination.
    (4) A party filing the integrated organization determination 
request submits a timely written request for withdrawal of their 
request for an integrated organization determination with the 
applicable integrated plan.
    (f) Notice of dismissal. The applicable integrated plan must mail 
or otherwise transmit a written notice of the dismissal of the 
integrated organization determination request to the parties. The 
notice states that there is a right to request that the applicable 
integrated plan vacate the dismissal action.
    (g) Vacating a dismissal. If good cause is established, the 
applicable integrated plan may vacate its dismissal of a request for an 
integrated organization determination within 6 months from the date of 
the notice of dismissal.
    (h) Effect of dismissal. The dismissal of a request for an 
integrated organization determination is binding unless it is modified 
or reversed by the applicable integrated plan or vacated under 
paragraph (g) of this section.
    (i) Withdrawing a request. A party that requests an integrated 
organization determination may withdraw its request at any time before 
the decision is issued by filing a written request with the applicable 
integrated plan.


Sec.  422.632  [Amended]

0
47. Section 422.632, as added on April 16, 2019 (84 FR 15835) effective 
January 1, 2021, is amended in paragraph (b)(1) by removing the 
reference ``Sec.  422.633(e)'' and adding in its place the reference 
``Sec.  422.633(d)''.
0
48. Section 422.633, as added on April 16, 2019 (84 FR 15835) effective 
January 1, 2021, is amended by adding paragraphs (g) through (k) to 
read as follows:


Sec.  422.633  Integrated reconsideration.

* * * * *
    (g) Withdrawing a request. The party or physician acting on behalf 
of an enrollee who files a request for integrated reconsideration may 
withdraw it by filing a written request for withdrawal with the 
applicable integrated plan.
    (h) Dismissing a request. The applicable integrated plan may 
dismiss an expedited or standard integrated reconsideration request, 
either entirely or as to any stated issue, under any of the following 
circumstances:
    (1) The person or entity requesting an integrated reconsideration 
is not a proper party to request an integrated reconsideration under 
Sec.  422.629(l).
    (2) The applicable integrated plan determines the party failed to 
make a valid request for an integrated reconsideration that 
substantially complies with Sec.  422.629(l) of this section.
    (3) The party fails to file the integrated reconsideration request 
within the proper filing timeframe in accordance with paragraph (d) of 
this section.
    (4) The enrollee or the enrollee's representative files a request 
for an integrated reconsideration, but the enrollee dies while the 
request is pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) No other individual or entity with a financial interest in the 
case wishes to pursue the integrated reconsideration.
    (5) A party filing the reconsideration request submits a timely 
written request for withdrawal of their request for an integrated 
reconsideration with the applicable integrated plan.
    (i) Notice of dismissal. The applicable integrated plan must mail 
or otherwise transmit a written notice of the dismissal of the 
integrated reconsideration request to the parties. The notice must 
state all of the following:
    (1) The reason for the dismissal.
    (2) The right to request that the applicable integrated plan vacate 
the dismissal action.
    (3) The right to request review of the dismissal by the independent 
entity.
    (j) Vacating a dismissal. If good cause is established, the 
applicable integrated plan may vacate its dismissal of a request for 
integrated reconsideration within 6 months from the date of the notice 
of dismissal.

[[Page 9227]]

    (k) Effect of dismissal. The applicable integrated plan's dismissal 
is binding unless the enrollee or other party requests review by the 
independent entity in accordance with Sec.  422.590(h).
0
49. Section 422.760 is amended by redesignating paragraphs (b)(3) and 
(4) as paragraphs (b)(4) and (5), respectively, and adding a new 
paragraph (b)(3) to read as follows:


Sec.  422.760  Determinations regarding the amount of civil money 
penalties and assessment imposed by CMS.

* * * * *
    (b) * * *
    (3) CMS calculates the minimum penalty amounts under paragraphs 
(b)(1) and (2) of this section using the following criteria:
    (i) Definitions for calculating penalty amounts--(A) Per 
determination. The penalty amounts calculated under paragraph (b)(1) of 
this section.
    (B) Per enrollee. The penalty amounts calculated under paragraph 
(b)(2) of this section.
    (C) Standard minimum penalty. The per enrollee or per determination 
penalty amount that is dependent on the type of adverse impact that 
occurred.
    (D) Aggravating factor(s). Specific penalty amounts that may 
increase the per enrollee or per determination standard minimum penalty 
and are determined based on criteria under paragraph (a) of this 
section.
    (E) Cost-of-living multiplier. The percent change between each 
year's published October consumer price index for all urban consumers 
(United States city average), which is released by The Office of 
Management and Budget (OMB) annually.
    (ii) Calculation of minimum penalty amounts. (A) Per determination 
and per enrollee minimum penalty amounts increases by multiplying the 
current standard minimum penalty and aggravating factor amounts by the 
cost-of-living multiplier.
    (B) The minimum penalty and aggravating factor amounts is updated 
no more often than every 3 years.
    (C) CMS does the following:
    (1) Tracks the calculation and accrual of the standard minimum 
penalty and aggravating factor amounts.
    (2) Announces the penalties and amounts described in paragraph (b) 
of this section on an annual basis.
* * * * *
0
50. Section 422.2260 is revised to read as follows:


Sec.  422.2260  Definitions.

    The definitions in this section apply for this subpart unless the 
context indicates otherwise.
    Advertisement (Ad) means a read, written, visual, oral, watched, or 
heard bid for call to attention. Advertisements can be considered 
communications or marketing based on the intent and content of the 
message.
    Alternate format means a format used to convey information to 
individuals with visual, speech, physical, hearing, and intellectual 
disabilities (for example, braille, large print, audio).
    Banner means a type of advertisement feature typically used in 
television ads that is intended to be brief, and flashes limited 
information across a screen for the sole purpose of enticing a 
prospective enrollee to contact the MA plan (for example, obtain more 
information) or to alert the viewer that information is forthcoming.
    Banner-like advertisement is an advertisement that uses a banner-
like feature, that is typically found in some media other than 
television (for example, outdoors and on the internet).
    Communications means activities and use of materials created or 
administered by the MA organization or any downstream entity to provide 
information to current and prospective enrollees. Marketing is a subset 
of communications.
    Marketing means communications materials and activities that meet 
both the following standards for intent and content:
    (1) Intended, as determined under paragraph (1)(ii) of this 
definition, to do any of the following:
    (i)(A) Draw a beneficiary's attention to a MA plan or plans.
    (B) Influence a beneficiary's decision-making process when making a 
MA plan selection.
    (C) Influence a beneficiary's decision to stay enrolled in a plan 
(that is, retention-based marketing).
    (ii) In evaluating the intent of an activity or material, CMS will 
consider objective information including, but not limited to, the 
audience of the activity or material, other information communicated by 
the activity or material, and timing and other context of the activity 
or material and is not limited to the MA organization's stated intent.
    (2) Include or address content regarding any of the following:
    (i) The plan's benefits, benefits structure, premiums, or cost 
sharing.
    (ii) Measuring or ranking standards (for example, star ratings or 
plan comparisons).
    (iii) Rewards and incentives as defined under Sec.  422.134(a).
    Outdoor advertising (ODA) means outdoor material intended to 
capture the attention of a passing audience (for example, billboards, 
signs attached to transportation vehicles). ODA may be communications 
or marketing material.
0
51. Section 422.2261 is added to read as follows:


Sec.  422.2261  Submission, review, and distribution of materials.

    (a) General requirements. MA organizations must submit all 
marketing materials, all election forms, and certain designated 
communications materials for CMS review.
    (1) The Health Plan Management System (HPMS) Marketing Module is 
the primary system of record for the collection, review, and storage of 
materials that must be submitted for review.
    (2) Materials must be submitted to the HPMS directly by the MA 
organization. Third party and downstream entities are not permitted to 
submit materials directly to CMS.
    (b) CMS review of marketing materials and election forms. MA 
organizations may not distribute or otherwise make available any 
marketing materials (as defined in Sec.  422.2260) or election forms 
unless one of the following occurs:
    (1) CMS has reviewed and approved the material.
    (2) The material has been deemed approved; that is, CMS has not 
rendered a disposition for the material within 45 days (or 10 days if 
using CMS model or standardized marketing materials as outlined in 
Sec.  422.2267(e)) of submission to CMS; or
    (3) The material has been accepted under File and Use, as follows:
    (i) The MA organization may distribute certain types of marketing 
materials, designated by CMS based on the material's content, audience, 
and intended use, as they apply to potential risk to the beneficiary, 5 
days following the submission.
    (ii) The MA organization must certify that the material meets all 
applicable CMS communications and marketing requirements in Sec. Sec.  
422.2260 through 422.2267.
    (c) CMS review of communications materials. CMS does not generally 
require submission and approval of communications materials prior to 
use, with the exception of certain designated communications materials 
that are critical to the beneficiary understanding or accessing their 
benefits (for example, the Evidence of Coverage (EOC)).
    (d) Standards for CMS review. CMS reviews materials to ensure the 
following:
    (1) Compliance with all applicable requirements under Sec. Sec.  
422.2260 through 422.2267.

[[Page 9228]]

    (2) Benefit and cost information is an accurate reflection of what 
is contained in the MA organization's bid.
0
52. Section 422.2262 is revised to read as follows:


Sec.  422.2262  General communications materials and activities 
requirements.

    MA organizations may not mislead, confuse, or provide inaccurate 
information to current or potential enrollees.
    (a) General rules. MA organizations must ensure their statements 
and the terminology used in communications activities and materials 
adhere to the following requirements:
    (1) MA organizations may not do any of the following:
    (i) Provide information that is inaccurate or misleading.
    (ii) Make unsubstantiated statements, including superlatives or 
pejoratives.
    (iii) Engage in activities that could mislead or confuse Medicare 
beneficiaries, or misrepresent the MA organization.
    (iv) 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, or vice versa.
    (v) Target potential enrollees based on income levels, unless it is 
a dual eligible special needs plan or comparable plan as determined by 
the Secretary.
    (vi) Target potential enrollees based on health status, unless it 
is a special needs plan or comparable plan as determined by the 
Secretary.
    (vii) State or imply plans are only available to seniors rather 
than to all Medicare beneficiaries.
    (viii) Employ MA plan names that suggest that a plan is not 
available to all Medicare beneficiaries, unless it is a special needs 
plan or comparable plan as determined by the Secretary. This 
prohibition does not apply to MA plan names in effect prior to July 31, 
2000.
    (ix) Display the names or logos or both of co-branded network 
providers on the organization's member identification card, unless the 
provider names or logos or both are related to the member selection of 
specific provider organizations (for example, physicians or hospitals).
    (x) Use a plan name that does not include the plan type. The plan 
type should be included at the end of the plan name, for example, 
``Super Medicare Advantage (HMO).''
    (xi) Claim they are recommended or endorsed by CMS, Medicare, or 
the HHS.
    (xii) Convey that a failure to pay premium will not result in 
disenrollment.
    (xiii) Use the term ``free'' to describe a $0 premium, any type of 
reduction in premium, reduction in deductibles or cost sharing, low-
income subsidy, or cost sharing for dual eligible individuals.
    (xiv) Imply that the plan operates as a supplement to Medicare.
    (xv) State or imply a plan is available only to or is designed for 
beneficiaries who are dually eligible for Medicare and Medicaid, unless 
it is a dual-eligible special needs plan or comparable plan as 
determined by the Secretary.
    (xvi) Market a non-dual eligible special needs plan as if it were a 
dual-eligible special needs plan.
    (xvii) Target marketing efforts primarily to dual eligible 
individuals, unless the plan is a dual eligible special needs plan or 
comparable plan as determined by the Secretary.
    (xviii) Claim a relationship with the state Medicaid agency, unless 
a contract to coordinate Medicaid services for that plan is in place.
    (2) MA organizations may do the following:
    (i) State that the MA organization is approved to participate in 
Medicare programs or is contracted to administer Medicare benefits or 
both.
    (ii) Use the term ``Medicare-approved'' to describe benefits or 
services in materials or both.
    (iii) Use the term ``free'' in conjunction with mandatory, 
supplemental, and preventative benefits provided at a zero cost share 
for all enrollees.
    (b) Product endorsements and testimonials. (1) Product endorsements 
and testimonials may take any of the following forms:
    (i) Television or video ads.
    (ii) Radio ads.
    (iii) Print ads.
    (iv) Social media ads. In cases of social media, the use of a 
previous post, whether or not associated with or originated by the MA 
organization, is considered a product endorsement or testimonial.
    (v) Other types of ads.
    (2) MA organizations may use individuals to endorse the MA 
organization's product provided the endorsement or testimonial adheres 
to the following requirements:
    (i) The speaker must identify the MA organization's product or 
company by name.
    (ii) Medicare beneficiaries endorsing or promoting the MA 
organization must have been an enrollee at the time the endorsement or 
testimonial was created.
    (iii) The endorsement or testimonial must clearly state that the 
individual was paid for the endorsement or testimonial, if applicable.
    (iv) If an individual is used (for example, an actor) to portray a 
real or fictitious situation, the endorsement or testimonial must state 
that it is an actor portrayal.
    (c) Requirements when including certain telephone numbers in 
materials. (1) MA organizations must adhere to the following 
requirements for including certain telephone numbers in materials:
    (i) When a MA organization includes its customer service number, 
the hours of operation must be included the first time (at a minimum) 
the number appears.
    (ii) When a MA organization includes its customer service number, 
it must provide a toll-free TTY number in conjunction with the customer 
service number in the same font size.
    (iii) On every material where 1-800-MEDICARE or Medicare TTY 
appears, the MA organization must include the hours and days of 
operation for 1-800-MEDICARE (that is, 24 hours a day/7 days a week).
    (2) The following advertisement types are exempt from these 
requirements:
    (i) Outdoor advertising.
    (ii) Banners or banner-like ads.
    (iii) Radio advertisements and sponsorships.
    (d) Standardized material identification (SMID). (1) MA 
organizations must use a standardized method of identification for 
oversight and tracking of materials beneficiaries receive.
    (2) The SMID consists of the following three parts:
    (i) The MA organization contract or Multi-Contract Entity (MCE) 
number (that is, ``H'' for MA or Section 1876 Cost Plans, ``R'' for 
Regional PPO plans (RPPOs), or ``Y'' for MCE identifier) followed by an 
underscore, except that the SMID for multi-plan marketing materials 
must begin with the word ``MULTI-PLAN'' instead of the MA 
organization's contract number (for example, H1234_abc123_C or MULTI-
PLAN_efg456_M).
    (ii) A series of alpha numeric characters (chosen at the MA 
organization's discretion) unique to the material followed by an 
underscore.
    (iii) An uppercase ``C'' for communications materials or an 
uppercase ``M'' for marketing materials (for example, H1234_abc123_C or 
H5678_efg456_M).
    (3) The SMID is required on all materials except the following:
    (i) Membership ID card.
    (ii) Envelopes, radio ads, outdoor advertisements, banners, banner-
like

[[Page 9229]]

ads, and social media comments and posts.
    (iii) OMB-approved forms/documents, except those materials included 
in Sec.  422.2267.
    (iv) Corporate notices or forms (that is, not MA/Part D specific) 
meeting the definition of communications (see Sec.  422.2260) such as 
privacy notices and authorization to disclose protected health 
information (PHI).
    (v) Agent-developed communications materials that are not 
marketing.
    (4) Non-English and alternate format materials, based on previously 
created materials, may have the same SMID as the material on which they 
are based.
0
53. Section 422.2263 is added to read as follows:


Sec.  422.2263  General marketing requirements.

    Marketing is a subset of communications and therefore must follow 
the requirements outlined in Sec.  422.2262 as well as this section. 
Marketing (as defined in Sec.  422.2260) must additionally meet the 
following requirements:
    (a) MA organizations may begin marketing prospective plan year 
offerings on October 1 of each year for the following contract year. MA 
organizations may market the current and prospective year 
simultaneously provided materials clearly indicate what year is being 
discussed.
    (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 value (as governed by guidance published by the HHS OIG), 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) Provide meals to potential enrollees regardless of value.
    (4) Market non-health care related products to prospective 
enrollees during any MA sales activity or presentation. This is 
considered cross-selling and is prohibited.
    (5) Compare their plan to other plans, unless the information is 
accurate, not misleading, and can be supported by the MA organization 
making the comparison.
    (6) Display the names or logos or both of provider co-branding 
partners on marketing materials, unless the materials clearly indicate 
via a disclaimer or in the body that ``Other providers are available in 
the network.''
    (7) Knowingly target or send unsolicited marketing materials to any 
MA enrollee during the Open Enrollment Period (OEP).
    (i) During the OEP, an MA organization may do any of the following:
    (A) Conduct marketing activities that focus on other enrollment 
opportunities, including but not limited to marketing to age-ins (who 
have not yet made an enrollment decision), marketing by 5-star plans 
regarding their continuous enrollment SEP, and marketing to dual-
eligible and LIS beneficiaries who, in general, may make changes once 
per calendar quarter during the first 9 months of the year;
    (B) Send marketing materials when a beneficiary makes a proactive 
request;
    (C) At the beneficiary's request, have one-on-one meetings with a 
sales agent; and
    (D) At the beneficiary's request, provide information on the OEP 
through the call center.
    (ii) During the OEP, an MA organization may not:
    (A) Send unsolicited materials advertising the ability/opportunity 
to make an additional enrollment change or referencing the OEP;
    (B) Specifically target beneficiaries who are in the OEP because 
they made a choice during Annual Enrollment Period (AEP) by purchase of 
mailing lists or other means of identification;
    (C) Engage in or promote agent/broker activities that intend to 
target the OEP as an opportunity to make further sales; or
    (D) Call or otherwise contact former enrollees who have selected a 
new plan during the AEP.
    (c) The following requirements apply to how MA organizations must 
display CMS issued Star Ratings:
    (1) References to individual Star Rating measure(s) must also 
include references to the overall Star Rating.
    (2) May not use an individual underlying category or measure to 
imply overall high Star Ratings.
    (3) Must be clear that the rating is out of 5 stars.
    (4) Must clearly identify the Star Rating contract year.
    (5) May only market the Star Ratings in the service area in which 
the Star Rating is applicable.
    (6) The following requirements apply to all 5 Star MA contracts:
    (i) May not market the 5 star special enrollment period, as defined 
in Sec.  422.62(b)(15), after November 30 of each year if the contract 
has not received an overall 5 star for the next contract year.
    (ii) May use CMS' 5 star icon or may create their own icon.
    (7) The following requirements apply to all Low Performing MA 
contracts:
    (i) The Low Performing Icon must be included on all materials about 
or referencing the specific contract's Star Ratings.
    (ii) Must state the Low Performing Icon means that the MA 
organization's contract received a summary rating of 2.5 stars or below 
in Part C or Part D or both for the last 3 years.
    (iii) May not attempt to refute or minimize Low Performing Status.
0
54. Section 422.2264 is revised to read as follows:


Sec.  422.2264  Beneficiary contact.

    For the purpose of this section, beneficiary contact applies to all 
outreach activities to a beneficiary or a beneficiary's caregivers by 
the MA organization or its agents and brokers.
    (a) Unsolicited contact. Subject to the rules for contact for plan 
business in paragraph (b) of this section, the following rules apply 
when materials or activities are given or supplied to a beneficiary or 
their caregiver without prior request:
    (1) MA organizations may make unsolicited direct contact by 
conventional mail and other print media (for example, advertisements 
and direct mail) or email (provided every email contains an opt-out 
option).
    (2) MA organizations may not do any of the following:
    (i) Use door to door solicitation, including leaving information of 
any kind, except that information may be left when an appointment is 
pre-scheduled but the beneficiary is not home.
    (ii) Approach enrollees in common areas such as parking lots, 
hallways, and lobbies.
    (iii) Unsolicited direct messages from social media platforms.
    (iv) Use telephone solicitation (that is, cold calling), text 
messages, or voicemail messages, including, but not limited to, the 
following:
    (A) Unsolicited calls based on referrals.
    (B) Calls to former enrollees who have disenrolled or those in the 
process of disenrolling, except to conduct disenrollment surveys for 
quality improvement purposes.
    (C) Calls to beneficiaries who attended a sales event, unless the 
beneficiary gave express permission to be contacted.
    (D) Unsolicited calls to prospective enrollees to confirm receipt 
of mailed information.
    (3) Calls are not considered unsolicited if the beneficiary 
provides consent or initiates contact with the plan. For example, 
returning phone calls or calling an individual who has

[[Page 9230]]

completed a business reply card requesting contact is not considered 
unsolicited.
    (4) MA organizations are responsible for ensuring sales staff, 
including agents and brokers, abide by Federal and state laws related 
to consumer protection, including, but not limited to, do not call 
requirements.
    (b) Contact for plan business. MA organizations may contact 
current, and to a more limited extent, former members, including those 
enrolled in other products offered by the parent organization, to 
discuss plan business, in accordance with the following requirements:
    (1) An MA organization may conduct the following activities as plan 
business:
    (i) Call current enrollees, including those in non-Medicare 
products, to discuss Medicare products. Examples of such calls include, 
but are not limited to the following:
    (A) Enrollees aging into Medicare from commercial products.
    (B) Existing enrollees, including Medicaid enrollees, to discuss 
other Medicare products or plan benefits.
    (C) Members in a Part D plan to discuss other Medicare products.
    (ii) Call beneficiaries who submit enrollment applications to 
conduct business related to enrollment.
    (iii) With prior CMS approval, call LIS enrollees that a plan is 
prospectively losing to due reassignment. CMS decisions to approve 
calls are for limited circumstances based on the following:
    (A) The proximity of cost of the losing plan as compared to the 
national benchmark; and
    (B) The selection of plans in the service area that are below the 
benchmark.
    (iv) Agents/brokers calling clients who are enrolled in other 
products they may sell, such as automotive or home insurance.
    (v) MA organizations may not make unsolicited calls about other 
lines of business as a means of generating leads for Medicare plans.
    (2) [Reserved]
    (c) Events with beneficiaries. MA organizations and their agent/
brokers may hold educational events, marketing or sales events, and 
personal marketing appointments to meet with Medicare beneficiaries, 
either face-to-face or virtually. The requirements for each type of 
event are as follows:
    (1) Educational events must be advertised as such and be designed 
to generally inform beneficiaries about Medicare, including Medicare 
Advantage, Prescription Drug programs, or any other Medicare program.
    (i) At educational events, MA organizations and agents/brokers may 
not market specific MA plans or benefits.
    (ii) MA organizations holding or participating in educational 
events may do any of the following:
    (A) Distribute communications materials.
    (B) Answer beneficiary-initiated questions pertaining to MA plans.
    (C) Set up future personal marketing appointments.
    (D) Distribute business cards.
    (E) Obtain beneficiary contact information, including Scope of 
Appointment forms.
    (iii) MA organizations holding or participating in educational 
events may not conduct sales or marketing presentations or distribute 
or accept plan applications.
    (2) Marketing or sales events are group events that fall within the 
definition of marketing at Sec.  422.2260.
    (i) If a marketing event directly follows an educational event, the 
MA organization or agent/broker must provide an opportunity for 
beneficiaries to determine if they want to continue onto the marketing 
event.
    (ii) MA organizations holding or participating in marketing events 
may do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Collect Scope of Appointment forms for future personal 
marketing appointments.
    (D) Conduct marketing presentations.
    (iii) MA organizations holding or participating in marketing events 
may not do any of the following:
    (A) Require sign-in sheets or require attendees to provide contact 
information as a prerequisite for attending an event.
    (B) Conduct activities, including health screenings, health 
surveys, or other activities that are used for or could be viewed as 
being used to target a subset of members (that is, ``cherry-picking'').
    (C) Use information collected for raffles or drawings for any 
purpose other than raffles or drawings.
    (3) Personal marketing appointments are those appointments that are 
tailored to an individual or small group (for example, a married 
couple). Personal marketing appointments are not defined by the 
location.
    (i) Prior to the personal marketing appointment beginning, the MA 
plan (or agent/broker, as applicable) must agree upon and record the 
Scope of Appointment with the beneficiary(ies).
    (ii) MA organizations holding a personal marketing appointment may 
do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Conduct marketing presentations.
    (D) Review the individual needs of the beneficiary including, but 
not limited to, health care needs and history, commonly used 
medications, and financial concerns.
    (iii) MA organizations holding a personal marketing appointment may 
not do any of the following:
    (A) 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.
    (B) 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.
    (C) Market non-health related products, such as annuities.
0
55. Section 422.2265 is added to read as follows:


Sec.  422.2265  Websites.

    As required under Sec.  422.111(h)(2), MA organizations must have a 
website.
    (a) General website requirements. (1) MA organization websites must 
meet the all of the following requirements:
    (i) Maintain current year contract content through December 31 of 
each year.
    (ii) Notify users when they will leave the MA organization's 
Medicare site.
    (iii) Include or provide access to (for example, through a 
hyperlink) applicable disclaimers with corresponding content. 
Overarching disclaimers, such as the Federal Contracting Statement, are 
not required on every page.
    (iv) Be updated to reflect the most current information within 30 
days of any information on the website changing.
    (v) Keep MA content separate and distinct from other lines of 
business, including Medicare Supplemental Plans.
    (2) MA organization websites may not do any of the following:
    (i) Require beneficiaries to enter any information other than zip 
code, county, or state for access to non-beneficiary-specific website 
content.
    (ii) Provide links to foreign drug sales, including advertising 
links.
    (iii) State that the MA organization is not responsible for the 
content of their social media pages or the website of any first tier, 
downstream, or related entity that provides information on behalf of 
the MA organization.

[[Page 9231]]

    (b) Required content. MA organization's websites must include the 
following content:
    (1) A toll-free customer service number, TTY number, and days and 
hours of operation.
    (2) A physical or Post Office Box address.
    (3) A PDF or copy of a printable provider directory.
    (4) A searchable provider directory.
    (5) When applicable, a searchable pharmacy directory combined with 
a provider directory.
    (6) Information on enrollees' and MA organizations' rights and 
responsibilities upon disenrollment. MA organizations may either post 
this information or provide specific information on where it is located 
in the Evidence of Coverage together with a link to that document.
    (7) A description of and information on how to file a grievance, 
organizational determination, and appeal.
    (8) Prominently display a link to the Medicare.gov electronic 
complaint form.
    (9) A Privacy Notice under the HIPAA Privacy Rule (45 CFR part 
160).
    (10) For PFFS plans, a link to the PFFS Terms and Conditions of 
Payment.
    (11) For MSA plans, the following statements:
    (i) ``You must file Form 1040, `US Individual Income Tax Return,' 
along with Form 8853, `Archer MSA and Long-Term Care Insurance 
Contracts' with the Internal Revenue Service (IRS) for any 
distributions made from your Medicare MSA account to ensure you aren't 
taxed on your MSA account withdrawals. You must file these tax forms 
for any year in which an MSA account withdrawal is made, even if you 
have no taxable income or other reason for filing a Form 1040. MSA 
account withdrawals for qualified medical expenses are tax free, while 
account withdrawals for non-medical expenses are subject to both income 
tax and a fifty (50) percent tax penalty.''
    (ii) ``Tax publications are available on the IRS website at https://www.irs.gov or from 1-800-TAX-FORM (1-800-829-3676).''
    (c) Required posted materials. MA organization's website must 
provide access to the following materials, in a printable format, 
within the timeframes noted in paragraphs (c)(1) and (2) of this 
section.
    (1) The following documents for each plan year must be posted on 
the website by October 15 prior to the beginning of the plan year:
    (i) Evidence of Coverage.
    (ii) Annual Notice of Change (for renewing plans).
    (iii) Summary of Benefits.
    (iv) Provider Directory.
    (v) Provider/Pharmacy Directory.
    (2) The following documents must be posted on the website 
throughout the year and be updated as required:
    (i) Prior Authorization Forms for physicians and enrollees.
    (ii) When applicable, Part D Model Coverage Determination and 
Redetermination Request Forms.
    (iii) Exception request forms for physicians (which must be posted 
by January 1 for new plans).
    (iv) CMS Star Ratings document, which must be posted within 21 days 
after its release on the Medicare Plan Finder.
0
56. Section 422.2266 is added to read as follows:


Sec.  422.2266  Activities with healthcare providers or in the 
healthcare setting.

    (a) Where marketing is prohibited. The requirements in paragraphs 
(c) through (e) of this section apply to activities in the health care 
setting. Marketing activities and materials are not permitted in areas 
where care is being administered, including but not limited to the 
following:
    (1) Exam rooms.
    (2) Hospital patient rooms.
    (3) Treatment areas where patients interact with a provider and 
clinical team (including dialysis treatment facilities).
    (4) Pharmacy counter areas.
    (b) Where marketing is permitted. Marketing activities and 
materials are permitted in common areas within the health care setting, 
including, are not limited to, the following:
    (1) Common entryways.
    (2) Vestibules.
    (3) Waiting rooms.
    (4) Hospital or nursing home cafeterias.
    (5) Community, recreational, or conference rooms.
    (c) Provider-initiated activities. Provider-initiated activities 
are activities conducted by a provider at the request of the patient, 
or as a matter of a course of treatment, and occur when meeting with 
the patient as part of the professional relationship between the 
provider and patient. Provider-initiated activities do not include 
activities conducted at the request of the MA organization or pursuant 
to the network participation agreement between the MA organization and 
the provider. Provider-initiated activities that meet the definition in 
this paragraph (c) fall outside of the definition of marketing in Sec.  
422.2260. Permissible provider-initiated activities include:
    (1) Distributing unaltered, printed materials created by CMS, such 
as reports from Medicare Plan Finder, the ``Medicare & You'' handbook, 
or ``Medicare Options Compare'' (from https://www.medicare.gov), 
including in areas where care is delivered.
    (2) Providing the names of MA organizations with which they 
contract or participate or both.
    (3) Answering questions or discussing the merits of a MA plan or 
plans, including cost sharing and benefit information, including in 
areas where care is delivered.
    (4) Referring patients to other sources of information, such as 
State Health Insurance Assistance Program (SHIP) representatives, plan 
marketing representatives, State Medicaid Office, local Social Security 
Offices, CMS' website at https://www.medicare.gov, or 1-800-MEDICARE.
    (5) Referring patients to MA plan marketing materials available in 
common areas;
    (6) Providing information and assistance in applying for the LIS.
    (7) Announcing new or continuing affiliations with MA 
organizations, once a contractual agreement is signed. Announcements 
may be made through any means of distribution.
    (d) Plan-initiated provider activities. Plan-initiated provider 
activities are those activities conducted by a provider at the request 
of an MA organization. During a plan-initiated provider activity, the 
provider is acting on behalf of the MA organization. For the purpose of 
plan-initiated activities, the MA organization is responsible for 
compliance with all applicable regulatory requirements.
    (1) During plan-initiated provider activities, MA organizations 
must ensure that the provider does not:
    (i) Accept or collect Scope of Appointment forms.
    (ii) Accept Medicare enrollment applications.
    (iii) Make phone calls or direct, urge, or attempt to persuade 
their patients to enroll in a specific plan based on financial or any 
other interests of the provider.
    (iv) Mail marketing materials on behalf of the MA organization.
    (v) Offer inducements to persuade patients to enroll in a 
particular MA plan or organization.
    (vi) Conduct health screenings as a marketing activity.
    (vii) Distribute marketing materials or enrollment forms in areas 
where care is being delivered.
    (viii) Offer anything of value to induce enrollees to select the 
provider.
    (ix) Accept compensation from the MA organization for any marketing 
or enrollment activities.

[[Page 9232]]

    (2) During plan-initiated provider activities, the provider may do 
any of the following:
    (i) Make available, distribute, and display communications 
materials, including in areas where care is being delivered.
    (ii) Provide or make available marketing materials and enrollment 
forms in common areas.
    (e) MA organization activities in the health care setting. MA 
organization activities in the health care setting are those 
activities, including marketing activities, that are conducted by MA 
organization staff or on behalf of the MA organization or any 
downstream entity, but not by a provider. All marketing must follow the 
requirements in paragraphs (a) and (b) of this section. However, during 
MA organization activities, the following is permitted:
    (1) Accepting and collect Scope of Appointment forms.
    (2) Accepting enrollment forms.
    (3) Making available, distributing, and displaying communications 
materials, including in areas where care is being delivered.
0
57. Section 422.2267 is added to read as follows:


Sec.  422.2267  Required materials and content.

    For information CMS deems to be vital to the beneficiary, including 
information related to enrollment, benefits, health, and rights, the 
agency may develop materials or content that are either standardized or 
provided in a model form. Such materials and content are collectively 
referred to as required.
    (a) Standards for required materials and content. All required 
materials and content, regardless of categorization as standardized in 
paragraph (b) of this section or model in paragraph (c) of this 
section, must meet the following:
    (1) Be in a 12pt font, Times New Roman or equivalent.
    (2) For markets with a significant non-English speaking population, 
be in the language of these individuals. Specifically, MA organizations 
must translate required 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.
    (3) Be provided to the beneficiary within CMS's specified 
timeframes.
    (b) Standardized materials. Standardized materials and content are 
required materials and content that must be used in the form and manner 
provided by CMS.
    (1) When CMS issues standardized material or content, an MA 
organization must use the document without alteration except for the 
following:
    (i) Populating variable fields.
    (ii) Correcting grammatical errors.
    (iii) Adding customer service phone numbers.
    (iv) Adding plan name, logo, or both.
    (v) Deleting content that does not pertain to the plan type (for 
example, removing Part D language for a MA-only plan).
    (vi) Adding the SMID.
    (vii) Adding the Privacy Notice under the HIPAA Privacy Rule.
    (2) The MA organization may develop accompanying language for 
standardized material or content, provided it does not conflict with 
the standardized material or content. For example, CMS may issue 
standardized content associated with an appeal notification. MA 
organizations may draft a letter that includes the standardized content 
in the body of the letter. The remaining language in the letter is at 
the plan's discretion, provided it does not conflict with the 
standardized content.
    (c) Model materials. Model materials and content are those required 
materials and content created by CMS as an example of how to convey 
beneficiary information. When drafting required materials or content 
based on CMS models, MA organizations:
    (1) Must accurately convey the vital information in the required 
material or content to the beneficiary, although the MA organization is 
not required to use CMS model materials or content verbatim; and
    (2) Must follow CMS's specified order of content, when specified.
    (d) Delivery of required materials. MA organizations must mail 
required materials in hard copy or provide them electronically, 
following the requirements in paragraphs (d)(1) and (2) of this 
section.
    (1) For hard copy mailed materials, each enrollee must receive his 
or her own copy, except in cases of non-beneficiary-specific 
material(s) where the MA organization has determined multiple enrollees 
are living in the same household and it has reason to believe the 
enrollees are related. In that case, the MA organization may mail one 
copy to the household. The MA organization must provide all enrollees 
an opt-out process so the enrollees can each receive his or her own 
copy, instead of a copy to the household. Materials specific to an 
individual beneficiary must always be mailed to that individual.
    (2) Materials may be delivered electronically following the 
requirements in paragraphs (d)(2)(i) and (ii) of this section.
    (i) Without prior authorization, MA organizations may mail new and 
current enrollees a notice informing enrollees how to electronically 
access the following required materials: The Evidence of Coverage, 
Provider and Pharmacy Directories, and Formulary. The following 
requirements apply:
    (A) The MA organization may mail one notice for all materials or 
multiple notices.
    (B) Notices for prospective year documents may not be mailed prior 
to September 1 of each year, but must be sent in time for an enrollee 
to access the specified documents by October 15 of each year.
    (C) The MA organization may send the notice throughout the year to 
new enrollees.
    (D) The notice must include the website address to access the 
documents, the date the documents will be available if not currently 
available, and a phone number to request that hard copy documents be 
mailed.
    (E) The notice must provide the enrollee with the option to request 
hardcopy materials. Requests may be materials specific, and must have 
the option of a one-time request or a permanent request that must stay 
in place until the enrollee chooses to receive electronic materials 
again.
    (F) Hard copies of requested materials must be sent within three 
business days.
    (ii) With prior authorization from the enrollee, MA organizations 
may provide any required material or content electronically. To do so, 
MA organizations must:
    (A) Obtain prior consent from the enrollee. The consent must 
specify both the media type and the specific materials being provided 
in that media type.
    (B) Provide instructions on how and when enrollees can access the 
materials.
    (C) Have a process through which an enrollee can request hard 
copies be mailed, providing the beneficiary with the option of a one-
time request or a permanent request (which must stay in place until the 
enrollee chooses to receive electronic materials again), and with the 
option of requesting hard copies for all or a subset of materials. Hard 
copies must be mailed within three business days.
    (D) Have a process for automatic mailing of hard copies when 
electronic versions or the chosen media type is undeliverable.
    (e) CMS required materials and content. The following are required 
materials that must be provided to current and or perspective 
enrollees, as applicable, in the form and manner outlined in this 
section:

[[Page 9233]]

    (1) Evidence of Coverage (EOC). The EOC is a standardized 
communications material through which certain required information 
(under Sec.  422.111(b)) must be provided annually.
    (i) Must be provided to current enrollees of plan by October 15 of 
each Year.
    (ii) Must be provided to new enrollees within ten (10) calendars 
days from receipt of CMS confirmation of enrollment or by last day of 
month prior to effective date, whichever is later.
    (2) Part C explanation of benefits (EOB). The EOB is a model 
communications material through which plans must provide the 
information required under Sec.  422.111(k). MA organizations may send 
this monthly or per claim with a quarterly summary.
    (3) Annual notice of change (ANOC). The ANOC is a standardized 
marketing material through which plans must provide the information 
required under Sec.  422.111(d)(2) annually.
    (i) Must send for enrollee receipt no later than September 30 of 
each year.
    (ii) Enrollees with an October 1, November 1, and December 1 
effective date must receive within ten (10) calendar days from receipt 
of CMS confirmation of enrollment or by last day of month prior to 
effective date, whichever is later.
    (4) Pre-Enrollment checklist (PECL). The PECL is a standardized 
communications material that plans must provide to prospective 
enrollees with the enrollment form and Summary of Benefits (SB), so 
that the enrollees understand important plan benefits and rules. It 
references information on the following:
    (i) The EOC.
    (ii) Provider directory.
    (iii) Pharmacy directory.
    (iv) Formulary.
    (v) Premiums/copayments/coinsurance.
    (vi) Emergency/urgent coverage.
    (vii) Plan-type rules.
    (5) Summary of Benefits (SB). MA organizations must disseminate a 
summary of highly utilized coverage that include benefits and cost 
sharing to prospective Medicare beneficiaries, known as the SB. The SB 
is a model marketing material. It must be in a clear and accurate form.
    (i) The SB must be provided with an enrollment form that meets the 
following:
    (A) In hard copy with a paper enrollment form.
    (B) For online enrollment, the SB must be made available 
electronically (for example, via a link) prior to the completion and 
submission of enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where they can access the SB.
    (ii) The SB must include the following information:
    (A) Medical benefits:
    (1) Monthly Plan Premium.
    (2) Deductible/Out-of-pocket limits.
    (3) Inpatient/Outpatient Hospital coverage.
    (4) Ambulatory Surgical Center (ASC).
    (5) Doctor Visits (Primary Care Providers and Specialists).
    (6) Preventive Care.
    (7) Emergency Care/Urgently Needed Services.
    (8) Diagnostic Services/Labs/Imaging.
    (9) Hearing Services/Dental Services/Vision Services.
    (10) Mental Health Services.
    (B) Prescription drug expense including (tiers/levels):
    (1) Deductible, the initial coverage phase, coverage gap, and 
catastrophic coverage.
    (2) A note that costs may differ based on pharmacy type or status 
(for example, preferred/non-preferred, mail order, long-term care (LTC) 
or home infusion, and 30- or 90-day supply), when applicable.
    (C) For Medicare Medical Savings Account Plans (MSAs), the SB must 
include the following:
    (1) The amount Medicare deposits into the beneficiaries MSA 
account.
    (2) Language that the beneficiary pays nothing once the deductible 
is met.
    (D) For dual eligible special needs plan (D-SNP)s, the SB must 
provide the Medicaid benefits to prospective enrollees. This may be 
done by either of the following:
    (1) Including the Medicaid benefits in the SB.
    (2) Providing a separate document with the Medicaid benefits that 
accompanies the SB.
    (E) For D-SNPs open to dually eligible enrollees with differing 
levels of cost, the SB must:
    (1) State how cost sharing and benefits differ depending on the 
level of Medicaid eligibility.
    (2) Describe the Medicaid benefits, if any, provided by the plan.
    (F) Fully integrated dual eligible SNPs (FIDE SNPs) and highly 
integrated D-SNPs, as defined in Sec.  422.2, that provide Medicaid 
benefits have the option to display integrated Medicare and Medicaid 
benefits in the SB.
    (G) MA organizations may include other health related benefits with 
the SB.
    (6) Enrollment/Election form. This is model communications material 
through which plans must provide the information required under Sec.  
422.60(c).
    (7) Enrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
422.60(e)(3).
    (8) Disenrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
422.74(b).
    (9) Mid-Year Change Notification. This is a model communications 
material through which plans must provide a notice to enrollees when 
there is a mid-year change in benefits or plan rules, under the 
following timelines:
    (i) Notices of changes in plan rules, unless otherwise addressed 
elsewhere in this part, must be provided 30 days in advance.
    (ii) For National Coverage Determination (NCD) changes announced or 
finalized less than 30 days before their effective date, a notification 
is required as soon as possible.
    (iii) Mid-year NCD or legislative changes must be provided no later 
than 30 days after the NCD is announced.
    (A) Plans may include the change in next plan mass mailing (for 
example, newsletter), provided it is within 30 days.
    (B) The notice must also appear on the MA organization's website.
    (10) Non-renewal Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
422.506.
    (i) The Non-renewal Notice must be provided at least 90 calendar 
days before the date on which the nonrenewal is effective. For 
contracts ending on December 31, the notice must be dated October 2 to 
ensure national consistency in the application of Medigap Guaranteed 
Issue (GI) rights to all enrollees, except for those enrollees in 
special needs plans (SNPs).
    (ii) The Non-renewal Notice must do all of the following:
    (A) Inform the enrollee that their plan will no longer be offered 
and told when their plan will end.
    (B) Identify the last day the enrollee has to make a Medicare 
health plan selection and include any applicable open enrollment 
periods or special election periods or both (for example, Medicare open 
enrollment, non-renewal special election period).
    (C) Explain what they must do to continue receiving Medicare 
coverage and what will happen if the enrollee chooses to do nothing.
    (D) Include all available health plan options must be included in 
the enrollee's notice along with an explanation of how to obtain each 
option.

[[Page 9234]]

    (E) Specify when coverage will start after a new Medicare plan is 
chosen.
    (F) List 1-800-MEDICARE contact information together with other 
organizations that may be able to assist with comparing plans (for 
example, SHIPs).
    (G) Explain Medigap to applicable enrollees and the special right 
to buy a Medigap policy and include a Medigap fact sheet with the non-
renewal notice that explains Medigap coverage, policy, options to 
compare Medigap policies, and options to buy a Medigap policy.
    (H) Include the MA organization's telephone number, TTY number, and 
hours and days of operation.
    (11) Provider Directory. This is a model communications material 
through which plans must provide the information under Sec.  
422.111(b)(3). The Provider Directory must:
    (i) Be provided to current enrollees of the plan by October 15 of 
each year.
    (ii) Be provided to new enrollees within 10 calendar days from 
receipt of CMS confirmation of enrollment or by last day of month prior 
to effective date, whichever is later.
    (iii) Be provided to current enrollees upon request, within three 3 
business days of the request.
    (iv) Be updated any time the MA organization becomes aware of 
changes.
    (A) Updates to the online provider directories must be completed 
within 30 days of receiving information requiring update.
    (B) Updates to hardcopy provider directories must be completed 
within 30 days; hard copy directories that include separate updates via 
addenda are considered up-to-date.
    (12) Provider Termination Notice. This is a model communications 
material through which plans must provide the information required 
under Sec.  422.111(e). The provider termination notice must do both of 
the following:
    (i) Be provided in hard copy.
    (ii) Be sent via U.S. mail (first class postage is recommended, but 
not required).
    (13) Star Ratings Document. This is a standardized marketing 
material through which Star Ratings information is conveyed to 
prospective enrollees.
    (i) The Star Ratings Document is generated through HPMS.
    (ii) The Star Ratings Document must be provided with an enrollment 
form, as follows:
    (A) In hard copy with a paper enrollment form.
    (B) For online enrollment, made available electronically (for 
example, via a link) prior to the completion and submission of 
enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where they can access the Star Ratings Document.
    (iii) New MA organization that have no Star Ratings are not 
required to provide the Star Ratings Document until the following 
contract year.
    (iv) Updated Star Ratings must be used within 21 calendar days of 
release of updated information on Medicare Plan Finder.
    (v) Updated Star Ratings must not be used until CMS releases Star 
Ratings on Medicare Plan Finder.
    (14) Organization Determination Notice. This is a model 
communications material through which plans must provide the 
information under Sec.  422.568.
    (15) Excluded Provider Notice. This is a model communications 
material through which plans must notify members when a provider they 
use has been excluded from participating in the Medicare program based 
on an OIG exclusion or the CMS preclusion list.
    (16) Notice of Denial of Medical Coverage or Payment (NDMCP) (also 
known as the Integrated Denial Notice (IDN)). This is a standardized 
material used to convey beneficiary appeal rights when a plan has 
denied a service as non-covered or excluded from benefits.
    (17) Notice of Medicare Non-Coverage (NOMNC). This is a 
standardized material used to convey termination of previously-approved 
coverage.
    (18) Detailed Explanation of Non-Coverage (DENC). This is a 
standardized material used to convey plan receipt of a request for an 
appeal on a beneficiary's behalf from the Beneficiary and Family 
Centered Care Quality Improvement Organization (BFCC-QIO).
    (19) Appointment of Representative (AOR). This is a standardized 
material used to assign an individual to act on behalf of a beneficiary 
for the purpose of a specific appeal, grievance, or organization 
determination.
    (20) An Important Message From Medicare About Your Rights (IM). 
This is a standardized material used to convey a beneficiary's 
discharge rights in an inpatient hospital setting.
    (21) Detailed Notice of Discharge Form (DND). This is a 
standardized material used to convey a detailed explanation of an 
appellant's discharge rights from an inpatient hospital setting.
    (22) Medicare Outpatient Observation Notice (MOON). This is a 
standardized material used to inform a beneficiary of outpatient status 
after an inpatient stay.
    (23) Appeal and Grievance Data Form. This is a standardized 
material used to convey organization-specific grievance and appeals 
data.
    (24) Request for Administrative Law Judge (ALJ) Hearing. This is a 
standardized material used to formally request a reconsideration of the 
independent review entity's determination.
    (25) Attorney Adjudicator Review in Lieu of ALJ Hearing. This is a 
standardized material used to request that an attorney adjudicator 
review a previously determined decision rather than having an ALJ do 
so.
    (26) Notice of Right to an Expedited Grievance. This is a model 
communications material used to convey a Medicare enrollee's rights to 
request that a decision be made on a grievance or appeal within a 
shorter timeframe.
    (27) Waiver of Liability Statement. This is a model communications 
material used by providers to waive beneficiary liability for payment 
for denied services.
    (28) Notice of Appeal Status. This is a model communications 
material used to inform a beneficiary of the denial of an appeal and 
additional appeal rights.
    (29) Notice of Dismissal of Appeal. This is a model communications 
material used to convey the rationale by an MA organization to dismiss 
beneficiary's appeal.
    (30) Federal Contracting Statement. This is model content through 
which plans must convey that they have a contract with Medicare and 
that enrollment in the plan depends on contract renewal.
    (i) The Federal Contracting Statement must include all of the 
following:
    (A) Legal or marketing name of the organization.
    (B) Type of plan (for example, HMO, HMO SNP, PPO, PFFS, PDP).
    (C) A statement that the organization has a contract with Medicare 
(when applicable, MA organizations may incorporate a statement that the 
organization has a contract with the state/Medicaid program).
    (D) A statement that enrollment depends on contract renewal.
    (ii) MA organizations must include the Federal Contracting 
Statement on all marketing materials with the exception of the 
following:
    (A) Banners and banner-like advertisements.
    (B) Outdoor advertisements.
    (C) Text messages.
    (D) Social media.
    (31) Star Ratings Disclaimer. This is standardized content. The 
disclaimer consists of the statement ``Every year, Medicare evaluates 
plans based on a 5-star rating system,'' and must be present whenever 
Star Ratings are mentioned in marketing materials, with the exception 
of when Star Ratings are published on small objects (that is, a give-
away items such as a pens or rulers).

[[Page 9235]]

    (32) Availability of Non-English Translations Disclaimer. This is 
standardized content. The disclaimer consists of the statement 
``ATTENTION: If you speak [insert language], language assistance 
services, free of charge, are available to you. Call 1-XXX-XXX-XXXX 
(TTY: 1-XXX-XXX-XXXX).''
    (i) The disclaimer must be placed in non-English languages that 
meet the 5 percent threshold for language translation under paragraph 
(a)(2) of this section.
    (ii) The disclaimer must be added to all required materials in this 
section.
    (33) Accommodations Disclaimer. This is standardized content. The 
disclaimer consists of the statement ``For accommodations of persons 
with special needs at meetings call '' and must be present on all 
advertisements and invitations to all events described under Sec.  
422.2264(c).
    (34) Mailing Statements. This is standardized content. It consists 
of statements on envelopes that MA organizations must include when 
mailing information to current members, as follows:
    (i) MA organizations must include the following statement when 
mailing information about the enrollee's current plan: ``Important 
[Insert Plan Name] information.''
    (ii) MA organizations must include the following statement when 
mailing health and wellness information: ``Health and wellness or 
prevention information.''
    (iii) The MA organization must include the plan name; however, if 
the plan name is elsewhere on the envelope, the plan name does not need 
to be repeated in the disclaimer.
    (iv) Delegated or sub-contracted entities and downstream entities 
that conduct mailings on behalf of a multiple MA organizations must 
also comply with this requirement; however, they do not have to include 
a plan name.
    (35) Promotional Give-Away Disclaimer. This is model content. The 
disclaimer consists of a statement that must make clear that there is 
no obligation to enroll in a plan, and must be included when offering a 
promotional give-away such as a drawing, prizes, or a free gift.
    (36) Provider Co-Branded Material Disclaimer. This is standardized 
content. The disclaimer consists of the statement: ``Other Pharmacies/
Physicians/Providers are available in our network,'' and must be 
included on materials that identify co-branding relationships with 
network provider or pharmacies. This disclaimer is not required when 
co-branding with a provider network or health system that represents 90 
percent or more of the network as a whole.
    (37) Out of Network Non-Contracted Provider Disclaimer. This is 
standardized content. The disclaimer consists of the statement: ``Out-
of-network/non-contracted providers are under no obligation to treat 
 members, except in emergency situations. Please call our 
customer service number or see your Evidence of Coverage for more 
information, including the cost- sharing that applies to out-of-network 
services,'' and must be included whenever materials reference out-of-
network/non-contracted providers.
    (38) NCQA SNP Approval Statement. This is standardized content and 
must be used by SNPs who have received NCQA approval. It consists of 
the following statement: ``[Insert Plan Name] has been approved by the 
National Committee for Quality Assurance (NCQA) to operate as a Special 
Needs Plan (SNP) until [insert last contract year of NCQA approval] 
based on a review of [insert Plan Name's] Model of Care.'' MA 
organizations are prohibited from including numeric SNP approval 
scores, and no other language referencing NCQA approval may be used.


Sec.  422.2268  [Removed]

0
58 Section 422.2268 is removed.
0
59. Section 422.2274 is revised to read as follows:


Sec.  422.2274  Agent, broker, and other third party requirements.

    If an MA organization uses agents and brokers to sell its Medicare 
plans, the requirements in paragraphs (a) through (e) of this section 
are applicable. If an MA organization makes payments to third parties, 
the requirements in paragraph (f) of this section are applicable.
    (a) Definitions. For purposes of this section, the following 
definitions are applicable:
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale or renewal of a plan or product offered 
by an MA organization including, but not limited to the following:
    (A) Commissions.
    (B) Bonuses.
    (C) Gifts.
    (D) Prizes or Awards.
    (E) Referral or Finder fees.
    (ii) Does not include any of the following:
    (A) Payment of fees to comply with State appointment laws, 
training, certification, and testing costs.
    (B) Reimbursement for mileage to, and from, appointments with 
beneficiaries.
    (C) Reimbursement for actual costs associated with beneficiary 
sales appointments such as venue rent, snacks, and materials.
    Fair market value (FMV) means, for purposes of evaluating agent/
broker compensation under the requirements of this section only, the 
amount that CMS determines could reasonably be expected to be paid for 
an enrollment or continued enrollment into an MA plan. FMV for an 
upcoming year is calculated by adding the current year FMV and the 
product of the current year FMV and MA Growth Percentage for aged and 
disabled beneficiaries, which is published for each year in the rate 
announcement issued pursuant to Sec.  422.312.
    Initial enrollment year means the first year that a beneficiary is 
enrolled in a plan vs. subsequent years (c.f., renewal year) that a 
beneficiary remains enrolled in a plan.
    Like plan type means one of the following:
    (i) PDP replaced with another PDP.
    (ii) MA or MA-PD replaced with another MA or MA-PD.
    (iii) Cost plan replaced with another cost plan.
    Plan year and enrollment year mean the year beginning January 1 and 
ending December 31.
    Renewal year means all years following the initial enrollment year 
in the same plan or in different plan that is a like plan type.
    Unlike plan type means one of the following:
    (i) An MA or, MA-PD plan to a PDP or Section 1876 Cost Plan.
    (ii) A PDP to a Section 1876 Cost Plan or an MA or MA-PD plan.
    (iii) A Section 1876 Cost Plan to an MA or MA-PD plan or PDP.
    (b) Agent/broker requirements. Agents and brokers who represent MA 
organizations must follow the requirements in paragraphs (b)(1) through 
(3) of this section. Representation includes selling products 
(including Medicare Advantage plans, Medicare Advantage-Prescription 
Drug plans, Medicare Prescription Drug plans, and section 1876 Cost 
plans) as well as outreach to existing or potential beneficiaries and 
answering or potentially answering questions from existing or potential 
beneficiaries.
    (1) Be licensed and appointed under State law (if required under 
applicable State law).
    (2) Be trained and tested annually as required under paragraph 
(c)(4) of this section, and achieve an 85 percent or higher on all 
forms of testing.

[[Page 9236]]

    (3) Secure and document a Scope of Appointment prior to meeting 
with potential enrollees.
    (c) MA organization oversight. MA organizations must oversee first 
tier, downstream, and related entities that represent the MA 
organization to ensure agents/brokers abide by all applicable State and 
Federal laws, regulations, and requirements. MA organizations must do 
all of the following:
    (1) As required under applicable State law, employ as marketing 
representatives only individuals who are licensed by the State to 
conduct marketing (as defined in this subpart) in that State, and whom 
the MA organization has informed that State it has appointed, 
consistent with the appointment process provided for under State law.
    (2) As required under applicable State law, report the termination 
of an agent/broker to the State and the reason for termination.
    (3) Report to CMS all enrollments made by unlicensed agents/brokers 
and for-cause terminations of agent/brokers.
    (4) On an annual basis, provide agent/broker training and testing 
on Medicare rules and regulations, the plan products that agents and 
brokers will sell including any details specific to each plan product, 
and relevant State and Federal requirements.
    (5) On an annual basis by the last Friday in July, report to CMS 
whether the MA organization intends to use employed, captive, and/or 
independent agents/brokers in the upcoming plan year and the specific 
rates or range of rates the plan will pay independent agents/brokers. 
Following the reporting deadline, MA organizations may not change their 
decisions related to agent/broker type, or their compensation rates and 
ranges, until the next plan year.
    (6) On an annual basis by October 1, have in place full 
compensation structures for the following plan year. The structure must 
include details on compensation dissemination, including specifying 
payment amounts for initial enrollment year and renewal year 
compensation.
    (7) Submit agent/broker marketing materials to CMS through HPMS 
prior to use, following the requirements for marketing materials in 
this subpart.
    (8) Ensure agents and brokers do not charge beneficiaries a 
marketing fee.
    (9) Establish and maintain a system for confirming that:
    (i) Beneficiaries enrolled by agents/brokers understand the 
product, including the rules applicable under the plan.
    (ii) Agent/brokers appropriately complete Scope of Appointment 
records for all marketing appointments (including telephonic and walk-
in).
    (10) Demonstrate that marketing resources are allocated to 
marketing to the disabled Medicare population as well as beneficiaries 
age 65 and over.
    (11) Must comply with State requests for information about the 
performance of a licensed agent or broker as part of a state 
investigation into the individual's conduct. CMS will establish and 
maintain a memorandum of understanding (MOU) to share compliance and 
oversight information with States that agree to the MOU.
    (d) Compensation requirements. MA organizations must ensure they 
meet the requirements in paragraphs (d)(1) through (5) of this section 
in order to pay compensation. These compensation requirements only 
apply to independent agent/brokers.
    (1) General rules. (i) MA organizations may only pay agents/brokers 
who meet the requirements in paragraph (b) of this section.
    (ii) MA organizations may determine, through their contracts, the 
amount of compensation to be paid, provided it does not exceed 
limitations outlined in this section.
    (iii) MA organizations may determine their payment schedule (for 
example, monthly or quarterly). Payments (including payments for AEP 
enrollments) must be made during the year of the beneficiary's 
enrollment.
    (iv) MA organizations may only pay compensation for the number of 
months a member is enrolled.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year, MA organizations may pay compensation at or 
below FMV.
    (i) MA organizations may pay either a full or pro-rated initial 
enrollment year compensation for:
    (A) A beneficiary's first year of enrollment in any plan; or
    (B) A beneficiary's move from an employer group plan to a non-
employer group plan (either within the same parent organization or 
between parent organizations).
    (ii) MA organizations must pay pro-rate initial enrollment year 
compensation for:
    (A) A beneficiary's plan change(s) during their initial enrollment 
year.
    (B) A beneficiary's selection of an ``unlike plan type'' change. In 
that case, the new plan would only pay the months that the beneficiary 
is enrolled, and the previous plan would recoup the months that the 
beneficiary was not in the plan.
    (3) Renewal compensation. For each enrollment in a renewal year, MA 
plans may pay compensation at an amount up to 50 percent of FMV.
    (i) MA plans may pay compensation for a renewal year:
    (A) In any year following the initial enrollment year the 
beneficiary remains in the same plan; or
    (B) When a beneficiary enrolls in a new ``like plan type''.
    (ii) [Reserved]
    (4) Other compensation scenarios. (i) When a beneficiary enrolls in 
an MA-PD, MA organizations may pay only the MA compensation (and not 
compensation for Part D enrollment under Sec.  423.2274 of this 
chapter).
    (ii) When a beneficiary enrolls in both a section 1876 Cost Plan 
and a stand-alone PDP, the 1876 Cost Plan sponsor may pay compensation 
for the cost plan enrollment and the Part D sponsor must pay 
compensation for the Part D enrollment.
    (iii) When a beneficiary enrolls in a MA-only plan and a PDP plan, 
the MA plan sponsor may pay for the MA plan enrollment and the Part D 
plan may pay for the PDP plan enrollment.
    (iv) When a beneficiary changes from two plans (for example, a MA 
plan and a stand-alone PDP) (dual enrollments) to one plan (MA-PD), the 
MA organization may only pay compensation at the renewal rate for the 
MA-PD product.
    (5) Additional compensation, payment, and compensation recovery 
requirements (Charge-backs). (i) MA organizations must retroactively 
pay or recoup funds for retroactive beneficiary changes for the current 
and previous calendar years. MA organizations may choose to recoup or 
pay compensation for years prior to the previous calendar year, but 
they must do both (recoup amounts owed and pay amounts due during the 
same year).
    (ii) Compensation recovery is required when:
    (A) A beneficiary makes any plan change (regardless of the parent 
organization) within the first 3 months of enrollment (known as rapid 
disenrollment), except as noted in paragraph (d)(5)(iii) of this 
section.
    (B) Any other time period a beneficiary is not enrolled in a plan, 
but the plan paid compensation based on that time period.
    (iii) Rapid disenrollment compensation recovery does not apply 
when:
    (A) A beneficiary enrolls effective October 1, November 1, or 
December 1 and subsequently uses the Annual Election Period to change 
plans for an effective date of January 1.
    (B) A beneficiary's enrollment change is not in the best interests 
of the

[[Page 9237]]

Medicare program, including for the following reasons:
    (1) Other creditable coverage (for example, an employer plan).
    (2) Moving into or out of an institution.
    (3) Gain or loss of employer/union sponsored coverage.
    (4) Plan termination, non-renewal, or CMS imposed sanction.
    (5) To coordinate with Part D enrollment periods or the State 
Pharmaceutical Assistance Program.
    (6) Becoming LIS or dually eligible for Medicare and Medicaid.
    (7) Qualifying for another plan based on special needs.
    (8) Due to an auto, facilitated, or passive enrollment.
    (9) Death.
    (10) Moving out of the service area.
    (11) Non-payment of premium.
    (12) Loss of entitlement or retroactive notice of entitlement.
    (13) Moving into a 5-star plan.
    (14) Moving from an LPI plan into a plan with three or more stars.
    (iv)(A) When rapid disenrollment compensation recovery applies, the 
entire compensation must be recovered.
    (B) For other compensation recovery, plans must recover a pro-rated 
amount of compensation (whether paid for an initial enrollment year or 
renewal year) from an agent/broker equal to the number of months not 
enrolled.
    (1) If a plan has paid full initial compensation, and the enrollee 
disenrolls prior to the end of the enrollment year, the total number of 
months not enrolled (including months prior to the effective date of 
enrollment) must be recovered from the agent/broker.
    (2) Example: A beneficiary enrolls upon turning 65 effective April 
1 and disenrolls September 30 of the same year. The plan paid full 
initial enrollment year compensation. Recovery is equal to 6/12ths of 
the initial enrollment year compensation (for January through March and 
October through December).
    (e) Payments to third parties. (1) Payments made to third parties 
(that is, entities other than individual agents/brokers) for services 
other than enrollment of beneficiaries (for example, training customer 
service, agent recruitment, or operational overhead) must not exceed 
FMV.
    (2) Administrative payments to third parties can be based on 
enrollment, provided payments are at or below FMV.
0
60. Section 422.2420 is amended by revising paragraph (b)(2)(i) to read 
as follows:


Sec.  422.2420  Calculation of the medical loss ratio.

* * * * *
    (b) * * *
    (2) * * *
    (i) Amounts that the MA organization pays (including under 
capitation contracts) for covered services, described at paragraph 
(a)(2) of this section, provided to all enrollees under the contract.
* * * * *
0
61. Section 422.2440 is revised to read as follows:


Sec.  422.2440  Credibility adjustment.

    (a) An MA organization may add the credibility adjustment specified 
under paragraph (e) of this section to a contract's MLR if the 
contract's experience is partially credible, as defined in paragraph 
(d)(1) of this section.
    (b) An MA organization may not add a credibility adjustment to a 
contract's MLR if the contract's experience is fully credible, as 
defined in paragraph (d)(2) of this section.
    (c) For those contract years for which a contract has non-credible 
experience, as defined in paragraph (d)(3) of this section, sanctions 
under Sec.  422.2410(b) through (d) will not apply.
    (d)(1) A contract's experience is partially credible if it is based 
on the experience of at least 2,400 member months and fewer than or 
equal to 180,000 member months.
    (2) A contract's experience is fully credible if it is based on the 
experience of more than 180,000 member months.
    (3) A contract's experience is non-credible if it is based on the 
experience of fewer than 2,400 member months.
    (e)(1) The credibility adjustment for a partially credible MA 
contract, other than an MSA contract, is equal to the base credibility 
factor determined under paragraph (f) of this section.
    (2) The credibility adjustment for a partially credible MA MSA 
contract is the product of the base credibility factor, as determined 
under paragraph (f) of this section, multiplied by the deductible 
factor, as determined under paragraph (g) of this section.
    (f) The base credibility factor for partially credible experience 
is determined based on the number of member months for all enrollees 
under the contract and the factors shown in Table 1 of this section. 
When the number of member months used to determine credibility exactly 
matches a member month category listed in Table 1 of this section, the 
value associated with that number of member months is the base 
credibility factor. The base credibility factor for a number of member 
months between the values shown in Table 1 of this section is 
determined by linear interpolation.
    (g) The deductible factor is based on the enrollment-weighted 
average deductible for all MSA plans under the MA MSA contract, where 
the deductible for each plan under the contract is weighted by the 
plan's portion of the total number of member months for all plans under 
the contract. When the weighted average deductible exactly matches a 
deductible category listed in Table 2 of this section, the value 
associated with that deductible is the deductible factor. The 
deductible factor for a weighted average deductible between the values 
shown in Table 2 of section is determined by linear interpolation.

  Table 1 to Sec.   422.2440--Base Credibility Factors for MA Contracts
------------------------------------------------------------------------
                                               Base credibility factor
               Member months                   (additional  percentage
                                                       points)
------------------------------------------------------------------------
<2,400....................................  N/A (Non-credible).
2,400.....................................  8.4%.
6,000.....................................  5.3%.
12,000....................................  3.7%.
24,000....................................  2.6%.
60,000....................................  1.7%.
120,000...................................  1.2%.
180,000...................................  1.0%.
>180,000..................................  0.0% (Fully credible).
------------------------------------------------------------------------


   Table 2 to Sec.   422.2440--Deductible Factors for MA MSA Contracts
------------------------------------------------------------------------
             Weighted average  deductible              Deductible factor
------------------------------------------------------------------------
<$2,500..............................................              1.000
$2,500...............................................              1.164
$5,000...............................................              1.402
>=$10,000............................................              1.736
------------------------------------------------------------------------

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
62. The authority citation for part 423 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395w-101 through 1395w-152, and 
1395hh.

0
63. Section 423.4 is amended by adding definitions for ``Credible 
allegation of fraud'', ``Fraud hotline tip'', ``Inappropriate 
prescribing'', ``Parent organization'', and ``Substantiated or 
suspicious activities of fraud, waste, or abuse'' in alphabetical order 
to read as follows:


Sec.  423.4  Definitions.

* * * * *

[[Page 9238]]

    Credible allegation of fraud means an allegation from any source, 
including but not limited to the following:
    (1) Fraud hotline tips verified by further evidence.
    (2) Claims data mining.
    (3) Patterns identified through provider audits, civil false claims 
cases, and law enforcement investigations. Allegations are considered 
to be credible when they have indicia of reliability.
* * * * *
    Fraud hotline tip is a complaint or other communications that are 
submitted through a fraud reporting phone number or a website intended 
for the same purpose, such as the Federal Government's HHS OIG Hotline 
or a health plan's fraud hotline.
* * * * *
    Inappropriate prescribing means that, after consideration of all 
the facts and circumstances of a particular situation identified 
through investigation or other information or actions taken by Medicare 
Advantage (MA) organizations and Part D plan sponsors, there is an 
established pattern of potential fraud, waste, and abuse related to 
prescribing of opioids, as reported by the plan sponsors. Plan sponsors 
may consider any number of factors including, but not limited, to the 
following:
    (1) Documentation of a patient's medical condition.
    (2) Identified instances of patient harm or death.
    (3) Medical records, including claims (if available).
    (4) Concurrent prescribing of opioids with an opioid potentiator in 
a manner that increases risk of serious patient harm.
    (5) Levels of morphine milligram equivalent (MME) dosages 
prescribed.
    (6) Absent clinical indication or documentation in the care 
management plan or in a manner that may indicate diversion.
    (7) State-level prescription drug monitoring program (PDMP) data.
    (8) Geography, time, and distance between a prescriber and the 
patient.
    (9) Refill frequency and factors associated with increased risk of 
opioid overdose.
* * * * *
    Parent organization means the legal entity that exercises a 
controlling interest, through the ownership of shares, the power to 
appoint voting board members, or other means, in a Part D sponsor or MA 
organization, directly or through a subsidiary or subsidiaries, and 
which is not itself a subsidiary of any other legal entity.
* * * * *
    Substantiated or suspicious activities of fraud, waste, or abuse 
means and includes, but is not limited to, allegations that a provider 
of services (including a prescriber) or supplier;
    (1) Engaged in a pattern of improper billing;
    (2) Submitted improper claims with suspected knowledge of their 
falsity;
    (3) Submitted improper claims with reckless disregard or deliberate 
ignorance of their truth or falsity; or
    (4) Is the subject of a fraud hotline tip verified by further 
evidence.
* * * * *
0
64. Section 423.38 is amended by revising paragraph (c)(8) and adding 
paragraphs (c)(11) through (33) to read as follows:


Sec.  423.38  Enrollment periods.

* * * * *
    (c) * * *
    (8) The individual demonstrates to CMS, in accordance with 
guidelines issued by CMS, that the PDP sponsor offering the PDP 
substantially violated a material provision of its contract under this 
part in relation to the individual, including, but not limited to the 
following--
    (i) Failure to provide the individual on a timely basis benefits 
available under the plan;
    (ii) Failure to provide benefits in accordance with applicable 
quality standards; or
    (iii) The PDP (or its agent, representative, or plan provider) 
materially misrepresented the plan's provisions in communications as 
outlined in subpart V of this part.
* * * * *
    (11) The individual is making an enrollment request into or out of 
an employer sponsored Part D plan, is disenrolling from a Part D plan 
to take employer sponsored coverage of any kind, or is disenrolling 
from employer sponsored coverage (including Consolidated Omnibus Budget 
Reconciliation Act (COBRA) coverage) to elect a Part D plan.
    (i) This special election period (SEP) is available to individuals 
who have (or are enrolling in) an employer or union sponsored Part D 
plan and ends two months after the month the employer or union coverage 
of any type ends.
    (ii) The individual may choose an effective date that is not 
earlier than the first of the month following the month in which the 
election is made and no later than up to three months after the month 
in which the election is made.
    (12) The individual is enrolled in a Part D plan offered by a Part 
D plan sponsor that has been sanctioned by CMS and elects to disenroll 
from that plan in connection with the matter(s) that gave rise to that 
sanction.
    (i) Consistent with the disclosure requirements at Sec.  
423.128(f), CMS may require the sponsor to notify current enrollees 
that if the enrollees believe they are affected by the matter(s) that 
gave rise to the sanction, the enrollees are eligible for a SEP to 
elect another PDP.
    (ii) The SEP starts with the imposition of the sanction and ends 
when the sanction ends or when the individual makes an election, 
whichever occurs first.
    (13) The individual is enrolled in a section 1876 cost contract 
that is non-renewing its contract for the area in which the enrollee 
resides.
    (i) Individuals eligible for this SEP must meet Part D plan 
eligibility requirements.
    (ii) This SEP begins December 8 of the then-current contract year 
and ends on the last day of February of the following year.
    (14) The individual is disenrolling from a PDP to enroll in a 
Program of All-inclusive Care for the Elderly (PACE) organization or is 
enrolling in a PDP after disenrolling from a PACE organization.
    (i) An individual who disenrolls from PACE has a SEP for 2 months 
after the effective date of PACE disenrollment to elect a PDP.
    (ii) An individual who disenrolls from a PDP has a SEP for 2 months 
after the effective date of PDP disenrollment to elect a PACE plan.
    (15) The individual moves into, resides in, or moves out of an 
institution, as defined by CMS, and elects to enroll in, or disenroll 
from, a Part D plan.
    (16) The individual is not entitled to premium free Part A and 
enrolls in Part B during the General Enrollment Period for Part B 
(January through March) for an effective date of July 1st are eligible 
to request enrollment in a Part D plan that begins April 1st and ends 
June 30th, with a Part D plan enrollment effective date of July 1st.
    (17) The individual belongs to a qualified State Pharmaceutical 
Assistance Program (SPAP) and is requesting enrollment in a Part D 
plan.
    (i) The individual is eligible to make one enrollment election per 
year.
    (ii) This SEP is available while the individual is enrolled in the 
SPAP and, upon loss of eligibility for SPAP benefits, for an additional 
2 calendar months after either the month of the loss of eligibility or 
notification of the loss, whichever is later.

[[Page 9239]]

    (18) The individual is enrolled in a Part D plan and elects to 
disenroll from that Part D plan to enroll in or maintain other 
creditable prescription drug coverage.
    (19)(i) The individual is enrolled in a section 1876 cost contract 
and an optional supplemental Part D benefit under that contract and 
elects a Part D plan upon disenrolling from the cost contract.
    (ii) The SEP begins the month the individual requests disenrollment 
from the cost contract and ends when the individual makes an enrollment 
election or on the last day of the second month following the month the 
cost contract enrollment ended, whichever is earlier.
    (20) The individual is requesting enrollment in a Part D plan 
offered by a Part D plan sponsor with a Star Rating of 5 Stars. An 
individual may use this SEP only once for the contract year in which 
the Part D plan was assigned a 5-star overall performance rating, 
beginning the December 8 before that contract year through November 30 
of that contract year.
    (21)(i) The individual is a non-U.S. citizen who becomes lawfully 
present in the United States.
    (ii) This SEP begins the month the enrollee attains lawful presence 
status and ends the earlier of when the individual makes an enrollment 
election or 2 calendar months after the month the enrollee attains 
lawful presence status.
    (22) The individual was adversely affected by having requested, but 
not received, required notices or information in an accessible format, 
as outlined in section 504 of the Rehabilitation Act of 1973, within 
the same timeframe that the Part D plan sponsor or CMS provided the 
same information to individuals who did not request an accessible 
format.
    (i) The SEP begins at the end of the election period during which 
the individual was seeking to make an election and the length is at 
least as long as the time it takes for the information to be provided 
to the individual in an accessible format.
    (ii) Part D plan sponsors may determine eligibility for this SEP 
when the criterion is met, ensuring adequate documentation of the 
situation, including records indicating the date of the individual's 
request, the amount of time taken to provide accessible versions of 
materials and the amount of time it takes for the same information to 
be provided to an individual who does not request an accessible format.
    (23) Individuals affected by a FEMA-declared weather-related 
emergency or major disaster are eligible for a SEP to make a Part D 
enrollment or disenrollment election. The SEP is available from the 
start of the incident period and for 4 calendar months after the start 
of the incident period. The individual is eligible for this SEP 
provided the individual--
    (i)(A) Resides, or resided at the start of the incident period, in 
an area for which Federal Emergency Management Agency (FEMA) has 
declared an emergency or a major disaster and has designated affected 
counties as being eligible to apply for individual or public level 
assistance; or
    (B) Does not reside in the affected areas but relies on help making 
healthcare decisions from one or more individuals who reside in the 
affected areas; and
    (ii) Was eligible for an election period at the time of incident 
period; and
    (iii) Did not make an election during that election period due to 
the weather-related emergency or major disaster.
    (24) The individual is using the SEP at Sec.  422.62(b)(8) of this 
chapter to disenroll from a MA plan that includes Part D benefits.
    (i) This SEP permits a one-time election to enroll in a Part D 
plan.
    (ii) This SEP begins upon disenrollment from the MA plan and 
continues for 2 calendar months.
    (25)(i) An individual using the MA Open Enrollment Period for 
Institutionalized Individuals (OEPI) to disenroll from a MA plan that 
includes Part D benefits plan is eligible for a SEP to request 
enrollment in a Part D plan.
    (ii) The SEP begins with the month the individual requests 
disenrollment from the MA plan and ends on the last day of the second 
month following the month MA enrollment ended.
    (26) An individual using the Medicare Advantage Open Enrollment 
Period (MA OEP) to elect original Medicare is eligible for a SEP to 
make a Part D enrollment election.
    (27)(i) The individual is enrolled in a MA special needs plan (SNP) 
and is no longer eligible for the SNP because he or she no longer meets 
the specific special needs status.
    (ii) The individual may request enrollment in a Part D plan that 
begins the month the individual's special needs status changes and ends 
the earlier of when he or she makes an election or 3 months after the 
effective date of involuntary disenrollment from the SNP.
    (28) The individual is found, after enrollment into a Chronic Care 
SNP, not to have the required qualifying condition.
    (i) This individual is eligible to enroll prospectively in a Part D 
plan.
    (ii) This SEP begins when the MA organization notifies the 
individual of the lack of eligibility for the Chronic Care SNP and 
extends through the end of that month and the following 2 calendar 
months.
    (iii) The SEP ends when the individual makes an enrollment election 
or on the last day of the second of the 2 calendar months following 
notification of the lack of eligibility, whichever occurs first.
    (29) The individual uses the SEP at Sec.  422.62(b)(15) of this 
chapter to enroll in a MA Private Fee-for-Service plan without Part D 
benefits, or enrolls in a section 1876 cost plan, is eligible to 
request enrollment in a PDP or the cost plan's optional supplemental 
Part D benefit, if offered.
    (i) This SEP begins the month the individual uses the SEP at Sec.  
422.62(b)(15) of this chapter and continues for 2 additional months.
    (ii) [Reserved]
    (30) An individual who uses the SEP at Sec.  422.62(b)(23) of this 
chapter to disenroll from a MA plan is eligible to request enrollment 
in a PDP.
    (i) This SEP begins the month the individual is notified of 
eligibility for the SEP at Sec.  422.62(b)(23) of this chapter and 
continues for an additional 2 calendar months.
    (ii) This SEP permits one enrollment into a PDP.
    (iii) This SEP ends when the individual has enrolled in the PDP.
    (iv) An individual may use this SEP to request enrollment in a PDP 
subsequent to having submitted a disenrollment to the MA plan or may 
simply request enrollment in the PDP, resulting in automatic 
disenrollment from the MA plan.
    (31) The individual is enrolled in a plan offered by a Part D plan 
sponsor that has been placed into receivership by a state or 
territorial regulatory authority. The SEP begins the month the 
receivership is effective and continues until it is no longer in effect 
or until the enrollee makes an election, whichever occurs first. When 
instructed by CMS, the MA plan that has been placed under receivership 
must notify its enrollees, in the form and manner directed by CMS, of 
the enrollees' eligibility for this SEP and how to use the SEP.
    (32) The individual is enrolled in a plan that has been identified 
with the low performing icon in accordance with Sec.  
423.186(h)(1)(ii). This SEP exists while the individual is enrolled in 
the low performing Part D plan.
    (33) The individual meets other exceptional circumstances as CMS 
may provide.
* * * * *

[[Page 9240]]

0
65. Section 423.40 is amended by revising paragraph (c) to read as 
follows:


Sec.  423.40  Effective dates.

* * * * *
    (c) Special enrollment periods. For an enrollment or change of 
enrollment in Part D made during a special enrollment period specified 
in Sec.  423.38(c), the coverage or change in coverage is effective the 
first day of the calendar month following the month in which the 
election is made, unless otherwise noted.
* * * * *
0
66. Section 423.100 is amended--
0
a. In the definition of ``Applicable drug'' by revising paragraph 
(1)(ii);
0
b. In the definition of ``Exempted beneficiary'' by:
0
i. Removing the word ``or'' at the end of paragraph (2);
0
ii. Removing the period at the end of paragraph (3) and adding ``; or'' 
in its place; and
0
iii. Adding paragraph (4); and
0
c. By revising the definition of ``Potential at-risk beneficiary''.
    The revisions and addition read as follows:


Sec.  423.100  Definitions.

* * * * *
    Applicable drug * * *
    (1) * * *
    (ii) In the case of a biological product, licensed under section 
351 of the Public Health Service Act (other than, with respect to a 
plan year before 2019), a product licensed under subsection (k) of such 
section 351); and
* * * * *
    Exempted beneficiary * * *
    (4) Has sickle cell disease.
* * * * *
    Potential at-risk beneficiary means a Part D eligible individual 
who meets any of the following:
    (1) Is identified using clinical guidelines (as defined in this 
section).
    (2) Who is identified by CMS as having a history of opioid-related 
overdose on the following basis:
    (i) At least one recent Medicare fee-for-service claim has been 
submitted that contains a principal diagnosis code indicating opioid 
overdose.
    (ii) At least one recent PDE for an opioid medication has been 
submitted.
    (3) 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 and such 
identification had not been terminated upon disenrollment.
* * * * *
0
67. Section 423.104 is amended by adding paragraph (d)(2)(iv) to read 
as follows:


Sec.  423.104  Requirements related to qualified prescription drug 
coverage.

* * * * *
    (d) * * *
    (2) * * *
    (iv) Specialty tier means a formulary cost sharing tier dedicated 
to high-cost Part D drugs with ingredient costs for a 30-day equivalent 
supply (as described in paragraph (d)(2)(iv)(A)(2) of this section) 
that are greater than the specialty tier cost threshold specified in 
paragraph (d)(2)(iv)(A) of this section.
    (A) Specialty-tier cost threshold. CMS sets the specialty-tier cost 
threshold for a plan year in accordance with this paragraph 
(d)(2)(iv)(A), using the following steps:
    (1) 30-day equivalent ingredient cost. Using the PDE data as 
specified in paragraph (d)(2)(iv)(C) of this section, CMS uses the 
ingredient cost reflected on the prescription drug event (PDE) to 
determine the ingredient cost in dollars for a 30-day equivalent supply 
of the Part D drug.
    (2) 30-day equivalent supply. CMS determines the 30-day equivalent 
supply as follows: If the days' supply reported on a PDE is less than 
or equal to 34, the number of 30-day equivalent supplies equals one. If 
the days' supply reported on a PDE is greater than 34, the number of 
30-day equivalent supplies is equal to the number of days' supply 
reported on each PDE divided by 30.
    (3) Top 1 percent. CMS determines the amount that equals the lowest 
30-day equivalent ingredient cost that is within the top 1 percent of 
all 30-day equivalent ingredient costs reflected in the PDE data.
    (4) Determination. Except as provided in paragraph (d)(2)(iv)(B) of 
this section, the amount determined in paragraph (d)(2)(iii) of this 
section is the specialty-tier cost threshold for the plan year.
    (5) Claims history. Except for newly FDA-approved Part D drugs only 
recently available on the market for which Part D sponsors would have 
little or no claims data, CMS approves placement of a Part D drug on a 
specialty tier when that Part D sponsor's claims data from the time 
period specified in paragraph (d)(2)(iv)(C) of this section 
demonstrates that greater than 50 percent of the Part D sponsor's PDEs 
for a given Part D drug, when adjusted for 30-day equivalent supplies, 
have ingredient costs for 30-day equivalent supplies, as described in 
paragraph (d)(2)(iv)(A)(2) of this section, that exceed the specialty-
tier cost threshold.
    (B) Limit on specialty-tier cost threshold adjustment. (1) CMS 
increases the specialty-tier cost threshold for a plan year only if the 
amount determined in paragraph (d)(2)(iv)(A)(3) of this section for a 
plan year is at least 10 percent above the specialty tier cost 
threshold for the prior plan year.
    (2) If an increase is made in accordance with this paragraph 
(d)(2)(iv)(B), CMS rounds the amount determined in paragraph 
(d)(2)(iv)(A)(3) of this section to the nearest $10, and the resulting 
dollar amount is the specialty-tier cost threshold for the plan year.
    (C) Data used to determine the specialty-tier cost threshold. CMS 
uses PDEs from the plan year that ended 12 months prior to the 
applicable plan year.
    (D) Maximum number of specialty tiers and maximum allowable cost 
sharing. A Part D plan may maintain up to two specialty tiers. CMS sets 
the maximum allowable cost sharing for a single specialty tier, or, in 
the case of a plan with two specialty tiers, the higher cost sharing 
specialty tier as follows:
    (1) For Part D plans with the full deductible provided under the 
Defined Standard benefit, as specified in paragraph (d)(1) of this 
section, 25 percent coinsurance.
    (2) For Part D plans with no deductible, 33 percent coinsurance.
    (3) For Part D plans with a deductible that is greater than $0 and 
less than the deductible provided under the Defined Standard benefit, a 
coinsurance percentage that is determined by subtracting the plan's 
deductible from 33 percent of the initial coverage limit (ICL) under 
section 1860D-2(b)(3) of the Act, dividing this difference by the 
difference between the ICL and the plan's deductible, and rounding to 
the nearest 1 percent.
* * * * *
0
68. Section 423.128 is amended by--
0
a. Revising paragraph (a)(1);
0
b. Adding paragraph (b)(11);
0
c. Revising paragraphs (d)(1)(i), (ii), and (iii); and
0
d. Adding paragraphs (d)(1)(v) and (vi) and (d)(4) and (5).
    The revisions and additions read as follows:


Sec.  423.128  Dissemination of Part D plan information.

    (a) * * *
    (1) To each enrollee of a Part D plan offered by the Part D sponsor 
under this

[[Page 9241]]

part, except as provided in paragraph (b)(11)(ii) of this section;
* * * * *
    (b) * * *
    (11) Opioid information. (i) Subject to paragraph (b)(11)(ii) of 
this section, for plan year 2021 and each subsequent year, a Part D 
sponsor must disclose to each enrollee identified in paragraph 
(b)(11)(ii) of this section at least once per year the following:
    (A) The risks associated with prolonged opioid use.
    (B) Coverage of non-pharmacological therapies, devices, and non-
opioid medications--
    (1) In the case of an MA-PD, under such plan; and
    (2) In the case of a PDP, under such plan and Medicare Parts A and 
B.
    (ii) The Part D sponsor may elect to, in lieu of disclosing the 
information described in paragraph (b)(11)(i) of this section to each 
enrollee under each plan offered by the Part D sponsor under this part, 
disclose such information to a subset of enrollees, such as enrollees 
who have been prescribed an opioid in the previous 2-year period.
* * * * *
    (d) * * *
    (1) * * *
    (i)(A) Is open at least from 8:00 a.m. to 8:00 p.m. in all regions 
served by the Part D plan.
    (B) Any call center serving pharmacists or pharmacies must be open 
so long as any network pharmacy in that region is open.
    (ii) At a minimum provides customer telephone service, including to 
pharmacists, in accordance with the following business practices:
    (A) Limits average hold time to 2 minutes. The hold time is defined 
as the time spent on hold by callers following the interactive voice 
response (IVR) system, touch-tone response system, or recorded 
greeting, before reaching a live person.
    (B) Answers 80 percent of incoming calls within 30 seconds after 
the Interactive Voice Response (IVR), touch-tone response system, or 
recorded greeting interaction.
    (C) Limits the disconnect rate of all incoming calls to 5 percent. 
The disconnect rate is defined as the number of calls unexpectedly 
dropped divided by the total number of calls made to the customer call 
center.
    (iii)(A) Provides interpreters for non-English speaking and limited 
English proficient (LEP) individuals.
    (B) Interpreters must be available within 8 minutes of reaching the 
customer service representative and be made available at no cost to the 
caller.
* * * * *
    (v)(A) Responds to TTY-to-TTY calls as defined in 47 CFR part 64, 
subpart F, in accordance with the mandatory minimum standards 
delineated in 47 CFR 64.604.
    (B) Provides effective real-time communication with individuals 
using auxiliary aids and services, including TTYs and all forms of 
Federal Communication Commission-approved telecommunications relay 
systems, when using automated-attendant systems. See 28 CFR 35.161 and 
36.303(d).
    (vi) Provides the information described in paragraph (d)(4) of this 
section to enrollees who call the customer service call center.
* * * * *
    (4) A Part D sponsor must implement, and make available directly to 
enrollees, in an easy to understand manner, the following accurate, 
timely, clinically appropriate, patient-specific formulary and benefit 
real-time information in their beneficiary-specific portal or computer 
application:
    (i) Enrollee cost sharing amounts.
    (ii) Clinically appropriate formulary medication alternatives for a 
given condition, which are not excluded based on cost implications.
    (iii) Formulary status, including utilization management 
requirements applicable to each alternative medication, as appropriate 
for each enrollee and medication presented.
    (5) The Part D sponsor may provide rewards and incentives to 
enrollees who use the beneficiary real time benefit tool (RTBT) 
described in paragraph (d)(4) of this section, provided the rewards and 
incentives comply with the requirements in paragraphs (d)(5)(i) through 
(iii) of this section, and the rewards and incentives information is 
made available to CMS upon request. Use is defined as logging into the 
RTBT, via portal or computer application, or calling the customer 
service call center to obtain the information described in paragraph 
(d)(4) of this section. The rewards and incentives must meet the 
following:
    (i) Be of nominal value, both individually and in the aggregate.
    (ii) Be offered to enrollees for no more than one login per month.
    (iii) Be designed so that all enrollees are eligible to earn 
rewards and incentives, and that there is no discrimination based on 
race, national origin, gender, disability, chronic disease, health 
status, or basis prohibited by any applicable law.
    (iv) Not be offered in the form of cash or other cash equivalents.
    (v) Not be used to target potential enrollees.
    (vi) Be earned solely for logging onto the beneficiary RTBT and not 
for any other purpose.
    (vii) Otherwise comply with all relevant fraud and abuse laws, 
including, when applicable, the anti-kickback statute and civil money 
penalty prohibiting inducements to beneficiaries.
* * * * *
0
69. Section 423.153 is amended--
0
a. By revising the section heading;
0
b. In paragraph (a) by removing the phrase ``A Part D plan sponsor may 
establish a drug management'' and adding in its place the phrase ``No 
later than January 1, 2022, a Part D plan sponsor must have established 
a drug management'';
0
c. By adding paragraphs (d)(1)(vii)(E) and (F);
0
d. By revising paragraph (d)(2);
0
e. In paragraph (f)(3)(ii) introductory text by removing the phrase 
``paragraphs (f)(10) and (11) of this section'' and adding in its place 
the phrase ``paragraphs (f)(9) through (13) of this section'';
0
f. In paragraph (f)(4)(ii)(A) by:
0
i. Removing the phrase ``paragraph (f)(2)(ii)(B) of this section'' and 
adding in its place the phrase ``paragraph (f)(3)(ii)(A) of this 
section'';
0
ii. Removing the phrase ``paragraph (f)(4)(i)(B) of this section'' and 
adding in its place the phrase ``paragraph (f)(2)(i)(B) of this 
section'';
0
g. Revising paragraphs (f)(5)(ii)(C)(3), (f)(6)(ii)(C)(4), and 
(f)(8)(i);
0
h. In paragraph (f)(15)(ii)(C) by removing the phrase ``any potential 
at-risk beneficiary'' and adding in its place the phrase ``any 
potential at-risk beneficiary or at-risk beneficiary''; and
0
i. By revising the heading of paragraph (g).
    The revisions and additions read as follows:


Sec.  423.153  Drug utilization management, quality assurance, 
medication therapy management programs (MTMPs), and access to Medicare 
Parts A and B claims data extracts.

* * * * *
    (d) * * *
    (1) * * *
    (vii) * * *
    (E) For enrollees targeted in paragraph (d)(2) of this section, 
provide at least annually as part of the comprehensive medication 
review, a targeted medication review, or another follow up service, 
information about safe disposal of prescription drugs that are 
controlled substances, drug take back programs, in-home disposal and 
cost-effective means to safely dispose of such drugs.
    (F) The information to be provided under paragraph (d)(1)(vii)(E) 
of this

[[Page 9242]]

section must comply with all requirements of Sec.  422.111(j) of this 
chapter.
    (2) Targeted beneficiaries. Targeted beneficiaries for the MTMP 
described in paragraph (d)(1) of this section are enrollees in the 
sponsor's Part D plan who meet the characteristics of at least one of 
the following two groups:
    (i)(A) Have multiple chronic diseases, with three chronic diseases 
being the maximum number a Part D plan sponsor may require for targeted 
enrollment;
    (B) Are taking multiple Part D drugs, with eight Part D drugs being 
the maximum number of drugs a Part D plan sponsor may require for 
targeted enrollment; and
    (C) Are likely to incur the following annual Part D drug costs:
    (1) For 2011, costs for covered Part D drugs greater than or equal 
to $3,000.
    (2) For 2012 and subsequent years, costs for covered Part D drugs 
in an amount greater than or equal to $3,000 increased by the annual 
percentage specified in Sec.  423.104(d)(5)(iv); or
    (ii) Beginning January 1, 2021, are at-risk beneficiaries as 
defined in Sec.  423.100.
* * * * *
    (f) * * *
    (5) * * *
    (ii) * * *
    (C) * * *
    (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. Sec.  423.582 and 423.584, including notice 
that if on redetermination the plan sponsor affirms its denial, in 
whole or in part, the case must be automatically forwarded to the 
independent review entity contracted with CMS for review and 
resolution.
    (6) * * *
    (ii) * * *
    (C) * * *
    (4) An explanation of the beneficiary's right to a redetermination 
under Sec.  423.580, including all of the following:
    (i) A description of both the standard and expedited 
redetermination processes.
    (ii) The beneficiary's right to, and conditions for, obtaining an 
expedited redetermination.
    (iii) Notice that if on redetermination the plan sponsor affirms 
its denial, in whole or in part, the case must be automatically 
forwarded to the independent review entity contracted with CMS for 
review and resolution.
* * * * *
    (8) * * *
    (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 after the date of the initial notice described in paragraph 
(f)(5) of this section and not more than the earlier of the following 
two dates:
    (A) The date the sponsor makes the relevant determination.
    (B) Sixty days after the date of the initial notice described in 
paragraph (f)(5) of this section.
* * * * *
    (g) Prescription drug plan sponsors' access to Medicare Parts A and 
B claims data extracts--* * *
* * * * *
0
70. Section 423.182 is amended--
0
a. In paragraph (a) by adding a definition for ``Tukey outer fence 
outliers'' in alphabetical order; and
0
b. By revising paragraphs (b)(3)(ii)(A) and (B).
    The additions and revisions read as follows:


Sec.  423.182  Part D Prescription Drug Plan Quality Rating System.

    (a) * * *
    Tukey outer fence outliers are measure scores that are below a 
certain point (first quartile - 3.0 x (third quartile x first 
quartile)) or above a certain point (third quartile + 3.0 x (third 
quartile - first quartile)).
    (b) * * *
    (3) * * *
    (ii) * * *
    (A)(1) For the first year after consolidation, CMS uses enrollment-
weighted measure scores using the July enrollment of the measurement 
period of the consumed and surviving contracts for all measures, except 
survey-based measures 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.
    (2) For contract consolidations approved on or after January 1, 
2021, if a measure score for a consumed or surviving contract is 
missing due to a data integrity issue as described in Sec.  
423.184(g)(1)(i) and (ii), CMS assigns a score of zero for the missing 
measure score in the calculation of the enrollment-weighted measure 
score.
    (B)(1) For the second year after consolidation, CMS uses 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 ensures that the CAHPS survey 
sample includes enrollees in the sample frame from both the surviving 
and consumed contracts.
    (2) For contract consolidations approved on or after January 1, 
2021, for all measures except CAHPS if a measure score for a consumed 
or surviving contract is missing due to a data integrity issue as 
described in Sec.  423.184(g)(1)(i) and (ii), CMS assigns a score of 
zero for the missing measure score in the calculation of the 
enrollment-weighted measure score.
* * * * *
0
71. Section 423.184 is amended by revising paragraph (g)(1)(ii)(A) to 
read as follows:


Sec.  423.184  Adding, updating, and removing measures.

* * * * *
    (g) * * *
    (1) * * *
    (ii) * * *
    (A)(1) The data submitted for the Timeliness Monitoring Project 
(TMP) or audit that aligns with the Star Ratings year measurement 
period is used to determine the scaled reduction.
    (2) For contract consolidations approved on or after January 1, 
2021, if there is a contract consolidation as described at Sec.  
423.182(b)(3), the TMP or audit data are combined for the consumed and 
surviving contracts before the methodology, as provided in paragraphs 
(g)(1)(ii)(B) through (M) of this section, is applied.
* * * * *
0
72. Section 423.186 is amended--
0
a. By revising paragraph (a)(2)(i);
0
b. In paragraphs (e)(1)(iii) and (iv) by removing the phrase ``weight 
of 2'' and adding in its place ``weight of 4''; and
0
c. By adding a sentence to the end of paragraph (i)(6).
    The revision and additions read as follows:


Sec.  423.186  Calculation of Star Ratings.

    (a) * * *
    (2) * * *
    (i) The method maximizes differences across the star categories and 
minimizes the differences within star categories using mean resampling 
with the hierarchal clustering of the current year's data, and a 
guardrail so that the measure-threshold-specific cut points for non-
CAHPS measures do not increase or decrease more than the value of the 
cap from 1 year to the next. Prior to applying mean resampling with 
hierarchal clustering, Tukey outer fence outliers are removed. The cap 
is equal to 5 percentage points for measures having a 0 to 100 scale 
(absolute

[[Page 9243]]

percentage cap) or 5 percent of the restricted range for measures not 
having a 0 to 100 scale (restricted range cap). New measures that have 
been in the Part C and D Star Rating program for 3 years or less use 
the hierarchal clustering methodology with mean resampling with no 
guardrail for the first 3 years in the program.
* * * * *
    (i) * * *
    (6) * * * Missing data includes data where there is a data 
integrity issue as defined at Sec.  423.184(g)(1).
* * * * *
0
73. Section 423.265 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  423.265  Submission of bids and related information.

* * * * *
    (b) * * *
    (2) Limit on number of plan offerings. Potential Part D sponsors' 
bid submissions may include no more than three stand-alone prescription 
drug plan offerings in a service area and must include only one basic 
prescription drug plan offering.
* * * * *
0
74. Section 423.286 is amended by revising paragraph (d)(4)(ii) to read 
as follows:


Sec.  423.286  Rules regarding premiums.

* * * * *
    (d) * * *
    (4) * * *
    (ii) Calculating the income-related monthly adjustment amount. The 
income-related monthly adjustment is equal to the product of the 
standard base beneficiary premium, as determined under paragraph (c) of 
this section, and the ratio of the applicable premium percentage 
specified in 20 CFR 418.2120, reduced by 25.5 percent; divided by 25.5 
percent (that is, premium percentage - 25.5 percent)/25.5 percent).
* * * * *
0
75. Section 423.329 is amended by revising paragraph (b)(4) to read as 
follows:


Sec.  423.329  Determination of payments.

* * * * *
    (b) * * *
    (4) Publication. CMS publishes the risk adjustment factors 
established under paragraph (b)(1) of this section for the upcoming 
calendar year in the Advance Notice and Rate Announcement publications 
specified under Sec.  422.312 of this chapter.
* * * * *
0
76. Section 423.502 is amended by adding paragraphs (b)(1)(i) and (ii) 
to read as follows:


Sec.  423.502  Application requirements.

* * * * *
    (b) * * *
    (1) * * *
    (i) An applicant may be considered to have failed to comply with a 
contract for purposes of an application denial under paragraph (b)(1) 
of this section if during the applicable review period the applicant 
does any of the following:
    (A) Was subject to the imposition of an intermediate sanction or 
civil money penalty under to subpart O of this part.
    (B) Failed to maintain a Part D summary rating score of at least 
three stars consistent with Sec.  423.505(b)(26).
    (C) Failed to maintain a fiscally sound operation consistent with 
the requirements of Sec.  423.505(b)(23).
    (ii) CMS may deny an application submitted by an organization that 
does not hold a Part D contract at the time of the submission when the 
applicant's parent organization or another subsidiary of the parent 
organization meets the criteria for denial stated in paragraph 
(b)(1)(i) of this section.
* * * * *
0
77. Section 423.503 is amended by revising paragraph (a)(3) to read as 
follows:


Sec.  423.503  Evaluation and determination procedures for applications 
to be determined qualified to act as a sponsor.

    (a) * * *
    (3) CMS does not approve an application when it would result in the 
applicant's parent organization, directly or through its subsidiaries, 
holding more than one PDP sponsor contract in the PDP Region for which 
the applicant is seeking qualification as a PDP sponsor.
* * * * *
0
78. Section 423.504 is amended by adding paragraphs (b)(4)(vi)(G)(4) 
through (7) to read as follows:


Sec.  423.504  General provisions.

* * * * *
    (b) * * *
    (4) * * *
    (vi) * * *
    (G) * * *
    (4) The Part D plan sponsor must have procedures to identify, and 
must report to CMS or its designee either of the following, in the 
manner described in paragraphs (b)(4)(vi)(G)(4) through (6) of this 
section:
    (i) Any payment suspension implemented by a plan, pending 
investigation of credible allegations of fraud by a pharmacy, which 
must be implemented in the same manner as the Secretary does under 
section 1862(o)(1) of the Act.
    (ii) Any information related to the inappropriate prescribing of 
opioids and concerning investigations, credible evidence of suspicious 
activities of a provider of services (including a prescriber) or 
supplier, and other actions taken by the plan.
    (5) The Part D plan sponsor must submit the data elements, as 
specified in this section, in the program integrity portal when 
reporting payment suspensions pending investigations of credible 
allegations of fraud by pharmacies; information related to the 
inappropriate prescribing of opioids and concerning investigations and 
credible evidence of suspicious activities of a provider of services 
(including a prescriber) or supplier, and other actions taken by the 
plan sponsor; or if the plan reports a referral, through the portal, of 
substantiated or suspicious activities of a provider of services 
(including a prescriber) or a supplier related to fraud, waste or abuse 
to initiate or assist with investigations conducted by CMS, or its 
designee, a Medicare program integrity contractor, or law enforcement 
partners. The data elements, as applicable, are as follows:
    (i) Date of Referral.
    (ii) Part C or Part D Issue.
    (iii) Complainant Name.
    (iv) Complainant Phone.
    (v) Complainant Fax.
    (vi) Complainant Email.
    (vii) Complainant Organization Name.
    (viii) Complainant Address.
    (ix) Complainant City.
    (x) Complainant State.
    (xi) Complainant Zip.
    (xii) Plan Name/Contract Number.
    (xiii) Plan Tracking Number.
    (xiv) Parent Organization.
    (xv) Pharmacy Benefit Manager.
    (xvi) Beneficiary Name.
    (xvii) Beneficiary Phone.
    (xviii) Beneficiary Health Insurance Claim Number (HICN).
    (xix) Beneficiary Medicare Beneficiary Identifier (MBI).
    (xx) Beneficiary Address.
    (xxi) Beneficiary City.
    (xxii) Beneficiary State.
    (xxiii) Beneficiary Zip.
    (xxiv) Beneficiary Date of Birth (DOB).
    (xxv) Beneficiary Primary language.
    (xxvi) Beneficiary requires Special Accommodations. If Yes, 
Describe.
    (xxvii) Beneficiary Medicare Plan Name.
    (xxviii) Beneficiary Member ID Number.
    (xxix) Whether the Beneficiary is a Subject.
    (xxx) Did the complainant contact the beneficiary. If Yes, is there 
a Report of the Contact?

[[Page 9244]]

    (xxxi) Subject Name.
    (xxxii) Subject Tax Identification Number (TIN).
    (xxxiii) Does the Subject have Multiple TIN's. If Yes, provide.
    (xxxiv) Subject NPI.
    (xxxv) Subject DEA Number.
    (xxxvi) Subject Medicare Provider Number.
    (xxxvii) Subject Business.
    (xxxviii) Subject Phone Number.
    (xxxix) Subject Address.
    (xl) Subject City.
    (xli) Subject State.
    (xlii) Subject Zip.
    (xliii) Subject Business or Specialty Description.
    (xliv) Secondary Subject Name.
    (xlv) Secondary Subject Tax Identification Number (TIN)
    (xlvi) Does the Secondary Subject have Multiple TIN's. If Yes, 
provide.
    (xlvii) Secondary Subject NPI.
    (xlviii) Secondary Subject DEA Number.
    (xlix) Secondary Subject Medicare Provider Number.
    (l) Secondary Subject Business.
    (li) Secondary Subject Phone Number.
    (lii) Secondary Subject Address.
    (liii) Secondary Subject City.
    (liv) Secondary Subject State.
    (lv) Secondary Subject Zip.
    (lvi) Secondary Subject Business or Specialty Description.
    (lvii) Complaint Prior MEDIC Case Number.
    (lviii) Period of Review.
    (lix) Complaint Potential Medicare Exposure.
    (lx) Whether Medical Records are Available.
    (lxi) Whether Medical Records were Reviewed.
    (lxii) Whether the submission has been Referred to Law Enforcement. 
Submission Accepted? If so, provide Date Accepted.
    (lxiii) What Law Enforcement Agency(ies) has it been Referred to.
    (lxiv) Whether HPMS Analytics and Investigations Collaboration 
Environment for Fraud, Waste, and Abuse (AICE-FWA) was Used.
    (lxv) Whether the submission has indicated Patient Harm or 
Potential Patient Harm.
    (lxvi) Whether the submission has been Referred. If so, provide 
Date Accepted.
    (lxvii) What Agency was it Referred to.
    (lxviii) Description of Allegations/Plan Sponsor Findings.
    (6)(i) The plan sponsor is required to notify the Secretary, or its 
designee, of a payment suspension described in paragraph 
(b)(4)(vi)(G)(4) of this section 14 days prior to implementation of the 
payment suspension.
    (ii) The plan sponsor is required to submit the information 
described in paragraph (b)(4)(vi)(G)(4)(ii) of this section no later 
than January 15, April 15, July 15, and October 15 of each year for the 
preceding periods, respectively, of October 1 through December 31, 
January 1 through March 31, April 1 through June 30, and July 1 through 
September 30. For the first reporting period (January 15, 2021), the 
reporting will reflect the data gathered and analyzed for the previous 
quarter in the calendar year (October 1-December 31).
    (7)(i) CMS provides plan sponsors with data report(s) or links to 
the information described in paragraphs (b)(4)(vi)(G)(4)(i) and (ii) of 
this section no later than April 15, July 15, October 15, and January 
15 of each year based on the information in the portal, respectively, 
as of the preceding October 1 through December 31, January 1 through 
March 31, April 1 through June 30, and July 1 through September 30.
    (ii) Include administrative actions, pertinent information related 
to opioid overprescribing, and other data determined appropriate by the 
Secretary in consultation with stakeholders.
    (iii) Are anonymized information submitted by plans without 
identifying the source of such information.
    (iv) For the first quarterly report (April 15, 2021), that the 
report reflect the data gathered and analyzed for the previous quarter 
submitted by the plan sponsors on January 15, 2021.
* * * * *
0
79. Section 423.505 is amended by revising paragraph (b)(22) to read as 
follows:


Sec.  423.505  Contract provisions.

* * * * *
    (b) * * *
    (22) Through the CMS complaint tracking system, address and resolve 
complaints received by CMS against the MA organization.
* * * * *
0
80. Section 423.514 is amended by redesignating paragraph (a)(5) as 
paragraph (a)(6) and adding a new paragraph (a)(5) to read as follows:


Sec.  423.514  Validation of Part D reporting requirements.

    (a) * * *
    (5) Pharmacy performance measures.
* * * * *
0
81. Section 423.560 is amended by--
0
a. Removing the definition of ``Appointed representative'';
0
b. Adding the definition of ``Representative'' in alphabetical order; 
and
0
c. Revising the definition of ``Specialty tier''.
    The addition and revision read as follows:


Sec.  423.560  Definitions.

* * * * *
    Representative means an individual either appointed by an enrollee 
or authorized under State or other applicable law to act on behalf of 
the enrollee in filing a grievance, obtaining a coverage determination, 
or in dealing with any of the levels of the appeals process. Unless 
otherwise stated in this subpart, the representative has all of the 
rights and responsibilities of an enrollee in filing a grievance, 
obtaining a coverage determination, or in dealing with any of the 
levels of the appeals process, subject to the rules described in part 
422, subpart M, of this chapter.
    Specialty tier has the meaning given the term in Sec.  423.104.
0
82. Section 423.566 is amended by revising paragraph (c)(2) to read as 
follows:


Sec.  423.566  Coverage determinations.

* * * * *
    (c) * * *
    (2) The enrollee's representative, on behalf of the enrollee; or
* * * * *
0
83. Section 423.568 is amended by adding paragraphs (i) through (m) to 
read as follows:


Sec.  423.568  Standard timeframe and notice requirements for coverage 
determinations.

* * * * *
    (i) Dismissing a request. The Part D plan sponsor may dismiss a 
coverage determination request, either entirely or as to any stated 
issue, under any of the following circumstances:
    (1) When the individual making the request is not permitted to 
request a coverage determination under Sec.  423.566(c).
    (2) When the Part D plan sponsor determines the party failed to 
make out a valid request for a coverage determination that 
substantially complies with paragraph (a) of this section.
    (3) When an enrollee or the enrollee's representative files a 
request for a coverage determination, but the enrollee dies while the 
request is pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) The enrollee's representative, if any, does not wish to pursue 
the request for coverage.
    (4) When a party filing the coverage determination request submits 
a timely written request for withdrawal of the request for a coverage 
determination with the Part D plan sponsor.

[[Page 9245]]

    (j) Notice of dismissal. The Part D plan must mail or otherwise 
transmit a written notice of the dismissal of the coverage 
determination request to the parties. The notice must state the all of 
the following:
    (1) The reason for the dismissal.
    (2) The right to request that the MA organization vacate the 
dismissal action.
    (3) The right to request reconsideration of the dismissal.
    (k) Vacating a dismissal. If good cause is established, the Part D 
plan sponsor may vacate its dismissal of a request for redetermination 
within 6 months from the date of the notice of dismissal.
    (l) Effect of dismissal. The Part D plan sponsor's dismissal is 
binding unless it is modified or reversed by the Part D plan sponsor or 
vacated under paragraph (k) of this section.
    (m) Withdrawing a request. A party that requests a coverage 
determination may withdraw its request at any time before the decision 
is issued by filing a written request with the Part D plan sponsor.
0
84. Section 423.570 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.570  Expediting certain coverage determinations.

* * * * *
    (f) Dismissing a request. The Part D plan sponsor may dismiss an 
expedited coverage determination in accordance with Sec.  423.568.
0
85. Section 423.578 is amended--
0
a. By revising paragraph (a)(6)(iii); and
0
b. In paragraph (b)(4) by removing the phrase ``the enrollee's 
appointed representative'' and adding in its place the phrase ``the 
enrollee's representative''.
    The revision reads as follows:


Sec.  423.578  Exceptions process.

    (a) * * *
    (6) * * *
    (iii) If a Part D plan sponsor maintains one or two specialty 
tiers, as defined in Sec.  423.104, the Part D sponsor may design its 
exception process so that Part D drugs on the specialty tier(s) are not 
eligible for tiering exception(s) to non-specialty tiers.
* * * * *
0
86. Section 423.582 is amended by adding paragraphs (e) through (h) to 
read as follows:


Sec.  423.582  Request for a standard redetermination.

* * * * *
    (e) Dismissing a request. A Part D plan sponsor may dismiss a 
redetermination request, either entirely or as to any stated issue, 
under any of the following circumstances:
    (1) When the person or entity requesting a redetermination is not a 
proper party under Sec.  423.580.
    (2) When the Part D plan sponsor determines the party failed to 
make out a valid request for redetermination that substantially 
complies with paragraph (a) of this section.
    (3) When the party fails to file the redetermination request within 
the proper filing time frame in accordance with paragraph (b) of this 
section.
    (4) When the enrollee or the enrollee's representative files a 
request for redetermination, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) The enrollee's representative, if any, does not wish to pursue 
the request for coverage.
    (5) When a party filing the redetermination request submits a 
timely written request for withdrawal of the request for a 
redetermination with the Part D plan sponsor.
    (f) Notice of dismissal. The Part D plan sponsor must mail or 
otherwise transmit a written notice of the dismissal of the 
redetermination request to the parties. The notice must state all of 
the following:
    (1) The reason for the dismissal.
    (2) The right to request that the Part D plan sponsor vacate the 
dismissal action.
    (3) The right to request review of the dismissal by the independent 
entity.
    (g) Vacating a dismissal. If good cause is established, a Part D 
sponsor may vacate its dismissal of a request for redetermination 
within 6 months from the date of the notice of dismissal.
    (h) Effect of dismissal. The dismissal of a request for 
redetermination is binding unless the enrollee or other party requests 
review by the IRE or the decision is vacated under paragraph (g) of 
this section.
0
87. Section 423.584 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.584  Expediting certain redeterminations.

* * * * *
    (f) Dismissing a request. The Part D plan sponsor may dismiss an 
expedited redetermination in accordance with Sec.  423.582.
0
88. Section 423.590 is amended by adding paragraphs (i) and (j) to read 
as follows:


Sec.  423.590  Timeframes and responsibility for making 
redeterminations.

* * * * *
    (i) Automatic forwarding of redeterminations made under a drug 
management program. If on redetermination the plan sponsor affirms, in 
whole or in part, its denial related to an at-risk determination under 
a drug management program in accordance with Sec.  423.153(f), the Part 
D plan sponsor must forward the case to the IRE contracted with CMS by 
the expiration of the applicable adjudication timeframe under paragraph 
(a)(2), (b)(2), or (d)(1) of this section.
    (j) Requests for review of a dismissal by the independent entity. 
If the Part D plan sponsor dismisses a request for a reconsideration in 
accordance with Sec.  423.582(e) or Sec.  423.584(f), the enrollee or 
other party has the right to request review of the dismissal by the 
independent entity. A request for review of a dismissal must be filed 
in writing with the independent entity within 60 calendar days from the 
date of the Part D plan sponsor's dismissal notice.
0
89. Section 423.600 is amended by--
0
a. Revising paragraph (b); and
0
b. Adding paragraphs (f) through (k).
    The revision and additions read as follows:


Sec.  423.600  Reconsideration by an independent review entity (IRE).

* * * * *
    (b) When an enrollee, or an enrollee's prescribing physician or 
other prescriber (acting on behalf of the enrollee), files an appeal or 
a determination is forwarded to the IRE by a Part D plan sponsor, the 
IRE is required to solicit the views of the prescribing physician or 
other prescriber.
    (1) The IRE may solicit the views of the prescribing physician or 
other prescriber orally or in writing.
    (2) A written account of the prescribing physician's or other 
prescriber's views (prepared by either the prescribing physician, other 
prescriber, or IRE, as appropriate) must be contained in the IRE 
record.
* * * * *
    (f) The party who files a request for reconsideration may withdraw 
it by filing a written request with the IRE.
    (g) The independent entity may dismiss a reconsideration request, 
either entirely or as to any stated issue, under any of the following 
circumstances:
    (1) When the person or entity requesting a reconsideration is not a 
proper party under paragraph (a) of this section.
    (2) When the IRE determines the party failed to make out a valid 
request for reconsideration that substantially complies with paragraph 
(a) of this section.
    (3) When the party fails to file the reconsideration request within 
the

[[Page 9246]]

proper filing time frame in accordance with paragraph (a) of this 
section.
    (4) When an enrollee or the enrollee's representative files a 
request for reconsideration, but the enrollee dies while the request is 
pending, and both of the following criteria apply:
    (i) The enrollee's surviving spouse or estate has no remaining 
financial interest in the case.
    (ii) The enrollee's representative, if any, does not wish to 
continue the appeal.
    (5) When a party filing the reconsideration request submits a 
timely written request for withdrawal of the request for a 
reconsideration with the IRE.
    (h) The IRE mails or otherwise transmits a written notice of the 
dismissal of the reconsideration request to the parties. The notice 
must state the all of the following:
    (1) The reason for the dismissal.
    (2) That there is a right to request that the IRE vacate the 
dismissal action.
    (3) The right to a review of the dismissal in accordance with Sec.  
423.2004.
    (i) If good cause is established, the IRE may vacate its dismissal 
of a request for redetermination within 6 months from the date of the 
notice of dismissal.
    (j) An enrollee has a right to have an IRE's dismissal reconsidered 
in accordance with Sec.  423.2004.
    (k) If the IRE determines that the Part D plan sponsor's dismissal 
was in error, the IRE vacates the dismissal and remands the case to the 
Part D plan sponsor for reconsideration. The IRE's decision regarding 
an Part D plan sponsor's dismissal, including a decision to deny a 
request for review of a dismissal, is binding and not subject to 
further review.
0
90. Section 423.760 is amended by--
0
a. Redesignating paragraphs (b)(3) and (4) as paragraphs (b)(4) and 
(5); and
0
b. Adding a new paragraph (b)(3).
    The addition reads as follows:


Sec.  423.760  Determinations regarding the amount of civil money 
penalties and assessments imposed by CMS.

* * * * *
    (b) * * *
    (3) CMS calculates the minimum penalty amounts under paragraphs 
(b)(1) and (2) of this section using the following criteria:
    (i) Definitions for calculating penalty amounts--(A) Per 
determination. The penalty amounts calculated under paragraph (b)(1) of 
this section.
    (B) Per enrollee. The penalty amounts calculated under paragraph 
(b)(2) of this section.
    (C) Standard minimum penalty. The per enrollee or per determination 
amount that is dependent on the type of adverse impact that occurred.
    (D) Aggravating factor(s). Specific penalty amounts that may 
increase the per enrollee or per determination standard minimum penalty 
and are determined based on criteria under paragraph (a) of this 
section.
    (E) Cost-of-living multiplier. The percent change between each 
year's published October consumer price index for all urban consumers 
(United States city average), which is released by the Office of 
Management and Budget (OMB) annually.
    (ii) Calculation of penalty amounts. (A) Per determination and per 
enrollee penalty amounts are increased by multiplying the current 
standard minimum penalty and aggravating factor amounts by the cost-of-
living multiplier.
    (B) The minimum penalty and aggravating factor amounts will be 
updated no more often than every 3 years.
    (C) CMS tracks the calculation and accrual of the standard minimum 
penalty and aggravating factor amounts and announce them on an annual 
basis.
* * * * *
0
91. Section 423.2006 is amended by redesignating paragraphs (c)(1) and 
(2) as paragraphs (c)(2) and (3) and adding a new paragraph (c)(1) to 
read as follows:


Sec.  423.2006  Amount in controversy required for an ALJ hearing and 
judicial review.

* * * * *
    (c) * * *
    (1) The amount remaining in controversy is computed as the 
projected value described in paragraph (c)(2) or (3) of this section, 
reduced by any cost sharing amounts, including deductible, coinsurance, 
or copayment amounts that may be collected from the enrollee for the 
Part D drug(s).
* * * * *


Sec.  423.2014  [Amended]

0
92. Section 423.2014 is amended in paragraph (a)(1)(ii) by removing the 
phrase ``appointed representative'' and adding in its place the phrase 
``representative''.


Sec.  423.2036  [Amended]

0
93. Section 423.2036 is amended in paragraphs (c) and (d) by removing 
the phrase ``appointed representative'' and adding in its place the 
phrase ``representative'' each time it appears.
0
94. Section 423.2260 is revised to read as follows:


Sec.  423.2260  Definitions.

    The definitions in this section apply for this subpart unless the 
context indicates otherwise.
    Advertisement (Ad) means a read, written, visual, oral, watched, or 
heard call to attention. Advertisements can be considered communication 
or marketing based on the intent and content of the message.
    Alternate format means used to convey information to individuals 
with visual, speech, physical, hearing, and intellectual disabilities 
(for example, braille, large print, audio).
    Banner means a type of advertisement feature typically used in 
television ads that is intended to be brief, and flashes limited 
information across a screen for the sole purpose of enticing a 
prospective enrollee to contact the MA plan (for example, obtain more 
information) or to alert the viewer that information is forthcoming.
    Banner-like advertisement is an advertisement that uses a banner-
like feature, that is typically found in some media other than 
television (for example, outdoors and on the internet).
    Communications means activities and use of materials created or 
administered by the Part D sponsor or any downstream entity to provide 
information to current and prospective enrollees. Marketing is a subset 
of communications.
    Marketing means communications materials and activities that meet 
both the following standards for intent and content:
    (1) Intended to do any of the following:
    (i) Draw a beneficiary's attention to a Part D plan or plans.
    (ii) Influence a beneficiary's decision making process when making 
a Part D plan selection.
    (iii) Influence a beneficiary's decision to stay enrolled in a Part 
D plan (that is, retention-based marketing).
    (2) Include or address content regarding any of the following:
    (i) The plan's benefits, benefits structure, premiums or cost 
sharing.
    (ii) Measuring or ranking standards (for example, star ratings or 
plan comparisons).
    (3) In evaluating the intent of an activity or material, CMS will 
consider objective information including, but not limited to, the 
audience of the activity or material, other information communicated by 
the activity or material, and timing and other context of the activity 
or material and is not limited to the MA organization's stated intent.
    Outdoor advertising (ODA) means outdoor material intended to 
capture the

[[Page 9247]]

attention of a passing audience (for example, billboards, signs 
attached to transportation vehicles). ODA may be a communication or 
marketing material.
0
95. Section 423.2261 is added to read as follows:


Sec.  423.2261  Submission, review, and distribution of materials.

    (a) General requirements. MA organizations must submit all 
marketing materials, all election forms, and certain designated 
communications materials for CMS review.
    (1) The Health Plan Management System (HPMS) is the primary system 
of record for the collection, review, and storage of materials that 
must be submitted for review.
    (2) Materials must be submitted to the HPMS Marketing Module 
directly by the Part D sponsor. Third party and downstream entities are 
not permitted to submit materials directly to CMS.
    (b) CMS review of marketing materials and election forms. Except as 
provided in paragraph (b) of this section, a Part D sponsor may not 
distribute or otherwise make available any marketing materials (as 
defined in Sec.  423.2260) or election forms unless one of the 
following occurs:
    (1) CMS has reviewed and approved the material.
    (2) The material has been deemed approved; that is, CMS has not 
rendered a disposition for the material within 45 days (or 10 days if 
using CMS model or standardized marketing materials as outlined in 
Sec.  422.2267(e) of this chapter) of submission to CMS. Materials that 
have been deemed may be used by the Part D sponsor.
    (3) The material has been accepted under Files and Use, as follows:
    (i) The MA organization may distribute certain types of marketing 
materials, designated by CMS based on the material's content, audience, 
and intended use, as they apply to potential risk to the beneficiary, 5 
days following the submission.
    (ii) The Part D sponsor must certify that the material meets all 
applicable CMS communications and marketing requirements in Sec. Sec.  
423.2260 through 423.2267.
    (c) CMS review of communications materials. CMS does not generally 
require submission and approval of communications materials prior to 
use, with the exception of certain designated communications that are 
critical to the beneficiary understanding or accessing their benefits 
(for example, the Evidence of Coverage (EOC)).
    (d) Standards for CMS review. CMS reviews materials to ensure the 
following:
    (1) Compliance with all applicable requirements under Sec. Sec.  
423.2260 through 423.2267.
    (2) Benefit and cost information is an accurate reflection of what 
is contained in the Part D sponsor's bid.
    (3) CMS may determine, upon review of such materials, that the 
materials must be modified, or may no longer be used.
0
96. Section 423.2262 is revised to read as follows:


Sec.  423.2262  General communications materials and activity 
requirements.

    Part D sponsors may not mislead, confuse, or provide inaccurate 
information to current or potential enrollees.
    (a) General rules. Part D sponsors must ensure their statements and 
the terminology used in communications activities and materials adhere 
to the following requirements:
    (1) Part D sponsors may not do any of the following:
    (i) Provide information that is inaccurate or misleading.
    (ii) Make unsubstantiated statements, including superlatives or 
pejoratives.
    (iii) Engage in activities that could mislead or confuse Medicare 
beneficiaries, or misrepresent the Part D sponsor.
    (iv) 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, or vice versa.
    (v) Target potential enrollees based on higher or lower income 
levels.
    (vi) Target potential enrollees based on health status.
    (vii) State or imply plans are only available to seniors rather 
than to all Medicare beneficiaries.
    (viii) Employ Part D plan names that suggest that a plan is not 
available to all Medicare beneficiaries.
    (ix) Display the names or logos or both of co-branded network 
pharmacies on the sponsor's member identification card, unless the 
pharmacy names or logos or both are related to the member selection of 
specific pharmacies.
    (x) Use a plan name that does not include the plan type. The plan 
type should be included at the end of the plan name, for example, 
``Super Medicare Drug Plan (PDP)''.
    (xi) Claim they are recommended or endorsed by CMS, Medicare, or 
the HHS.
    (xii) Convey that a failure to pay premium will not result in 
disenrollment.
    (xiii) Use the term ``free'' to describe a $0 premium, any type of 
reduction in premium, reduction in deductibles or cost sharing, low-
income subsidy, or cost sharing for dual eligible individuals.
    (xiv) State or imply a plan is available only to or is designed for 
Medicaid beneficiaries.
    (xv) Market a Part D plan not designed to serve dual eligible 
beneficiaries as if it were a plan designed to serve dual eligible 
beneficiaries.
    (xvi) Target marketing efforts primarily to dual eligible 
individuals.
    (xvii) Claim a relationship with the state Medicaid agency, unless 
a contract to coordinate Medicaid services for that plan is in place.
    (2) Part D sponsors may do the following:
    (i) State that the Part D sponsor is approved to participate in 
Medicare programs or is contracted to administer Medicare benefits or 
both.
    (ii) Use the term ``Medicare-approved'' to describe benefits or 
services in materials or both.
    (b) Product endorsements and testimonials. (1) Product endorsements 
and testimonials may take any of the following forms:
    (i) Television or video ads.
    (ii) Radio ads.
    (iii) Print ads.
    (iv) Social media ads. In cases of social media, the use of a 
previous post, whether or not associated with or originated by the Part 
D sponsor, is considered a product endorsement or testimonial.
    (v) Other types of ads.
    (2) Part D sponsors may use individuals to endorse the Part D 
sponsor's product provided the endorsement or testimonial adheres to 
the following requirements:
    (i) The speaker must identify the Part D sponsor's product or 
company by name.
    (ii) Medicare beneficiaries endorsing or promoting the Part D 
sponsor must have been an enrollee at the time the endorsement or 
testimonial was created.
    (iii) The endorsement or testimonial must clearly state that the 
individual was paid for the endorsement or testimonial, if applicable.
    (iv) If an individual is used (for example, an actor) to portray a 
real or fictitious situation, the advertisement must state that it is 
an actor portrayal.
    (c) Requirements when including certain telephone numbers in 
materials. (1) Part D sponsors must adhere to the following 
requirements for including certain telephone numbers in materials:
    (i) When a Part D sponsor includes its customer service number, the 
hours of operation must be included the first time (at a minimum) the 
number appears.

[[Page 9248]]

    (ii) When a Part D sponsor includes its customer service number, it 
must provide a toll-free TTY number in conjunction with the customer 
service number in the same font size.
    (iii) On every material where 1-800-MEDICARE or Medicare TTY 
appears, the Part D sponsor must include the hours and days of 
operation for 1-800-MEDICARE (that is, 24 hours a day/7 days a week).
    (2) The following advertisement types are exempt from these 
requirements:
    (i) Outdoor advertising.
    (ii) Banners or banner-like ads.
    (iii) Radio advertisements and sponsorships.
    (d) Standardized material identification (SMID). (1) Part D 
sponsors must use a standardized method of identification for oversight 
and tracking of materials beneficiaries receive.
    (2) The SMID consists of the following three parts:
    (i) The Part D sponsor's contract or Multi-Contract Entity (MCE) 
number, (that is, ``S'' for PDPs, or ``Y'' for MCE identifier) followed 
by an underscore, except that the SMID for multi-plan marketing 
materials must begin with the word ``MULTI-PLAN'' instead of the Part D 
sponsor's contract number (for example, S1234_abc123_C or MULTI-
PLAN_efg456_M).
    (ii) A series of alpha numeric characters (at the Part D sponsor's 
discretion) unique to the material followed by an underscore.
    (iii) An uppercase ``C'' for communication materials or an 
uppercase ``M'' for marketing materials (for example, S1234_abc123_C or 
S5678_efg456_M).
    (3) The SMID is required on all materials except the following:
    (i) Membership ID card.
    (ii) Envelopes, radio ads, outdoor advertisements, banners, banner-
like ads, and social media comments and posts.
    (iii) OMB-approved forms/documents, except those materials included 
in Sec.  423.2267.
    (iv) Corporate notices or forms (that is, not Part D-specific) 
meeting the definition of communications such as privacy notices and 
authorization to disclose protected health information (PHI).
    (v) Agent-developed communications materials that are not 
marketing.
    (4) Non-English and alternate format materials, based on previously 
created materials, may have the same SMID as the material on which they 
are based.
0
97. Section 423.2263 is added to read as follows.


Sec.  423.2263  General marketing requirements.

    Marketing is a subset of communications and therefore must follow 
the requirements outlined in Sec.  423.2262 as well as this section. 
Marketing (as defined in Sec.  423.2260) must additionally meet the 
following requirements:
    (a) Part D sponsors may begin marketing prospective plan year 
offerings on October 1 of each year for the following contract year. 
Part D sponsors may market the current and prospective year 
simultaneously provided materials clearly indicate what year is being 
discussed.
    (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 value (as governed by guidance published by the Department of 
Health and Human Services Office of Inspector General (HHS OIG)), 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) Provide meals to potential enrollees regardless of value.
    (4) Market non-health care related products to prospective 
enrollees during any Part D sales activity or presentation. This is 
considered cross-selling and is prohibited.
    (5) Compare their plan to other plans, unless the information is 
accurate, not misleading, and can be supported by the Part D sponsor 
making the comparison.
    (6) Display the names or logos or both of pharmacy co-branding 
partners on marketing materials, unless the materials clearly indicate 
via a disclaimer or in the body that ``Other pharmacies are available 
in the network.''
    (7) Knowingly target or send unsolicited marketing materials to any 
Part D enrollee during the Open Enrollment Period (OEP).
    (i) During the OEP, Plans/Part D sponsors may do any of the 
following:
    (A) Conduct marketing activities that focus on other enrollment 
opportunities, including but not limited to marketing to age-ins (who 
have not yet made an enrollment decision), marketing by 5-star plans 
regarding their continuous enrollment special election period (SEP), 
and marketing to dual-eligible and LIS beneficiaries who, in general, 
may make changes once per calendar quarter during the first nine months 
of the year.
    (B) Send marketing materials when a beneficiary makes a proactive 
request;
    (C) At the beneficiary's request, have one-on-one meetings with a 
sales agent; and
    (D) At the beneficiary's request, provide information on the OEP 
through the call center.
    (ii) During the OEP, Plans/Part D sponsors may not:
    (A) Send unsolicited materials advertising the ability/opportunity 
to make an additional enrollment change or referencing the OEP;
    (B) Specifically target beneficiaries who are in the OEP because 
they made a choice during Annual Enrollment Period (AEP) by purchase of 
mailing lists or other means of identification;
    (C) Engage in or promote agent/broker activities that intend to 
target the OEP as an opportunity to make further sales; or
    (D) Call or otherwise contact former enrollees who have selected a 
new plan during the AEP.
    (c) The following requirements apply to how Part D sponsors must 
display CMS issued Star Ratings:
    (1) References to individual Star Rating measure(s) must also 
include references to the contract's overall Star Rating.
    (2) May not use an individual underlying category or measure to 
imply overall high Star Ratings.
    (3) Must be clear that the rating is out of 5 stars.
    (4) Must clearly identify the Star Rating contract year.
    (5) May only market the Star Ratings in the service area in which 
the Star Rating is applicable.
    (6) The following requirements apply to all 5 Star PDP contracts:
    (i) May not market the 5 star special enrollment period, as defined 
in Sec.  423.38(c)(20), after November 30 of each year if the contract 
has not received an overall 5 star for the next contract year.
    (ii) May use CMS' 5 star icon or may create their own icon.
    (7) The following requirements apply to all Low Performing MA 
contracts:
    (i) The Low Performing Icon must be included on all materials about 
or referencing the specific contract's Star Ratings.
    (ii) Must state the Low Performing Icon means that the Part D 
sponsor's contract received a summary rating of 2.5 stars or below in 
Part D for the last 3 years.
    (iii) May not attempt to refute or minimize Low Performing Status.
0
98. Section 423.2264 is revised to read as follows:

[[Page 9249]]

Sec.  423.2264  Beneficiary contact.

    For the purpose of this section, beneficiary contact applies to all 
outreach activities to a beneficiary or their caregivers by the Part D 
sponsor or its agents and brokers.
    (a) Unsolicited contact. Subject to the rules for contact for plan 
business in paragraph (b) of this section, the following rules apply 
when materials or activities are given or supplied to a beneficiary or 
their caregiver without prior request:
    (1) Part D sponsors may make unsolicited direct contact by 
conventional mail and other print media (for example, advertisements 
and direct mail) or email (provided every email contains an opt-out 
option).
    (2) Part D sponsors may not do any of the following:
    (i) Use door to door solicitation, including leaving information of 
any kind, except that information may be left when an appointment is 
pre-scheduled but the beneficiary is not home.
    (ii) Approach enrollees in common areas such as parking lots, 
hallways, lobbies.
    (iii) Send unsolicited direct messages from social media platforms.
    (iv) Use telephone solicitation (that is, cold calling), text 
messages, or voicemail messages, including, but not limited to the 
following:
    (A) Unsolicited calls based on referrals.
    (B) Calls to former enrollees who have disenrolled or those in the 
process of disenrolling, except to conduct disenrollment surveys for 
quality improvement purposes.
    (C) Calls to beneficiaries who attended a sales event, unless the 
beneficiary gave express permission to be contacted.
    (D) Unsolicited calls to prospective enrollees to confirm receipt 
of mailed information.
    (3) Calls are not considered unsolicited if the beneficiary 
provides consent or initiates contact with the plan. For example, 
returning phone calls or calling an individual who has completed a 
business reply card requesting contact is not considered unsolicited.
    (4) Part D sponsors are responsible to ensure sales staff, 
including agents and brokers, abide by Federal and state laws related 
to consumer protection, including but not limited to do not call list 
requirements.
    (b) Contact for plan business. Part D sponsors may contact current, 
and to a more limited extent, former members, including those enrolled 
in other products offered by the parent organization, to discuss plan 
business, in accordance with the following requirements:
    (1) A Part D sponsor may conduct the following activities as plan 
business:
    (i) Call current enrollees, including those in non-Medicare 
products, to discuss Medicare products. Examples of such calls include, 
but are not limited to the following:
    (A) Enrollees aging into Medicare from commercial products.
    (B) Existing enrollees, including Medicaid enrollees, to discuss 
other Medicare products or plan benefits.
    (C) Members in an MA or cost plan to discuss other Medicare 
products.
    (ii) Call beneficiaries who submit enrollment applications to 
conduct business related to enrollment.
    (iii) With prior CMS approval, call LIS enrollees that a plan is 
prospectively losing to due reassignment. CMS decisions to approve 
calls are for limited circumstances based on the following:
    (A) The proximity of cost of the losing plan as compared to the 
national benchmark, and
    (B) The selection of plans in the service area that are below the 
benchmark.
    (iv) Agents/brokers calling clients who are enrolled in other 
products they may sell, such as automotive or home insurance.
    (v) Part D sponsors may not make unsolicited calls about other 
lines of business as a means of generating leads for Medicare plans.
    (2) [Reserved]
    (c) Events with beneficiaries. Part D sponsors and their agent/
brokers may hold educational events, marketing or sales events, and 
personal marketing appointments to meet with Medicare beneficiaries, 
either face-to-face or virtually. The requirements for each type of 
event are as follows:
    (1) Educational events must be advertised as such and be designed 
to generally inform beneficiaries about Medicare, including Medicare 
Advantage, Prescription Drug programs, or any other Medicare program.
    (i) At educational events, Part D sponsors and agents/brokers may 
not market specific Part D sponsors or benefits.
    (ii) Part D sponsors holding or participating in educational events 
may do any of the following:
    (A) Distribute communication materials.
    (B) Answer beneficiary initiated questions pertaining to Part D 
sponsors.
    (C) Set up future personal marketing appointments.
    (D) Distribute business cards.
    (E) Obtain beneficiary contact information, including Scope of 
Appointment forms.
    (iii) Part D sponsors holding or participating in educational 
events may not conduct sales or marketing presentations or distribute 
or accept plan applications.
    (2) Marketing or sales events are group events that fall within the 
definition of marketing at Sec.  423.2260.
    (i) If a marketing event directly follows an educational event, the 
Part D sponsor or agent/broker must provide an opportunity for 
beneficiaries to determine if they want to continue with the marketing 
event.
    (ii) Part D sponsors holding or participating in marketing events 
may do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Collect Scope of Appointment forms for future personal 
marketing appointments.
    (D) Conduct marketing presentations.
    (iii) Part D sponsors holding or participating in marketing events 
may not do any of the following:
    (A) Require sign in sheets or require attendees to provide contact 
information as a prerequisite for attending an event.
    (B) Conduct activities, including health screenings, health 
surveys, or other activities that are used for or could be viewed as 
being used to target a subset of members (that is ``cherry-picking'').
    (C) Use information collected for raffles or drawings for any 
purpose other than raffles or drawings.
    (3) Personal marketing appointments are those appointments that are 
tailored to an individual or small group (for example, a married 
couple). Personal marketing appointments are not defined by the 
location.
    (i) Prior to the personal marketing appointment beginning, the Part 
D sponsor (or the agent/broker, as applicable) must agree upon and 
record the Scope of Appointment with the beneficiary(ies).
    (ii) Part D sponsors holding a personal marketing appointment may 
do any of the following:
    (A) Provide marketing materials.
    (B) Distribute and accept plan applications.
    (C) Conduct marketing presentations.
    (D) Review the individual needs of the beneficiary including, but 
not limited to, health care needs and history, commonly used 
medications, and financial concerns.
    (iii) Part D sponsors holding a personal marketing appointment may 
not do any of the following:

[[Page 9250]]

    (A) 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.
    (B) 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.
    (C) Market non-health related products such as annuities.
0
99. Section 423.2265 is added to read as follows:


Sec.  423.2265  Websites.

    As required under Sec.  423.128(d)(2), Part D sponsors must have a 
website.
    (a) General website requirements. (1) Part D sponsor websites must 
meet the all of the following requirements:
    (i) Maintain current year contract content through December 31 of 
each year.
    (ii) Notify users when they will leave the Part D sponsor's 
Medicare site.
    (iii) Include or provide access to (for example, through a 
hyperlink) applicable disclaimers with corresponding content. 
Overarching disclaimers, such as the Federal Contracting Statement, are 
not required on every page.
    (iv) Be updated to reflect the most current information within 30 
days of any information on the website changing.
    (v) Keep PDP content separate and distinct from other lines of 
business, including Medicare Supplemental Plans.
    (2) Part D sponsor websites may not do any of the following:
    (i) Require beneficiaries to enter any information other than zip 
code, county, or state for access to non-beneficiary-specific website 
content.
    (ii) Provide links to foreign drug sales, including advertising 
links.
    (iii) State that the Part D sponsor is not responsible for the 
content of their social media pages or the website of any first tier, 
downstream, or related entity that provides information on behalf of 
the Part D sponsor.
    (b) Required content. A Part D sponsor's websites must include the 
following content:
    (1) A toll-free customer service number, TTY number, and days and 
hours of operation.
    (2) A physical or Post Office Box address.
    (3) A PDF or copy of a printable pharmacy directory.
    (4) A searchable pharmacy directory.
    (5) A searchable formulary.
    (6) Information on enrollees' and Part D sponsors' rights and 
responsibilities upon disenrollment. Part D sponsors may either post 
this information or provide specific information on where it is located 
in the Evidence of Coverage together with a link to that document.
    (7) A description of and information on how to file a grievance, 
organizational determination, and appeal.
    (8) Prominently display a link to the Medicare.gov electronic 
complaint.
    (9) Privacy Notice under the HIPAA Privacy Rule (45 CFR part 160).
    (10) Prescription Drug Transition Policy.
    (11) LIS Premium Summary Chart.
    (12) Prescription Drug Transition Policy.
    (c) Required posted materials. A Part D sponsor's website must 
provide access to the following materials, in a printable format, 
within the timeframes noted in paragraphs (c)(1) and (2) of this 
section.
    (1) The following documents for each plan year must be posted on 
the website by October 15 prior to the beginning of the plan year:
    (i) Evidence of Coverage.
    (ii) Annual Notice of Change (for renewing plans).
    (iii) Summary of Benefits.
    (iv) Pharmacy Directory.
    (v) Formulary.
    (vi) Utilization Management Forms for physicians and enrollees.
    (2) The following documents must post on the website throughout the 
year and be updated as required:
    (i) Prior Authorization Forms for Physicians and Enrollees.
    (ii) Part D Model Coverage Determination and Redetermination 
Request Forms.
    (iii) Exception request forms for physicians (which must be posted 
by January 1 for new plans).
    (iv) CMS Star Ratings document, which must be posted within 21 days 
after its release on the Medicare Plan Finder.
0
100. Section 423.2266 is added to read as follows:


Sec.  423.2266  Activities with healthcare providers or in the 
healthcare setting.

    (a) Where marketing is prohibited. The requirements in paragraphs 
(c) through (e) of this section apply to activities in the health care 
setting. Marketing activities and materials are not permitted in areas 
where care is being administered, including but not limited to the 
following:
    (1) Exam rooms.
    (2) Hospital patient rooms.
    (3) Treatment areas where patients interact with a provider and 
his/her clinical team and receive treatment (including dialysis 
treatment facilities).
    (4) Pharmacy counter areas.
    (b) Where marketing is permitted. Marketing activities and 
materials are permitted in common areas within the health care setting, 
including, not limited to, the following:
    (1) Common entryways.
    (2) Vestibules.
    (3) Waiting rooms.
    (4) Hospital or nursing home cafeterias.
    (5) Community, recreational, or conference rooms.
    (c) Provider-initiated activities. Provider-initiated activities 
are activities conducted by a provider at the request of the patient, 
or as a matter of a course of treatment, and occur when meeting with 
the patient as part of the professional relationship between the 
provider and patient. Provider-initiated activities do not include 
activities conducted at the request of the Part D sponsor or pursuant 
to the network participation agreement between the Part D sponsor and 
the provider. Provider-initiated activities that meet this definition 
fall outside of the definition of marketing in Sec.  423.2260. 
Permissible provider-initiated activities include:
    (1) Distributing unaltered, printed materials created by CMS, such 
as reports from Medicare Plan Finder, the ``Medicare & You'' handbook, 
or ``Medicare Options Compare'' (from https://www.medicare.gov) 
including in areas where care is delivered.
    (2) Providing the names of Part D sponsors with which they 
contract.
    (3) Answering questions or discussing the merits of a Part D plan 
or plans, including cost sharing and benefit information including in 
areas where care is delivered.
    (4) Referring patients to other sources of information, such as 
State Health Insurance Assistance Program (SHIP) representatives, plan 
marketing representatives, State Medicaid Office, local Social Security 
Offices, CMS' website at https://www.medicare.gov, or 1-800-MEDICARE.
    (5) Referring patients to Part D marketing materials available in 
common areas.
    (6) Providing information and assistance in applying for the LIS.
    (7) Announcing new or continuing affiliations with Part D sponsors, 
once a contractual agreement is signed. Announcements may be made 
through any means of distribution.
    (d) Plan-initiated provider activities. Plan-initiated provider 
activities are those activities conducted by a provider at the request 
of a Part D sponsor.

[[Page 9251]]

During a plan-initiated provider activity, the provider is acting on 
behalf of the Part D sponsor. For the purpose of plan-initiated 
activities, the Part D sponsor is responsible for compliance with all 
applicable regulatory requirements.
    (1) During plan-initiated provider activities, Part D sponsors must 
ensure that the provider does not:
    (i) Accept/collect scope of appointment forms.
    (ii) Accept Medicare enrollment applications.
    (iii) Make phone calls or direct, urge, or attempt to persuade 
their patients to enroll in a specific plan based on financial or any 
other interests of the provider.
    (iv) Mail marketing materials on behalf of a Part D sponsor.
    (v) Offer inducements to persuade patients to enroll with a 
particular Part D sponsor.
    (vi) Conduct health screenings as a marketing activity.
    (vii) Distribute marketing materials or enrollment forms in areas 
where care is being delivered.
    (viii) Offer anything of value to induce enrollees to select the 
provider.
    (ix) Accept compensation from the Part D sponsor for any marketing 
or enrollment activities.
    (2) During plan-initiated provider activities, the provider may do 
any of the following:
    (i) Make available, distribute, and display communications 
materials, including in areas where care is being delivered.
    (ii) Provide or make available marketing materials and enrollment 
forms in common areas.
    (e) Part D sponsor activities in the healthcare setting. Part D 
sponsor activities in the health care setting are those activities, 
including marketing activities, that are conducted by Part D sponsor or 
any downstream entity, but not by a provider. All marketing must follow 
the requirements in paragraphs (a) and (b) of this section. However, 
during Part D sponsor activities, the following is permitted:
    (1) Accepting and collect Scope of Appointment forms.
    (2) Accepting enrollment forms.
    (3) Making available, distributing, and displaying communications 
materials, including in areas where care is being delivered.
0
101. Section 423.2267 is added to read as follows:


Sec.  423.2267  Required materials and content.

    For information CMS deems to be vital to the beneficiary, including 
information related to enrollment, benefits, health, and rights, the 
agency may develop materials or content that are either standardized or 
provided in a model form. Such materials and content are collectively 
referred to as required.
    (a) Standards for required materials and content. All required 
materials and content, regardless of categorization as standardized in 
paragraph (b) of this section or model in paragraph (c) of this 
section, must meet the following:
    (1) Be in a 12pt font (Times New Roman or equivalent).
    (2) For markets with a significant non-English speaking population, 
be in the language of these individuals. Part D sponsors must translate 
required 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.
    (3) Be provided to the beneficiary within CMS's specified 
timeframes.
    (b) Standardized materials. Standardized materials and content are 
required materials and content that must be used in the form and manner 
provided by CMS.
    (1) When CMS issues standardized material or content, a Part D 
sponsor must use the document without alteration except for the 
following:
    (i) Populating variable fields.
    (ii) Correcting grammatical errors.
    (iii) Adding customer service phone numbers.
    (iv) Adding plan name, logo, or both.
    (v) Deleting content that does not pertain to the plan type (for 
example, removing Part D language for a MA-only plan).
    (vi) Adding the SMID.
    (vii) Adding the Privacy Notice under the HIPAA Privacy Rule.
    (2) When CMS issues standardized content, Part D sponsors--
    (i) Must use the language provided without alteration.
    (ii) May develop accompanying language for standardized material or 
content, provided it does not conflict with the standardized material 
or content. For example, CMS may issue standardized content associated 
with an appeal notification. Part D sponsors may draft a letter that 
includes the standardized content in the body of the letter. The 
remaining language in the letter is at the plan's discretion, provided 
it does not conflict with the standardized content.
    (c) Model materials. Model materials and content are those required 
materials and content created by CMS as an example of how to convey 
beneficiary information. When drafting required materials or content 
based on CMS models, MA organizations--
    (1) Must accurately convey the vital information in the required 
material or content to the beneficiary, although the Part D sponsor is 
not required to use CMS model materials or content verbatim; and
    (2) Must follow CMS's specified order of content, when specified.
    (d) Delivery of required materials. Part D sponsor must mail 
required materials in hard copy or provide them electronically, 
following the requirements in paragraphs (d)(1) and (2) of this 
section.
    (1) For hard copy mailed materials, each enrollee must receive his 
or her own copy, except in cases of non-beneficiary-specific 
material(s) where the Part D sponsor has determined multiple enrollees 
are living in the same household and it has reason to believe the 
enrollees are related. In that case, the Part D sponsor may mail one 
copy to the household. The Part D sponsor must provide all enrollees an 
opt-out process so the enrollees can each receive his or her own copy, 
instead of a copy to the household. Materials specific to an individual 
beneficiary must always be mailed to that individual.
    (2) Materials may be delivered electronically following the 
requirements in paragraphs (d)(2)(i) and (ii) of this section.
    (i) Without prior authorization, Part D sponsor may mail new and 
current enrollees a notice informing enrollees how to electronically 
access the following required materials: The Evidence of Coverage, 
Provider and Pharmacy Directories, and Formulary. The following 
requirements apply:
    (A) The Part D sponsor may mail one notice for all materials or 
multiple notices.
    (B) Notices for prospective year documents may not be mailed prior 
to September 1 of each year, but must be sent in time for an enrollee 
to access the specified documents by October 15 of each year.
    (C) The Part D sponsor may send the notice throughout the year to 
new enrollees.
    (D) The notice must include the website address to access the 
documents, the date the documents will be available if not currently 
available, and a phone number to request that hard copy documents be 
mailed.
    (E) The notice must provide the enrollee with the option to request 
hardcopy materials. Requests may be materials specific, and must have 
the option of a one-time request or a permanent request that must stay 
in place until the enrollee chooses to receive electronic materials 
again.

[[Page 9252]]

    (F) Hard copies of requested materials must be sent within three 
business days.
    (ii) With prior authorization from the enrollee, the Part D sponsor 
may provide any required material or content electronically. To do so, 
the Part D sponsor must do all of the following:
    (A) Obtain prior consent from the enrollee. The consent must 
specify both the media type and the specific materials being provided 
in that media type.
    (B) Provide instructions on how and when enrollees can access the 
materials.
    (C) Have a process through which an enrollee can request hard 
copies be mailed, providing the beneficiary with the option of a one-
time request or a permanent request (which must stay in place until the 
enrollee chooses to receive electronic materials again), and with the 
option of requesting hard copies for all or a subset of materials. Hard 
copies must be mailed within 3 business days.
    (D) Have a process for automatic mailing of hard copies when 
electronic versions or the chosen media type is undeliverable.
    (e) CMS required materials and content. The following are required 
materials that must be provided to current and or perspective 
enrollees, as applicable, in the form and manor outlined in this 
section:
    (1) Evidence of Coverage (EOC). The EOC is a standardized 
communications material through which certain required information 
(under Sec.  423.128(b)) must be provided annually.
    (i) Must be provided to current enrollees of plan by October 15 of 
each Year.
    (ii) Must be provided to new enrollees within 10 calendar days from 
receipt of CMS confirmation of enrollment or by last day of month prior 
to effective date, whichever is later.
    (2) Annual Notice of Change (ANOC). The ANOC is a standardized 
marketing material through which plans must provide the information 
required under Sec.  423.128(g)(2) annually.
    (i) Must send for enrollee receipt no later than September 30 of 
each year.
    (ii) Enrollees with an October 1, November 1, and December 1 
effective date must receive within ten (10) calendar days from receipt 
of CMS confirmation of enrollment or by last day of month prior to 
effective date, whichever is later.
    (3) Pre-Enrollment Checklist (PECL). The PECL is a standardized 
communications material that plans must provide to prospective 
enrollees with the enrollment form and Summary of Benefits (SB) so that 
the enrollees understand important plan benefits and rules. The PECL 
references information on the following:
    (i) The EOC.
    (ii) Provider directory.
    (iii) Pharmacy directory.
    (iv) Formulary.
    (v) Premiums/copayments/coinsurance.
    (vi) Emergency/urgent coverage.
    (vii) Plan-type rules.
    (4) Summary of Benefits (SB). Part D sponsors must disseminate a 
summary of highly utilized coverage that include benefits and cost 
sharing to prospective Medicare beneficiaries, known as the SB. The SB 
is a model marketing material. It must be in a clear and accurate 
format.
    (i) The SB must be provided with an enrollment form that meets the 
following:
    (A) In hardcopy with a paper enrollment form.
    (B) For online enrollment, the SB must be made available 
electronically (for example, via a link) prior to the completion and 
submission of enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where they can access the SB.
    (ii) The SB must include the following information:
    (A) The prescription drug expense (tiers/levels) as follows:
    (1) Deductible, the initial coverage phase, coverage gap, and 
catastrophic coverage.
    (2) A note that costs may differ based on pharmacy type or status 
(for example, preferred/non-preferred, mail order, long-term care (LTC) 
or home infusion, and 30- or 90-day supply), when applicable.
    (3) For dual eligible enrollees with differing levels of cost must 
state how cost sharing and benefits differ depending on the level of 
Medicaid eligibility.
    (B) The SB may include other health related benefits.
    (5) Enrollment/Election form. This is the model communications 
material through which plans must provide the information required 
under Sec.  423.32(b).
    (6) Enrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
423.32(d).
    (7) Disenrollment Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
423.36(b)(2).
    (8) Formulary. This is a model communications material through 
which Part D sponsors must provide information required under Sec.  
423.128(b)(4).
    (i) Must be provided to current enrollees of plan by October 15 of 
each year.
    (ii) Must also provide to new enrollees within 10 calendar days 
from receipt of CMS confirmation of enrollment or by last day of month 
prior to effective date, whichever is later.
    (9) Low Income Subsidy (LIS) Notice. This is a model communications 
content through which Part D sponsors must notify potential enrollees 
of what their plan premium will be once they are eligible for Extra 
Help and receive the low-income subsidy.
    (10) Low Income Subsidy (LIS) Rider. This is a model communications 
material provided to all enrollees who qualify for Extra Help. In the 
LIS Rider, the Part D sponsors must convey how much help the 
beneficiary will receive in the benefit year toward their Part D 
premium, deductible, and copayments provide to all beneficiaries who 
qualify for Extra Help.
    (i) The LIS Rider must be provided at least once per year by 
September 30.
    (ii) The LIS Rider must be sent to enrollees who qualify for Extra 
Help or have a change in LIS levels within 30 days of receiving 
notification from CMS.
    (11) Midyear Change Notification. This is a model communications 
material through which plans must provide a notice to enrollees when 
there is a midyear change in benefits or plan rules, under the 
following timelines:
    (i) Notices of changes in plan rules, unless otherwise addressed 
elsewhere in the regulation, must be provided 30 days in advance.
    (ii) National Coverage Determination (NCD) changes announced or 
finalized less than 30 days before effective date, a notification is 
required as soon as possible.
    (iii) Midyear NCD or legislative changes must be provided no later 
than 30 days after the NCD is announced.
    (A) Plans may include the change in next plan mass mailing (for 
example, newsletter), provided it is within 30 days.
    (B) The notice must also appear on the MA organization's website.
    (12) Non-renewal Notice. This is a model communications material 
through which plans must provide the information required under Sec.  
423.507.
    (i) The Non-renewal Notice must be provided at least 90 calendar 
days before the date on which the nonrenewal is effective. For 
contracts ending on December 31, the notice must be dated October 2 to 
ensure national consistency in the application of Medigap Guaranteed 
Issue (GI) rights to all enrollees, except for those enrollees

[[Page 9253]]

in Medicare-Medicaid Plans (MMPs) and special needs plans (SNPs).
    (ii) The Non-renewal Notice must do all of the following:
    (A) Inform the enrollee that their plan will no longer be offered 
and told when their plan will end.
    (B) Identify the last day the enrollee has to make a Part D sponsor 
selection. Include any applicable open enrollment periods or special 
election periods or both (for example, Medicare open enrollment, non-
renewal special election period).
    (C) Explain what they must do to continue receiving Medicare 
coverage and what will happen if the enrollee chooses to do nothing.
    (D) Include all available health plan options must be included in 
the enrollee's notice along with an explanation of how to obtain each 
option.
    (E) Specify when coverage will start after a new Medicare plan is 
chosen.
    (F) List 1-800-MEDICARE contact information together with other 
organizations that may be able to assist with comparing plans (for 
example, SHIPs).
    (H) Include the Part D sponsor's organization's telephone number, 
TTY number, and hours and days of operation.
    (13) Part D Transition Letter. This is a model communications 
material that must be provided to the beneficiary when they receive a 
transition fill for a nonformulary drug. The Part D Transition Letter 
must be sent within 3 days of adjudication of temporary transition 
fill.
    (14) Pharmacy Directory. This is a model communications material 
through which Part D sponsors must provide the information required 
under Sec.  423.128. The pharmacy directory must meet all of the 
following:
    (i) Be provided to current enrollees by October 15 of each year and 
upon request, within 3 business days of the request.
    (ii) Be provided to new enrollees within 10 calendars days from 
receipt of CMS confirmation of enrollment or by last day of month prior 
to effective date, whichever is later.
    (iii) Plan sponsors must update directory information any time the 
Part D sponsor becomes aware of changes.
    (A) All updates to the online provider directories are expected to 
be completed within 30 days of receiving information requiring update.
    (B)(1) Updates to hardcopy provider directories must be completed 
within 30 days.
    (2) Hardcopy directories that include separate updates via addenda 
are considered up-to-date.
    (15) Prescription transfer letter. This is a model communications 
material must be sent when a Part D sponsor requests permission from an 
enrollee to fill a prescription at a different network pharmacy than 
the one currently being used by enrollee.
    (16) Star Ratings Document. This is a standardized marketing 
material through which Star Ratings information is conveyed to 
prospective enrollees.
    (i) The Star Ratings Document is generated through HPMS.
    (ii) The Star Ratings Document must be provided with an enrollment 
form as follows:
    (A) In hardcopy with a paper enrollment form.
    (B) For online enrollment, made available electronically (for 
example, via a link) prior to the completion and submission of 
enrollment request.
    (C) For telephonic enrollment, the beneficiary must be verbally 
told where they can access the Star Ratings Document.
    (iii) New Part D sponsor that have no Star Ratings are not required 
to provide the Star Ratings Document until the following contract year.
    (iv) Updated Star Ratings must be used within 21 calendar days of 
release of updated information on Medicare Plan Finder.
    (v) Updated Star Ratings must not be used until CMS releases Star 
Ratings on Medicare Plan Finder.
    (17) Coverage Determination Notices. This is a model communications 
material through which plans must provide the information under Sec.  
423.568.
    (18) Excluded Provider Notices. This is a model communications 
material through which plans must notify members when a provider they 
use has been excluded from participating in the Medicare program based 
on an OIG exclusion or the CMS preclusion list.
    (19) Notice of Denial of Medicare Prescription Drug Coverage. This 
is a standardized material used to convey detailed descriptions of 
denied drug coverage and appeal rights.
    (20) Medicare Prescription Drug Coverage and Your Rights. This is a 
standardized material used to convey a beneficiary's appeal rights when 
a drug cannot be filled at point-of-sale.
    (21) Medicare Part D Coverage Determination Request Form. This is a 
model material used to collect additional information from a 
prescriber.
    (22) Request for Additional Information. This is a standardized 
material used by the Part D sponsor to request a beneficiary obtain 
additional information from the prescriber regarding a beneficiary's 
exception request.
    (23) Notice of Right to an Expedited Grievance. This is a model 
communications material used to convey a Medicare beneficiary's rights 
to request that a decision be made on a grievance or appeal within a 
shorter timeframe.
    (24) Notice of Inquiry. This is a model communication from a 
prescription drug plan informing a beneficiary if a drug is covered by 
the formulary.
    (25) Notice of Case Status. This is a model communications material 
used to inform a beneficiary of the denial of an appeal and additional 
appeal rights.
    (26) Request for Reconsideration of Medicare Prescription Drug 
Denial. This is a model notice used to inform the beneficiary of rights 
to an independent review of a Part D sponsor's decision.
    (27) Notice of Redetermination. This is a model communications 
material used to convey instructions for requesting an appeal of an 
adverse coverage determination.
    (28) Part D LEP Reconsideration Notice. This is a model 
communication used to convey detailed instructions on how to request a 
reconsideration of an assessed Part D late enrollment penalty.
    (29) LEP Reconsideration Request Form. This is a model 
communication used to request an appeal of a decision on an LEP by the 
independent review entity.
    (30) Request for Administrative Law Judge (ALJ) Hearing or Review 
of Dismissal. This is a model communication used by an enrollee to 
request a hearing by the ALJ or a review of the IRE dismissal.
    (31) Appointment of Representative (AOR). This is a standardized 
material used to assign an individual to act on behalf of a beneficiary 
for the purpose of an appeal, grievance, or coverage determination.
    (32) Federal Contracting Statement. This is model content through 
which plans must convey that they have a contract with Medicare and 
that enrollment in the plan depends on contract renewal.
    (i) The Federal Contracting Statement must include all of the 
following:
    (A) Legal or marketing name of the organization.
    (B) Type of plan (for example PDP).
    (C) A statement that the organization has a contract with Medicare 
(when applicable, Part D sponsors may incorporate a statement that the 
organization has a contract with the State/Medicaid program).
    (D) A statement that enrollment depends on contract renewal.
    (ii) Part D sponsors must include the Federal Contracting Statement 
on all

[[Page 9254]]

marketing materials with the exception of the following:
    (A) Banner and banner-like advertisements.
    (B) Outdoor advertisements.
    (C) Text messages.
    (D) Social media.
    (33) Star Ratings Disclaimer. This is standardized content. The 
disclaimer consists of the statement ``Every year, Medicare evaluates 
plans based on a 5-star rating system,'' and must be present whenever 
Star Ratings are mentioned in marketing materials, with the exception 
of when Star Ratings are published on small objects (that is, a give-
away items such as a pens or rulers).
    (34) Availability of Non-English Translations Disclaimer. This is 
standardized content. The disclaimer consists of the statement 
``ATTENTION: If you speak [insert language], language assistance 
services, free of charge, are available to you. Call 1-XXX-XXX-XXXX 
(TTY: 1-XXX-XXX-XXXX).''
    (i) The disclaimer must be placed in non-English languages that 
meet the 5 percent threshold for language translation under paragraph 
(a)(2) of this section.
    (ii) The disclaimer must be added to all required materials in this 
section.
    (35) Accommodations Disclaimer. This is standardized content. The 
disclaimer consists of the statement ``For accommodations of persons 
with special needs at meetings call '' and must 
be present on all advertisements and invitations to all events as 
described under Sec.  423.2264(b).
    (36) Mailing Statements. This is standardized content. It consists 
of statements on envelopes that Part D sponsor must include when 
mailing information to current members, as follows:
    (i) Part D sponsors must include the following statement when 
mailing information about the enrollee's current plan: ``Required on 
all advertisements and invitations to events (educational and 
marketing).''
    (ii) Part D sponsors must include the following statement when 
mailing health and wellness information ``Health and wellness or 
prevention information.''
    (iii) The Part D sponsor must include the plan name; however, if 
the plan name is elsewhere on the envelope, the plan name does not need 
to be repeated in the disclaimer.
    (iv) Delegated or sub-contracted entities and downstream entities 
that conduct mailings on behalf of a multiple Part D sponsors must also 
comply with this requirement, however, they do not have to include a 
plan name.
    (37) Promotional Give-Away Disclaimer. This is model content. The 
disclaimer consists of a statement that must make clear that there is 
no obligation to enroll in a plan, and must be included when offering a 
promotional give-away such as a drawing, prizes, or a free gift.
    (38) Provider Co-branded Material Disclaimer. This is standardized 
content. The disclaimer consists of the statement: ``Other Pharmacies/
Physicians/Providers are available in our network,'' and must be 
included on materials that identify co-branding relationships with 
network provider or pharmacies.


Sec.  423.2268  [Removed]

0
102 Section 423.2268 is removed.
0
103. Section 423.2274 is revised to read as follows:


Sec.  423.2274  Agent, broker, and other third party requirements.

    If a Part D sponsor uses agents and brokers to sell its Medicare 
Part D plans, the requirements in paragraphs (a) through (e) of this 
section are applicable. If a Part D sponsor makes payments to third 
parties, the requirements in paragraph (f) of this section are 
applicable.
    (a) Definitions. For purposes of this section, the following 
definitions are applicable:
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale or renewal of a plan or product offered 
by a Part D sponsor including, but not limited to the following:
    (A) Commissions.
    (C) Bonuses.
    (C) Gifts.
    (D) Prizes or Awards.
    (E) Referral or Finder fees.
    (ii) Does not include any of the following:
    (A) Payment of fees to comply with State appointment laws, 
training, certification, and testing costs.
    (B) Reimbursement for mileage to, and from, appointments with 
beneficiaries.
    (C) Reimbursement for actual costs associated with beneficiary 
sales appointments such as venue rent, snacks, and materials.
    Fair market value (FMV) means, for purposes of evaluating agent and 
broker compensation under the requirements of this section only, the 
amount that CMS determines could reasonably be expected to be paid for 
an enrollment or continued enrollment into a Part D plan. FMV for an 
upcoming year is calculated by adding the current year FMV and the 
product of the current year FMV and the Annual Percentage Increase for 
Part D, which is published for each year in the rate announcement 
issued pursuant to Sec.  422.312 of this chapter.
    Initial enrollment year means the first year that a beneficiary is 
enrolled in a plan vs. subsequent years (c.f., renewal year) that a 
beneficiary remains enrolled in a plan.
    Like plan type means one of the following:
    (i) PDP replaced with another PDP.
    (ii) MA or MA-PD replaced with another MA or MA-PD.
    (iii) Cost plan replaced with another cost plan.
    Plan year and enrollment year mean the year beginning January 1 and 
ending December 31.
    Renewal year means all years following the initial enrollment year 
in the same plan or in different plan that is a like plan type.
    Unlike plan type means one of the following:
    (i) An MA or MA-PD plan to a PDP or Section 1876 Cost Plan.
    (ii) A PDP to a Section 1876 Cost Plan or an MA or MA-PD plan.
    (iii) A Section 1876 Cost Plan to an MA or MA-PD plan or PDP.
    (b) Agent/broker requirements. Agents and brokers who represent 
Part D sponsors must follow the requirements in paragraphs (b)(1) 
through (3) of this section. Representation includes selling products 
(including Medicare Advantage plans, Medicare Advantage-Prescription 
Drug plans, Medicare Prescription Drug plans, and section 1876 Cost 
plans) as well as outreach to existing or potential beneficiaries and 
answering or potentially answering questions from existing or potential 
beneficiaries.
    (1) Be licensed and appointed under State law (if required under 
applicable State law).
    (2) Be trained and tested annually as required under paragraph 
(c)(4) of this section, and achieve an 85 percent or higher on all 
forms of testing.
    (3) Secure and document a Scope of Appointment prior to meeting 
with potential enrollees.
    (c) Part D sponsor oversight. Part D sponsors must oversee first 
tier, downstream, and related entities that represent Part D sponsor to 
ensure agents/brokers abide by all applicable State and Federal laws, 
regulations, and requirements. Part D sponsors must do all of the 
following:
    (1) As required under applicable State law, employ as marketing 
representatives only individuals who are licensed by the State to 
conduct marketing (as defined in this subpart) in that State, and whom 
the Part D sponsor has informed that State it has appointed,

[[Page 9255]]

consistent with the appointment process provided for under State law.
    (2) As required under applicable State law, report the termination 
of an agent/broker to the State and the reason for termination if 
required by state law.
    (3) Report to CMS all enrollments made by unlicensed agents/brokers 
and for-cause terminations of agent/brokers.
    (4) On an annual basis, provide agent/broker training and testing 
on Medicare rules and regulations, the plan products that agents and 
brokers will sell including any details specific to each plan product, 
and relevant State and Federal requirements.
    (5) On an annual basis by the last Friday in July, report to CMS 
whether the Part D sponsor intends to use employed, captive, and/or 
independent agents/brokers in the upcoming plan year and the specific 
rates or range of rates the plan will pay independent agents/brokers. 
Following the reporting deadline, Part D sponsor may not change their 
decisions related to agent/broker type, or their compensation rates and 
ranges, until the next plan year.
    (6) On an annual basis by October 1, have in place full 
compensation structures for the following plan year. The structure must 
include details on compensation dissemination, including specifying 
payment amounts for initial enrollment year and renewal year 
compensation.
    (7) Submit agent/broker marketing materials to CMS through HPMS 
prior to use, following the requirements for marketing materials in 
this subpart.
    (8) Ensure agents and brokers do not charge beneficiaries a 
marketing fee.
    (9) Establish and maintain a system for confirming that:
    (i) Beneficiaries enrolled by agents/brokers understand the 
product, including the rules applicable under the plan.
    (ii) Agent/brokers appropriately complete Scope of Appointment 
records for all marketing appointments (including telephonic and walk-
in).
    (10) Demonstrate that marketing resources are allocated to 
marketing to the disabled Medicare population as well as beneficiaries 
age 65 and over.
    (11) Must comply with State requests for information about the 
performance of a licensed agent or broker as part of a state 
investigation into the individual's conduct. CMS will establish and 
maintain a memorandum of understanding (MOU) to share compliance and 
oversight information with States that agree to the MOU.
    (d) Compensation requirements. Part D sponsors must ensure they 
meet the requirements in paragraphs (d)(1) through (5) of this section 
in order to pay compensation. These compensation requirements only 
apply to independent agent/brokers.
    (1) General rules. (i) MA organizations may only pay agents/brokers 
who meet the requirements in paragraph (b) of this section.
    (ii) Part D sponsors may determine, through their contracts, the 
amount of compensation to be paid, provided it does not exceed 
limitations outlined in this section.
    (iii) Part D sponsors may determine their payment schedule (for 
example, monthly or quarterly). Payments (including payments for AEP 
enrollments) must be made during the year of the beneficiary's 
enrollment.
    (iv) Part D sponsors may only pay compensation for the number of 
months a member is enrolled.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year, Part D sponsors may pay compensation at or 
below FMV.
    (i) Part D sponsors may pay either a full or pro-rated initial 
enrollment year compensation for:
    (A) A beneficiary's first year of enrollment in any plan; or
    (B) A beneficiary's move from an employer group plan to a non-
employer group plan (either within the same parent organization or 
between parent organizations).
    (ii) Part D sponsors must pay pro-rate initial enrollment year 
compensation for:
    (A) A beneficiary's plan change(s) during their initial enrollment 
year.
    (B) A beneficiary's selection of an ``unlike plan type'' change. In 
that case, the new plan would only pay the months that the beneficiary 
is enrolled, and the previous plan would recoup the months that the 
beneficiary was not in the plan.
    (3) Renewal compensation. For each enrollment in a renewal year, 
Part D sponsors may pay compensation at an amount up to 50 percent of 
FMV.
    (i) Part D sponsors may pay compensation for a renewal year:
    (A) In any year following the initial enrollment year the 
beneficiary remains in the same plan; or
    (B) When a beneficiary enrolls in a new ``like plan type''.
    (ii) [Reserved]
    (4) Other compensation scenarios. (i) When a beneficiary enrolls in 
a PDP, the Part D sponsor may pay only the PDP compensation (and not 
compensation for MA enrollment under Sec.  422.2274 of this chapter).
    (ii) When a beneficiary enrolls in both a section 1876 Cost Plan 
and a stand-alone PDP, the 1876 Cost Plan sponsor may pay compensation 
for the cost plan enrollment and the Part D sponsor must pay 
compensation for the Part D enrollment.
    (iii) When a beneficiary enrolls in a MA-only plan and a PDP, the 
MA plan may pay for the MA plan enrollment and the Part D sponsor may 
pay for the PDP enrollment.
    (5) Additional compensation, payment, and compensation recovery 
requirements (Charge-backs). (i) Part D sponsors must retroactively pay 
or recoup funds for retroactive beneficiary changes for the current and 
previous calendar years. Part D sponsors may choose to recoup or pay 
compensation for years prior to the previous calendar year, but they 
must do both (recoup amounts owed and pay amounts due during the same 
year).
    (ii) Compensation recovery is required when:
    (A) A beneficiary makes any plan change (regardless of the parent 
organization) within the first 3 months of enrollment (known as rapid 
disenrollment), except as noted in paragraph (d)(5)(iii) of this 
section.
    (B) Any other time period a beneficiary is not enrolled in a plan, 
but the plan paid compensation based on that time period.
    (iii) Rapid disenrollment compensation recovery does not apply 
when:
    (A) A beneficiary enrolls effective October 1, November 1, or 
December 1 and subsequently uses the Annual Election Period to change 
plans for an effective date of January 1.
    (B) A beneficiary's enrollment change is not in the best interests 
of the Medicare program, including for the following reasons:
    (1) Other creditable coverage (for example, an employer plan).
    (2) Moving into or out of an institution.
    (3) Gain or loss of employer/union sponsored coverage.
    (4) Plan termination, non-renewal, or CMS imposed sanction.
    (5) To coordinate with Part D enrollment periods or the State 
Pharmaceutical Assistance Program.
    (6) Becoming LIS or dually eligible for Medicare and Medicaid.
    (7) Qualifying for another plan based on special needs.
    (8) Due to an auto, facilitated, or passive enrollment.
    (9) Death.
    (10) Moving out of the service area.
    (11) Non-payment of premium.
    (12) Loss of entitlement or retroactive notice of entitlement.
    (13) Moving into a 5-star plan.
    (14) Moving from an LPI plan into a plan with three or more stars.

[[Page 9256]]

    (iv)(A) When rapid disenrollment compensation recovery applies, the 
entire compensation must be recovered.
    (B) For other compensation recovery, plans must recover a pro-rated 
amount of compensation (whether paid for an initial enrollment year or 
renewal year) from an agent/broker equal to the number of months not 
enrolled.
    (1) If a plan has paid full initial compensation, and the enrollee 
disenrolls prior to the end of the enrollment year, the total number of 
months not enrolled (including months prior to the effective date of 
enrollment) must be recovered from the agent/broker.
    (2) Example: A beneficiary enrolls upon turning 65 effective April 
1 and disenrolls September 30 of the same year. The plan paid full 
initial enrollment year compensation. Recovery is equal to 6/12ths of 
the initial enrollment year compensation (for January through March and 
October through December).
    (e) Payments to third parties. (1) Payments made to third parties 
(that is, entities other than individual agents/brokers) for services 
other than enrollment of beneficiaries (for example, training customer 
service, agent recruitment, or operational overhead) must not exceed 
FMV.
    (2) Administrative payments to third parties can be based on 
enrollment, provided payments are at or below FMV.
0
104. Section 423.2305 is amended by revising the definition for 
``Applicable discount'' to read as follows.


Sec.  423.2305  Definitions.

* * * * *
    Applicable discount means 50 percent or, with respect to a plan 
year after plan year 2018, 70 percent of the portion of the negotiated 
price (as defined in this section) of the applicable drug of a 
manufacturer that falls within the coverage gap and that remains after 
such negotiated price is reduced by any supplemental benefits that are 
available.
* * * * *
0
105. Section 423.2440 is revised to read as follows:


Sec.  423.2440  Credibility adjustment.

    (a) A Part D sponsor may add the credibility adjustment specified 
under paragraph (e) of this section to a contract's MLR if the 
contract's experience is partially credible, as defined in paragraph 
(d)(1) of this section.
    (b) A Part D sponsor may not add a credibility adjustment to a 
contract's MLR if the contract's experience is fully credible, as 
defined in paragraph (d)(2) of this section.
    (c) For those contract years for which a contract has non-credible 
experience, as defined in paragraph (d)(3) of this section, sanctions 
under Sec.  423.2410(b) through (d) will not apply.
    (d)(1) A contract's experience is partially credible if it is based 
on the experience of at least 4,800 member months and fewer than or 
equal to 360,000 member months.
    (2) A contract's experience is fully credible if it is based on the 
experience of more than 360,000 member months.
    (3) A contract's experience is non-credible if it is based on the 
experience of fewer than 4,800 member months.
    (e) The credibility adjustment for partially credible experience is 
determined based on the number of member months for all enrollees under 
the contract and the factors shown in Table 1 of this section. When the 
number of member months used to determine credibility exactly matches a 
member month category listed in Table 1 of this section, the value 
associated with that number of member months is the credibility 
adjustment. The credibility adjustment for a number of member months 
between the values shown in Table 1 of this section is determined by 
linear interpolation.

Table 1 to Sec.   423.2440--Credibility Adjustments for Part D Contracts
------------------------------------------------------------------------
                                               Credibility adjustment
               Member months                   (additional  percentage
                                                       points)
------------------------------------------------------------------------
<4,800....................................  N/A (Non-credible).
4,800.....................................  8.4%.
12,000....................................  5.3%.
24,000....................................  3.7%.
48,000....................................  2.6%.
120,000...................................  1.7%.
240,000...................................  1.2%.
360,000...................................  1.0%.
>360,000..................................  0.0% (Fully credible).
------------------------------------------------------------------------

PART 455--PROGRAM INTEGRITY: MEDICAID

0
106. The authority citation for part 455 continues to read as follows:

    Authority: 42 U.S.C. 1302.

0
107. Section 455.2 is amended by--
0
a. In the definition of ``Credible allegation of fraud,'' revising 
paragraph (1); and
0
b. Adding the definition of ``Fraud hotline tip'' in alphabetical 
order.
    The revision and addition read as follows:


Sec.  455.2  Definitions.

* * * * *
    Credible allegation of fraud. * * *
    (1) Fraud hotline tips verified by further evidence.
* * * * *
    Fraud hotline tip. A fraud hotline tip is a complaint or other 
communications that are submitted through a fraud reporting phone 
number or a website intended for the same purpose, such as the Federal 
Government's HHS OIG Hotline or a health plan's fraud hotline.
* * * * *

PART 460--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)

0
108. The authority citation for part 460 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f).

0
109. Section 460.6 is amended by revising the definition of 
``Services'' to read as follows:


Sec.  460.6  Definitions.

* * * * *
    Service, as used in this part, means all services that could be 
required under Sec.  460.92, including items and drugs.
* * * * *
0
110. Section 460.56 is added to subpart D to read as follows:


Sec.  460.56  Procedures for imposing sanctions and civil money 
penalties.

    CMS provides notice and a right to request a hearing according to 
the procedures set forth in either of the following:
    (a) Section 422.756(a) and (b) of this chapter if CMS imposes a 
suspension of enrollment or payment under Sec.  460.42 or Sec.  
460.48(b).
    (b) Section 422.756(e)(2)(v) of this chapter if CMS imposes civil 
money penalties under Sec.  460.46.
0
111. Section 460.92 is revised to read as follows:


Sec.  460.92  Required services.

    (a) The PACE benefit package for all participants, regardless of 
the source of payment, must include the following:
    (1) All Medicare-covered services.
    (2) All Medicaid-covered services, as specified in the State's 
approved Medicaid plan.
    (3) Other services determined necessary by the interdisciplinary 
team to improve and maintain the participant's overall health status.
    (b) Decisions by the interdisciplinary team to provide or deny 
services under paragraph (a) of this section must be based on an 
evaluation of the participant that takes into account:
    (1) The participant's current medical, physical, emotional, and 
social needs; and

[[Page 9257]]

    (2) Current clinical practice guidelines and professional standards 
of care applicable to the particular service.


Sec.  460.96  [Amended]

0
112. Section 460.96 is amended by--
0
a. Removing paragraphs (a) and (b); and
0
b. Redesignating paragraphs (c) through (e) as paragraphs (a) through 
(c).
0
113. Section 460.98 is amended by--
0
a. Revising paragraph (a);
0
b. Adding a sentence to the end of paragraph (b)(1); and
0
c. Adding paragraphs (b)(4) and (5).
    The revision and additions read as follows:


Sec.  460.98  Service delivery.

    (a) Access to services. A PACE organization is responsible for 
providing care that meets the needs of each participant across all care 
settings, 24 hours a day, every day of the year, and must establish and 
implement a written plan to ensure that care is appropriately 
furnished.
    (b) * * *
    (1) * * * These services must be furnished in accordance with Sec.  
460.70(a).
* * * * *
    (4) Services must be provided as expeditiously as the participant's 
health condition requires, taking into account the participant's 
medical, physical, emotional, and social needs.
    (5) The PACE organization must document, track, and monitor the 
provision of services across all care settings in order to ensure the 
interdisciplinary team remains alert to the participant's medical, 
physical, emotional, and social needs regardless of whether services 
are formally incorporated into the participant's plan of care.
* * * * *
0
114. Section 460.l02 is amended by revising paragraphs (d)(1) and 
(d)(2)(ii) to read as follows:


Sec.  460.102  Interdisciplinary team.

* * * * *
    (d) * * *
    (1) The interdisciplinary team is responsible for the following:
    (i) The initial assessment, periodic reassessments, plan of care, 
and coordination of 24-hour care delivery.
    (ii) Documenting all recommendations for care or services and the 
reason(s) for not approving or providing recommended care or services, 
if applicable, in accordance with Sec.  460.210(b).
    (2) * * *
    (ii) Remaining alert to pertinent input from any individual with 
direct knowledge of or contact with the participant, including the 
following:
    (A) Other team members.
    (B) Participants.
    (C) Caregivers.
    (D) Employees.
    (E) Contractors.
    (F) Specialists.
* * * * *
0
115. Section 460.104 is amended by revising paragraph (d)(2) to read as 
follows:


Sec.  460.104  Participant assessment.

* * * * *
    (d) * * *
    (2) In response to a service delivery request. In accordance with 
Sec.  460.121(h), the PACE organization must conduct an in-person 
reassessment if it expects to deny or partially deny a service delivery 
request, and may conduct reassessments as determined necessary for 
approved services.
* * * * *
0
116. Section 460.112 is amended by--
0
a. Adding paragraph (b)(4);
0
b. Redesignating paragraph (c)(3) as paragraph (c)(5); and
0
c. Adding new paragraphs (c)(3) and (4).
    The additions read as follows:


Sec.  460.112  Specific rights to which a participant is entitled.

* * * * *
    (b) * * *
    (4) To contact 1-800-MEDICARE for information and assistance, 
including to make a complaint related to the quality of care or the 
delivery of a service.
    (c) * * *
    (3) To have reasonable and timely access to specialists as 
indicated by the participant's health condition and consistent with 
current clinical practice guidelines.
    (4) To receive necessary care in all care settings, up to and 
including placement in a long-term care facility when the PACE 
organization can no longer provide the services necessary to maintain 
the participant safely in the community.
* * * * *
0
117. Section 460.121 is added to read as follows:


Sec.  460.121  Service delivery requests.

    (a) Written procedures. Each PACE organization must have formal 
written procedures for identifying and processing service delivery 
requests in accordance with the requirements of this section.
    (b) What is a service delivery request--(1) Requests that 
constitute a service delivery requests. Except as provided in paragraph 
(b)(2) of this section, the following requests constitute service 
delivery requests:
    (i) A request to initiate a service.
    (ii) A request to modify an existing service, including to 
increase, reduce, eliminate, or otherwise change a service.
    (iii) A request to continue coverage of a service that the PACE 
organization is recommending be discontinued or reduced.
    (2) Requests that do not constitute a service delivery request. 
Requests to initiate, modify, or continue a service do not constitute a 
service delivery request if the request is made prior to development of 
the initial care plan.
    (c) Who can make a service delivery request? Any of the following 
individuals can make a service delivery request:
    (1) The participant.
    (2) The participant's designated representative.
    (3) The participant's caregiver.
    (d) Method for making a service delivery request. An individual may 
make a service delivery request as follows:
    (1) Either orally or in writing.
    (2) To any employee or contractor of the PACE organization that 
provides direct care to a participant.
    (e) Processing a service delivery request. (1) Except as provided 
in paragraph (e)(2) of this section, the PACE organization must bring a 
service delivery request to the interdisciplinary team as expeditiously 
as the participant's condition requires, but no later than 3 calendar 
days from the time the request is made.
    (2) If a member of the interdisciplinary team is able to approve 
the service delivery request in full at the time the request is made, 
the PACE organization--
    (i) Must fulfill all of the following:
    (A) Notice of the decision to approve a service delivery request 
requirements specified in paragraph (j)(1) of this section.
    (B) Effectuation requirements specified in paragraph (k) of this 
section.
    (C) Recordkeeping requirements specified in paragraph (m) of this 
section.
    (ii) Is not required to process the service delivery request in 
accordance with paragraphs (f) through (i), (j)(2), and (l) of this 
section.
    (f) Who must review a service delivery request? The full 
interdisciplinary team must review and discuss each service delivery 
request and decide to approve, deny, or partially deny the request 
based on that review.
    (g) Interdisciplinary team decision making. The interdisciplinary 
team

[[Page 9258]]

must consider all relevant information when evaluating a service 
delivery request, including, but not limited to, the findings and 
results of any reassessments required in paragraph (h) of this section, 
as well as the criteria specified in Sec.  460.92(b).
    (h) Reassessments in response to a service delivery request. (1) If 
the interdisciplinary team expects to deny or partially deny a service 
delivery request, the appropriate members of the interdisciplinary 
team, as identified by the interdisciplinary team, must conduct an in-
person reassessment before the interdisciplinary team makes a final 
decision. The team members performing the reassessment must evaluate 
whether the requested service is necessary to meet the participant's 
medical, physical, emotional, and social needs.
    (2) The interdisciplinary team may conduct a reassessment prior to 
approving a service delivery request, either in-person or through the 
use of remote technology, if the team determines that a reassessment is 
necessary.
    (i) Notification timeframe. Except as provided in paragraph (i)(1) 
of this section, when the interdisciplinary team receives a service 
delivery request, it must make its decision and notify the participant 
or their designated representative of its decision as expeditiously as 
the participant's condition requires, but no later than 3 calendar days 
after the date the interdisciplinary team receives the request.
    (1) Extensions. The interdisciplinary team may extend the timeframe 
for review and notification by up to 5 calendar days if either of the 
following occur:
    (i) The participant or other requestor listed in paragraph (c)(2) 
or (3) of this section requests the extension.
    (ii) The extension is in the participant's interest because the 
interdisciplinary team needs additional information from an individual 
not directly employed by the PACE organization that may change the 
interdisciplinary team's decision to deny a service. The 
interdisciplinary team must document the circumstances that led to the 
extension and demonstrate how the extension is in the participant's 
best interest.
    (2) Notice of extension. When the interdisciplinary team extends 
the timeframe, it must notify the participant or their designated 
representative in writing. The notice must explain the reason(s) for 
the delay and must be issued as expeditiously as the participant's 
condition requires, but no later than 24 hours after the IDT decides to 
extend the timeframe.
    (j) Notification requirements--(1) Notice of decisions to approve a 
service delivery request. If the interdisciplinary team makes a 
determination to approve a service delivery request, it must provide 
the participant or the designated representative either oral or written 
notice of the determination. Notice of any decision to approve a 
service delivery request must explain the conditions of the approval in 
understandable language, including when the participant may expect to 
receive the approved service.
    (2) Notice of decisions to deny a service delivery request. If the 
interdisciplinary team decides to deny or partially deny a service, it 
must provide the participant or the designated representative both oral 
and written notice of the determination. Notice of any denial must--
    (i) State the specific reason(s) for the denial, including why the 
service is not necessary to maintain or improve the participant's 
overall health status, taking into account the participant's medical, 
physical, emotional, and social needs, and the results of the 
reassessment(s) in understandable language.
    (ii) Inform the participant or designated representative of his or 
her right to appeal the decision under Sec.  460.122.
    (iii) Describe the standard and expedited appeals processes, 
including the right to, and conditions for, obtaining expedited 
consideration of an appeal of a denial of services as specified in 
Sec.  460.122.
    (iv) For a Medicaid participant, inform the participant of both of 
the following, as specified in Sec.  460.122(e)(1):
    (A) His or her right to continue receiving disputed services during 
the appeals process until issuance of the final determination.
    (B) The conditions for continuing to receive disputed services.
    (k) Effectuation requirements. If the interdisciplinary team 
approves a service delivery request, in whole or in part, the PACE 
organization must provide the approved service as expeditiously as the 
participant's condition requires, taking into account the participant's 
medical, physical, emotional, and social needs. The interdisciplinary 
team must explain when the participant may expect to receive the 
service in accordance with paragraph (j)(1) of this section.
    (l) Effect of failure to meet the processing timeframes. If the 
interdisciplinary team fails to provide the participant with timely 
notice of the resolution of the request or does not furnish the 
services required by the revised plan of care, this failure constitutes 
an adverse decision, and the participant's request must be 
automatically processed by the PACE organization as an appeal in 
accordance with Sec.  460.122.
    (m) Recordkeeping. The PACE organization must establish and 
implement a process to document, track, and maintain records related to 
all processing requirements for service delivery requests received both 
orally and in writing. These records must be available to the 
interdisciplinary team to ensure that all members remain alert to 
pertinent participant information.
0
118. Section 460.122 is amended by--
0
a. Revising the introductory text and paragraphs (b) and (c)(1), (2), 
and (4);
0
b. Redesignating paragraphs (c)(5) and (6) as paragraphs (c)(6) and 
(7), respectively;
0
c. Adding a new paragraph (c)(5);
0
d. Revising paragraph (d);
0
e. Redesignating paragraphs (g) through (i) as paragraphs (h) through 
(j), respectively;
0
f. Adding a new paragraph (g); and
0
g. Revising newly redesignated paragraph (h).
    The revisions and additions read as follows:


Sec.  460.122  PACE organization's appeals process.

    For purposes of this section, an appeal is a participant's action 
taken with respect to the PACE organization's noncoverage of, or 
nonpayment for, a service including denials, reductions, or termination 
of services. A request to initiate, modify or continue a service must 
first be processed as a service delivery request under Sec.  460.121 
before the PACE organization can process an appeal under this section.
* * * * *
    (b) Notification of participants. Upon enrollment, at least 
annually thereafter, and whenever the interdisciplinary team denies a 
service delivery request or other request for services or payment, the 
PACE organization must give a participant written information on the 
appeals process.
    (c) * * *
    (1) Timely preparation and processing of a written denial of 
coverage or payment as provided in Sec.  460.121(g).
    (2) How a participant or their designated representative files an 
appeal, including procedures for accepting oral and written appeal 
requests.
* * * * *

[[Page 9259]]

    (4) Review of an appeal by an appropriate third party reviewer or 
committee. An appropriate third party reviewer or member of a review 
committee must be an individual who meets all of the following:
    (i) Appropriately credentialed in the field(s) or discipline(s) 
related to the appeal.
    (ii) An impartial third party who meets both of the following:
    (A) Was not involved in the original action.
    (B) Does not have a stake in the outcome of the appeal.
    (5) The distribution of written or electronic materials to the 
third party reviewer or committee that, at a minimum, explain all of 
the following:
    (i) Services must be provided in a manner consistent with the 
requirements in Sec. Sec.  460.92 and 460.98.
    (ii) The need to make decisions in a manner consistent with how 
determinations under section 1862(a)(1)(A) of the Act are made.
    (iii) The rules in Sec.  460.90(a) that specify that certain 
limitations and conditions applicable to Medicare or Medicaid or both 
benefits do not apply.
* * * * *
    (d) Opportunity to submit evidence. A PACE organization must give 
all parties involved in the appeal a reasonable opportunity to present 
evidence related to the dispute, in person, as well as in writing.
* * * * *
    (g) Notification. A PACE organization must give all parties 
involved in the appeal appropriate written notification of the decision 
to approve or deny the appeal.
    (1) Notice of a favorable decision. Notice of any favorable 
decision must explain the conditions of the approval in understandable 
language.
    (2) Notice of adverse decisions. (i) If an appeal decision is 
partially or fully adverse to a participant, the PACE organization must 
provide the participant with written notification of the decision. 
Notice of any denial must--
    (A) State the specific reason(s) for the denial;
    (B) Explain the reason(s) why the service would not improve or 
maintain the participant's overall health status;
    (C) Inform the participant of his or her right to appeal the 
decision; and
    (D) Describe the external appeal rights under Sec.  460.124.
    (ii) If an appeal decision is partially or fully adverse to a 
participant, at the same time the decision is made, the PACE 
organization must notify the following:
    (A) CMS.
    (B) The State administering agency.
    (C) The participant.
    (h) Actions following a favorable decision. A PACE organization 
must furnish the disputed service as expeditiously as the participant's 
health condition requires if a determination is made in favor of the 
participant on appeal.
* * * * *
0
119. Section 460.124 is revised to read as follows:


Sec.  460.124  Additional appeal rights under Medicare or Medicaid.

    A PACE organization must inform a participant in writing of his or 
her appeal rights under Medicare or Medicaid managed care, or both, 
assist the participant in choosing which to pursue if both are 
applicable, and forward the appeal to the appropriate external entity.
    (a) Appeal rights under Medicare. Medicare participants have the 
right to a reconsideration by an independent review entity.
    (1) A written request for reconsideration must be filed with the 
independent review entity within 60 calendar days from the date of the 
decision by the third party reviewer under Sec.  460.122.
    (2) The independent outside entity must conduct the review as 
expeditiously as the participant's health condition requires but must 
not exceed the deadlines specified in the contract.
    (3) If the independent review entity conducts a reconsideration, 
the parties to the reconsideration are the same parties described in 
Sec.  460.122(c)(2), with the addition of the PACE organization.
    (b) Appeal rights under Medicaid. Medicaid participants have the 
right to a State Fair Hearing as described in part 431, subpart E, of 
this chapter.
    (c) Appeal rights for dual eligible participants. Participants who 
are eligible for both Medicare and Medicaid have the right to external 
review by means of either the Independent Review Entity described in 
paragraph (a) of this section or the State Fair Hearing process 
described in paragraph (b) of this section.
0
120. Section 460.200 is amended by--
0
a. Redesignating paragraphs (b) introductory text and (b)(1) through 
(4) as paragraphs (b)(1) introductory text and (b)(1)(i) through (iv), 
respectively;
0
b. Adding a new paragraph (b)(2); and
0
c. Revising paragraph (d).
    The addition and revision read as follows:


Sec.  460.200  Maintenance of records and reporting of data.

* * * * *
    (b) * * *
    (2) CMS and the State administering agency must be able to obtain, 
examine or retrieve the information specified at paragraph (b)(1) of 
this section, which may include reviewing information at the PACE site 
or remotely. PACE organizations may also be required to upload or 
electronically transmit information, or send hard copies of required 
information by mail.
* * * * *
    (d) Safeguarding data and records. PACE organization must do all of 
the following:
    (1) Establish written policies and implement procedures to 
safeguard all data, books, and records against loss, destruction, 
unauthorized use, or inappropriate alteration.
    (2) Maintain all written communications received from participants 
or other parties in their original form when the communications relate 
to a participant's care, health, or safety in accordance with Sec.  
460.210(b)(6).
* * * * *
0
121. Section 460.210 is amended by--
0
a. Redesignating paragraphs (b)(4) through (12) as (b)(7) through (15); 
and
0
b. Adding new paragraphs (b)(4) through (6).
    The additions read as follows:


Sec.  460.210  Medical records.

* * * * *
    (b) * * *
    (4) All recommendations for services made by employees or 
contractors of the PACE organization, including specialists.
    (5) If a service recommended by an employee or contractor of the 
PACE organization, including a specialist, is not approved or provided, 
the reason(s) for not approving or providing that service.
    (6) Original documentation of any written communication the PACE 
organization receives relating to the care, health or safety of a 
participant, in any format (for example, emails, faxes, letters, etc.) 
and including, but not limited to the following:
    (i) Communications from the participant, his or her designated 
representative, a family member, a caregiver, or any other individual 
who provides information pertinent to a participant's health or safety 
or both.
    (ii) Communications from an advocacy or governmental agency such as 
Adult Protective Services.
* * * * *


[[Page 9260]]


    Dated: January 13, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: January 24, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-02085 Filed 2-5-20; 4:15 pm]
BILLING CODE 4120-01-P